Canberra Doorstop 17/12/20

17 December 2020

SUBJECTS: Mid-Year Economic and Fiscal Update.


SUBJECTS: Mid-Year Economic and Fiscal Update.

JIM CHALMERS, SHADOW TREASURER: Any improvement in the budget and in the economy is welcome but we need some perspective here. The economy is a bit stronger than many had feared but it's still quite a lot weaker than we need it to be. Much of the improvement today is a function of the reopening of state economies and the higher than expected iron ore prices than in the budget. Despite some slightly better figures today, the defining features of this budget update are still record deficits, a record trillion dollars of debt, weaker wages growth, almost a million unemployed, another 90,000 Australians still expected to join the unemployment queues by March, and unacceptably high unemployment for some years yet. The economy is recovering but it isn't rebounding strongly enough or quickly enough for the 2.2 million Australians who still don't have a job or can't find the hours that they need to support their loved ones.

In the Treasurer's flurry of slogans and self-congratulation, he seems to have forgotten those Australians who still don't have enough work. Scott Morrison's quiet Australians have become millions of invisible Australians. This Government seems incapable of understanding what life is like for those 2.2 million Australians who are unemployed or underemployed in the economy today. Without a plan for unemployment and underemployment, today's mid-year budget update is yet another marketing exercise which doesn't do enough to ensure that people can get ahead in the recovery and that people aren't left behind.

Instead of a proper jobs plan we have a festival of waste, rorts, and favours, and a Government which is using this pandemic as an excuse to cut wages, cut super, and wind back important consumer protections. You have to be pretty messed up ideologically to see the even weaker wages growth in this mid-year update and think that the solution is more pay cuts, but that's what this Government is embarking on as we speak.

This is especially damaging when you consider that despite the welcome improvement in the budget and the economy, there is still a lot of uncertainty that Australians will have to deal with into 2021. Obviously, being able to limit the spread of the virus is crucial, as is the deployment of the vaccine, but also the withdrawal of important government support will be a big factor, as will be people's willingness to spend down some of the savings that they've accumulated over the course of this year. There's a lot of uncertainty around China, and the broader global scene is very difficult and will remain so for some time. This mid-year budget update doesn't give Australians a sense of the costs and consequences of what we're seeing in the relationship with China in particular.

This recovery will only be worth the sacrifices that Australians have made over the course of the last year if more Australians can actually participate in that recovery. Our defining purpose here needs to be to make sure that as the recovery in the economy continues, that more and more Australians have a slice of the action, that more and more Australians can get back to work, that they can find the hours that they need to support their families and put food on the table. This is what a recovery should really be about. It's not about just numbers on a page. It's about millions of Australians who can't get ahead and who are at risk of being left behind if the Government continues down this path that they're on of pay cuts, super cuts and the weakening of consumer protections.

It is crucially important that as we contemplate this recovery from the worst recession since the Great Depression, it can't be another missed opportunity to deal with issues which have been in the economy for so long like insecure work, stagnant wages, and weak business investment, all of these issues which were slowing the economy even before COVID-19. We will just go back to that if the Government continues down their ideological path. The people of Australia deserve better. We need them to play a more meaningful role in the recovery of this economy.

I'll throw to Katy and then we'll take your questions.

SENATOR KATY GALLAGHER, SHADOW MINISTER FOR FINANCE: Thanks, Jim. I'll just make a few additional comments to what Jim said. It's been quite a year.

This time last year, I don't think we could have imagined we'd be coming in and listening to a Government saying that a deficit in the order of $197 billion is a good outcome. I think it shows the magnitude of the job ahead. But there's still combined deficits in the order of $456 billion across the forward estimates. We are going to see debt exceed a trillion dollars. The deficit next year is going to be twice as big as last year. I think with the books in in that sort of shape it becomes even more important that the quality of the government spend is top notch, and I guess that's the thing we'll be focusing on. Whether the dollars spent actually delivers an outcome for people. Whether it's creating jobs, helping people to put food on the table, looking after businesses that are doing it tough. And I don't think based on this Government's record we convinced of that.

This update has, of course, accounted for Robodebt, which I think is probably the single biggest policy failure of any government ever. Where they essentially ran a scam and they hounded vulnerable Australians into paying back money that many of them, thousands of them, did not owe to the Government. And not only they did this they did this year after year despite knowing that that policy had questions raised about it through the AAT and things like that. $1.2 billion on Robodebt, including in this budget update the damages component for that. We've seen hundreds of millions of dollars spent on government advertising. This year will be probably the biggest year on government advertising. That's hundreds of thousands of dollars a day. Some of that flowing to a Liberal Party aligned firms who have done pretty well out of the COVID-19 period.

