E&OE TRANSCRIPT
DOORSTOP
CANBERRA
THURSDAY, 5 MARCH 2020

SUBJECTS: Impact of Coronavirus on the economy; National Accounts; Global markets; Stimulus; Newstart.

JIM CHALMERS, SHADOW TREASURER: The impact of the Coronavirus on the economy will be substantial. Most economists, the Reserve Bank, and the Treasury are expecting the impact on this March quarter to be very substantial. It remains to be seen how long the economic impact of this Coronavirus will be doing damage to our economy. Yesterday's National Accounts showed that Australia enters this difficult period from a position of relative economic weakness, not strength. For too long now the Liberal National Government has not had a plan to deal with the longstanding weakness in the economy. They haven't shown the necessary economic leadership to deal with the challenges which have been around for some time. Australia's economic challenges did not just appear with the Coronavirus and they won't disappear when the Coronavirus does either. We've had an issue for some time with economic growth, productivity, stagnant wages, household debt, and consumption. Right across the board there have been challenges in the economy and we saw that again in the National Accounts yesterday. Those National Accounts showed that growth in the economy in the last quarter was slower than the quarter before, and that annual growth was well below trend, well below average and a full percentage point lower than it was when Scott Morrison became Prime Minister and Josh Frydenberg became the Treasurer. They now say that they'll come forward with a package of stimulus for the economy. Labor will examine the detail of that package when it is announced. If it's good we will back it but if it's deficient or insufficient then we'll make those points as well. We all want the Australian economy and the Australian people to get through this difficult period. We all want the economy to grow because growing the economy is how we create jobs and opportunities for people in our communities. We intend to play a constructive role in helping Australia through this period. That's why we've been suggesting measured, responsible steps that the Government could take to support an economy which has been floundering for some time.

Australians have every reason to be really proud of almost three decades of unbroken economic growth in this country. Those three decades of continuous economic growth are the envy of the rest of the world. It began under Labor and it was protected by Labor when it was at maximum risk. The Liberals and Nationals are now custodians of those three decades of unbroken economic growth. Australia is being tested by the economic impact of this Coronavirus and the Government's being tested as well. Labor passed the test. It remains to be seen whether this Government will pass the test. There is nothing in the last seven years and three terms which makes us think that they will get the economic calls right given they've gotten it wrong at every step before. Australia needs them to get this right. We'll examine what they come forward with and we'll make our views known about it then. Our default, preferred position is to support what we can to help Australia get through this period.

JOURNALIST: You talk about Labor supporting the stimulus and having called for stimulus in the past. What form would you like to see it take?

CHALMERS: There are a range of options for the Government to pick up and run with to deal with broader issues in the economy. There's an issue with consumption and clearly an increase to Newstart would boost consumption because every dollar of that would find its way into the economy. There are options with the timing of their tax cut. We took to the last election a business investment incentive which will do a lot of good in the economy. Business investment went backwards for the third consecutive quarter in the numbers which were released yesterday. We've had a big problem for a long time now. Josh Frydenberg said in September that he was looking at a version of what Labor proposed. We're now in March and businesses have not been investing because they're waiting to see what the Treasurer comes up with. That's been counterproductive given he flagged it so long ago and hasn't taken that step. We can do more on infrastructure. It's disappointing that the Deputy Prime Minister is only just now starting to write to the States to see what projects they might want. Writing a letter is not stimulus. We need to do better there. We need to do better in energy and wages policy too.

JOURNALIST: Has Labor now agreed to an increase in Newstart? Before you were saying that you wanted to see what the evidence was for an increase. It seems as though you are flagging that you will now support an increase in Newstart and if you are should it be $75 or $95 a week?

CHALMERS: We've said for months now that we support a responsible increase in Newstart. We've been saying that over and over again. I probably said it myself hundreds of times. We haven't put a figure on it because it's for the Government to come forward with a figure. We've said that there needs to be a responsible increase for all the reasons I've outlined. There are other things that the Government could be looking at too, whether it's in tax, business tax, infrastructure, energy or wages policy.

JOURNALIST: The Reserve Bank is predicting that 0.5 per cent will be shaved off growth for the March quarter. Given the significant impact of the Coronavirus how would you characterise that downgrade?

CHALMERS: The Reserve Bank is absolutely right to say that the economic impact of Coronavirus will be substantial and it will be felt right around the country. I think a similar story will be told by the Treasury when they appear later today. We've said for some time that Australians need to brace for a substantial economic impact from this virus and from the fires before it. We also need to acknowledge that the economy has been weak for some time. These challenges didn't just appear. They've been exacerbated by the virus and by the fires but not created by them. If Australia ends its three decades of unbroken economic growth it won't just be because of the current virus and the fires, it will also be because of a lack of economic leadership and a lack of economic plan.

JOURNALIST: Mr Chalmers, Deutsche Bank warned yesterday that it expects Australia to fall into recession for the first time since 1991 due to the loss of exports, and tourism revenue from China. Is the lesson out of this that our economy is too closely linked to one particular market and does it need to diversify away from China?

CHALMERS: Australia is an extraordinary beneficiary of our relationship with China. Many industries have done very well out of that close economic relationship with China. More broadly, when it comes to the economy, the broader the better. The more we can diversify our appeal to the markets of the world the better. That's possible without abandoning that big market that we've done so well out of. The broader the better. A lot of companies who have done well out of the relationship with China are also looking for ways to appeal to other markets too.

JOURNALIST: So we need to walk away? We need to step back a bit from our market in China?

CHALMERS: That's not what I'm saying. I'm saying that it's possible to wring maximum advantage from our close economic relationship with China at the same time as we broaden our appeal to other markets.

JOURNALIST: You talk about stimulus. You say you'll see what their stimulus looks like before you get on board, whether or not you will support it. When you were the Government you criticised the Coalition for not getting on board with the second tranche of stimulus. Wouldn't it be hypocritical for you to vote down any stimulus?

CHALMERS: We intend to be far more responsible about the economy than the Liberals and Nationals were during the Global Financial Crisis. Our interest is not in scoring political points like theirs was. Our interest is to try and get Australian workers, businesses and communities through a difficult period. We will strike a responsible tone and point out where there are challenges and weaknesses and what needs to be done. Our responsibility is to point out if the Government's package is insufficient or badly designed. Our inclination is to be as responsible and constructive as we can be. The best outcome here is a good outcome for Australian workers, businesses and communities. That's not the approach that the Liberals and Nationals took last time. As was said at the time, they would have preferred to see the country fail than the Labor Government succeed. That was a big problem at the time and we want to approach this very differently.

JOURNALIST: How soon do you want to see the stimulus rolled out? We're heading into a non-sitting week. You'd assume that the Government will announce something next week, [inaudible]?

CHALMERS: Everybody's assuming that there'll be a package announced in the next few days, if not the next couple of weeks. The Government's been relatively clear about that. We need to make sure that whatever they're rolling out can be rolled out quickly. The challenges in the economy have been longstanding. They're now particularly acute. One of the real reasons why stimulus was so successful under the Labor Government during the GFC is because we got the size and speed of it right. We need to make sure that this Government gets the size and the speed of their package right. They've sat on their hands for too long already. We need to make sure that it's not too little, too late. The sooner they can come up with a good package, the sooner we can look at it and come to a position on it. Thanks very much.

ENDS