JIM CHALMERS MP
SHADOW TREASURER
MEMBER FOR RANKIN
E&OE TRANSCRIPT
RADIO INTERVIEW
ABC BRISBANE DRIVE
MONDAY, 10 MAY 2021
SUBJECTS: Comparisons between the Global Financial Crisis and COVID-19; Debt and deficit; Population and economic growth.
STEVE AUSTIN, HOST: Treasurer Josh Frydenberg is expected to announce big spending measures tomorrow night. There's likely to be a ten-year $10 billion infrastructure package, and some changes to superannuation for older Australians. We already know about the aged care money as well. Labor Opposition Leader Anthony Albanese has dismissed the Budget as being full of flashy pre-election promises. And Mr Albanese says that we no lasting legacy except for crippling debt. We'll find out tomorrow night when the Treasurer delivers his speech, but I'm intrigued to speak with my next guest Jim Chalmers, who has worked in the Treasurer's office when Labor was in power in 2008. Jim Chalmers is the Shadow Treasurer, and federal Member for Rankin. Jim Chalmers, good to have you back on the program.
JIM CHALMERS, SHADOW TREASURER: Welcome back, Steve. Good to be here.
AUSTIN: What was your job when Wayne Swan was the federal Treasurer, around 2008-2009, what was your role?
CHALMERS: I think then I was Deputy Chief of Staff and Principal Advisor and I was Chief of Staff a couple of years later.
AUSTIN: I want you to jog our memory because I'm fascinated to contrast the stimulus boost you did back then and what's happening now. So, what was the situation you were faced with during the Global Financial Crisis, as it was back then, the GFC in 2008?
CHALMERS: Well, the global economy effectively shut down because the financial system fell apart. There were some dodgy financial instruments that had been manipulated and resold and all the rest of it and when faith in those broke down basically the wheels of the global economy stopped. So pretty early on in the life of that Rudd Government, with Wayne Swan as Treasurer, they faced some pretty difficult decisions to try and avoid recession here. Our major trading partners went into recession. We avoided it. It's largely as a consequence of the policies that those two guys put in place that we were able to do that. They got it nice and early. They had a stimulus in the Budget. They pumped the money out there responsibly.
AUSTIN: You followed Ken Henry's advice, basically? Go hard and go early, whatever it was?
CHALMERS: Go hard, go early, go households was Ken's advice. They did that and they did it very effectively. And so we avoided recession then. We've actually just come to the end of an almost 30 year period of unbroken continuous economic growth and one of the reasons for that is because of what Kevin and Wayne and the team back then were able to do to avoid recession a little over 10 years ago.
AUSTIN: Now, why did you choose to stimulate the economy? You guys pumped really large amounts of money into the Australian economy, not once, but twice. Why did you choose to do that, what was the thinking, the rationale?
CHALMERS: The main thinking is that we've got to put people first. That means trying to save their jobs, trying to save their livelihoods, trying to make sure that there's money pumping around the economy, that people have some spending power, particularly when things are most dire. So we did that, not just to make sure that people had some disposable income but also building a lot of infrastructure, a lot of things that had a lasting benefit. I think one of the really key considerations we had then, which I would argue is different than what the Government's doing now, is we wanted to make sure that we were building a lasting legacy. That we actually had something to show for it. I think there's a bit less of that thinking now.
AUSTIN: I'm intrigued by the comparison because I realised the GFC back then is not the same as a pandemic scenario now, but for many Australians, the effect is still the same on their income or their jobs and their uncertainty. So what issues were you facing then that the federal Government is facing now with the pandemic? Because this Government, this team, was very, very critical of what you guys did back then. On the second stimulus, not the first, the second stimulus. So what issues were you facing?
CHALMERS: The common issue faced then and now was a big slowdown in the global economy with big consequences for our economy here at home and particularly for people's jobs and their ability to support their families. So at one level there are similarities, but very different kinds of downturns. In our case the financial system falling apart. In the situation last year a pandemic which necessitated government's closing down big parts of the economy. So they're a little bit different there. But the main difference is actually in the outcomes. We were able to avoid recession a little over 10 years ago. They weren't able to avoid recession this time around. So that 30 year period of economic growth ended with the sharpest recession we've had in this country since the Great Depression almost 100 years ago. So that's really the main difference, in that outcome. Also there was much less debt accumulated just over a decade ago in the GFC, many multiples of that, now more than a trillion dollars in debt. And we would argue some of that has been wasteful spending that as we've spoken about before, they've given JobKeeper to profitable businesses that didn't need it, they've had sports rorts and dodgy land deals and all the rest of it. So, another big difference is the debt position. It's much, much higher now than it was back then.
