ABC Radio National Breakfast 23/04/20

23 April 2020

SUBJECTS: The impact of Coronavirus on the economy; Australia’s economic recovery; Company tax cuts; Australia’s energy mix; Virgin; Equity stakes.


SUBJECTS: The impact of Coronavirus on the economy; Australia’s economic recovery; Company tax cuts; Australia’s energy mix; Virgin; Equity stakes.

FRAN KELLY, HOST: Jim Chalmers, welcome back to Breakfast.


KELLY: The Government wants a consensus approach to rebuilding our economy after this pandemic. Will Labor be on board with that?

CHALMERS: We want a big conversation about what the nation looks like after the Coronavirus wards empty, but we don't want it to focus just exclusively on a return to the old narrow ideological obsessions of the Government. There is a role here for economic reform. There's more than one way to grow the economy, though. There's a role for energy costs, getting those down. There's a role for research and development, and science. There's a role for skills development. We need to be thinking about things like social housing. Australians would be disappointed to learn that after making all these sacrifices now to get through this diabolical health crisis, that waiting for them on the other side is just all of the old failed approaches which meant that we entered this crisis from a position of relative economic weakness rather than strength.

KELLY: Sure. But that's not what the Government is saying at the moment. In fact, the RBA Governor who kicked off his calls for reforms this week urged the Government to look at everything; tax reform, IR reform, regulation, infrastructure, skills, and education. And there are some signs that the Government is open to new ideas, isn't there?

CHALMERS: My point is that even Phil Lowe has talked about all of those broad areas. He's talked in the past about stagnant wages, underemployment, energy costs and all of those other things that you rightly identified. The Government hears the Governor talk about those things and picks up and runs with the old obsessions of industrial relations, red tape and company tax at the headline level. What we're saying is that one of the real issues that has emerged from this crisis is just how insecure work is for millions of Australians. The answer there is not to make it less secure with more of the same obsessions with industrial relations reform that the Government has. There is room here, Fran, for a big national conversation, yes about tax, but also about energy. Not having a settled energy policy in the last few years has been a real handbrake on growth. We need to talk about skills because that goes to adapting and adopting technology. We need to talk about research and development, and science. All of these sorts of things. We're up for that conversation, absolutely.

Any objective observer of the way that Labor has approached this crisis would recognise we have been constructive and responsible. We've been supportive where we can but we've also pointed out where the Government might be going down the wrong path.

KELLY: But we're already hearing reports of the Prime Minister pushing for a new consensus for reform around business, unions and the community. I mean, it's sounding like the Accord and there's quotes suggesting that they want to have an economic reform process not seen since 30 years ago in the Hawke-Keating era. That must be music to your ears, surely?

CHALMERS: We'll judge them by their actions, Fran, and by what they actually put on the table at the end of the day, whether it's in the budget or before then. It's one thing to say that you want bipartisanship or consensus. It remains to be seen whether they're capable of that after this crisis subsides. If we could find more common ground that would be a good thing for the country. I think there's a real appetite for that in the community and amongst your listeners and I'm sure you've picked that up as well. But that doesn't mean being silent when we think that the Government is at risk of reviving all of those old failed approaches that we've seen in last seven years; all of the union bashing, all of the insecure work and stagnant wages and all these sorts of things which have become such an obvious problem in our economy for so long and been identified by the Reserve Bank Governor and others over time. We need to address all of those things, and a narrow ideological agenda –

KELLY: Where would you start? Where would you start? If you're rejecting a narrow ideological push, where would you start? What would be your focus?

CHALMERS: I think one of the most important things which has been neglected in this conversation is energy costs. In my job, as you'd expect, not just during this crisis but before that as well, I spend a lot of time engaging with the business community. The one thing that comes up almost every time, if not every time, in every boardroom in Australia, is that not having a settled energy policy and all of the uncertainty that that brings means that businesses can't invest with confidence. They don't know what the energy landscape looks like. If we want to revive parts of our manufacturing sector, if we want to build genuinely self-sufficiency, if we want to build a modern economy with good, well-paid jobs then we've got to get the energy mix right. We need more renewables in the system. We need to get the costs down. We need cheaper, cleaner energy. If we do that give ourselves the chance to grow the economy the right way.

KELLY: Okay, but will Labor pledge not to bring its old ideological state of mind to the table, to this debate, too? For instance, if company tax cuts are back on the table, and the Treasurer made it pretty clear to me yesterday he'd like to have another go at that, is that a different argument now given companies are in real trouble after this virus and will need some support to fight it?

CHALMERS: We'll make our decisions based on what's best for real people in the real economy. To do that we need to weigh up whatever the Government proposes against all of the other alternatives. We've expressed a view in the past on company tax cuts, not an ideological view necessarily but a view based on the economics and the cost of it. A headline company tax rate cut would largely spray around overseas in the form of share buybacks, dividends and executive salaries. What we've done in the past is said that there is an opportunity to support business, to get them investing, recognising that business investment before the crisis was going backwards, the weakest it's been since the 1990s recession, even before Coronavirus and before the fires. We've said there are more cost effective ways to support business and to get them investing again so that we can create Australian jobs. We've shown a willingness in the past, Fran, to say yes let's do something for business but let's do it in a more cost effective way. The approach that we will continue to take is what's good for the economy, what's good for real people and especially what's good for their jobs.

KELLY: Can I just ask you finally about Virgin? The Government said it wouldn't bail out Virgin. There's been a fair bit of support for that, saying that money would just go to overseas owners, why would we do that? But Labor does want the Government to take out equity stakes in, quote, all critical businesses facing hardship. What businesses do you want the Government to take out equity stakes in to support them?

CHALMERS: The point that my colleague Brendan O'Connor was making there is that the Government shouldn't rule out what could be useful policy levers when it comes to supporting business through this crisis. He has identified two groups of companies; either companies and industries that need a little bit of help getting through this period, but also some companies and some industries who might need an equity injection to scale up to meet the needs of the crisis. You can think about medical technology companies and the like. What we're saying is that this might be a useful policy lever because it's scalable, it is conditional, the taxpayer can recoup the investment down the track -

KELLY: Well, maybe. I mean we have got into trouble trying to pick winners before.

CHALMERS: It's not as you describe it, Fran, in my view. These are extraordinary times as the Government keeps saying, and things that you wouldn't normally consider should be considered. They should be on the table. That's the point that Brendan O'Connor is making. Let's not rule out these kinds of steps. They may be useful in some cases. Clearly, it would be useful in the case of Virgin Australia.

KELLY: Jim Chalmers, thanks very much for joining us.

CHALMERS: Thank you, Fran.