ABC Radio National Breakfast 03/12/20

03 December 2020

SUBJECTS: National Accounts; Recession and recovery; Labour market; JobKeeper; Over 35s excluded from hiring credits; China.

SUBJECTS: National Accounts; Recession and recovery; Labour market; JobKeeper; Over 35s excluded from hiring credits; China.
FRAN KELLY, HOST: Shadow Treasurer Jim Chalmers joins us now. Jim Chalmers welcome back to Breakfast.
KELLY: 3.3 per cent growth in the September quarter, the best results since 1976, better than budget forecasts, better than market expectations. If you were Federal Treasurer today, you'd be banging the drum about this, wouldn't you?
CHALMERS: We've said repeatedly, Fran, that we welcome the rebound in GDP growth for the September quarter. As you rightly pointed out to the Treasurer a moment ago it's hardly surprising when it's measured against that horrific June quarter that we had just before that, and when you consider that the economy reopened in most of Australia in that period, and that's a key driver of this recovery in the numbers that we saw yesterday. We welcome it. We want people to get ahead in the recovery but there are still concerns that people are being left behind; still a million unemployed, still 1.4 million people are looking for more work, and in the next phase of wage subsidies, workers over 35 have been left out entirely. We need to sift through the slogans and the self-congratulation to look at what's really happening to real people in the economy. That's the most important thing.
KELLY: Talking of slogans you've called for less smirk and more work, that's the quote about the Treasurer, accusing him of declaring premature victory. But Josh Frydenberg is careful to point out that while the technical recession is over there is still a long way to go for a full recovery. Aren't you open to criticism that you're talking down this good news?
CHALMERS: Not at all Fran -
KELLY: The economy is key to us progressing and going forward?
CHALMERS: Absolutely. That's why, repeatedly, yesterday and today, we've welcomed the rebound in GDP growth. But it would be misleading your listeners and the Australian people more broadly if we were to do what Josh Frydenberg seems to do, to pretend that this one off September quarter GDP figure makes up for substantial weakness still in the jobs market in particular. This is a point that the Reserve Bank Governor was making yesterday. There is still substantial weakness in the labour market. The Government doesn't expect unemployment to come down to an acceptable level for some years now. We need to be cognisant of that. We need to focus on that. We can't declare victory too early. We need to make sure that this recovery is supported so that people aren't left behind.
KELLY: Victoria's reopening, consumer spending, the virus very much suppressed here - it looks like all upside from here on so long as we keep the virus under control. Won't this number and the vaccine approval in Britain - soon to be in America and parts of Europe - give households the confidence to draw down some of these savings now that they stocked away and spend their way to a sustained recovery? Won't this mean the optimism and hope that the Treasurer was talking about a lot yesterday?
CHALMERS: Yes ideally, Fran. The next quarter is expected to be a strong one given what has happened in Victoria in this period. We need to see some of those accumulated savings circulating in our shops, small businesses, and local communities. Even the best version of that won't necessarily mean that in all corners of Australia and for all families and all workplaces, that the labour market will just come roaring back. Nobody really expects that this number that we got yesterday or another strong number for the December quarter will mean that the labour market will automatically be fine and we'll have full employment and all the rest of it. The point about "less smirk, more work for people" is that we need to view this recovery through the prism of what it means for real people, their jobs, and their capacity to provide for their loved ones. The economy is not one number on a page, Fran. The economy is what it means to people and their capacity to live well, to provide for each other, and look out for each other. That's not something that I think the Treasurer understands.
KELLY: You don't think the Government's doing that? The Treasurer was just telling us that they've extended HomeBuilder. They've got the job hiring scheme. They've got some mechanisms in place that are still to kick in really. Are you saying that's not enough?
CHALMERS: One of the key concerns with that hiring subsidy, is that if you're over 35 you're deliberately excluded. There's a lot of anxiety about that in the community. That's a really good example of our central task here, which is to make sure people get ahead in the recovery and aren't left behind but the Government is deliberately, by the design of their policy, leaving those workers over 35 out of the hiring subsidy. What might otherwise be a good idea, government support to encourage hiring so that we're creating jobs and getting people into work, has been diminished once again like JobKeeper was by poor implementation.
KELLY: Talking of JobKeeper, Labor is urging the Government to keep JobKeeper going beyond March. The word from the Treasurer there seemed to be that there's no plans for that. The Reserve Bank Governor Philip Lowe agrees JobKeeper does need to be withdrawn. If you think March is too early, when should it tail off? At what point will the economy be strong enough, do you think, to pull out that support?
CHALMERS: First of all, Fran, we have the same view as the Reserve Bank Governor. We've had that view for months now. Nobody is pretending that JobKeeper needs to be a permanent feature of the economy or a permanent expense in the budget. We have never said that. What we have said is that it needs to be responsive to what's actually going on in the economy. The best way to determine that when it comes to JobKeeper is what's happening in the jobs market. The Reserve Bank Governor and the Government's own figures say that unemployment will be too high for too long, for some years in fact. We would like the Government to be more flexible than their language suggests, so that if it becomes clear that the labour market is weak for a longer period that support like JobKeeper is responsive to that. My fear is that the Government is so keen and in such a rush to pat themselves on the back, that the decisions that they make to withdraw support too early, something the OECD and the Reserve Bank have warned against, will cruel the recovery or not make it as strong as it should be and could be.
KELLY: China looms large over our economy. The OECD was giving us a warning about that again this week. Will there be a sustained recovery if relations with China aren't somehow put back on track. Josh Frydenberg says the situation's very serious. Do you share the concerns of Mark McGowan and others that iron ore exports could be next?
CHALMERS: I do think it's a very concerning period. Obviously relations are at a low ebb. I spend a lot of time with our exporters, our employers, and their peak organizations, and they are anxious about what the coming months and years will bring in terms of the China relationship. It's one of a number of uncertainties that we have in this recovery. On the health front, subsequent outbreaks, the timing of the deployment of the vaccine; on the domestic economic front, there's uncertainties around the withdrawal of support, and whether or not people are prepared to spend their savings as we have discussed. The global scene is uncertain too -
KELLY: Do you agree with Anthony Albanese's comments yesterday? That the Government's relationship with China has basically completely broken down?
CHALMERS: I think it's self-evident that the relationship is not in good condition. This is an especially low ebb for the relationship between our countries. I think he's well within his rights to point that out.
KELLY: Jim Chalmers, thank you very much for joining us.
CHALMERS: Thanks so much Fran.