AUSTIN: Back then this Government's criticism of your policy was quite sharp. And I wondered whether you see that now...
CHALMERS: I remember that too, Steve, it rings a bell!
AUSTIN: ...I mean, essentially, in many ways, this government, in some ways, has copied philosophically at least what you did back then. In other words, you know, this government is stimulating furiously, it looks to me like certain things gonna be overheated now in terms of the economy. But this government has sort of basically taken out of your playbook and done, not exactly the same, but very, very similar in terms of massive amounts of money injected into the economy to stimulate it.
CHALMERS: I think what that shows is that most of what they've said about the economy and about economic policy for the last decade or so has been a complete sham. We've been consistent about it. We've been constructive as you know, you and I speak almost every week, and you know that we try to be pretty constructive about it. We do think that when things are especially dire that there's a role for the government to step in. Sometimes that involves borrowing money to support the economy. We think as long as you're doing that in a cost-effective way, and you're not wasting money, than that's worth it. It'd be worse to let the economy just hit the fence entirely, and all the human wreckage that would come from that. So we tried to be pretty constructive. We've been consistent all along. There's a role for the budget. Sometimes that necessitates some debt. The other guys have just been all over the shop, they've had all these different positions determined not by economics but by politics. And I think what the last year or so has really exposed is just how hollow, and shambolic, and dishonest that campaign from them has been for much of the last 10 years. Their argument that they've perpetrated against the Labor Party since the GFC is now a smoking ruin.
AUSTIN: We'll know tomorrow night, but we're going to have an extraordinary, we already have extraordinary debt, and we'll have more tomorrow night by the sounds of it. The only way that we can pay back debt is either through growth, or through basically creating inflation, or through growth, or through immigration. Why does Australia's economic growth, or from taxation as well I should point out, but why does Australia's economic growth come in the main from migration, normally.
CHALMERS: That's been a big part of the story. There wasn't enough growth before COVID-19 but what growth there was, was a function of population growth.
AUSTIN: And you've pointed out that most of the debt came on the books be prior to the pandemic?
CHALMERS: Exactly right yeah. The Government wants to pretend now that all this weakness in the Budget and weakness in the economy is purely a consequence of the pandemic, but things weren't real flash even before the pandemic. But population has got a big role to play in that. If you think about a healthy, functioning, growing economy, then population growth is part of that. Making sure that you've got bigger markets to sell your goods into. That's an important part of it. One of the intriguing or heartening things about the growth we've seen in the last couple of quarters, is that people who are spending more and more at home because of the closer to the international border. That has propped up growth in the absence of migration, but I don't think that's a durable situation. At some point we will return to stronger population growth and part of that will be migration.
AUSTIN: So the only way we're gonna be able to pay back all this debt in my mind Jim Chalmers is taxation, growth through manipulating interest rates. What do you think?
CHALMERS: There's three ways: grow the economy, tax changes or spending changes. The preference, far and away, is to grow the economy quickly enough and sustainably and broadly enough that you're making inroads into that debt. The Treasurer himself has talked about eye-watering levels of debt, you know a trillion dollars is a number of multiples what...
AUSTIN: How many zeros is that, Jim Chalmers!
CHALMERS: Lots of zeros! And it's growing. And so getting on top of that will require growing the economy. I think at some point the Government will go back to cutting the Budget as well, but I don't think we'll know that before the election.
AUSTIN: Just a quick one from a listener, Grant. He says your claim for avoiding a recession wasn't your economic management but it was basically China, it was China that saved us then, and China is still saving us now. Do you have a view on that?
CHALMERS: I'm glad Grant's given me that opportunity because I don't think there's ever any one explanation for Australia's relative economic success, but all of the credible economic commentators from around the world have given the lion's share of the credit to the policies of the Government. Obviously, China was part of it too, but also businesses and workers that did the right thing by each other. Grant's right to say that there were a range of factors but if you look at what most of the credible people around the world have said about our stimulus during the Global Financial Crisis, they think it was world's best practice and that's a fairly common view.
AUSTIN: Thanks for coming on.
CHALMERS: Thank you, Steve.
AUSTIN: Jim Chalmers is the Shadow Treasurer for the Labor opposition and federal Member for Rankin here in Queensland.
ENDS
