JIM CHALMERS MP
MEMBER FOR RANKIN
ABC BRISBANE DRIVE
THURSDAY, 28 APRIL 2022
SUBJECTS: Cost of living crisis; Skyrocketing inflation, falling real wages and rising interest rates; Labor’s Economic Plan and Budget Strategy; Scott Morrison has excuses for everything and plans for nothing; Scott Morrison takes credit but not responsibility; Childcare as an economic reform; Multinational tax reform; Getting more value for money in the public service.
STEVE AUSTIN, HOST: My guest is Labor's Treasury Spokesperson, Jim Chalmers. Jim Chalmers, Australia has the best position, if you like, when it comes to inflation compared to our OECD partners, is essentially what Josh Frydenberg is saying. What would you do differently?
JIM CHALMERS, SHADOW TREASURER: Firstly, two things about that Steve, and good afternoon. That'd be cold comfort to Australians who are dealing with this triple whammy of skyrocketing inflation, falling real wages, and we're about to get interest rate rises as well. The international comparison doesn't mean much to Australians who are facing that pretty grim reality. The second thing, is if you want to talk about international...
AUSTIN: I guess from their point of view, it underlines the international volatility, in other word. This is Josh Frydenberg's point, it's international factors more than anything?
CHALMERS: If you want to make that international comparison, the one that matters most is what's happening to real wages because real wages are a combination of inflation and wage outcomes. And on that score, we're doing worse than the Americans, we're doing worse than the countries with which we compare ourselves. Australians, in this environment, are actually faring worse in real wage terms than our counterparts overseas. But I want to make a broader point, Steve. You listen to Josh Frydenberg in that clip that you just played, you listen to Scott Morrison who's been out and about this morning. These guys have got an excuse for everything and a plan for nothing. If something good happens in the economy, they take all the credit for it. If something difficult happens in the economy, they take none of the responsibility for it. That drives people absolutely wild. When the unemployment rate was coming down in welcome ways, they were all over it, they were all in front of the cameras and all the rest of it. Now that we've got inflation at the highest rate, as you rightly point out, for more than 20 years - since the GST was introduced, now that we've got interest rates about to go up multiple times - if you listen to the market commentators - then all of a sudden they want to pretend that they've got nothing to do with the economy. And they can't have it both ways.
AUSTIN: From today, people eligible for a $250 cost of living payment will start receiving that one-off bonus from the federal government. Would you do this? Would you reverse it? Would you do something differently, today?
CHALMERS: We won't be reversing it obviously, people are getting it now. We supported it through the parliament. We said at the time when the Government handed down that Budget that our issue wasn't with the cost of living relief our issue was that there wasn't a plan after that. I feel like a lot of these big challenges in the economy - and we've spoken about the two most important ones, inflation and real wages - it feels like the Government knows that these are issues and what they've tried to do, is they've tried to take them from one side of the election just to the other side of the election. So our question - I think the Australian people's question - is what about after that, what's the plan to actually get the economy growing in a way that doesn't add to these inflationary pressures? How do we get real wages moving again? How do we begin to deal with the fact that this trillion dollars of debt that whoever wins the election will inherit, there's not enough quality spending in there? We're the only ones taking this issue seriously. I released yesterday, with Katy Gallagher, our Economic Plan - which is directed towards those challenges very specifically. Because it feels like the Government's got a plan to get themselves through an election but not a plan to get Australians through this very difficult period, where no matter how hard they work they can't get ahead.
AUSTIN: Your plan - the 13, 14 page document - is cracking down on multinational tax avoidance. You've sort of committed - or Anthony Albanese has committed - to being responsible and conservative, to repair the Budget, to go after some of the tech giants like Amazon, Facebook and Google, and to expand the Australian Public Service. It kind of seemed like the odd one out, why would you want to expand the Australian Public Service? That hasn't gone well in a state context here in Queensland.
CHALMERS: I'm happy to get to that. The Economic Plan is broader than that, but those issues that you identify are key parts of our Budget Strategy, which is part of our Economic Plan. What the Budget Strategy says, is how do we recognise we'd be inheriting a trillion dollars in debt, the country has got almost nothing to show for that because of all this rorts and waste that we would inherit in the Budget. So what do we need to do as initial steps? First of all, recognise that the Commonwealth spend on contractors, consultants and labour hire has gone through the roof. If you trim that by about 10% in the first year, you get about $3 billion over the forward estimates.
AUSTIN: Let me just ask about the labour hire one in particular.
AUSTIN: It means, labour hire does mean, sort of lower wage cost, doesn't it? Doesn't that mean that projects and jobs come in more efficiently? That's what the advantage of labour hire as I understand?
CHALMERS: You would assume that Steve, but the especially dumb thing about this development is that in many cases the Commonwealth is paying more for labour hire than they would for a public servant. They've got this artificial public service cap, and what it means is you can go outside and pay more for labour hire to get the work done. You asked me about the extra public servants that we would employ, we'd save about $3 billion from outsourcing, and we'd put about half a billion of that back in permanent frontline staff in areas like Veterans Affairs and Centrelink and all these areas where people go nuts waiting on the line for half a day, to try and rebuild some of that capacity. That's part of it, the next bit...
