SENATOR KATY GALLAGHER
SHADOW MINISTER FOR FINANCE
SHADOW MINISTER FOR THE PUBLIC SERVICE
SENATOR FOR THE AUSTRALIAN CAPITAL TERRITORY
PARLIAMENT HOUSE, CANBERRA
THURSDAY, 23 JULY 2020
SUBJECTS: Budget Update; State borders.
JIM CHALMERS, SHADOW TREASURER: These are dark days and confronting numbers in the budget update today. The defining features of what has been released today are the deepest downturn on record and high and rising unemployment. We now know the Government expects 240,000 Australians to lose their job between now and Christmas. Australians already knew that things were grim when it came to jobs in the economy, but what they desperately wanted to hear today from the Government was a plan with how to deal with that unemployment. Australians who are looking to the Government for a plan to deal with this jobs crisis in this recession and a plan to create new jobs in the recovery would have been deeply disappointed by the Government's failures to present that plan today.
What we got today wasn't a plan, it wasn't even half an update. It wasn't a plan, it was a pamphlet. There were no new ideas on what the Government presented today, and there were very few new insights as well. They told us that unemployment will keep rising, but they didn't tell us what they will do to respond to that. They failed to tell the 240,000 Australians that expect to lose their job between now and Christmas what they will do to respond to this jobs crisis. Today was a badly missed opportunity for the Government to outline a strategy for jobs.
We waited a couple of months for this update. The Government delayed this update twice. We waited a couple of months and the Government's main message today is that we need to wait a couple more. That's not good enough for the 240,000 Australians who will lose their job. Every day of delay means more jobs are shed in this economy. We desperately want the Government to succeed with their response to this recession and to come up with a plan we can engage with. Throughout this recession, Labor has been constructive and responsible. We have sought to engage with the Government and improve important initiatives like JobKeeper and JobSeeker. But for us to play the role of a constructive Opposition, we need something to engage with. The Government needs to come forward with a plan for jobs that we can support if possible, or improve it if necessary.
Too many Australians are losing their jobs in this economy. The unemployment queues are longer than they need to be because the Government hasn't come forward with the plan that Australians need and deserve for them when it comes to their jobs. Every Australian desperately needs this Government to do a far better job of managing this economy coming out of recession than they did going into it.
Over to you, Katy.
SENATOR KATY GALLAGHER, SHADOW MINISTER FOR FINANCE: Thank you very much, Jim. Just to add to those comments from Jim, these are really grim numbers today. $85 billion deficit in 19-20 and $184.5 billion deficit in 20-21. But as Jim said, this is not a full economic update, it's not a full fiscal update. At best, it is a one-year forecast. And it doesn't even tell Australians half the story.
The Finance Minister has been out saying the structural integrity of the budget remains intact. Well, how would we know? Because this update certainly doesn't give us the answers that would support that kind of claim.
This is the seventh and eighth deficit from this Government. The numbers are big, but we also need to remember that there were $170 billion of accumulated deficits before the COVID-19 pandemic hit. This Government set themselves a test about debt and deficit, and they have failed that test well before the pandemic hit. In terms of the debt, this Government promised to lower debt, but they have increased it every single year they have been in office. Seven years before the pandemic hit, the debt had already exceeded half $1 trillion. And two-thirds of this in the increased debt burden was borrowed before the pandemic hit. So, today's numbers tell us that gross debt is forecast to reach $850 billion, and the Government would have us believe that all of that debt is COVID-19 related, when it is simply not true. 35 per cent of those massive debt figures are linked to the COVID-19 response borrowings.
Now, in terms of spending, as Jim said, Labor has been constructive, supportive and worked with the Government in terms of the economic support that has been required for Australians to support jobs and to support families, which has been our main focus. Going forward, what we're saying to the Government is that every single cent of spending, which is being borrowed, must support an outcome which creates jobs, supports job creation, gets people into training, and supports families. This isn't a blank cheque situation. We understand borrowings are needed and extra support for the economy is required. But we want to make sure those borrowings and spendings are directly related to supporting those hundreds of thousands of Australians who need the help, the one that are worried about their future, the young people, the women, the part-timers, the people locked out of the Government's economic support packages to date. We want to make sure that Government spending is quality spending, not rort spending, not money for mates, but money for jobs and money to support people.
