MEMBER FOR RANKIN
SENATOR KATY GALLAGHER
SHADOW MINISTER FOR FINANCE
SHADOW MINISTER FOR THE PUBLIC SERVICE
LABOR SENATOR FOR THE AUSTRALIAN CAPITAL TERRITORY
ANDREW LEIGH MP
SHADOW ASSISTANT MINISTER FOR TREASURY
SHADOW ASSISTANT MINISTER FOR CHARITIES
MEMBER FOR FENNER
PARLIAMENT HOUSE, CANBERRA
WEDNESDAY, 27 APRIL 2022
SUBJECTS: Labor’s Economic Plan; Budget repair; Years of waste and rorts weighing down the Morrison Government’s Budget; Labor’s Powering Australia Plan; A second debate; Investing in the APS after years of erosion under the Morrison Government; Australia’s role in the Pacific.
JIM CHALMERS, SHADOW TREASURER: Thanks very much everybody for being here today in Canberra. Today we release our economic plan and key elements of our budget strategy which forms such an important part of that broader economic plan. A better future relies on a better economy and a better Budget, and Labor will deliver all three. And this release today couldn't be better timed given we found out today that inflation in the March quarter was 5.1%. This is the highest inflation that we've had in Australia for more than 20 years. This is the highest inflation we've had in this country since the introduction of the GST. Australians are getting absolutely smashed by the rising cost of living on Scott Morrison's watch. This is Scott Morrison's triple whammy of skyrocketing cost of living, rising interest rates and falling real wages. And that's what the number was all about today.
This inflation number should be a wake up call for a government which is out of touch, out of plans and out of time. Now these inflationary pressures have been building in the economy for some time. And I know the Prime Minister wanted to wave a graph around earlier today. So have a look at this graph, which has cost of living over the last year under Scott Morrison. And what that shows is that the cost of living pressures have been building since before the war in Ukraine.
Now, this is a government which takes credit for unemployment falling in welcome ways but won't take responsibility for the fact that real wages are going backwards in this country more substantially than they are in the US and in other places as well. On Scott Morrison's watch, prices are going through the roof, real wages are falling and interest rate rises are about to add to the pain that people feel right around Australia. In this country, under Scott Morrison, everything is going up except people's pay, and they're about to be hit with rising interest rates on top of all of that. Now, after 10 years and a trillion dollars in debt, this government has nothing to show for that except skyrocketing inflation, falling real wages and rising interest rates.
On every single measure of tax, they've taxed more than the last Labor Government did. They've taxed more as a proportion of the economy, in total, adjusted for inflation and per person, as well. On every measure they've taxed more, borrowed more and spent more than the last Labor Government but delivered much, much less. Average growth, average productivity, business investment, wages, average unemployment are all weaker or worse under this government than they were under Labor. And that's what this plan that we're releasing today is all about. This plan is all about the three big challenges that we face in this economy: inflation, falling real wages, and the fact that we don't have an economic dividend from the trillion dollars of debt that this government has racked up — more than half of it before the pandemic.
So that's what this plan that we are releasing today is all about. Only Labor is taking these challenges in our economy seriously. Only Labor has a plan for beyond the election to make sure that there are more opportunities for more people, that working families can get ahead in this country and that they aren't left behind. We take the challenges of improving the Budget, growing the economy without adding to inflationary pressures, and getting real wages moving again — we take those challenges seriously. The Morrison Government just has a plan for an election. We have a plan for a better future based on a better economy and a better budget as well. This government has dropped the ball on inflation, and they have left Australians unprepared for the big challenges and the big opportunities that are on our horizon when it comes to the economy. So our plan is about growing the economy without adding to inflation, getting real wages moving again, and getting genuine economic bang for buck from the Budget. And our Budget strategy is key to achieving those objectives as well.
Today we announce almost $5 billion in Budget improvements to help fund our commitments and to strengthen the Budget and to begin to re-orient it towards quality spending and not just quantity of spending. Not one cent of the almost $5 billion in Budget improvements that were announced today will come at the expense of ordinary Australians. And that's a very important point. Now the three policies that we are proposing in more detail today are, first of all, trimming spending on outsourced contractors, consultants and labour hire. Secondly, an internal audit of waste and rorts in the first year of a new government. And thirdly, measures to ensure multinationals pay a fairer share of tax where they make their profits and, in our case, here in Australia. So we will support the OECD's two-pillar policy when it comes to multinational taxes. We will limit debt-related deductions at 30% of profits consistent with the OECD's recommended approach. We will limit the ability of multinationals to abuse Australia's tax treaties when holding intellectual property in tax havens and we will introduce a range of transparency and reporting requirements as well.
