E&OE TRANSCRIPT
RADIO INTERVIEW
ABC RADIO BRISBANE
MONDAY, 13 JULY 2020
 
SUBJECTS: Economic support; Future of JobKeeper and JobSeeker; Income Tax Cuts; the Australian economy; Modern Monetary Theory.

STEVE AUSTIN, HOST: Lets go to Canberra [sic] and speak with the Federal Opposition Spokesperson Jim Chalmers who's Labor's Member for Rankin. Five million Australians will at some point this week notice major cash in their bank account as part of the Federal Government's response to the economic crisis caused by COVID-19. $750 starts going into accounts; it will probably take about a week to get into everyone's account. It's economic stimulus number two. Jim Chalmers does Labor support economic stimulus number two?
 
JIM CHALMERS, SHADOW TREASURER: Hi Steve coming to you from Logan rather than Canberra
 
AUSTIN: Logan there you go.
 
CHALMERS: Of course, yes we did. We supported it through the parliament. We think it's a good idea to get some money out the door and into the hands of people who are doing it tough and just as importantly to get it circulating around the economy that needs it. We've spoken before, you and I, about how difficult it is for small business in particular out in the suburbs and I think these kinds of payments are good for the person who receives them but also good for local economies.
 
AUSTIN: This goes to people who are pensioners, disability pensioners, the unemployed and the like; in other words the people who you would expect to be at the most significant economic disadvantage. Is there a better way of distributing an economic support payment like this?
 
CHALMERS: I think the theory of it's good. It's people who are most likely to spend in the economy who are the people who've got the least margin in their week to week living. We've always said if you're going to be handing out money to get people through a difficult period and get businesses through a difficult period you want to give it to people who need it the most and who are most likely to spend it.
 
AUSTIN: What should people spend it on? Should they spend it or should they pay down debt?
 
CHALMERS: I don't like to tell people what to do with their money here, people will do all of those things in different measure depending on their own circumstances, but clearly a heap of it will find its way into small businesses and into shopping malls and that's a good thing. Others might pay down debt. We saw that a bit with the tax cuts that have come out in recent months. But I think overall, it’s a good thing. In times like this you need to make sure that people are supported. 
 
AUSTIN: Will we need payment number three or payment number four before the year's out?
 
CHALMERS: Well the Government's looking at that now at the moment. They're working out their options and they said they'll let us in on the secret at the end of July and what they plan to do with things like JobSeeker, JobKeeper and some of the other support that's in the economy and they said they'll update the budget. I think the point that the Reserve Bank and others have made, Deloitte Access Economics and the like, is that unemployment is going to be higher for longer, and there will be a need for government support for some time yet.
 
AUSTIN: This is ABC radio; I'm speaking with the Opposition Treasury Spokesperson Jim Chalmers. Jim's the ALP Member for Rankin. The Morrison Government is considering bringing forward their income tax cuts and will extend income support beyond September. You've been questioning this. Just clarify for me, it's not clear to me, what Federal Labor's position is on income tax cuts. I think you're slightly concerned about it? Jim Chalmers tell me why?
 
CHALMERS: I wouldn't say that's our position Steve. Our position is if there's a plan to bring forward some of these tax cuts let’s see the plan, and then we'll engage in the same kind of responsible and constructive way that we have been doing on some of these other changes. We've actually been quite supportive, we've got quite an open mind about bringing forward some of these tax cuts.  Perhaps not the ones that come in four or five years down the track but the next round which is slated to come in in a couple of years’ time. We said it might make sense to bring that forward for middle income earners, so that we can get some of that spending power back in the economy. We do genuinely have an open mind to that but if there's a plan to do that let's see it first. We're not just going to sign up for something without having seen it.
 
AUSTIN:I know a lot of people who say we should be raising taxes on particularly the upper income level person so you could put that money to things that need it like universities, or the CSIRO or passing it onto the states for the education and health systems. Which is your preference Jim Chalmers?
 
CHALMERS: First things first, let’s sort out JobKeeper and JobSeeker. These are the sorts of immediate considerations that governments need to have. Clearly at some point down the track the budget will be in quite bad shape; the worst it's ever been actually. So governments of either persuasion will have to try and work out how to pay -
 
AUSTIN: The worst it’s ever been since World War Two.
 
CHALMERS: The worst it’s been since records were kept like this. In World War Two, there was a lot of red ink in the budget for obvious reasons, but this is the worst in modern times. So a government of either persuasion will have to work out how do they pay down some of this debt and how do they fund the things they really care about. 
 