CHALMERS: Over to you.
JOURNALIST: Jim, the Opposition didn't quibble when the budget was moved to October. Why now are you saying October is not a good opportunity for them to spell out in greater detail their economic plans?
CHALMERS: We have been saying for some time that Australians shouldn't have to wait for this budget update and for the proper budget in October. We understood when there were initial delays, and we said instead of a full budget why don't you provide a full update and budget bottom line and expectations for growth and employment. They delayed that twice. Now when we call for a plan to deal with high and rising unemployment, they say Australians have to wait a couple more months on top of that.
There is a lot of anxiety in the community, there is a lot of uncertainty. People want to know what is happening with their jobs, they are worried about how they will put food on the table, school shoes on their kids, pay the rent, and pay off the mortgage. I think the Government owes it to all those Australians, whether out of work or worried about being out of work, to let them know what the plan is for jobs. The Government has had a range of excuses for that. They've had a range of excuses for not providing a full budget update today. They have a range of excuses for not letting Australians in on the plan. But I would have thought it's been obvious for some time now that we're going to have higher unemployment for longer, and that means any responsible Government should have a plan to deal with that.
JOURNALIST: The Treasurer said unemployment could be about 5 per cent higher had they not put in the support packages that they have had. Doesn’t that mean what they have done so far has worked? What is your response to those sorts of projections?
CHALMERS: A couple of points about that, Sarah. First of all, we wanted the JobKeeper program to save jobs. That is why we suggested it in the first place. That is why we welcomed the Government's change of heart when they came to the view that wage subsidies were appropriate. It's good that it is supporting jobs in the economy. All the Government has done is extend that program, which is better than turning off the tap at the end of September, but that is not a comprehensive plan for jobs, especially when that welcome support is withdrawn from the economy in March.
JOURNALIST: Some are saying Victoria will only be in lockdown for six weeks and the entire rest of the country will continue reopening. Do you think that is overly optimistic?
CHALMERS: It remains to be seen whether the Government's forecasts and assumptions are accurate. Even under the assumptions they have adopted here, we are talking about an extra 240,000 Australians who are expected to join the unemployment queues between now and Christmas. That of itself should be a spur to action for the Government. That of itself should encourage the Government to come forward with a plan sooner rather than later to support people and to create new jobs when the otherwise welcome support is withdrawn from the economy.
JOURNALIST: Do you think there needs to be more spending on programs like JobKeeper, JobSeeker, things like that?
CHALMERS: The point that we have made all along, and which Katy has made more eloquently than I, is that spending needs to be effective. We have always understood that a crisis of this magnitude requires the Government to step in and support people and their jobs. We have always acknowledged that this diabolical health crisis has devastating economic consequences and consequences for the budget as well. The point we are making is that every dollar that is spent in this task and in this effort needs to be effective. The measure of effectiveness is what it means for jobs and the Government's ability to prevent unemployment, which is already too high, getting even higher.
JOURNALIST: There also seems to be some reliance on a boost to growth in mining investment. How important do you see mining, particularly in your state, to the economic recovery?
CHALMERS: I want to pay tribute to the resources sector in this country. I want to acknowledge the heavy lifting that has been done by the resources sector and resource states as well. It is not just the best state in the Commonwealth, Queensland, but also Western Australia on top of that. The resources sector has made a terrific contribution without which this downturn would be even deeper. We are relying very heavily on the resources sector. I also wanted to say that I agree entirely with what Senator Cormann said early today, in recognising the efforts of the resources sector in making the right arrangements for their workforce so that that sector can continue to create jobs and wealth for Australians. That has been a crucial part of what we've seen here in terms of the resources sector. We desperately need that economic activity in that sector and especially in those two states. I pay tribute to the sector, and I pay tribute to the mining states as well.
JOURNALIST: An extra 240,000 Australians will be out of work by Christmas. Do you think that if the JobKeeper program didn't taper off so far that would have softened that impact? Or what do you think the impact of that extended program will be?