Now, under the Liberals and Nationals, Australians are paying much more tax than they were when this government came to office. But multinationals at the same time are avoiding their obligations to Australians. Too much money is lost to Australians and to the services that they rely on, which suffer as a consequence of all of this revenue leakage. And the same goes for Australian businesses. We want to level the playing field when it comes to tax so that Australian businesses can compete and can prosper as well. So our changes to multinational tax are about levelling the playing field for Australian businesses, and making sure that there are the funds available to fund the services like Medicare and other services that Australians rely on as well.
Now our proposals are responsible, they're conservative, they're measured and they're restrained. What we're proposing here with these tax changes adds barely 0.1% to tax receipts and goes absolutely nowhere near the tax cap that the government has imposed. Now we expect the usual breathless and unhinged scare campaigns from our political opponents. But Scott Morrison and Josh Frydenberg can't have it both ways. They can't pretend that they want to do something meaningful on multinational tax avoidance, at the same time as they pretend that taxes won't go up if they are re-elected. They're either lying to Australians about no new taxes, or they're lying to 130 countries around the world that they've told they will join in taking meaningful action on multinational tax avoidance. So the question for Scott Morrison and Josh Frydenberg is this: are they lying to Australians, or are they lying to the global community when it comes to new taxes on multinational corporations here and around the world? This government has announced that they will do something in this area, but true to form they haven't delivered. There's always that gap between announcement and delivery when it comes to this government and we're seeing it all once again.
It says it all about a government which is happy to take more tax from ordinary Australians so that multinationals can continue to pay below or no tax and meet their obligations. Now, obviously, we're happy to take some questions but before we do, in a moment, I'll ask Katy Gallagher to run through the substantial savings measures we're proposing today and then Andrew Leigh to add to my remarks on multinationals. But I really wanted to thank my colleagues in the Expenditure Review Committee, which has met now for more than 100 hours in the course of this term with Katy or I in the chair. I wanted to thank the core economic team in particular, Katy and Andrew but Stephen Jones and Matt Thistlethwaite as well, but especially Katy for her work on savings and Andrew, who has done a heap of work when it comes to the multinational tax policy that we're announcing today. So Katy, and then Andrew, then happy to take your questions.
KATY GALLAGHER, SHADOW MINISTER FOR FINANCE: Thanks very much, Jim. Well, over the next four years, the Budget faces huge challenges which all of you in this room know with rising demand for services, substantial deficits and debt hitting a trillion dollars. So if we're successful in May, we will inherit the worst set of budget books of any incoming government. And we understand that Australians expect us to manage the national finances responsibly and in their interests. We also understand that there is not scope to do everything you'd like and we can't undo all the damage that's been done over a decade in one budget or, indeed, one term and that we need to prioritise and sequence our investments. That's why you'll see our policy announcements are carefully thought through, they're modest and they're important investments to support our broader economic plan, which Jim has just outlined. Clearly, with cumulative deficits in the order of $225 billion and a trillion dollars of debt and increases in interest on that debt, the Budget needs to be managed more responsibly. We need to make sure that the Budget and measures funded from it are going to support Australian households, helping families to make ends meet with the rising costs of living and we need to ensure that every dollar is delivering and that every dollar is well-spent and in-line with our economic plan. So our budget plan is linked to our economic plan. And when we are looking at investments, clearly we're going to be looking at creating jobs, boosting participation, helping households keep pace with the cost of living, new skills, lifting productivity, and generating new business investment.