AUSTIN: You normally pay down debt through taxation, don't you?
 
CHALMERS: Well there's three ways; the best way to do it as you grow the economy at a sufficient pace that debt is a smaller proportion -
 
AUSTIN: No one in the world has been able to do that in the recent memory.
 
CHALMERS: That's what we did after the Second World War, you just mentioned, that's largely the story of post-war Australia, and the immediate aftermath anyway. That's the highest priority but clearly, governments will look at spending and they'll look at taxing. 
 
AUSTIN: Taxation is normally the way Government does things with money but the economy was growing prior to Coronavirus very slowly. In my mind it was really only through immigration; we weren't actually getting significant productivity growth. As far as I can recall the only growth in the Australian economy pre-Coronavirus was actually through immigration, which stimulated housing construction and so on.
 
CHALMERS: Exactly right Steve; you've hit the nail on the head.  Without immigration, the economy would have barely grown at all. It would have been in all sorts, it was already growing below average. In the lead up to this  crisis we did have a problem with business investment, productivity and wages, really right across the board so sometimes when people say "we need to get back to how things were before" I think we need to get back to something better.
 
AUSTIN: Yeah it wasn't that great before. There's no immigration now, and there's no inbound tourism now. So that means the task is going to be much, much harder so doesn't that increase the case for actual taxation, rather than hoping to grow our way out of things?
 
CHALMERS: It's certainly true that it's hard to see the borders reopening anytime soon when you see some of the horrible outcomes in other parts of the world including parts of the world that people come to Australia from. So I accept that that's not going to be an option for some time yet. But I do think we need to be thinking about how we grow the place and certainly how we try and fix the jobs market in particular. I think of it in three steps; the first step is, you respond to the crisis, that's about JobKeeper and JobSeeker. The second stage is how you bolster the recovery maybe through public housing but other things like that. Thirdly, you need to have a bit of a sense of where the growth is going to come from in the future and that comes down to research and turning our ideas into jobs, skills and training, energy policy - all those sorts of things we've spoken about before.
 
AUSTIN: You're potentially the alternative Treasurer - so what would you do differently that's been done today? 
 
CHALMERS: I think the most important thing that we could do is come up with some kind of settlement on energy policy. Businesses around Australia tell me all the time that energy is one of their big costs and we've got to get that cost down. We need cheaper and cleaner energy. The only way to do that is to get some certainty in energy policy otherwise people aren't going to invest. So we need to fix that. That's the best way of all -
 
AUSTIN: Cheap energy?
 
CHALMERS: Investment certainty is what leads to cheaper energy, and cleaner energy, and people haven't had that for a decade now. That's been a real handbrake on growth. So if you're serious about growing the place after this crisis there's a heap of things we can do but I think energy might be the most important.
 
AUSTIN: How would you explain modern monetary theory in a statement or a paragraph. A couple of listeners are asking me, like I can't explain it simply. So how would you explain modern monetary theory, Jim Chalmers?
 
CHALMERS: I think the simplest way to think about is in countries that control their own currency, that print their own currency; they can never run out of money.
 
AUSTIN: That's like Australia, we print our own currency.
 
CHALMERS: Yeah.
 
AUSTIN: So how close are we to modern monetary theory when we're stimulating everything courtesy of the taxpayer. We've just got the digital printing presses printing money.
 
CHALMERS: I don't think there's much appetite in either side of the Parliament for that but I do acknowledge, and partly because of Alan Kohler’s vast following on the ABC but others as well, that people are attracted to this idea in the broader community. I think that just reflects the seriousness of the economic situation that we're in, and people's belief that there is a role for government to step in when things are as dire as they are now in the economy. But having said that I don't think Modern Monetary Theory is a step Australia should take.
 
AUSTIN: All due respect to Alan, just because he thinks it’s a great idea doesn't mean it’s a great idea.
 
CHALMERS: He has popularised it.
 
AUSTIN: Well, you've got to be careful of popular wisdom, don't you. I mean, it's all very well to be comforted by this truth but unpleasant truths are often what we need to hear. So where do you stand on the idea of Modern Monetary Theory; is it a good or bad?
 
CHALMERS: I'm not an enthusiast. I wouldn't be taking Australia down that path. But I get a lot of emails about it, no doubt I'll get a few more now!
 
AUSTIN: Good luck answering them!
 
CHALMERS: But it’s good that people are thinking about what we can do differently in the economy, I just don't agree with going down that path.
 
AUSTIN: Thanks for your time.
 
CHALMERS: Thanks Steve.