TUESDAY, 3 NOVEMBER 2020
SUBJECTS: RBA interest rate decision; Confidence in the economy; The US election.
JIM CHALMERS, SHADOW TREASURER: Today the Reserve Bank is taking unprecedented steps to support the economy during this deepest, most damaging recession in almost 100 years. These are the most drastic steps that the Reserve Bank has ever taken. It's a vote of no confidence in the Morrison Government's handling of this recession, and their handling of the budget. By taking these steps the Reserve Bank has obviously concluded that the Morrison Government has not done enough in their budget to support the economy and to support jobs during this very difficult period.
It makes no sense whatsoever for the Morrison Government to be cutting JobKeeper and other forms of economic support at the same time as the Reserve Bank and others say that more, not less, needs to be done. The Reserve Bank has been forced to do more because the Morrison Government is not doing enough. For too long now and not just during this recession, before as well, the Morrison Government has left too much of the heavy lifting to the Reserve Bank. We're seeing that again today.
The Reserve Bank is stepping in and taking these unprecedented steps to lower borrowing costs and support the economy because in the most recent budget, Scott Morrison and Josh Frydenberg locked in cuts to JobKeeper and JobSeeker, and didn't do enough to replace them with other job-creating and job-supporting measures.
When it comes to the forecasts in what the Reserve Bank has just released a few minutes ago, it's important to remember that the Reserve Bank still expects unemployment to be too high for too long. They have come to the same conclusion that many others have; that even though it will look like a recovery on paper over the coming months and years, it will still feel like a recession for too many Australians who are out of work.
Already we've got a million unemployed, and another 160,000 expect to join them between now and Christmas. We need a government as focused on chasing jobs as they are on chasing headlines. The Reserve Bank has stepped in and taken these unprecedented steps. If only the Government wasn't cutting JobKeeper, and was doing more to support jobs and the economy.
JOURNALIST: These cuts, what message does it send to the banks?
CHALMERS: We need the banks to pass on some relief in borrowing costs. We should also remember of course that one of the consequences of a cut like this is another hit to savers in our economy and in our communities. These decisions aren't taken lightly. I suspect that the cuts to the interest rates are not the most important or substantial changes being announced by the Bank today. We are talking about a fairly substantial program of intervening in the debt markets by the Reserve Bank. That's been made necessary by the fact that we are seeing cuts to JobKeeper and other forms of economic support. The Government seems to be doing less which necessitates the Reserve Bank doing more.
JOURNALIST: It seems to have come at a time when there's a bit of easing in the states of some of the restrictions to trigger consumer confidence. Is that the reason?
CHALMERS: The opening up of some of the states, in Victoria but also some of the other restrictions which have been eased in other places including Queensland, will have an impact on confidence. It will have an impact on the economy. That's a good thing. That's what we want to see. We've always said that we don't want the restrictions to be in place for even one day longer than is necessary, but equally we need to recognise that the best thing to do for state economies is to limit the spread of the virus. That's why premiers have had to make difficult decisions balancing all of those factors -
JOURNALIST: That cut, though, comes specifically at that time to take advantage of that?
CHALMERS: It has come at the same time, and hopefully it boosts confidence. We want to see more confidence in the economy, we want to see more spending in local businesses and shops right around Australia and in local communities. That would be a very welcome development, if there was a boost to confidence. There were new confidence numbers released today, and the most important part about those numbers is that the measure of ‘current financial conditions’ fell by more than 6 per cent. This is the biggest weekly decline since March, when we had the biggest impact of the pandemic. The ANZ Roy Morgan consumer confidence analysis says that this may be a sign that the cutbacks in JobKeeper and JobSeeker payments are starting to be felt. If we care about confidence in the economy, and we do, and we want to see more confidence in the economy, then cutting JobSeeker and JobKeeper prematurely is not a good way to go about it. The numbers released today bear that out.
JOURNALIST: Just one more thing; Donald Trump has been tweeting about the prospect of cheating and danger with US vote counting. What do you make of that?
CHALMERS: We're at the business end of the US election cycle. Many of us will be watching with a lot of interest over the next 24 or 48 hours. From our point of view, we want a free, fair and safe election where every vote is counted. The best role for leaders to play in that is to boost confidence and trust in democratic processes, not diminish that trust and that confidence. Our relationship with the United States will be strong whoever wins the election in the coming days. Our alliance is between two nations, not between two governments. We hope that that election is free, fair and safe, and we'll be watching with interest.
JOURNALIST: It's scaremongering, though, isn't it really?
CHALMERS: Those are your words. I think the responsibility on leaders of any political persuasion is to boost trust and confidence in our democracies, not diminish that trust and confidence. The whole world is watching what's happening in the US. Obviously the election will have a lot of consequences for the Americans but also for the rest of the world and so we'll be watching it with interest.
Thanks very much.