Wasteful spending is one of the areas that I've been looking at closely as Shadow Finance Minister. So identifying, targeting, and putting and end to some of the waste and rorts that we've seen, particularly over Mr Morrison's leadership and use it to re-invest in services, or improve our Budget position. So today we announced that Labor in government would reduce spending on outsourcing arrangements, contractors, consultants and labour hire. We will be making savings in the order of $3 billion over the forward estimates and trimming the current spend by about 10% in the first year. We'll also undertake an internal audit of the Coalition's rorts and wasteful spending. This will be led by Finance and Treasury in the first year to identify money that can be re-allocated back into delivering services to the Australian people or returned to the Budget to assist with Budget repair. We know that the best way to fix the Budget and pay down debt is to lift growth and boost incomes and the best way to improve the economy and lift growth is to make smart and responsible investments like our policies are, to expand productive capacity so it can grow faster than debt. Happy to take questions about my areas, but I'll hand to Andrew now.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Thanks, Katy. It's a real pleasure to be working with Jim and Katy on this important announcement today. On the weekend, Scott Morrison gave an ironclad guarantee not to implement a global agreement on making multinationals pay their fair share of tax. He effectively walked away from a 130 country deal that was signed off by Australia on the 8th of October 2021. Now Scott Morrison made 55 calls to leaders of 30 countries to try and secure Mathias Cormann the job as the head of the OECD. But he's now broken his promise to the Paris-based OECD to act on multinational tax dodging. It wouldn't be the first time Scott Morrison's lied to the French, but it's pretty remarkable that he would break a deal which was brokered by Mathias Cormann. And the measures we're announcing today on multinational tax are pro-business, they're carefully calibrated, and they're responsible. They target the scourge of tax havens like the Cayman Islands and Bermuda. And when Scott Morrison thinks about the Cayman Islands, he probably thinks it's a nice place to go for a holiday next time a natural disaster strikes Australia. But we know the tax havens are the hidey holes for ill-gotten gain. They are places where terrorists, drug runners and kidnappers store their loot. If you're doing business in a tax haven, you're rubbing shoulders with criminals.
Two fifths of multinational profits now pass through tax havens. And according to one study, the majority of money that's held in tax havens is held there in breach of other country's tax laws. Cracking down on tax havens is about levelling the playing field for Australian businesses. If you're a cafe in Rockhampton, you're probably not thinking about how to stash your profits off in the Cayman Islands. If you're a local firm, then you're not using these sort of tax artifices. But you're competing in an increasingly digitalised economy against multinational firms that are using tax havens. When multinationals pay less, Australians pay more. Our measures implement the OECD's is two-pillar agreement and target the abuse of debt deductions in a way that's specifically been recommended by the OECD. As you know, there's three debt deduction rules for multinationals: the worldwide gearing ratio, the arm's length test, and the safe harbour rule. Our proposal is simply to change the safe harbour rule from 60% of assets to 30% of profits. Firms will still be able to use those other two debt deduction tests. And if the Liberals have a problem with us implementing the OECD's approach on debt deductions, they'd better pick up the phone and call Mathias Cormann.
We're also providing additional transparency. If you're a listed firm you should disclose to shareholders the risk you're taking by operating in tax havens. If you want a large government tender, then you should disclose to Australian taxpayers your country of tax domicile. We will also implement a register of beneficial ownership. This is something that the Liberals promised six years ago, but they failed to deliver on. It makes sure that Australians know who owns listed firms. And that specifically makes it harder for Vladimir Putin's cronies to stash their money in the Australian share market. This isn't a speculative risk. Serena Lillywhite the head of Transparency International has said that Australia is one of the best places to launder dirty money and has called for a beneficial ownership register. Australia was lagging behind other countries. Boris Johnson announced the beneficial ownership register, which he says will open up the matryoshka doll of Russian owned companies. We know from the Panama Papers that Putin's people use tax havens. So if Australia really wants to shirt front Putin in a way that will hurt him, we need to tackle tax havens and tackle the lack of transparency in the system right now. We're happy to take your questions.
JOURNALIST: Couple of questions — one on the audit. Given some of these slush funds and so forth you identify would have been not designed but, you know, costed and stuff by Treasury, do you really think Treasury and Finance are the best bodies to audit those? Wouldn’t it be better getting someone independent in to put the ruler through government spending over last few years? And on the sort of savings of $5 billion over four years, it's not really a lot compared to the size of the deficit, the debt. I mean, you spent $6 billion just on a vaccine incentive. Is there any more in there that Labor can do to find savings between now and the election, or will you go harder after you're elected?
