JIM CHALMERS MP
SHADOW TREASURER
MEMBER FOR RANKIN
E&OE TRANSCRIPT
RADIO INTERVIEW
ABC BRISBANE DRIVE
MONDAY, 28 JUNE 2021
SUBJECT: 2021 Intergenerational Report
STEVE AUSTIN, HOST: Treasurer Josh Frydenberg says the COVID 19 pandemic is partly to blame for a forecast that the federal Budget will not reach a surplus for at least four decades. 40 years! The coalition had claimed they were on track to deliver a surplus before the pandemic hit but the latest Intergenerational Report suggests Australia can now expect deficits through until 2060. 2060! That's not a massive mistake by the way - 2060! And Mr Frydenberg told ABC News today the level of government stimulus injected to keep the economy afloat will not be offset by a larger population. So I'm intrigued to see what my guest sees in the Intergenerational Report. Jim Chalmers is the ALP federal Member for Rankin here in Queensland and the Shadow Treasury Spokesperson. What an honour it is to have you in the studio face-to-face!
JIM CHALMERS, SHADOW TREASURER: It's nice to see you, Steve.
AUSTIN: Well, the Report says Australia has a strong economy that's growing. So that's positive. But Josh Frydenberg points out the Report says we're going to be in deficit for at least four decades - forty years! Are you surprised at that?
CHALMERS: Not surprised, but I think that's one of the ways that this is a pretty disturbing picture painted by the Intergenerational Report today. It does say that there'll be deficits and debt for the next 40 years, at least. It says that the economy will be smaller than expected, it says that growth in the economy will be slower than it was before. But I think the most damning way to think about the key conclusion out of the Intergenerational Report today is that the Treasury expects the economy to be weaker over the next 40 years than it was over the last 40. And I think that's a pretty stunning admission of failure from the Government.
AUSTIN: Isn't the because of slower population growth though?
CHALMERS: That's part of the story, and as you said rightly in your introduction, COVID-19 is only part of that story as well. Actually, the Government was already substantially underperforming on a lot of the forecasts from the last IGR by the time COVID-19 showed up.
AUSTIN: This is the third one now I think, isn't it? One was Peter Costello.
CHALMERS: No, it's the fifth one.
AUSTIN: Fifth one, I'm sorry.
CHALMERS: Costello did two, Swan did one, Hockey did one - the fourth one was a bit of a joke, frankly - and then we have this one today. And this one draws some pretty serious conclusions, I think. My fear is that the Government, certainly the Treasurer, assumes that the economy more or less peaked in the last 40 years compared to the next 40. I think that's a very damaging conclusion for a Government and a country to draw. I refuse to think that the country has peaked. I think the economy can be stronger, and more sustainable, and more inclusive, and better after COVID-19 than it was before. But not if we continue on this path that the Government's got us on.
AUSTIN: My guest is the Shadow Treasury Spokesperson, Jim Chalmers. He's also the Member for Rankin here in Queensland. Let me go through some points that stood out to me and ask you about them. The Report says slower population growth is the main reason for the expected slowdown in economic growth, that our population will reach 38.8 million by around 2060-21 but this is lower than previous projections. I was surprised. It seemed like a lot of people to me.
CHALMERS: Well, there’s two parts to that. I mean, partly, people are having fewer kids. That's been an issue for some time, but it's exacerbated in these assumptions. And the other thing is that migration slows as well. That's really important, but there's other really important determinants of what's happening here as well. I accept people don't sit around their kitchen table talking about productivity, but that is one of the main things in what has been pretty lacklustre growth in our economy. The Treasurer just assumes things are going to get better on the productivity front in this IGR, but assuming is different to actually having a plan for it. And I think where the Government falls down is not having a plan to deal with all of these issues which are rightly raised in the Report.
AUSTIN: So the Report says productivity has been the most important source of income growth in Australia.
CHALMERS: Yep.
AUSTIN: Contributing over 80% of the growth in real gross national income per person over the past 30 years. That was a real surprise to me. The end of that paragraph says government policies can assist in lifting productivity by helping individuals and businesses take advantage of new innovations and technologies. So what does federal Labor say we should be doing to achieve that?
CHALMERS: Well, there's a number of parts to that, but I mean if you want to make the economy more productive you need cheaper and cleaner energy; you need to teach and train our people to keep up with technological change and make it work for us and not against us; and we need to get better at turning our ideas into jobs. This is how we make the economy more productive. Unfortunately, the alternative to that, the way that we won't grow productivity and won't grow the economy, is more of the same attacks on wages, and superannuation, and the NDIS, and Medicare. My fear is that the government will use this IGR as an excuse to do all the ideologically motivated attacks that they've always wanted to do, whether it's to the NDIS, or Medicare, or other important areas, when the real warning from the Report is let's not just have generational debt without a generational dividend. Let's actually invest in people, so that we can get more opportunities, for more people, in more parts of the country.
