CNBC SQUAWK BOX
FRIDAY, 24 JULY 2020
SUBJECT: Budget update.
WILL KOULOURIS, HOST: For further assessment on whether or not the Government has been putting us in the best possible position, I'm actually very pleased to be able to welcome the Shadow Treasurer of Australia, Jim Chalmers. He's joining us live down there from Canberra. Jim, you heard what the Finance Minister said just then. He's saying the Government's doing what it can. He's flagging that surge in part time workers that we did see in June. So in your mind, are we on the right track?
JIM CHALMERS, SHADOW TREASURER: I don't think anybody could look at the really confronting numbers which were released yesterday and conclude that everything was on the right track. Of all of the confronting numbers, all of the eye-watering numbers to use the Government's language, yes debt and deficit was through the roof; yes, there's a big problem with GDP growth, the biggest downturn we've seen on record. But I think the most important number, probably the most confronting number in what was released, was the unemployment number. That shows something like an extra 240,000 Australians are expected to lose their job between now and Christmas to add to the million already without work. That means the budget update should have had a plan for those jobs. What are we going to do to create jobs when the otherwise welcome support trails away out of the economy? That's the most pressing task for the Government.
KOULOURIS: Now we did get a little bit of perhaps that potential plan when we saw that the wage subsidies earlier in this week were extended for a further six months. But interestingly, when it did come to that, in terms of the JobSeeker payments, they've only provided clarity until December. What are you going to be pushing for to help all of those unemployed people that just don't have any knowledge or guidance as to what their fate is going to be into next year?
CHALMERS: First of all, it's really important that those two methods of support were extended. The original plan from the Government was that they would end at the end of September. That was clearly not going to be good enough. To the extent that they've been extended, that's a good thing. It's better than just pulling all of that support out of the economy. On JobSeeker, the unemployment benefit, we would like it if the Government gave people more certainty about the future of that payment. We'd like it if they locked in a permanent increase. What they've done instead is said that they'll have another look closer to Christmas. I think that's a recipe for uncertainty for people who are already pretty anxious and pretty worried about putting food on the table.
REBECCA QUICK, HOST: Mr Chalmers, but if you were in power, while you say that it would be nice for the Government to give more certainty to people about the future of unemployment benefits at the same time, what would you do if you were in that position to actually create jobs?
CHALMERS: That's the most important question. We've been saying this week in the context of this budget update that we need a comprehensive plan for jobs. A couple of examples of what we could do here; we could invest in public housing which is labour intensive, has a lot of jobs associated with it, and build something with lasting benefit for our most vulnerable people. That's one idea that we should have heard more about this week. Clearly, there's an issue in Australia with energy policy certainty. That's been the case for some time. That's one of the things feeding those very confronting numbers around business investment falling during this recession here in Australia. Let's sort out energy policy so that businesses get cleaner and cheaper energy, can bring their business costs down, invest with confidence, and put on more people.
QUICK: When you were talking earlier about how you don't believe that we're on the right track, and you were highlighting some of the big deficit numbers that were revealed yesterday, nonetheless, do you concede Mr Chalmers that if the Government had not implemented those big spending measures that arguably we would be in a much worse economic position than we are now? And also the budget deficit could have looked even worse too?
CHALMERS: Look clearly the JobKeeper program is doing a lot of the work that it was intended to do. That was the reason we called for a wage subsidy like that in the first place. It's why we welcomed the Government's change of heart when they implemented one. Clearly those dollars flowing into businesses and to workers in an economy which desperately needs it is really important. There are some gaps in the program which would ideally have been closed; too many people were left out and left behind when it comes to the JobKeeper program, but many have been supported and that's a good thing. The point that we're making is this; extending that program and extending the unemployment benefit supplement is a welcome step but it's not of itself a proper plan for jobs. We need to focus, here in Australia, on where the new jobs are going to come from. This recession will be longer than it needs to be, the unemployment queues will be longer than they need to be, if the Government doesn't come forward with a genuine, comprehensive plan for jobs into the future.
MARTIN SOONG, HOST: So Mr Chalmers, this is Martin. Let me quickly jump in quickly with a question. As you suggested a couple of minutes ago, at least some of those jobs could come from investment in new, more efficient clean energy. I get you there. But that's going to cost money, which leads me back to the money question. You've repeatedly said that the Government's been drawing a lot of attention to how much it's been doing, look how much we're spending, we've got a record budget deficit. You've been pointing out repeatedly though, that two-thirds of that deficit was racked up pre-Coronavirus, suggesting that this is an inherited thing, and they're not really spending as much as they could or should. Are you then advocating an even wider budget deficit, and by how much, to create some of these jobs that you talked about?
CHALMERS: Let me make a couple of points about that. You're right to identify that the vast majority of the debt in the budget was there before Coronavirus. That's an important point. There's been an issue in the budget for some time. This isn't the first and second budget deficit the Government is handing down; it’s their seventh and eighth deficits. That's an important bit of historical context. When it comes to energy policy, we're proposing to actually get some certainty in the system. That requires the Government and the Opposition to come together and agree a framework for energy policy. That doesn't itself cost the budget money. It's one of the things that we could do, reform that we could pursue, which would be really good for business, for investment, and for jobs, and therefore for the economy but that doesn't necessarily cost money. On the broader point about the fiscal position, the only test here needs to be, is the borrowing that the Government's doing effective? We measure that effectiveness by what it means for jobs. If the economy is going to be in bad shape for longer, if unemployment is going to be higher for longer, then clearly the Government will need to look at what else needs to be done. They had an opportunity this week in the budget update. We would have liked it if they'd grabbed that opportunity, but that's the most important focus that we can have here in the Parliament in Canberra in the coming weeks.
KOULOURIS: Now Mr Chalmers, the Government is obviously - and they flagged this quite continuously - that they're going to be trying to pass some pretty significant reform across the board in order to recover from this COVID-19 pandemic from an economic side. What's your line in the sand? There are some IR reforms they're trying to push, perhaps even business incentives, company tax cuts. Where do you draw the line in terms of what you're willing to support on that front?
CHALMERS: We've said, Will, if there's a plan to do some of those things, let's see the plan. Throughout this recession, and I think I've spoken to you about this before, we've tried to be, as an Opposition in Australia, really constructive and responsible, to engage with the Government, to agree where we can and only disagree where we absolutely have to. Some of those things that you raised, I think should be considered. We should be looking at whether some income tax cuts can be brought forward. We should be looking at whether there's a way to incentivise business investment via the tax system. Industrial relations is one of those things which is trickier, because we don't want the Government to respond to this crisis of higher unemployment and more insecure work by making work even more insecure. That's an issue that we have but let's talk about it. Let's see what the Government is actually proposing. At the moment we've got some slogans but we don't have a plan.
QUICK: On 6 October, the Government will deliver the 21-22 Budget. Do you think that it would be helpful, and that there is a good case, to bring forward the already legislated income tax cuts for July 2022?
CHALMERS: Yeah, I think the Government should be considering that. That's a point that we've made for some time. Middle Australia is struggling. There is an issue with consumption, demand, and spending in our economy. That's something that they should have a good look at. We've said that we would have an open mind to that if the Government put forward a plan. They haven't done that yet. When it comes to income tax cuts, they've said we have to wait a couple more months to see what they intend to do there, but we'll engage with that constructively as well. It's something that should be considered.
QUICK: Thank you so much for joining us today and for your candid conversation Mr Jim Chalmers, Australian Shadow Treasurer.