GALLAGHER: So on the first question, re: Treasury and Finance, we have a lot of faith in the independence of those departments and the leadership of those departments. That's why giving this indication today will give them the opportunity to, you know, prepare if we are fortunate to win an election on how best to go about that audit. Look, the way Scott Morrison, he's the architect, he's the master architect of hiding money in the Budget. Treasury and Finance, you know, they take the decision of government and they reflect it in the Budget papers. So where you see a $7 billion allocation, I have no doubt that there's $7 billion. The thing that we can't fully answer is what's in that $7 billion and where's it going. And that's why we need a thorough, you know, running the ruler over these arrangements and how they've crept in. Scott Morrison started this when he was Social Security Minister, I think, just heading into Treasury, he had a lot of success with one of these grants rounds, and since then they've proliferated. So we need to have a really close look at what's in them. It's very hard, almost impossible, to find out how much is in these funds. So that's part of the reason why we need this audit. We want to get moving on it straightaway. We want it done in the first year. And we think Finance and Treasury have the skills to do it. In terms of other savings, well, you know, we'll make more announcements of that as we progress through the campaign. And we are going through, obviously, we're working from PEFO and going through that in fine detail as much as we can. But there is a Budget repair job for us. We are aware of that. We want to manage that and we will manage the Budget responsibly and part of that — it's difficult from opposition without full line of sight about where everything is. Again, I go back to the audit, but where we can make sensible savings to re-allocate or return to Budget repair we will do so.
CHALMERS: Can I just add to that very briefly. We will be inheriting a trillion dollars in debt, as Katy said. And we don't pretend that an incoming government of either political persuasion can turn that ship around quickly. As Katy said when it comes to spending as well, you know, the damage that has been done by this government, which doubled the debt even before the pandemic, means that you know, one Budget, one term in office will not completely fix all of the damage that's been done to the economy or to the Budget. And so our responsibility is to do what we meaningfully can, to begin where we can to start to improve the quality of the Budget. And we have deliberately been, when it comes to the multinational tax measures, we've deliberately been conservative and responsible and restrained about it. We have deliberately set the start date for two of the measures, you know, 14 months down the track to give us time to meaningfully consult. We do not pretend that a new government can click its fingers and clean up all of the mess that this government's created in the economy and in the Budget.
JOURNALIST: The gap between wages growth and CPI is now a staggering 2.8%. Forgive me I've only had about a minute to look over your plan, but there's nothing in here about how much wages will grow under Labor. I think the government's forecasting 3.25% that the wages will be in 2022/2023. I know they don't really reach their targets, but exactly what are you, what's your forecast for wages growth?
CHALMERS: First of all, the government's made 55 forecasts of wages growth, they've been wrong 52 times. This is a government which is notorious for over promising and under delivering on wages growth and we won't make the same mistake. But what we have said in the plan that we're releasing today is that there are at least five ways that we would get real wages growing again. First of all, making it easier for people to work more and earn more by reforming child care, training people for higher wage opportunities, investing in industries where we've got issues with wages growth particularly in the care economy, supporting wage cases.
JOURNALIST: [Inaudible interjection]
CHALMERS: Well, it's not for us from opposition to create a new set of Treasury forecasts. It is for us to identify the challenge in the economy, principally falling real wages, skyrocketing inflation, and not enough to show in economic terms for a trillion dollars in debt, and to say what we would do about it. And what we've done today is we've released our plan that shows what we would do about wages. And clearly, if we were successful on the 21st of May, we would immediately start implementing our policies in that first budget and the forecasts would be updated in the appropriate way.
JOURNALIST: Is there a case to keep the low and middle income tax offset beyond the end of this financial year? And similarly, will Labor commit if elected to extending the government's cut in a fuel excise beyond September just to ease the cost of living pressures on Australians?
CHALMERS: Look, we're not committed to extending either of those two measures. We've been very upfront about it, really since the Budget, that we think it would be difficult for a government of either political persuasion, to extend those costs of living measures. We've said that there's a role for cost of living relief in the near term as Australians are getting absolutely smashed by skyrocketing cost of living and falling real wages. Our beef with the government is that there is absolutely no plan beyond those temporary cost of living measures to deal with the inflationary pressures in the economy. It's quite extraordinary that this government, after almost a decade in office, is entirely bereft of any ideas beyond a plan to get them through the election. And our economic plan, which is all about building the capacity of the economy without adding to those inflationary pressures, is all about dealing with the primary challenge we have in our economy right now, which is skyrocketing inflation, which has been highlighted today by that remarkable 5.1% number.
