RN Breakfast 2/12/21

02 December 2021

SUBJECTS: Australia the worst performing advanced economy in the September quarter; The downturn we didn’t have to have; Cost of living pressures; Labour shortages and cost of living pressures the result of eight years of mismanagement not two; Morrison Government ends the year a clapped out clown car; Kate Jenkins’ recommendations; Farewell Fran Kelly.






SUBJECTS: Australia the worst performing advanced economy in the September quarter; The downturn we didn’t have to have; Cost of living pressures; Labour shortages and cost of living pressures the result of eight years of mismanagement not two; Morrison Government ends the year a clapped out clown car; Kate Jenkins’ recommendations; Farewell Fran Kelly.


FRAN KELLY, HOST: Jim Chalmers is the Shadow Treasurer. Jim Chalmers, welcome back to Breakfast.

JIM CHALMERS, SHADOW TREASURER: It's a real privilege Fran, to be on your last show.

KELLY: Thanks for coming in, I really appreciate it, there in our Parliament House studios. This is the last sitting day for the year. On the economic front, the 1.9% drop in September quarter GDP is better, significantly better, than what markets were forecasting. Overall economic growth this year is at 3.9%. Do you welcome this result?

CHALMERS: Of course not, Fran. This was the third worst downturn in the history of the National Accounts here and to put it in perspective for your listeners, 28 countries in the OECD have reported their economic outcomes for the September quarter and ours was the last and the worst in the world - the 28th best out of 28 countries, the worst performing economy in the developed world. So I don't think there's much there to celebrate. We hope that the economy recovers strongly from there but it's not a recovery if working families are being left behind. Now they're confronting these skyrocketing costs of petrol, and rent, and all the rest of it, at the same time as their real wages are going backwards. So I don't think the Government has anything to crow about.

KELLY: Is it a bit of a glass-half-empty view though, when the OECD today says it expects the Australian economy to grow by 4.1% next year? I think the RBA forecast is even higher than that. So it's not such an issue and not so surprising that economies fall and contract during lockdowns, months of lockdowns as we saw in this case, but it's how they bounce back. All signs are that the December quarter is going to be quite strong.

CHALMERS: Well, first of all, the reason why our economy is the worst performing in the OECD, the difference...

KELLY: But how do you say it's the worst performing when we've got unemployment so low?

CHALMERS: Because 28 countries have reported for the September quarter and ours is the worst outcome on the figures that the Government released yesterday. The point that I'm making Fran, is the difference is the big mistakes made here on quarantine, and vaccines, and all the rest of it, made this the downturn that we didn't have to have. It didn't have to be as bad as this. Now you ask about the recovery and you ask about the OECD. Everybody wants the economy to recover strongly. It is the strong expectation of economists that it will do so. But the OECD overnight actually downgraded our forecast for Australia. They said these are very uncertain times, they pointed to issues around the quality of spending in the Budget, which is a big issue for this Government which is addicted to rorts and waste and mismanagement. So there are a lot of challenges in the economy still and we shouldn't be complacent about it, because the Government was complacent about it this time last year and again in the May Budget. They said the economy would come roaring back, instead they delivered the third-worst outcome in the history of the National Accounts. So we need to be careful here. There is a lot about the economy that we can be pleased with but there's a lot that we need to still be concerned about. So we can't be complacent like the Government is.

KELLY: Households are cashed up, household gross disposable income rose 4.6% in the September quarter, that's a 20% increase since the start of the pandemic. Australians now have $250 billion socked away of savings through this pandemic. Do you give the Government credit for keeping Australians in work and saving in the midst of this crisis or supporting family households too with government subsidies?

CHALMERS: I think it is really important that we do have that arsenal of private savings there and I think we do have that going for us as we head into the recovery. We want to make sure that that money finds its way into the small businesses of this country and the local economies of this country. That is something that we have going for us, I'm not sure the Government deserves credit for that. They seem to want to take credit for anything that's going for us in the economy, but not take responsibility for all the difficult parts of the economy. And in the labour market...

KELLY: Can I just interrupt you there Jim Chalmers, and ask you what you think the psychology of that is? $250 billion in household savings is enormous, I think, do you think that's a sign of confidence or anxiety?