AUSTIN: The Report does say that before the pandemic, the Budget had returned to balance and was projected to be in surplus for an extended period. Doesn't that undermine some of your previous criticisms?
CHALMERS: Not for one second. I mean, the Budget was in deficit. This Government said that there'd be a surplus in the first year and every year thereafter, they delivered instead eight deficits and now they're saying there'll be at least 40 more deficits from a Government that said one of the main reasons, if not the main reason to elect them and re-elect them, was that they would get the Budget back into surplus. Now, we've always been constructive and reasonable and said when the economy's weak, that's when you step in, that's what we did a little over a decade ago with stunning success. We understand when there needs to be spending. What we're saying today and what we've said for some time is you need to actually have something to show for those deficits and all of that debt. And my fear is, once again, that we've got this generational debt without a generational dividend, We don't have enough to show for the trillion dollars-plus that the Government's borrowed.
AUSTIN: The Report says that real per-person health spending is projected to more than double over the next 40 years. Now that also stood out to me. What does that mean as far as you're concerned?
CHALMERS: Well, it's partly a function of the ageing of our population.
AUSTIN: Japan has less young workers, more older people, and the young have to support the old financially.
CHALMERS: Yeah, not quite as bad as the Japanese but we do have an issue there. This is one of the key conclusions of all five of the Intergenerational Reports, it was one of the reasons why it was important that Peter Costello introduced this.
AUSTIN: You've only got three or four kids! Work harder!
(LAUGHTER)
CHALMERS: I think the new average is something like one and a half and I've got three, so I think I’ve done twice what's been asked of others!
(LAUGHTER)
AUSTIN: You have, fair enough!
CHALMERS: And Costello did do a good job I think shining a light on this issue we have with birth rates in this country. There is an issue. And there is an issue that we've had to turn off the tap with the closure of the international borders when it comes to migration. We should have used this period to think about what migration needs to look like after COVID-19. I'm not sure the Government's done that thinking either. I think that goes to a broader problem. Today, the Government's identified a whole bunch of problems they don't really have a plan to deal with, whether its population, whether its health, and all the rest of it. And I think what that means is they'll use that stat that you just recited, which is a function of the ageing of the population, that health costs will increase. I think most people would expect them to come after Medicare and or the NDIS as a result of that.
AUSTIN: Aged care spending is projected to nearly double by 2060, for the next generation. That seems like a lot, isn't it?
CHALMERS: Yeah, I mean there will be a big call on the aged care budget, obviously. And as our population gets older, as the costs of aged care and health care more broadly increase, there will be a bigger call on the Budget, but we can see this coming. That's why the IGR is an important exercise, because we can see this coming, and the responsibility is on governments to make sure that the entire Budget is sustainable. And if our priority is older Australians, as it should be, and our priority is Australians with a disability, as it should be, then we've got to make sure that we have room in the Budget as it evolves to fund the care that people need and deserve.
AUSTIN: So what would federal Labor do to improve the tax base because what I've taken away from the Report is that it's a healthy tax base that's going to pay for all this and obviously it's up to the Government to decide how they do that. They have started to claw back some taxes from multinationals, a few years back they brought in the legislation. They've made the superannuation changes recently, which apparently put more in the hands of workers. What does federal Labor think should be done to improve the tax base in Australia?
CHALMERS: I don't think the job when it comes to multinationals is finished, not anywhere near it. When you look at the developments around the world, President Biden and Secretary Yellen in the US, the OECD, a whole range of countries are looking at how to make the multinational tax system more sustainable. One of the big conclusions out of the Report today was that the burden will increasingly fall on workers and decreasingly fall on businesses. And I think the multinational part of that's a really important part of it, so I think there is still some work to do.
AUSTIN: So, should we be lifting the company tax rate because it's reasonably low I think, it's 25, 26 per cent?
CHALMERS: It's 25 for smaller companies and 28 for bigger companies, I don't think the headline rate is where we should be looking, I think it's the amount of tax that multinationals actually pay in the countries where they make the big profits. We want to make sure that the Australian people benefit from that.
AUSTIN: The Report highlights improving the skills of workers, everyone talks about these days about skilling up workers but it's not a short term solution is it, particularly when there's a higher level of technology being used and being required, that's actually probably quite a difficult one to achieve?
CHALMERS: You're making me all nostalgic, Steve! The first time I sat here speaking with you was about these issues.m
AUSTIN: Yes!
CHALMERS: About training and technology and a book I wrote with Mike Quigley.
AUSTIN: It's not just about how to be a plumber, is it? It's high-end computer skills, high-end IT skills.