JOURNALIST: Just to you, do these new arrangements for multinationals, the 15% minimum tax rate apply to all large multinationals including the extractive industries? And to Katy, if I may, you both talked about fiscal discipline but unless I've missed it, this document doesn't commit you to re-starting the normal fiscal rules, which is that all expenditure is offset. Given we're in an environment of rising inflation and rising interest rates, you know, when does the actual fiscal discipline start?
CHALMERS: We think that fiscal discipline means a budget which reflects the economy. And our economy, as I keep saying, is beset by that combination of three challenges. And our Budget settings are designed to meet those challenges. Obviously down the track, we would take advice from Treasury and Finance, if they're required an update to the fiscal rules. But our priority right now is re-orienting the Budget away from waste and rorts towards productive investments and growing the economy without adding to inflation, boosting real wages and beginning to deal with the legacy on the fiscal side that the government will be leaving us if we were successful at the election. Now your question about the impact of the policy, so there's four different categories of changes here. The first category has got the two OECD pillars. Pillar one, no Australian firms affected, that just applies to the mega, global multinationals. The minimum tax proposal would impact on a small number of Australian companies. It's for companies over a billion dollars, but the vast majority of those are already paying more than 15% and so it depends which side of that 15% threshold that those companies fall on. When it comes to our approach to debt deductions, we're talking here we think, about roughly 600 firms in Australia, less than 100 companies impacted by our tax havens measure and that's because right across the board, what this proposal is geared towards is the biggest multinationals who are moving their arrangements around the world to avoid paying tax here in Australia. That's the answer to those parts of the questions, I’ll throw to Katy for the other bit.
GALLAGHER: I think, Jim, answered it at the beginning. But I would say that, you know, in the last couple of years in particular, I think most Australians understand that there are a number of different outcomes from a Budget. One, you support the economy and two, you manage finances responsibly. That's, you know, most people would expect that I think. So that goes to our point around making sure our investments are going to where they need to go, so dealing with cost of living getting wages moving, but also that the quality of the spend that is that you're getting bang for your buck in terms of the investments you're making in aged care, in child care, infrastructure, in the NBN, in housing, all of those areas that are going to deliver a dividend to the community. So, you know, yes, there's a Budget repair job, and you know, it would be my job to come in and look at how we sensibly deal with the Budget repair whilst maintaining support in those important areas of the economy. It's not going to be an easy job. These jobs are going to be there for anyone who wins the election. I hope it's Labor. But we take the job seriously, as we do managing the Budget responsibly. And, you know, the thing from my point of view sitting in Senate Estimates, hour after hour, is that there I'm not sure, in fact, I'm positive that this government hasn't always dealt with the Budget that way — i.e. made decisions that are about delivering for the Australian people and fiscally responsible. And I would say there's example after example, where they haven't met that test. We are setting those tests for ourselves.
JOURNALIST: Thank you, during the campaign, we're seeing a lot of commitments being made. And you're now saying that if you win you will do an audit of waste and rorts and commitments. But at the moment, we've got communities around Australia where they may have been promised by the Coalition money for the local oval, for a sports facility block. A hydrogen project in Townsville, all these promises are being made. What's your commitment to those voters if there's a Labor Government? Will that oval still get the money that's promised to it? Will the hydrogen project in Townsville still get its $70 million? What's the baseline proposition from Labor on all of those commitments being made?
CHALMERS: What we've tried to do is we've tried to point out specifically when a commitment has been made, whether or not we will match it, and there have been some investments that the government has announced, including that hydrogen example where we've said that we would match it. So we've tried to be clear about that. The government has made an extraordinary amount of commitments in this election campaign. It's detailed in the document that we've provided you some of the examples of the hundreds of millions of dollars being committed each day by the government. We've said where we think it's responsible, we said we match it. We've also gone about our own commitments in a different different way, in my view, a more rigorous and robust way. The challenge that we're dealing with, with this internal audit of waste and rorts in the Budget, is more about the accumulated damage done to the Budget of almost a decade now, which from a government which is born to rort, which has made rorting and wasting taxpayer money and art form. And we want to get to the bottom of some of those issues.
