ABC Melbourne Mornings 03/09/20

03 September 2020

SUBJECTS: Recession; Weak pre-COVID economy; The Victorian economy and outbreak; The Morrison Government’s lack of a jobs plan.


SUBJECTS: Recession; Weak pre-COVID economy; The Victorian economy and outbreak; The Morrison Government’s lack of a jobs plan.
VIRGINIA TRIOLI, HOST: Jim Chalmers, good morning.
JIM CHALMERS, SHADOW TREASURER: Good morning, Virginia. Your caller was making a series of very fine points.
TRIOLI: I had a feeling you might agree with him. Here we are in the position that I guess with sinking hearts we all knew that we'd have to end up in and which really every economy around the world has been anticipating given the pandemic. But what's particular to the political process in your mind, separate to the pandemic? Given the situation we find ourselves in, is this an outcome of the political situation in Australia of the last 10 years, in your view? I'll give you a give you a free kick to start and then we'll get into it.
CHALMERS: I think you're right. Nobody was particularly surprised to learn that we're in a deep and damaging recession. We've known that for some time. The surprising bit is that we still don't know from the Government what they intend to do about it. There's not a plan for jobs. To your question about the last 10 years or so, and as your caller said rightly, the economy came into this from a position of weakness, and that's because we haven't been attentive enough to some of the things which should have really troubled us even before COVID: insecure work; stagnant wages; declining living standards; and people who work hard but can't get ahead, let alone do all the things that they want to do to provide for their family. There've been problems in the economy for some time. This crisis hasn't created problems for the first time, but they have accelerated and exacerbated those problems. That's why, not to be flippant about it, I think your caller did make that point really well. We need to see a plan for jobs and we need to make sure that the Government doesn't withdraw support from the economy in the form of JobKeeper and the like too soon because that will make the unemployment queues even longer.
TRIOLI: I'll just jump in there and say that Jeff Rubin is joining us on the program in the chat room later on. For everyone listening this morning, he's a world leading Canadian economist and a really interesting writer. He's written a new book called The Expendables: How the Middle Class Got Screwed by Globalisation. The points you're making, Jim Chalmers, go way, way back across governments of both major political stripes when it comes to job insecurity, wage stagnation and the loss of that future that the middle class could look forward to. But we'll table that for later on today. For now, the Federal Treasurer has been slamming the Victorian Government. He's basically holding this state responsible for a recession deeper than it should have been. Is he right?
CHALMERS: The numbers we got yesterday for the June quarter which showed the worst set of numbers we've had for almost a century don’t even include the Victorian Stage 4 lockdown so clearly the Government shouldn't be blaming Victoria for those numbers.
TRIOLI: Maybe the blame comes our way in the September quarter?
CHALMERS: I don't think anyone would dispute, I don't think even the Victorian Government would dispute, that the outbreak in Victoria has had some diabolical economic consequences. That's been clear for some time. That's not disputed, that's not contested, but it's not the only problem in the economy and it’s not the only reason why we're in the situation that we're in now. We've got a million unemployed Australians. The Government says another 400,000 will join the unemployment queues between now and Christmas. Not all of that can be pinned on Victoria.
TRIOLI: Has Victoria overreacted though? I mean, there are those who are raising their voices louder and louder saying the lockdown has been too harsh, too long, and too damaging to the economy. What's your view?
CHALMERS: First of all, nobody wants the lockdown to go even a day longer than is necessary and is responsible. But we need to remember that a lot of the characters who are making those points now were the ones who were calling for the place to be opened up faster before we saw that big outbreak. Some people have had that view for some time. They've been wrong about it in the past. We need to make sure that we continue to listen to the medical advice, and that we're careful and cautious because the worst thing for the economy but more importantly for our communities and our people would be if we declared victory over this virus outbreak too soon and we saw yet another wave of infections. That would be absolutely devastating so we need to be careful.
TRIOLI: How do you strike that balance? What's the balance that should be struck between reopening borders generally and businesses in Victoria in particular, and also driving infections down? People talk about the magic number here. Jim Chalmers, what's the happy medium?
CHALMERS: The most important thing is to listen to the medical experts. There are people who spend their whole lives studying these outbreaks and we need to listen to them. Nobody in the political system is an expert on it so we need to rely heavily on the advice. One of the reasons why people are elected to positions of responsibility in government is because they're there to make difficult decisions. Premier Andrews is responsible for making the decisions about how these restrictions are eventually lifted. I think if he continues to listen to the medical advice and he continues to weigh up all of these factors and does it in a careful and cautious way then that's the only course of action available.
TRIOLI: You mentioned the plan that Josh Frydenberg, the Treasurer, is working on. It's a five year plan he tells us, a plan for jobs and growth to dig us out of this recession. What should that look like?
CHALMERS: First of all, we should have seen it by now. We've known we're in a recession for some time now. That's the first point, but from my point of view, it needs to be comprehensive. We need to get JobKeeper right in the first instance. We need to think about things like building social housing because it's labour intensive and has a lasting benefit. There’s infrastructure, obviously. There will need to be local jobs programs in the hardest hit communities. I think there'll need to be investment in jobs in the care economy. I think we need to get energy policy right because business tells me one of the reasons they haven't been investing is because they don't have that certainty that they need to invest with confidence, and if they're not investing in the economy that means fewer jobs. All of these sorts of things would be sensible components of a decent, comprehensive jobs plan. We should have seen one now from the Government and we haven't.
TRIOLI: A high danger is that Australia might come out of COVID recession, as a more unequal society than we went in. How do we insure against that?
CHALMERS: This is one of our biggest fears, alongside a discarded generation of workers, these are the darkest fears we have for this. We don't want to snap back to an economy which is even less equal and even less secure for more of our people. Our highest priority has got to be jobs and keeping people connected to the labour market, because we know from recessions in the past that if people fall through the cracks or slip through the social safety net then it's harder and harder over time to get them reengaged with work and reengaged with society. We don't want to see this spike in unemployment cascade through the generations and concentrated in particular communities. If we're serious about that then we need a jobs plan now and we need to support people in this most difficult time.
TRIOLI: Good to talk to you, Jim Chalmers
CHALMERS: Thank you, Virginia.