Consultant and contractor spend, going through the roof completely out of control if you look at it. Go and have a look at AusTender. Every day, millions of dollars flying out by agencies, you know, in seemingly unlimited spend. We've seen billions of dollars that are going to be spent fixing the second-rate NBN. We've got about $8 billion in specially established funds to pork-barrel Scott Morrison all the way to the next election, making SportsRorts seem almost insignificant. We could go on - the COVID Commission - $5 million. The money is going flying out the door. I think it's fair to say the splash of cash for friends of Scott Morrison, for mates, or to win seats is, it's pretty clear. But I think there is, what's not in this document for the rest of us and that speaks volumes about this Government. So, look at the issue with aged care. This is not a failure of a system brought on by COVID-19, the failure of the system in aged care was highlighted by COVID-19 but it's seven years of neglect from this Government. They know what they have to do in terms of trying to fix this system, and they offer 10,000 new home care places. 100,000 on the waiting list, 30,000 people who have died waiting for care. That speaks volumes that there isn't a proper plan in place to fix this, to fix what is a clearly broken system. JobSeeker, I guess that's the other big glaring omission in this. This Government has had time after time, update after update, to fix the problem of adequacy of JobSeeker. There is 1.5 million Australians relying on that payment. This Government is happy to kick the can down the road. Probably into next year sometime, it will be next year sometime, before you can give people certainty on that. $40 a day for a million and a half Australians that's what they're being told for Christmas this year from Scott Morrison.

The Finance Minister spoke in his comments about how they're working to keep Australians safe and secure.

Well, I'd say those millions of Australians, those who are unemployed, underemployed, those who are relying on income support, those who are relying on JobKeeper, millions of Australians who aren't going to feel safe and secure in the lead up to Christmas. This Government had the opportunity to fix some of these major problems. And they've squibbed it in this Budget update, and they've kicked the can down the road. They've left vulnerable Australians millions of them, worried about what next few means for them.

CHALMERS: Over to you.

JOURNALIST: You've criticised the size of the deficits, and so forth, yet the only thing that has made any real impact on the deficit today is the faster-than-anticipated drop off in JobKeeper. At the same time you're talking about how cruel it is to wind up JobKeeper and JobSeeker. Should we have higher deficits to continue these payments? Which one is it?

CHALMERS: No, we've been consistent throughout. What matters here is not just the level of spending, or the level level of debt and deficit, but the quality of it. The quality of that spending matters most. As Katy ran through more eloquently than I a moment ago, this is a Government which has engaged in a festival of waste, rorts, and favours which has seen a billion dollar Robodebt settlement, paying 10 times the ticket price for land owned by a Liberal Party donor, the list goes on and on. All of this waste and all of these rorts has meant that the quality of spending has not been what it should be. They've racked up a trillion dollars in debt and they don't have enough jobs to show for it. The better quality the spending, the more likely that is to lead to employment, and that's been our central focus since day one of this crisis. We welcome the fact that hundreds of thousands of people have maintained the connection with their employer because of JobKeeper. That's the entire reason we suggested it in the first place. It's why we didn't rub the Government's nose in it when they initially said that it was a bad idea and then came around to our view. We thought that was a good outcome for the country. When our counterparts talk about those people who have been helped by JobKeeper we think that's a good thing. That's why we wanted those wage subsidies in the first place. It doesn't mean we can't say that there have been people slip through the cracks. There are people who've been left behind. There have been casuals not catered for, as you know, and other workers needlessly excluded from what has otherwise been a good step. It comes down to the quality of the spend. We measure that quality and effectiveness by what it means for jobs. The Government has racked up a trillion dollars of debt but still almost a million people are unemployed, and more than two million unemployed or underemployed.

JOURNALIST: Labor is working through its policy agenda for the next election. This may be the last MYEFO before that election. How does close to $300 billion in deficits affect how you put together your policy agenda together?

CHALMERS: We need to look for bang for buck. The defining feature of the work that Katy and I do together is how we can ensure that every dollar we commit to makes a meaningful difference to the key challenges we have in our society and in our economy. We measure that effectiveness and bang for buck by what it means for employment, getting people back into work, making sure that people can find the hours that they need to provide for the people they care for. There has always been a responsibility on both of the parties in the parliament to get value for money. Our argument is that the Government has failed on that front in recent times because of all that waste, rorts, and favours for mates. If every cent the Government had proposed had gone towards our key economic challenges, then that would be a good thing. Our job is to demonstrate that we can do a better job with public money, spend it more effectively, and invest it more effectively in the future so that we can create good, well paid, secure jobs in the future. That's our mission. We are really focused on that, on jobs, wages, and living standards. That's core business for the Labor Party. It will be in all of our policies between now and the election.