JOURNALIST: But doesn't that necessarily mean that voters have this, have the prospect of an audit, if you win power, and then a grant that's been promised in the local community having a question mark over it. How do you get around that?
CHALMERS: No, because, yeah I understand your question, if the commitment has merit, we will support it, and we will match it. We're really talking about going back to the structural problems in the Budget developed over almost a decade now which has turned the kind of rorting and wasting that the government's been sprung for again and again into an art form. We're talking about that. That is our that is our priority.
JOURNALIST: The data today shows that inflation for essential items is running higher than for non-essentials. What would Labor do in the short-term to help with the price of things like groceries and on that point, this all adds pressure on the Reserve Bank to raise interest rates next week. What would that mean for Labor in the election campaign?
CHALMERS: I’m reluctant to make a political point about interest rates rising. You know, the Reserve Bank Governor has said for some time now to expect that interest rates will rise no matter who is in office. And clearly after today's incredibly high inflation number, there'll be more speculation about a rate rise next week. If you think about all of the challenges that Australians are facing, including some that you've identified, groceries are going up, you know child care is expensive, power bills are still expensive and to add to that pain, we will have an interest rate rise. This is the triple whammy that Scott Morrison has presided over: wages going backwards in real terms, cost of living going through the roof and now an interest rate rise as well. And I think Australians are worried about that because they know that the government has got a plan to get them through the election, but they've dropped the ball in the longer term when it comes to taking some of the pressure off some of these costs of living in some of these areas where cost of living are acute. You asked about our plans. We've got plans to make childcare cheaper, we've got plans to get power bills down and we've got plans to get real wages going again, the government doesn't have sufficient plans in each of those areas to make that a reality.
JOURNALIST: But these costs are going up now, people are facing these pressures when they go to the supermarket at the moment. So what are you going to do short-term to ease it?
CHALMERS: That’s why we supported the cost of living measures that were in the Budget because we recognise people are under serious pressure right now. Our issue is that there's nothing from the government beyond that to alleviate cost of living pressures. That's why we have plans in child care, in power bills and in real wages.
JOURNALIST: Briefly, how much do you expect to get from the OECD process versus Labor's other measures in the $1.9 billion on multinationals and for Katy Gallagher, does the efficiency dividend in the public service remain under a Labor government?
CHALMERS: So in terms of the costing, so, there are four parts, as I say. We have not released a number for the two-pillar OECD approach for exactly the same reasons that the government has not. So the government has committed publicly, as Andrew ran through a moment ago, to the two-pillar approach from the OECD. Treasury considers it premature to put a number against the 15% minimum tax and the other OECD pillar and we have taken the same approach as the government on that particular measure. It's premature to cost that measure. There's still some uncertainty around the start date of it and the Australian composition of that. When it comes to the debt deductions measure, that will be $1.45 billion over the forward estimates. When it comes to the issues around intellectual property and tax havens that'll be $445 million over the forward estimates and the transparency measures have no cost. Katy?
GALLAGHER: We haven't made any changes the efficiency dividend. I would say that — and I should have said this at the outset — we are as part of our announcement today re-investing just short of $500 million back in to internal capability within the APS. So that'll affect that a little bit. But we see that as being an important part of reducing our reliance on labour hire and contracting arrangements and rebuilding internal capability in the APS which has been eroded so much, but we'll have more to say about that.
JOURNALIST: Thank you. Can I ask you on minimum wage, in 2019 Labor were talking about a living wage — is that idea still alive under Labor today? And the ACTU are calling for a 5% increase to minimum wage. Now, I know you've said today that you're not wanting to make economic forecasts, but can you at the very least say in the submission that Labor would be making, should it win, to the Fair Work Commission, would you be putting a specific number on how much you think their wage, minimum wage, should be increasing?
CHALMERS: Yeah, we'll have more to say about that as the minimum wage case proceeds. But as we've said, ever since the ACTU released their submission, we think it's self evident that minimum wages should keep up with the cost of living. We've said that for some time. We've said that in many cases, people on minimum wages have been the heroes of the pandemic. And the thanks that they get shouldn't be another cut to their real wages so that they fall further behind and they can't get ahead.
