E&OE TRANSCRIPT
RADIO INTERVIEW
ABC RN DRIVE
WEDNESDAY, 5 SEPTEMBER 2018
 
SUBJECT/S: National Accounts; Liberals’ division and dysfunction; interest rates; Liberals’ company tax leak; Morrison’s humiliating pension age backflip; Great Barrier Reef Foundation
 
PATRICIA KARVELAS: Jim Chalmers is Acting Shadow Treasurer. He's also Shadow Finance spokesman, and I spoke to him a short time ago. Jim Chalmers, welcome back to RN Drive.
 
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: Thanks, Patricia.
 
KARVELAS: Economic growth has come in better than expected for the second quarter in a row. Wages are growing and employment is up. Does this mean the Government's measures to boost the economy are clearly working?
 
CHALMERS: Not at all, Patricia. I think the best way to understand the new figures that were released today is that a relatively strong headline GDP figure, which we welcome, doesn't tell the full story about what's going on in the economy. There are some other numbers today which were released which were very troubling. I think the main one that worries us in the Labor Party is that company profits are growing more than five times faster than wages. We've got another very, very weak wages number in this new data today, which shows that people's incomes aren't keeping up with the cost of living. That's why I think a lot of people out in the community, they hear Scott Morrison or now Josh Frydenberg talk about how well the economy's going and for them there's a bit of a disconnect because the economy that people are feeling and experiencing is a very different reality.
 
KARVELAS: OK, you might talk about reality, but GDP is up 0.9 per cent. This is the best result since September 2012. How can you not applaud that?
 
CHALMERS: I've already said, Patricia, that we welcome a strong headline GDP figure. That is important, but it doesn't tell the full story for the reasons that I just identified.
 
KARVELAS: OK, but do you give the Government credit for this outcome? They've been in Government for some years now, and this is now the best result since 2012. 
 
CHALMERS: No, I'm not in a rush to give the Government credit, Patricia. We've got very, very strong global conditions, which are the main thing feeding into these kinds of numbers. So I don't think the Government should be in a rush to claim credit. It's good to see a strong headline GDP number. We've said that repeatedly today. But what Australians are a bit bewildered about is that the Government wants to claim credit for something when we've got stagnant wages, we've got living standards actually go backwards in this new data today. So for a whole range of reasons, middle Australia isn't actually feeling the benefit of that stronger headline number.
 
KARVELAS: The RBA has kept interest rates on hold. But we're now seeing the beginning of banks raising interest rates outside of that. They say borrowing costs are up. Do you accept their argument?
 
CHALMERS: Banks are extremely profitable, and I think Westpac's customers would be perfectly entitled to be very angry about that out-of-cycle rate rise. I think what the banks are doing, or what Westpac has done, is taken advantage of a political situation where we have a Government which is very distracted and divided, and a new Prime Minister who's gone out of his way repeatedly to side with the big banks over ordinary working people in this country. So all of those things have come together. We've seen an out-of-cycle interest rate rise, which is very disappointing, and I think customers of that bank have got every right to be considering their other options.
 
KARVELAS: We're also seeing a decline in house prices in most capital cities. Given the levels of household debt, are you worried about the combined impact of falling house prices and rising interest rates.
 
CHALMERS: It's important not to overreact to one set of data about house prices. I think that's very important. We've had patchy data on housing around the country the last little while. I think the priority, as you would know, is to make sure that we boost the supply of housing and make it more affordable. That's why we've got policies on negative gearing and the like. But certainly people who are paying back a mortgage are feeling squeezed. Not a lot of people could carry a substantial increase in interest rates, because they're already stretched; their wages haven't gone up for a long time, and that's a key reason why people are finding it hard to service those mortgages.
 
KARVELAS: The Government has confirmed plans to fast-track tax cuts for small and medium-sized businesses at a cost of about $3.6 billion. Are you opposed to that?
 