CHALMERS: A couple of things about that. Our primary concern with the JobKeeper announcement made earlier this week is that the same people that were excluded from the first part of the program are still excluded from the second part of the program. That means that the unemployment queues are longer than they need to be and will grow faster than they need to because too many people are excluded from that program at the same time as the Government's borrowing money to overpay some people in that scheme. Our primary concern with the changes is that too many have been left behind, and too many have been left out of JobKeeper. There needs to be some transition over time away from these extraordinary levels of support in the economy. Scott Morrison's original instinct, which we're pleased wasn't followed through on, was to pull all of that support out of the economy at the end of September. That would have been catastrophic for people and their jobs. We're pleased to see them change course on that front. What we now need is a plan for jobs which recognises that JobKeeper won't be there forever. We don't yet have a plan for where the jobs will be created into next year despite the fact that the Government's conceded today that unemployment will be higher for longer.
JOURNALIST: Jim, the Government's floated a couple of ideas that might potentially work into a plan like that, an investment rebate, and perhaps bringing forward income tax cuts. What other than those two things could Labor contribute at this point in terms of planning like that?
CHALMERS: We need a comprehensive plan across the economy. Let me give you a couple of examples of what the Government should be looking at. If you look at public housing, that ticks a lot of boxes; it's labour intensive so there's a lot of jobs in it, it has a lasting benefit for people, especially the most vulnerable Australians. The Government should have been announcing today, as part of a comprehensive plan, something about public housing, instead of that HomeBlunder program that they announced a few weeks ago. That's one example of what they should be doing. In the medium-term, obviously, we need an energy policy in this country. Our problems with business investment aren't just a feature of this recession. We've had problems with business investment in Australia for some time now. One of the reasons for that is because the Government has not settled an energy policy. Katy and I have been spending a heap of time in the boardrooms and in the Zoom rooms of this country in recent times. The main message we get from business is that has been a handbrake on growth, a handbrake on jobs, that lack of certainty around energy. Let's come together as a Parliament and fix that along the lines proposed by Anthony Albanese in his letter to Scott Morrison a few weeks ago. There are things that can be done to support jobs growth and economic growth which are not being done.
JOURNALIST: You mentioned the industrial relations arrangements in the mining sector. Does Labor support more flexible industrial relations across the board as a way of generating jobs?
CHALMERS: Again, we've been really responsible and constructive about proposals when they come forward. The arrangements, which were struck in the depths of this crisis, were for businesses who were enduring an especially deep downturn. Our worry is that the Government is now using this crisis as an excuse for more enduring, more detrimental changes to the way workers are treated in the workforce. We don't think they've yet made the case for why businesses which have bounced back should hang on to some of these arrangements which were struck when they were in the deepest part of the downturn.
JOURNALIST: Just on the resources sector, obviously you said WA and Queensland are so crucial to that. Doesn't it make sense to be looking at the borders and keeping them strong against other states, making sure that those sectors aren't jeopardised by outbreaks of their own?
CHALMERS: Our approach all along has been to support the Premiers of any political persuasion when they make these difficult decisions based on the best available medical advice, as that advice evolves. I want to pay tribute to Annastacia Palaszczuk. She got a lot of stick for her courageous decision on the borders which turns out to have been an inspired decision which has protected a lot of Queenslanders from what's going on elsewhere in Australia. Whether it's Mark McGowan or Annastacia Palaszczuk, they've made difficult decisions. They've stuck to the courage of their convictions. They've listened to the best advice. We've got no reason to expect they won't continue to do that. If they continue to do that, of course we will support the decisions that they take. Mark McGowan has shown inspired leadership as well during this crisis. I think the people of Western Australia have responded to that and that's a good thing.
JOURNALIST: What do you make of the Treasurer's comments regarding workplace flexibility? He's indicated that it's something they are looking to pursue through the Parliament.
CHALMERS: The Government shouldn't be using this crisis as an excuse to satisfy some of their old, ongoing, ideological obsessions regarding industrial relations. We've been responsible, and we've engaged when they've come forward with sensible temporary arrangements. They need to make the case for ongoing changes. We don't think that case has yet been made.