CHALMERS: Well, it's partly a function of people not being able to get out and spend. Obviously online shopping and all the rest of it has been an opportunity for people but the big downturn in the September quarter was in spending on services, which makes a lot of sense when people are locked-down. It's harder to have those opportunities to spend on services, or accommodation, or the other elements of the economy that fared particularly badly. And so some people have some savings, more than usual, and we want to make sure that finds its way into the economy. You asked about the labour market as well. The unemployment rate only tells part of the story of the economy, and particularly the jobs market. The jobs market is defined by the fact that we have two million Australians who are either unemployed or underemployed, at the same time as we've got skill shortages and labour shortages all around the country. That doesn't just speak to the economic mismanagement of the last two years but the failures of the last eight years to train Australians for the opportunities as they emerge.

KELLY: I want to come to unemployment but just before we finish this sort of level of government spending and subsidies, Labor was critical of the Government when it ended JobKeeper, you also said the Government was wrong to end disaster and business support payments once we reached 80% vaccination rate. Do you acknowledge now it's time to rein in the spending as we perhaps start opening up again.

CHALMERS: We've said all along that as the economy recovers, obviously, you better target and you better taper those payments. But the September quarter outcome that we saw was a vindication of the view that we had. We said that in March, and we said in May, when the Government said that everything was fine and everything was coming roaring back. That complacency stomped on the green shoots of that recovery. We ended up with the third-worst outcome in our history in September and that vindicates our view that we need to constantly be reviewing what's best for the economy. That premature withdrawal of support was horrific news for all of those small businesses that hit the fence, all of those workers who lost their job, all of those workers who were working zero hours. You go to places like Cairns and other parts of Australia who had been punched by the closure of the international border in particular, and I think that our view throughout the year has been vindicated by events.

KELLY: And those areas and tourist spots like Cairns are now starting to cry out for workers. And we have this anomaly, as you say, of a million unemployed and another million underemployed I think, is your figure. And yet we've had Jennifer Westacott and others here on the program saying business can't get a workforce. What's the answer to that in the short term because a skilled workforce takes time to build? Do we need to open up to international students and skilled workers more quickly?

CHALMERS: Clearly, the economy needs to open up when it's appropriate, and safe, and responsible to do that. A key part of our economy is international students and international tourism. They’re two big, key planks of our prosperity. So we need to make sure that we can open up safely when the time is right. Obviously, the omicron strain of the virus has thrown a bit of a spanner in the works, but we need to take the health advice and do the right thing on that front.

KELLY: Okay.

CHALMERS: The fact that we have these skills and labour shortages, this has been an issue for eight years in lots of ways, not just the last two years. We should have been training more people, we should have been sorting out childcare, we should have been getting the investment environment right. The OECD overnight, one of the key points that they made in that report that you cited, is that we need to have better quality spending. We need to have a comprehensive plan for climate change as well so we can grab those jobs, and that investment, and those opportunities. Right across the board we've got a complacent government, and that's why we've had these poor economic outcomes.

KELLY: I just want to get a comment from you on the findings of the Sex Discrimination Commissioner Kate Jenkins and the report into the culture at Parliament House. There were 28 recommendations. The report found the power imbalances, gender inequality, lack of accountability and a quote 'male, pale, and stale culture' needs to be urgently addressed. Will Labor agree to take on all 28 recommendations if you win government?

CHALMERS: As we've said Fran, we want to implement the recommendations, we're going to do that in consultation with our staff and via the relevant Shadow Ministers. I think Tanya Plibersek was on your show in the last couple of days making that point. We need to take Kate Jenkins' report seriously. There's a heap of work that we all need to do to make this a better workplace.

KELLY: Okay. And we've seen some senior government Members announce their resignation. In the last day there was Christian Porter, yesterday announced he's quitting. It's expected the Health Minister, Greg Hunt, will announce he's quitting parliament too. In a statement on Facebook, Christian Porter said quote 'perhaps the only certainty now is that there appears to be no limit to what some will say or allege to do or do to gain an advantage over a perceived enemy'. Is that how you see politics today?

CHALMERS: Not necessarily Fran, and I don't think there'll be a lot of sympathy for that view, to be frank about it. This Government finishes the year as a bit of a clapped-out clown car. They've got these defections, they've got all this disunity, all this desperation. We'll hear later today that Greg Hunt is also leaving. Clearly, we need to make politics more meaningful and a better place for people to work, something that people aspire to work in, but I'm not sure there'll be lots of sympathy for Christian Porter and his Facebook post.

KELLY: Jim Chalmers, thanks very much for joining us.

CHALMERS: Fran, thank you so much for all the opportunities over many years now. I really wish you well, that calm voice of authority in the morning and that colossal contribution to Australian public life. Well done and I hope you enjoy whatever comes next.

KELLY: Thanks very much, I appreciate that. Jim Chalmers, Shadow Treasurer.