AUSTIN: Sorry, how many extra Commonwealth public servants would a Labor Government employ?
CHALMERS: Just over 1,000 and I'm happy to tell you - if I can find it in my document - I'm happy to tell you exactly where those public servants would be. Because that's an important part of the story. 1,080 I think from memory, and in places like Veterans Affairs, Centrelink the National Disability Insurance Scheme, and other important frontline services.
AUSTIN: And you think by doing that, that would save Commonwealth Treasury money.
CHALMERS: It's not just us that thinks that, that's the considered view of the people that do these kinds of costings.
CHALMERS: That you can get more value for money - more value for less money, in this case - and use some of those savings to fund our priorities in areas like aged care.
AUSTIN: Okay, my guest is Jim Chalmers, the Opposition's Treasury Spokesperson. He's telling me about their economic plan. Labor released their Economic Plan and Budget Strategy yesterday. Steve Austin's my name. I want to ask you about housing. For the last few years, the cost of housing in Australia - pretty well everywhere - has been going gangbusters. If you're selling your house, you were doing cartwheels. If you're trying to buy a house, you are going deeper and deeper into debt. What's Labor's plan to actually try and stop this and help get young people into owning their own home?
CHALMERS: We're going to have more to say about this in the election campaign. Steve. We've still got about three weeks to go. Our Spokesperson Jason Clare, our Leader Anthony Albanese, I've said a number of times that we will have more to say about housing. We've started at the social and affordable housing end, I think as you and I have spoken about on earlier occasions. We supported some of the steps that the Government has taken, but we don't think it's enough and we'll have more to say before long.
AUSTIN: Okay, because many people I speak to privately think that housing - not only social housing, which has been a bit of a feature today here in Queensland, but actually the ability of people to buy their own home - is really almost at national emergency levels. That's how difficult things are when it comes to owning your own home, particularly if you're a young person and you want to start a family and build a future.
CHALMERS: I think so. I think this is a costs of living crisis broadly, but housing is an important part of that. You think about those numbers that came out yesterday, the big drivers were housing, and groceries, and petrol...
AUSTIN: And education.
CHALMERS:...all of the essentials, the things that you can't avoid, are the things that are going up the most. That's why people are under so much pressure, particularly when you've got their real wages going backwards.
AUSTIN: And when are you releasing your plan to tackle this problem?
CHALMERS: We'll do it during the course of the election campaign, I'm not gonna identify which day Steve, but we've still got three and a bit weeks left and we'll have more to say during the course of the rest of the campaign.
AUSTIN: A short while ago, Labor released your child care policy today, which you claimed - or your representative claimed - that Labor's policy will save parents $1,600 a year on average. That seems very high. Where does Labor get that figure from?
CHALMERS: That is the average from the $5.4 billion child care policy that we've released. That's the average, but your listeners might want a couple of examples. As I understand it, if the family's on 150 grand a year and using child care for three days on average, it's about 70 bucks a week. If your family's on 120 grand and you're using child care five days a week, it's something like $84 a week. Those are substantial sums and the reason why we've made it so substantial is because child care ticks all of the boxes. It gets costs of living relief to families, but it also is a really important economic reform. Because one of the challenges we've got, as the unemployment rate comes down and as we've got issues with wages, is we want to make it easier for people to work and to work more and to earn more. Child care is a really important part of the story, and for too long child care subsidies have been seen as some kind of social security but we need to see it as an economic reform that gets more people working and earning more, particularly in the context of the skills shortages and labour shortages that we've got around the country.
AUSTIN: The problem with the moment is the gap between the government subsidy for child care and the actual real cost of childcare is slowly getting larger or bigger. Like Medicare, the cost of running the child care centre is rising faster than the actual subsidies. So when would that $1,600 saving kick in according to your plan, you calculations?
CHALMERS: First of all, yeah, it is expensive. That's the reason why we want to deal with it. Our policy kicks in next year, that's what we've announced. If we're successful on the 21st of May, we'll have a Budget before the end of the year and child care will be a big part of that.
AUSTIN: My guest is Labor's Jim Chalmers. This is ABC Radio Brisbane, Steve Austin's my name. You've flagged a bigger tax push against global tech companies. I've asked the Government about this in the past, quite some months back now, and they observed that they've already done that, they've already moved to tighten up multinational tax avoidance. So how much do you expect to gain further, I'm keen to know how you expect to capture this extra money that they haven't already captured?