JOURNALIST: Your colleague talked about the adequacy of JobSeeker. I'm taking it, Senator, that you think it should remain where it is with the Coronavirus supplement. Would that be an unfair conclusion?

GALLAGHER: What we've been saying and we've been saying for some months that the Government has to deal with the issue of adequacy through permanent increase. We have not put dollar figure on that yet ...

JOURNALIST: Your colleague talked about the adequacy of JobSeeker. I'm taking it, Senator, that you think it should remain where it is with the Coronavirus supplement. Would that be an unfair conclusion?

GALLAGHER: Well, no, because we've given the Government the room, with access to the treasury and all the information that they have. We've given them the space to come up with what a permanent figure should be. If they choose not to do so, we'll go through our processes in the lead up to the election. And I think we'll certainly have a view on it as part of that. But, you know, this is the Government that has kicked the can down the road for over a year on this issue. They are determined not to deal with the adequacy issue for people on NewStart. And it says everything about this Prime Minister that he can find money for a whole range of other things. But for the most vulnerable, for those living on the lowest income, he's decided he has to keep monitoring the situation before he comes up with something and has only given them three months from now until they revert back to forty dollars a day and there is no other budget update for which to increase. The next opportunity is through the budget. People on NewStart deserve better than that from this Prime Minister and they haven't been given it and we've given him the room to come back, do the proper job and come back with what an adequate figure for a permanent increase should be

JOURNALIST: Jim, do you think the Government's relying too heavily on iron ore prices?

CHALMERS: It's a big part of the story today. True to form, the Treasurer wants you to believe that the higher than expected prices for iron ore, or the reopening of the Victorian economy, is somehow his doing. He shouldn't take credit for that. We want to see strong prices for commodities. It is really important for our budget. It has been for as long as I've been around. We welcome the fact that our iron ore is fetching a higher than expected price in global markets. That's a good thing and it's helped the budget out on this occasion. It shows how important it is to get behind our exporters who employ a lot of people and generate a lot of wealth for this country. Iron ore is just one example of that. But the budget has improved slightly because of some of those changes in commodity prices and also the reopening of state economies again. That's a welcome thing but we need a bit of perspective. As Katy said a moment ago, it's hard to describe a deficit of a couple of hundred billion as a good outcome for the country. There's a lot of work to do in the budget and in the economy. I'm concerned that the Treasurer is engaged in his usual sloganeering and self-congratulation rather than coming clean with the Australian people about what he plans to do about our economic and budget challenges.

JOURNALIST: What do you make of the assumptions that there will outbreaks but that there'll be contained, a vaccine in March and fully implemented by the end of next year, no state border restrictions? Do you think they're overly optimistic?

CHALMERS: It remains to be seen. Those were the assumptions that they printed a couple of months ago as well. In relation to the health outcomes, we're on Team Australia in that we want the vaccine deployed as quickly as possible. We want to make sure that we can limit the spread of this pandemic. Ideally we'd get that done as soon as possible. It remains to be seen whether those assumptions are too optimistic. Ideally we'd get that happening as soon as possible. It does need to be pointed out that most countries have half a dozen options when it comes to vaccines; we have were left a little short of that, and we're not exactly at the front of the queue when it comes to the deployment of the vaccine. That's a bit troubling as well. We're worried that the Government was a bit slow off the mark in securing some of these deals. Having said all that, we want as many people as possible vaccinated as soon as possible. If we do that, that will have an economic dividend too.

JOURNALIST: Jim and Katy, do you think it's reasonable for the Government, once unemployment's comfortably below 6 per cent, which we got a bit more information on today, to then start to focus on stabilising the debt? Is that a reasonable course that they're charging or is it too slow or-?

CHALMERS: A couple of things about that John, and Katy might want to add to it. We don't think they're ambitious enough when it comes to unemployment. We think that having an unemployment target just under 6 per cent means that a lot of people are left out and left behind. Unemployment, even at that level, would be substantially higher than what we would consider to be acceptable. We share the Governor of the Reserve Bank's view that full employment is much lower than that, and we think that governments should be doing what they can to work towards full employment. The Government's been insufficiently ambitious on that front. We note that the new unemployment forecasts now do have unemployment lower than their target where they said they would start budget repair. If that's the case, then the Government needs to start identifying for people what those cuts are going to be. If that's their fiscal strategy, and they're forecasting that before the end of the forward estimates, they owe it to the Australian people before the election to tell people what they're going to cut. From our point of view, the Government will need support for some time. That's a point made by the Reserve Bank, the OECD and others. The Government will need ongoing support because the labour market is weaker than we want it to be. I'm not sure the Government understands that.

Thanks very much.