CHALMERS: (Laughs) That's a very civilised description of what went on today, Patricia. What actually happened today was there was yet another leak of a Government policy; the Cabinet leaking on itself. And then we saw on the front pages of the Financial Review, the consequences of that. The Government has not announced a policy. All they've done is somebody's leaked the consideration of that policy. There are not enough hours in the day, frankly, for Labor to come to a formal position on what they've leaked against each other. We'll wait to see if it becomes formal Government policy before we indicate our view.
 
KARVELAS: But what do you think of this policy? You say OK there's a leak, and of course you've got straight to the political angle. But I'm asking you about the substantive policy.
 
CHALMERS: I'm not sure there is a substantive policy, Patricia. That's my point.
 
KARVELAS: OK, but you know what the proposal is, so what's your view on the proposal?
 
CHALMERS: There were multiple proposals, even in that leak today, Patricia.
 
KARVELAS: Well let's go with this one - fast-tracking tax cuts. 
 
CHALMERS: (Laughs)
 
KARVELAS: I've got one for you, though! Fast tracking tax cut for small and medium-sized businesses. Do you think it's a good idea?
 
CHALMERS: We'd consider it if it became policy. What we've said is that we would support tax cuts for something like 98 per cent of the companies that are the beneficiaries of the existing policy. We've said that we'd consider any of these sorts of things if it becomes formal policy. Even in the leak today, there were two options. So I see no need really to rush to judgement on them.
 
KARVELAS: On this pension, Prime Minister Scott Morrison says he'll ditch this measure to raise the pension age to 70. Labor voted against this measure. You've been opposed to this for some time since the 2014 Budget; this has been policy for a long time. Aren't you happy the Government has abandoned it? You've been making political hay over it, but aren't you actually happy this is the outcome?
 
CHALMERS: We are happy that the seniors of Australia and the Labor Party have had a victory here and forced the Government into another humiliating backdown. But what troubles us, and I think what troubles Australian seniors too, is that they know that Scott Morrison was arguably the most enthusiastic backer of this policy to jack up the age pension age to 70. So I think at the first available opportunity it'll be back on the table for consideration.
 
KARVELAS: So isn't this just another example though of the sort of political point scoring that makes it hard to deliver good policy? You've made a case, the seniors lobby's made a case, the Government's clearly listened.
 
CHALMERS: Yeah, and we need to make that stick, Patricia. I'm not sure that it will stick. I think Morrison himself voted for this change seven times in the Parliament. He supported it every single day of the 1000 days or so that he was the Treasurer of this country, and now he's trying to pretend that he doesn't support it. I just think that people will see through that. That's the point I'm making.
 
KARVELAS: Labor has written to the Great Barrier Reef Foundation warning them not to spend any more of the $444 million they received from the Federal Government. They received this money from the Government, the election is eight months away. Why shouldn't they spend it? Doesn't that just put everything at a standstill on this?
 
CHALMERS: The main reason why Tony Burke wrote to the Foundation this week was to indicate to them what our actions would be if we win Government, and that is to change the policy so that we can recover the unspent part of that money and dedicate it to the reef, but via public agencies. That's our policy and we thought it was only responsible and reasonable to indicate it formally to the chair of the Foundation. It would be irresponsible in the extreme for the Foundation to now rush to spend as much of this money as possible. That wouldn't be a responsible use of taxpayers' money. We've already seen enough of a debacle around this, with the Government granting so much money without proper process, and there are still questions for Morrison and Frydenberg and Mathias Cormann and others to answer about it. Tony's done the right thing here. He's indicated to the Foundation what we intend to do, so they are on notice.
 
KARVELAS: So you expect them to not spend it? Not do anything?
 
CHALMERS: We expect them to factor in that we intend to claw back the money by changing the policy so that we can invest in the reef the right way with the right processes via public agencies. I think any objective observer would consider it a bit unreasonable and a bit irresponsible if the Foundation now went out there and rushed to spend as much money as possible.
 
KARVELAS: Thanks so much for your time, Jim Chalmers.
 
CHALMERS: Thank you very much, Patricia.