ABC 730 27/04/22

27 April 2022

SUBJECTS: Skyrocketing cost of living; real wages going backwards; interest rates; not enough to show from a trillion dollars in debt; Labor’s economic plan; Years of waste and rorts weighing down the Morrison Government’s Budget.



ABC 730


SUBJECTS: Skyrocketing cost of living; real wages going backwards; interest rates; not enough to show from a trillion dollars in debt; Labor’s economic plan; Years of waste and rorts weighing down the Morrison Government’s Budget.
HOST, LEIGH SALES: Senator Simon Birmingham is the Finance Minister and Leader of the Government in the Senate and Jim Chalmers is the Shadow Treasurer. Welcome to both of you this evening. Simon Birmingham first to you, with inflation numbers like today's voters will go to the ballot box knowing that they're not imagining that everything is getting more expensive and that it's harder to make ends meet. Why would they vote for more of that?

SENATOR SIMON BIRMINGHAM: Well Leigh, Australia is not immune from international pressures. We've seen particular pressures on oil prices since Russia's invasion of Ukraine. Shocks that have come from COVID-19. But Australia's inflation rate is still markedly lower than the US, it's lower than the UK, Germany, Italy, Canada or New Zealand, for example. So our economic plan is not only driving unemployment down to lows not seen in close to 50 years, but is also ensuring that, in withstanding some of these international pressures like inflation, we are doing far better than many other countries. And of course, our strength in the fact that our budget improved by the biggest some in some 70 years, gives us the capacity and has allowed us to halve excise for this period of time, to provide additional payments to pensioners and those on fixed incomes, to ensure that when people put their tax return in from the first of July, they will get more back of what they've earned and to build on the tax relief that our Government has provided, and of course, has more to come in the next term.

SALES: Jim Chalmers, do you agree that it's international pressures and do you agree that the policy settings currently are correct?

JIM CHALMERS, SHADOW TREASURER: Well, these inflationary pressures and most importantly, falling real wages were actually a feature of the economy even before some of this international turbulence. So I don't agree with that. You know, we've had almost a decade now of stagnant wages growth and that's meant falling real wages in recent times, because we've got this diabolical triple whammy on Scott Morrison's watch, which is cost of living going through the roof, real wages going backwards, and now the prospect of interest rate rises very soon. This can't be the thanks that Australians get for all the sacrifices that they made for each other throughout this pandemic. This combination of prices through the roof, real wages going backwards and interest rate rises, but this is a feature of the economy on Scott Morrison's watch.

SALES: Jim Chalmers would Labor agree that the only responsible path for the Reserve Bank to take next week is to raise interest rates?

CHALMERS: As you know Leigh, every time we've talked about this, you know we don't get into giving free advice to the independent Reserve Bank. You know our issue is with the Government that doesn't have a plan to deal with these inflationary pressures in the economy. What I did today with Katy Gallagher and Andrew Leigh was to release our plan for beyond the election. How do we grow the economy in ways that doesn't add to these inflationary pressures? How do we get real wages growing again? And how do we deal with this legacy of not having enough of an economic dividend from this trillion dollars in debt that the Government has racked up, more than half of it before the pandemic? That should be the focus. There's some near term cost of living relief, which we supported, but the Government doesn't have a plan beyond that. And that's why I think the price that Australians have to pay for another three years of this rotten Government shouldn't be this combination of cost of living pressure and real wages falling and interest rates rising to make it even harder for Australians to get ahead.

SALES: Simon Birmingham the Government couldn't blame the RBA next week, if they do raise interest rates, right?

BIRMINGHAM: We respect the independence of the RBA Leigh and we, indeed have acknowledged for some time that there will be a normalisation of interest rates, which have been at abnormally low levels. Australians have used this time during COVID-19, of very low interest rates and additional government support to increase household savings to pay down mortgages faster than had previously been the case, to increase levels of business savings, but we know that people are still doing it tough and that's why we did what we could in the recent Budget to provide additional relief. The alternative we saw from the Labor Party released today, which simply proposes one element of savings that wouldn't even pay for a single Labor Party policy in their child care policy. A $5 billion claim savings, many of which are quite fanciful. But that stacks up against a $5.4 billion spend on the Labor side in just one policy area alone. That's a demonstration that we would see if there were a change of government, a government that was profligate with its money and that would only put even further pressure on households.

CHALMERS: You've racked up a trillion dollars in debt, Simon and you've got almost nothing to show for it. We're not taking lectures from you about responsible economic management. The commitments that we've made are a fraction of the tens of billions of dollars that you've wasted and rorted.

SALES: Senator Birmingham?

BIRMINGHAM: Jim, I don't call unemployment rates headed to the lowest levels in 50 years, nothing. I call that a huge opportunity for Australia right now. We are proud of the fact that we've got close to 2 million extra Australians in work. We've outlined plans to see that continue to grow. That's providing Australians with the opportunities to be able to get ahead in life. We've seen homeownership, first homeownership rates climbing.

CHALMERS: They can't get ahead because inflation is through the roof and real wages are going backwards. They can't get ahead on your watch. If you're gonna take responsibility for the unemployment at 4 per cent, you've got to take responsibility for the rest of the mess.

SALES: Senator Birmingham.

BIRMINGHAM: They're getting jobs in record numbers. And what we've seen is that first homeownership rates under our policy settings have been growing. We've achieved positive outcomes in terms of our budget repairing faster than many other countries in the world and having the fastest improvement in 70 years. And we're in a situation where those inflation rates are lower than much of the rest of the world.

SALES: Let me ask both of you. Both of your parties are going around in this campaign promising spending initiatives. You're both going to back income tax cuts. In an inflationary environment, how is that responsible? Jim Chalmers?

CHALMERS: Well, the responsible thing to do in this inflationary environment is to make sure that the commitments you make are all about growing the size of the economy and the capacity of the economy without adding to these inflationary pressures. What we need is a bigger, better trained workforce. Bigger in the sense that child care policy will mean more people can work more and earn more. We need a better trained workforce so they can grab these opportunities of a recovering economy. We need to invest in the digital economy, the care economy, advanced manufacturing in ways that we have proposed, because it's not just the quantity of the spending that matters Leigh, it's the quality of the spending. Whether you generate a genuine economic dividend and our criticism of this trillion dollars of debt that Simon and Josh Frydenberg have racked up is that there is so much in there, which is wasteful, so many rorts in there that have been uncovered by others independently. We're just not getting that bang for buck that we need.

SALES: Let me go to Senator Birmingham to ask your response to that? And also, is it responsible in this environment to be promising government spending?

BIRMINGHAM: Well Leigh, when we handed down the recent budget, and we had significant improvements in the bottom line, what we did was we took $103 billion of the additional revenue, and we put it towards having lower deficits. We took the vast majority of it to ensure that future debt would be lower than previously forecast. Future deficits would be lower than previously forecast. Where we did invest extra, we made sure it was in targeted cost of living relief to deal with those oil price spikes we're seeing right now. And we made sure that overwhelmingly, any extra investments went into productive infrastructure. Investment in relation to our ports, our rail, making sure that we're able to also invest in apprenticeships, which we've seen commencements come to record levels for trade apprenticeships and we want to now support those to continue but also towards completion to address those skills challenges we're seeing across the economy.

SALES: We're out of time, Simon Birmingham, Jim Chalmers, thank you for time this evening.

CHALMERS: Thank you.

BIRMINGHAM: Thanks Leigh.