CNBC SQUAWK BOX
WEDNESDAY, 22 APRIL 2020
SUBJECTS: Impact of Coronavirus on the economy; Wage subsidies and JobKeeper eligibility; Tax cuts; Australian Government debt; Virgin; China.
WILL KOULOURIS, HOST: Jim, thank you for joining us today. Speaking on that uncertainty, we're looking at an incredibly uncertain future when it does come to the economy moving forward. The Government has engaged in quite considerable stimulus, as has the RBA on the funding side, but do you think that the Government has actually done enough or does there need to be even more stimulus injected?
JIM CHALMERS, SHADOW TREASURER: Good morning, Will. You're right that we are obviously in a very uncertain period for the economy. We're not alone in the region in that regard and some of the numbers which have come out in the last couple of days from our Bureau of Statistics and also from the Reserve Bank Governor as you mentioned have been very sobering, if not extremely confronting. There are expectations of a pretty serious spike in unemployment and the onus is on Governments and indeed Oppositions like ours to make sure that we're doing everything we can to protect as many jobs as we can in this really difficult period. The Government has taken some welcome steps, which we supported in the Parliament, things like wage subsidies and cash payments to the most vulnerable people in our economy are important and were supported by Labor through the Parliament.
There are additional steps that the Government could be taking. One of the really troubling aspects of the numbers which were released yesterday were that the vast bulk of the job losses are in the areas that the otherwise-welcome wage subsidies don't cover. We've been saying for some time that the unemployment queues will be unnecessarily longer in Australia if the Government doesn't move to plug some of the gaps that we've identified in the wage subsidy scheme.
KOULOURIS: Now, in terms of the stimulus and perhaps even addressing some of the issues that you just raised in terms of adding casuals or even migrant workers, the debt burden has been one of the key things that the Government has pointed to in terms of perhaps not being able to fund all of that. We've also had the Finance Minister just recently on our program saying that he's going to still be pushing through those personal tax cuts. The Treasurer just yesterday or this morning was saying basically that he's looking at company tax cuts now. Is that something that you would support in Opposition, the furtherment of company tax cuts here in Australia?
CHALMERS: First of all, Will, on the point you raise about debt, obviously there are going to be extraordinary levels of debt in the budget when we're through this difficult period. It should be noted that that net debt in our budget had already more than doubled under the life of this Government before the crisis hit. That is obviously a factor that we all need to consider.
The highest priority is protecting as many jobs as we can and getting that support to workers where some workers are missing out; casuals in particular as you identified just then are a really important priority. It's a higher priority in the near-term than anything else.
There will come a time to repay the debt that has been accumulated, not just in this period but over recent years. When we do that we need to make sure we strike the right balance. We need to make sure that the most vulnerable people aren't carrying a disproportionate burden of that effort. We need to make sure that any new policies are getting bang for back in the economy. If the Government comes forward with suggestions for changes to policy, obviously we'll consider them but we also think this crisis shouldn't be an excuse just to dust off all of the things that they've put forward in the last seven years which haven't been supported by the community.
MARTIN SOONG, HOST: Mr Chalmers, this is Martin. Let me quickly jump in with a question. The historic, unprecedented, epic crash in oil; we're into day two of that happening as we speak, second-by-second. Have you modelled potentially what that could do to Australian Government finances?
CHALMERS: Obviously in Australia, just like in all the other countries of the region, that pretty extraordinary fall in oil prices is having an impact. It's not being necessarily passed on consistently at the retail level but certainly it's having an impact on the economy and will have an impact on our public finances too. One of the really interesting numbers that our central bank Governor released yesterday, Martin, was the one that said that we're expecting negative inflation. That's in big part contributed to by the fall in oil prices and some of the other policy changes as well. Clearly that will have an impact. We want to see it passed on at the retail level to ordinary consumers, but it will have an impact on our budget and our economy more broadly too.
SRI JEGARAJAH, HOST: Jim, should the Scott Morrison administration have rescued Virgin Australia, thereby protecting Australian jobs?
CHALMERS: In short, yes. There are something like 16,000 jobs associated with Virgin Australia. We're told that the company went to the Government I think nine times asking for some support through this difficult period. Obviously, airlines all around the region and all around the world are going through a difficult period because of the understandable restrictions placed on their businesses. These are extraordinary times and governments should consider extraordinary measures. Other governments are doing that around the world and ours should be doing that as well. There are 16,000 Australians going through a very uncertain period. We're now in a situation of voluntary administration. We don't know what that will mean at the end of it for those jobs, there are no guarantees for them. There are no guarantees for regional routes. There are no guarantees for tourism, particularly in important areas like North Queensland and Far North Queensland, the state that I'm from. There's a lot of uncertainty which could be addressed if the Government stepped up and stepped in. We've been calling for that for some time.
JEGARAJAH: Jim, ultimately then, do you think Virgin is going to go the way of Ansett and go into liquidation? That's going to be it? Or will it survive and come out stronger?
CHALMERS: It remains to be seen. Those are obviously the key questions. It remains to be seen what Virgin Airlines looks like three, six, or nine months down the track. There's a process underway now to deal with some of the interest that's been shown in the company. Those 16,000 Australians who work at Virgin are going through an uncertain period. The Government could have ended that uncertainty and they chose not to. Now we're really in the hands of the private bidders and the voluntary administrators.
KOULOURIS: Shadow Treasurer, just finally your counterpart, the Treasurer Josh Frydenberg, was actually on the offensive just this morning, basically saying that some comments from the Chinese embassy were unwarranted that were directed at Peter Dutton. Do you have any concerns about the relationship between Australia and China coming out of this COVID-19 crisis because of this kind of tit-for-tat politicking?
CHALMERS: We need to be very conscious of maintaining our relationships around the region at a difficult time. It's a very stressful time for a lot of administrations. We need to make sure that we are putting forward our views. Supporting the inquiry into the origins and outbreak of this virus is a perfectly normal position to take. We need to make sure that our language is restrained and that we maintain those relationships effectively. We have the same position as the Government effectively on supporting that inquiry in the first place which is the thing that has attracted some of that commentary from the Chinese Government. On an ongoing basis China is massively important to us commercially, diplomatically and in all the other ways. We need to make sure that we're striking that balance. These are very complex issues at a very stressful time.
JEGARAJAH: Jim, we really appreciate your time. Thank you very much indeed for sharing your thoughts with us and your insights. Jim Chalmers there, Shadow Treasurer of Australia.