JOURNALIST: Are you concerned that a brutal relationship with China might affect the resource sector?
CHALMERS: Clearly the relationship with China is always complex but it's becoming even more so. There are complexities and difficulties in managing that relationship which have economic consequences and we've seen that in recent months. We need to communicate our views clearly and calmly to China. We need to make sure that we continue to wring maximum advantage out of that relationship when it comes to the economy.
JOURNALIST: Do you accept, as the Government's put it, that with net debt at around 36 per cent of GDP, that compared to other countries around the world it is not too bad and not something that we need to be overly worried about?
GALLAGHER: We've certainly accepted the need for borrowings to support the economy. We don't make any pre-tense out of that. But this is the Government that said we had a debt crisis and debt and deficit disaster when debt was much, much, much lower than it is now and what's forecast over the next couple of years. So, my response is that I think the Government uses whatever metrics they like to suit their argument of the day. We've been told for years that there's a debt disaster in this country. I think what COVID has taught us is the need for some sensible dialogue about that. But also, that where spending is required, where Government spending is required, it has to be a high-quality spend. That's our bottom line. So, we are not going to give them a blank cheque.
JOURNALIST: So, what is Labor's metric? Is 36 per cent of GDP a reasonable figure at this point?
GALLAGHER: What we're saying is that the borrowings that have been used are required. I think it's difficult. You've got to understand your debt levels and your economic circumstance at the time. Debt has been demonised in this country for a long time. And I think we've all realised if those that have been pretending otherwise about the need for governments to invest, where private investment disappears. So, I think it is hard to say what's appropriate. The appropriate debt level is one that supports the economy, supports jobs, delivers the outcomes that we've been talking about. We want unemployment figures as low as possible. We want job creation. We want opportunity. And we don't want families to be worried about their future. If that requires careful measured borrowings, then so be it. But the Government has to justify that. We don't want sports rorts, we don't want regional rorts. We don't want money for mates. We don't want consultancies going out the door like water out of a bar, which is what we've been seeing. We want really good high-quality spending. That's what we're asking of this Government. Whether they can deliver that is another thing.
JOURNALIST: Just on that, you said it's been demonised in this country. The RBA Governor made a similar point earlier this week and he was saying that we need to see a change in mindset. When you see the kinds of front pages that we had today, do you think that it's actually possible for Australians to think about government debt as a potentially a positive thing?
GALLAGHER: Well, I guess that remains to be seen. The architects of the demonisation are the Government of today. I mean, they're the ones that campaigned openly and said they were going to lower the debt. They've increased it every single budget that they've handed down. They have increased the debt after campaigning for years that they're going to lower debt. So, it remains to be seen where this ends up. As I said, I think the Government chooses the metric and the argument of the day that supports the position they're in rather than a considered position that's in the national interest. We're trying to make our decisions based on the national interest, a mature response. But we're not giving them a blank cheque. We're saying whatever spent, every dollar that's being spent now is being borrowed, make sure that it delivers an outcome. Make sure it delivers a job, saves a job, creates a job, gets someone into training or supports a family that's going through a really terrible time at the moment. That's what the Government needs to be doing. And they need to prove that to us and to the Australian people.
JOURNALIST: Also, on Philip Lowe's speech, could I ask, Jim, are you concerned that the RBA now says its hands are tied and that there's no more that it could do to stimulate the economy?
CHALMERS: It's been clear for some time now that as the Government left the Reserve Bank to do all the heavy lifting, that the Reserve Bank's ammunition would be tapped out at some point. They're making, I think, an understandable point, which is that the Government, having vacated the field for so long, in terms of growing the economy and supporting employment in particular, that now means that the Government has to come to the table. They've done some things that we've welcomed; JobKeeper, for example, despite some issues with the implementation. They have done other things that we've supported through the Senate. Clearly, it's not good enough for the Government to say on the one hand we expect unemployment to be higher for longer, and on the other hand that they don't have a plan to deal with it. I think the Reserve Bank over time has shown that they've been willing to do things they hadn't previously contemplated. The interventions that they've made have been really important but they can't go it alone. They need a Government which is as interested in supporting employment in this economy as the Bank is.
Thanks very much.