ABC THE BUSINESS
WEDNESDAY, 2 DECEMBER 2020
SUBJECTS: National Accounts; Recession and recovery; Labour market; JobSeeker.
ELYSSE MORGAN, HOST: Jim Chalmers, these growth figures are pretty good. As the Treasurer says the recovery looks to be gaining momentum. Labor's been calling for the extension of a whole bunch of the supports that have been pushed into households and businesses. Isn't this a sign that we no longer need those programs, and tapering may be appropriate?
JIM CHALMERS, SHADOW TREASURER: The quarterly GDP number for September was welcome, but not surprising. The point that we've been making is that that number doesn't tell the full story about the condition of the economy. What looks like a recovery on paper will still feel like a recession for a lot of Australians. The labour market is expected to still be pretty weak for quite some time yet and that's a point that the Reserve Bank Governor was making as recently as today. He's also been making the point, as did the OECD overnight, that we shouldn't be in a rush to pull back some of this economic support out of the economy which runs the risk of cruelling the recovery. That's the point that Labor has been making for some time.
MORGAN: Which supports do you think are critical to continue with? We have JobSeeker pushed out at a low rate right until March; we've got JobKeeper also until late March at a lower rate. Do you think that they should still be extended beyond March?
CHALMERS: The point we have been making, and I think you and I have probably talked about this before as well, is that we understand that when it comes to JobKeeper for example, there will be a point where that is tapered away and out of the economy when the labour market is ready for that. The Government has been in a rush to pull some of that support out. We weren't supportive of the cuts that they made in October. We are worried that they're declaring victory over this recession too soon and that will have consequences.
MORGAN: What do you think will be the signs that it is okay to start tapering JobKeeper in particular?
CHALMERS: I don't think there's one indicator but certainly the issues that we're most cognisant of and most concerned about, and the Reserve Bank's on the same page by the looks of it, are all the labour market indicators. We've got a million unemployed, unemployment’s been rising, and 1.4 million Australians are underemployed. We've got an issue with wages which the Governor of the Reserve Bank said today will be a feature of the economy for some time. I think those are the issues that we need to zero in on.
MORGAN: You're going to be pushing for JobKeeper to be extended as it is now beyond March, even though we are seeing the recovery gain momentum? Even if we still do have pockets of pain in the economy?
CHALMERS: Our consistent position all along Elysse is that you want to make sure that JobKeeper in particular, but some of this other support as well, is really responsive to what's actually going on in the economy. That's why we were critical about the snap back assumption which proved to be horribly wrong. It's why we've being critical about some of these moves that the Government's made. You want it to be reacting to what's happening in the labour market. You want some flexibility -
MORGAN: But don't you think it should be more nuanced than it is currently, rather than how it's doled out at the moment? We also saw in the data this week that year on year gross company profits, are up by 19 per over that same period? Wages are up by 0.4 per cent. Doesn't that show that this needs to be more nuanced?
CHALMERS: I don't think it necessarily shows that, but it's an important point that you make that in today's numbers we had profit share going up and wages share of income going down. That's clearly an issue that was a problem even before COVID-19, but we don't want this pandemic to be a reason why that situation gets worse. We've got a substantial issue with wages in this country. Compensation per employee today was another weak number, but wages have been weak for some time now. That's one of the reasons why consumption has been weak for some time, despite a bit of a recovery today. It's a reason why so many of the other problems that we had in the economy even before 2020 have been more or less neglected because we've had this historically stagnant wages growth.
MORGAN: You've argued that the base rate of JobSeeker is too low, but you haven't nominated a permanent figure for that. What's your view now? You’ve just spent this interview arguing that we've still got a very rocky road ahead. A lot of people will still need support. How much support?
CHALMERS: We take the view that a lot of your guests have had over the last 12 or 18 months or so that it shouldn't go back to $40 a day. You're right that we haven't nominated a new figure and you're right that we said it should be responsive, at least in the near term, to economic conditions. The time has come for the Government to give people some certainty about the permanent rate.
MORGAN: How much should it be? Why won't anyone from Labor ever make any indication as to what you think it should be? Why is it such a taboo?
CHALMERS: I wouldn't describe it that way. It's simply that we don't know what kind of budget we'd inherit; we don't know what rate we’ll inherit will be. Between now and -
MORGAN: You didn't know what the budget was going to look like a couple of months ago and you argued about whether or not people should be allowed to access their super. You didn't know what the budget would look like and you argued about whether or not JobKeeper should be extended at the same rate or pulled back or not. You just said that people who are looking for jobs need certainty. Why not just put out a number, and actually make the Government then respond to it?
CHALMERS: Because the examples you just used then Elysse are about temporary support in the economy. We're talking about the permanent base rate and between now and the next election there'll be at least one more mid-year update, maybe two. There'll be at least one more budget. The Government themselves have said that somewhere in the first half of next year they will clarify their position. I think it's responsible and reasonable that Labor understands what rate and what kind of budget we will inherit before making a decision of that magnitude which has an ongoing impact on the budget.
MORGAN: Jim Chalmers, thank you very much for your time.
CHALMERS: Thank you, Elysse.