CHALMERS: Yeah, I'll get to the detail of it. The Government’s in disarray about this. In the space of an hour or two, you had one Minister bagging it and another Minister saying we were copying their homework. They can't have it both ways. We've got to take this challenge seriously. We are losing billions of dollars that could be funding Medicare or funding child care, because it's becoming easier and easier with the developments in the digital economy in particular, for big global multinationals to park their profits and their debt in different parts of the world and avoid their obligations to Australia and to Australians. That means that the playing field is not level for Australian businesses either. The Government says that they want to do something here, they've put out press releases saying that they're in favour of doing something here, but they haven't delivered. What we've said, is there are a number of ways that you can responsibly, conservatively, in a restrained way, start to rectify this problem, so multinationals are paying a fairer share of tax. There's a big OECD program which the Government says that they support, which is about a global minimum tax combined with some issues around the tech economy, which we've said, and the Government has said, we support. There's an important measure which raises $1.45 billion dollars in our proposal that we released yesterday, which is about capping the amount of debt interest deductions that companies can claim, because they shift their debt around the world to low tax jurisdictions and it means they avoid their tax. There's another one which is $445 million over the forward estimates, which is about stopping this treaty shopping where businesses tuck their intellectual property in tax havens and avoid their tax obligations. And then there's another part of our policy, which is about transparency. Combined, those four sets of measures will make a meaningful difference. They don't go over the top, they're not excessive, they're consistent with international developments and policies - particularly out of the OECD, but also out of the US, the UK, in some cases Germany and Japan - to make sure that people are paying a fairer share of tax where they make their profits, so that that can fund services that people need.
AUSTIN: Let me ask you about fossil fuel companies. Australians at the moment are receiving minimal benefit from the massive spike in energy prices, particularly in the area of gas exports, you know, the petroleum resource rent tax. At the moment, because it was originally geared for the oil industry and gas exploration takes longer to come on stream, it turns out that companies like Chevron, Shell and Woodside are paying no tax at all despite - well, it's not capturing hardly any tax at all, despite reporting record profits from their gas exports. What's wrong with the petroleum resource rent tax and would you do anything about it Jim Chalmers?
CHALMERS: We're not proposing to change the PRRT.
AUSTIN: Why not?
CHALMERS: Some of those tax arrangements are legitimate, when it comes to writing off big investments that they've made in Australia and they've done that under existing tax law. What we're proposing...
AUSTIN: How is that any different though from going after the multinational tech companies?
CHALMERS: What we're proposing is, there are global multinationals in that sector that you're talking about, which would be impacted by our policy, but our policy is not geared towards any sector or another. Some of the OECD developments are about developments in the digital economy, but our package, broadly, is not about one sector or another. It's about big, global, multinationals shifting their profits and their debt around to avoid tax. Some of those inevitably are from this industry that you're talking about, some are from the tech industry, there are other industries impacted as well. But we're not going to this election with a proposal to do anything specific to the industry that you're asking me about.
AUSTIN: Exxon earned $57 billion in revenue from their operations, claimed it made zero profit and paid no tax, and has paid no petroleum resource rent tax to Australia. Same for Shell, $25 billion in revenue, claimed a total profit of $616 million, paid zero tax, and zero petroleum resource rent tax. Neither the Government nor Labor intends on doing anything about this.
CHALMERS: What I'm saying Steve, is that some of those multinationals will be impacted by the policies that we proposed yesterday, but you asked me about specific changes to the PRRT and we're not proposing any of those.
AUSTIN: My guest is Labor's Jim Chalmers, this is ABC Radio Brisbane. I'm going to let you go in just a minute Jim Chalmers, but I note in today's Australian Financial Review that apparently the US President Joe Biden has said that whoever is the victor in the Australian election on May 21st has been invited to travel to Tokyo as part of the Quadrilateral Security dialogue - that quad - which perhaps vital includes India, Japan, Australia and others. Would a Labor leader be going to that, would you be prepared to go?
CHALMERS: I would have thought so Steve, that's obviously a matter for whoever wins the election. Whether it's Prime Minister Morrison or Prime Minister Albanese, the opportunity to spend time with President Biden, Prime Minister Modi, Prime Minister Kishida in that Quad arrangement, I think, would be too good to refuse. It would be a very important opportunity, when it comes to the security of our region and the economic security of our region, that if it were possible to be part of it, you'd want to be part of it. Whoever wins the election, it's a big opportunity for Australia. The Quad is such an important institution when it comes to advancing our interests, and whenever we can participate in it, we should.
AUSTIN: My guest is Jim Chalmers, let me squeeze in one more. May 21st, election day, let's assume that Labor wins. First 100 days of a Labor Government, what would the priorities be of an Albanese Labor Government?
CHALMERS: For me in my portfolio, we'd be putting together a Budget to implement our commitments and we'd be starting to deal with this legacy that whoever wins the election will inherit - a heap of debt, rising interest rates, rising inflation, falling real wages. So I suspect if we do get over the line on the 21st of May, pretty quickly we'll be in Budget mode.
AUSTIN: I'll leave it there, thanks for coming up on this afternoon Jim Chalmers.
CHALMERS: Appreciate your time Steve, all the best.
AUSTIN: Jim Chalmers is the ALP's Shadow Treasury Spokesperson.