CHALMERS: Exactly, and also making sure your skills keep up. So what we want to do is we want to get the training system to catch people up with technological change, and keep up with technological change, so that it works for people and not against them. That's more important than ever. That's why one of the first announcements that Anthony Albanese made was about Skills Australia, which is making sure we work with business and industry to ensure that we are training the right kind of skills so that people can do that. That will be increasingly important, we do have this issue with productivity, we do have this issue with spreading opportunity around the country. And one of the most important ways we can do that is to make sure the skills and training systems are as good as they can be.
AUSTIN: Fourteen to five, news at five. Jim Chalmers, is the Shadow Treasury Spokesperson for federal Labor. He's also the Member for Rankin here in Queensland. The Report says that we also need to take full advantage of digital technologies to boost productivity, now that's continuing on from that skills thing, but at the moment we have driverless trucks on the mine sites, driverless trains in Western Australia where some guy or girl with a joystick, I think here in Queensland he was actually driving them technically or monitoring them. Unions, workers often feel quite nervous about losing their jobs to technology. How would we take full advantage, which is the Intergenerational Report language, of digital technologies to boost productivity?
CHALMERS: I think there is a lot of anxiety about that, about automation and about technological change. And I think that that puts the onus on governments to make sure that as technology changes, and we become more digital, the economy becomes more digital, that we're giving people the skills to catch up and keep up, which is what I said a moment ago. I really think that there are going to be so many opportunities in the workplaces and workforces of the future, but we won't grab them unless we equip people for them. And that's how we deal with people's sometimes legitimate anxiety about how the workplace is changing. One of the things that really stands out for me, is right now we've got skill shortages in the economy which will get worse, at the same time as we've got 1.7 million Australians who can't find a job or enough hours at work. So something's not right.
AUSTIN: There's jobs going everywhere in this town, I see this signs in every shop! You know they're reasonably low-skilled too, you don't need to have a university education to get a job at the moment, I mean, there's plenty around.
CHALMERS: That's why we need to get much better matching people up with opportunities. There is 1.7 million people who can't find work or enough work at the same time as there are some industries which are struggling to find workers. I think that's a bit of a signal that we're not doing things right.
AUSTIN: My guest is Jim Chalmers. Back to the population figure, 38.8 million they say by 2060. Just judging from a couple of text messages that have come through, people find that figure, a bit nervous, or it makes them a bit nervous. I remember when Kevin Rudd was Prime Minister, I think his forecast was 35 million, at the time his switchboard lit up when he made that public announcement. There were howls of outrage. There is a nervousness in Australia, even though we've got a huge amount of space, there is a nervousness in Australia of hearing those sorts of population figures. Does federal Labor have a population policy or a population growth policy today?
CHALMERS: Well, first of all, I think that because that anxiety is there, and we recognise that and we don't lightly dismiss it, there is a role for government leadership, not just in extolling the benefits of population growth but making sure that it can actually work. And that's why you've got to get the growth corridors right, you've got to get the infrastructure, the social institutions, right. So that when Australia grows, as it will inevitably, but also I think for good, positive reasons then you got to make sure that people can deal with that change. In terms of our approach to population, we think that this time now with the international border closed in particular, is the best time to think about what the best version of our migration policy looks like after COVID-19. Kristina Keneally and other colleagues have been putting that work in, and that thought in, but at the very least I think the thing that we could make a priority is to get this migration intake right. We were just talking about those skill shortages, just talking about the deficiencies in training, we need to get that right as part of giving people confidence that our migration policy settings are right too.
AUSTIN: The Report says migration needs to be managed well to ensure it supports higher living standards. One of the things that surprised many people, I'm sorry for keeping you so long, but one thing that surprises many people, people's actual living standards appear to have gone up a bit with the shutting of the borders. There's a lot of people I know who like the fact that the borders are closed - not universities, not farmers and producers, but certain people find that they are winners from the closed borders in Australia at the moment.
CHALMERS: Yeah, but it's not a sustainable situation for a country like ours which is so reliant on, not just in those industries that you mentioned, but on population growth more broadly. It's not well known that before COVID-19 if we didn't have that migration and that population growth, the economy wouldn't have grown at all. So I do understand.
AUSTIN: Our only economic growth has actually come through immigration?
CHALMERS: Immediately before COVID-19 that was the case, we were actually in a per capita recession. And that's a big issue for us to deal with. That's why the current situation is warranted right now, but not sustainable into the medium term.
AUSTIN: Thanks for coming in.
CHALMERS: Thank you, Steve.
AUSTIN: Labor's Jim Chalmers, Shadow Treasury Spokesperson and the Member for Rankin here in Queensland.
ENDS