JOURNALIST: Does that mean you support the 5% minimum wage increase?
CHALMERS: I said we'll have more to say about the minimum wage case as it proceeds, but I've run you through some of the principles that we adopt.
JOURNALIST: [Inaudible] wage increases across the board, won't that lead to further inflationary pressure, which ultimately will harm wage earners?
CHALMERS: Well, the key here is to get the economy growing in a way that's not adding to those inflationary pressures. And part of getting the economy growing the right way is to get real wages growing the right way. As it stands, people are getting absolutely smashed by this toxic combination of skyrocketing prices and falling real wages. And we want to grow the economy in a broad and inclusive and sustainable way without adding to those inflationary pressures. The absence of wages growth under this government for much of the last decade, has been, in their words, a deliberate design feature of their economic policy. We take a very different approach. Growth in real wages is about keeping up with the skyrocketing cost of living and getting ahead and growing the economy must be about how do we do that without adding to those inflationary pressures. Now we've got a plan to do that. And we've released that plan today, the government is completely silent on what happens after the election. They've got a series of measures in their budget, which are only designed to take the big problems in the economy from one side of the election and park them on the other side of the election. And we think that there's a better way to go about it.
JOURNALIST: Shadow Treasurer one to you and then one to Senator Gallagher. You talked about bringing power prices down and I note that you say you'll do that by putting more renewable energy on the marketplace, because it's cheaper, the price will come down. That is not how the wholesale power prices is set, it's set on the highest cost of generation not on the lowest. So will you guarantee that those those numbers are going to come down for Australians, you'll hit that target? And Senator Gallagher, Anthony Albanese said earlier this year that he would debate wherever and whenever with the Prime Minister. Channel Nine has secured a debate with the Prime Minister on the 8th of May, will he be as good as his word and turn up for that debate?
CHALMERS: Well, first of all on power prices, we have released the most comprehensive modelling that an opposition has released on a policy ever. And our Powering Australia Plan says that by the middle of this decade, we'll get power prices down by $275 a year. And that is a substantial saving for people, which recognises that the cheapest cost of new sources of energy is renewable increasingly. So if people aren't prepared to take our word for it, they should take the word of the most respected energy economists in Australia who've done this modelling and determined that there will be substantial savings. That won't be the only benefit from our Powering Australia Plan. It will get our power bills down with cheaper and cleaner energy, it will boost investment in the economy in ways that are very helpful in our economic plan and it will create more than 600,000 jobs and five out of six of those will be in the regions. I heard the Prime Minister bleating today about this press release of a jobs target. The only party going into this election with an economic plan for after the election, and with a modelled jobs policy, is the Labor Party. And we're going to this election with a modelled policy that says more than 600,000 jobs will be created from our Powering Australia Plan. Five out of six of those will be in the region. So we've got a plan. They've got a press release. And our plan gives Australia a much better chance of growing the economy the right way in a way that gets power bills down, gets investment up, creates jobs and creates opportunities right around Australia.
GALLAGHER: In terms of the debate, what I do know is that Anthony Albanese smashed Scott Morrison at last week's debate, so I think, so I have no doubt that it's in our interests for more debates to occur. The way these things normally happen is there's engagement between the two parties through their campaign directors. I would suggest to Scott Morrison that that's the way to approach settling dates whether it be with Channel Nine or other networks, about how to host and and hold debates. But from our point of view, let those normal arrangements occur and Anthony's absolutely happy to debate Scott Morrison on those terms.
JOURNALIST: [Inaudible] and also to Katy Gallagher, Treasury and Finance over the years has done a lot of work in the region and working with Pacific nations in things like money laundering, governance and Budget financing. Given what's happened in the Solomons, do you see that stepping up? And secondly, on the Solomons, Karen Andrews says that she believes that Beijing struck this arrangement with the Solomon Islands government in the middle of an election campaign quite deliberately, what's your response to that?
CHALMERS: Even by the incredibly low standards of this government, I thought what Karen Andrews said was remarkably desperate and remarkably unhinged. And the Australian people will determine who wins this election and they have a choice between a better future with a stronger economy under Labor, or another three years of skyrocketing prices and falling real wages and all of the dysfunction and drift and mistakes and the corruption of the Budget that we've seen over the best part of a decade. On a day when inflation is going through the roof, on a day when it becomes clearer than ever, that ordinary working families are falling behind and can't get ahead. It says everything about this government that they want to make a claim like that.
GALLAGHER: Look, just in a general sense, and I think you saw this reflected in the policy we announced yesterday which did have a component in there about financing and support to work with Pacific nations, but we want to be the partner of choice for the Pacific. And that is, you know, if that can be assisted through APS or public sector engagement and advice, then, of course, that would be what we would implement. And you know, the policies, what we've seen under Scott Morrison is he's vacated the field, he made jokes about the islands going underwater, he made them re-write or tried to bully them into re-writing outcomes from their summit. And, you know, it's no surprise that they are now skeptical of our engagement with them. So we need to rebuild trust and make those investments where we can and where we can use our capacity and certainly across those Departments of Treasury and Finance, to better support them or if they are seeking that advice, then of course, we would do that.
JOURNALIST: [Inaudible] both with home purchases and also with rental costs. What specifically is Labor doing to address those housing costs, particularly, given that you have given up the negative gearing policy from the last election?
CHALMERS: Yeah, so we've released part of our housing policy, but we'll have more to say during the course of the election. As you know, we think the most important place to start is social and affordable housing. That's why we've got our Housing Australia Future Fund. It's why —
JOURNALIST: [Inaudible interjection]
CHALMERS: Yeah, it's why we've proposed some other measures as well, and it's why we've been supportive of some of the government's measures, frankly. But we will have more to say about housing policy before election day. We do understand that housing, including in the numbers today is one of the biggest contributing factors to skyrocketing cost of living and we won't be silent on it.
JOURNALIST: On multinational tax, if I could just ask for the viewers at home, is there an example a multinational company you can give that will be captured under this? And secondly, the BCA has pushed against Scott Morrison's claims that Labor's changes to the safeguard mechanism were a carbon tax, which is fair enough. Is it though a carbon trading scheme, is that what that would be given that really it sets baselines, and those baselines under you guys will be ramped down slowly, people can buy and sell credits. Isn't that a carbon trading scheme? Or can you clarify that a bit?
CHALMERS: So on the first, on your first question about specific companies, obviously what we're proposing today is not about one company or another. There are different arrangements and different circumstances that each company has and the ATO secrecy rules prevent them from sharing the impacts of it. In terms of the sectoral impact of what we're proposing, obviously, the two pillars of the OECD scheme are directed towards developments in the digital economy, but our broader package doesn't target one sector or another. It is a broad plan which is blind to specific company examples to try and get the system right.
Now when it comes to the safeguard mechanism, once again, the government has been lying about the safeguard mechanism to try and distract from the diabolical dysfunction and division that we're seeing when it comes to their commitment to net zero by mid century. This Liberal/National Coalition is hopelessly split on net zero. We've got a situation where Josh Frydenberg, because he's in a battle in Kooyong, is trying to pretend that the party is united behind net zero at the same time as you've got a range of other members and candidates, not just Matt Canavan, saying that the commitment is flexible. Now this needs to be cleared up. You know, this is one of the central issues of this election campaign. And the governing party seeking re-election to yet another term can't get its story straight on net zero by mid century.
Now on the safeguard mechanism as we've set now for some time, ever since the policy was released at the beginning of December and increasingly in recent days, the safeguard mechanism is about 215 entities having their obligations determined by the Clean Energy Regulator. They have options and they meet those obligations. Our preference is that they reduce their emissions, if they're unwilling or unable to do that, then they're welcome to participate by buying credits. We've said that, Chris Bowen, everybody has said that in one way or another. You can call that whatever you like, but that has been clear. That has been a consistent and clear feature of our policy since we announced it. You mentioned the BCA, now I want to pay tribute to the BCA because they have played an incredibly constructive role in getting not just our policy where it is and being supportive of it, but contributing to the broader discussion as well. The BCA is a force for good when it comes to dealing with climate change, getting cleaner and cheaper energy and more investment, more jobs, more secure jobs around Australia into the system. And what they've said today is just the truth, which is that they have asked for improvements to the safeguard mechanism. That is central to our policy. That's why the business community and the investment community supports our policy. And that's why the Government is a joke when it comes to climate change. Thanks very much.