SKY Afternoon Agenda 1/12/21

01 December 2021

SUBJECT: National Accounts.





SUBJECT: National Accounts.


KIERAN GILBERT, HOST: Let's look at these numbers more now with the Shadow Treasurer, Jim Chalmers. Thanks very much for your time. Do you think voters will buy Labor's argument that this is about the government's incompetence when clearly it was because of the Delta outbreak that those lockdowns happen?

JIM CHALMERS, SHADOW TREASURER: It's beyond dispute that the government's mismanagement of the pandemic has meant mismanagement of the economy. Around the world, there are 27 other advanced economies that have reported growth for the September quarter, but Australia's economy actually shrank. There are two reasons for that, two differences between us and the rest of the world: Morrison and Frydenberg. They made a lot of mistakes when it came to ordering enough vaccines, when it came to purpose-built quarantine, that made the lockdowns necessary, and that's why we get these really quite confronting numbers today.

GILBERT: Isn't it true, though, that the vast majority of those other nations in the OECD copped it so badly in the first wave, and meant that they were coming from a lower base in terms of their growth?

CHALMERS: But everyone had, the government wants to pretend that Delta came out of nowhere and everyone got smashed by it, but what we know from today's figures, is that Australia went backwards while those other countries went forwards. And the difference is, in our country, our leaders, Morrison and Frydenberg and the government, made these big mistakes with vaccines and quarantine, and people are paying very dearly for it. We were losing billions of dollars a week out of the national economy because of those mistakes, and we see that laid bare in today's national accounts.

GILBERT: But again, it goes to that question of how we got through the initial period better than everyone else. Therefore, they were coming from a lower base.

CHALMERS: The issue was at this time last year on your show and in the Budget, Josh Frydenberg was saying the economy's coming roaring back. And that complacency meant that the Government didn't make the right decisions about those things, quarantine, vaccine and in other areas. And so, what should have been a stronger recovery for Australia, turned out to be the third biggest contraction in the history of the national accounts, and that's because the complacency that they showed back then stomped on the green shoots of that recovery. We don't want to see more of that complacency now.

GILBERT: So, in that context, would you also like to reiterate what the Treasurer has said about the need for calm heads among state and territory leaders to avoid future lock downs, including this current experience with this latest variant?

CHALMERS: Of course we want to see calm heads prevail. That means listening to the health advice. The state governments have done a much better job making these difficult decisions than the federal government has. Nobody wants to see lockdowns for one day longer than is necessary. But we need to do the right thing here. We can't be complacent, particularly about this Omicron variant. We don't know enough about it yet to know what its full impact will be, but we do know now after today's figures, that we approach this period of uncertainty from a position of weakness because the Government mismanaged the economy and the pandemic throughout 2021.

GILBERT: Is there an argument that Labor's push for those standalone quarantine facilities, that loses a bit of its potency when hopefully we have less quarantining happening.

CHALMERS: Well, the idea that hotel quarantine has been good for us is obviously laughable, given all of the leakage out of hotel quarantine. The issue is that we've got this new variant now, we don't know what's coming at us down the track (interrupted)

GILBERT: So, they won't become white elephants is that the risk?

CHALMERS: The idea that this is the last pandemic that we will confront, I don't think that bears scrutiny. And what should have happened some time ago, we've been calling about it for some time, as you know, to build these purpose-built facilities so that we can deal with what might come at us. And the complacency which said 'don't worry about building it, don't worry about ordering enough vaccines', we're paying very dearly for that now. So, the point we're making is the Government wants to take credit for the recovery, which we hope is coming, we hope it's strong and broad and inclusive and all of that, they want to take credit for the recovery, but they won't take responsibility for the downturn that we learned a lot about today.

GILBERT: One of the key issues I spoke to Andrew Clennell about it a bit earlier is that voters I think going into the election will be petrol prices. People obviously feeling it, hurting at the bowser at the moment, very expensive. You will recall when Kevin Rudd was in government, in fact, when he was running for office, promised a fuel watch and petrol commissioner and all sorts of things. Really, there's not much of government in Australia can do against those international forces, is there?

CHALMERS: Well, I think the key thing here is wages. People's capacity to actually pay for the skyrocketing cost of living. Real wages are going backwards. The Government's own Budget says they'll go backwards over the next four years and that's why people are doing it so tough. Insecure work, stagnant wages for eight years means that people are falling behind as petrol prices skyrocket, not just petrol, rent, a whole bunch of other essentials which people cannot keep up with. Because under this government wages outcomes have been so poor for so long.

GILBERT: Isn't that, though, a medium-term proposition at best, wages? It's something that's more structural as opposed to a silver bullet.

CHALMERS: Well, it's been an issue for eight years, right? And the Government has said in a moment of frankness, probably in this studio, said that it was a deliberate design feature of the government's economic policy to have this downward pressure on wages. That's one of the key weaknesses, defining weaknesses, in our economy. So, what we've said are there are issues you can do, you can deal with in terms of job insecurity, in terms of training, and in other areas, to get wages growing again, because when you talk to real people in real communities, which I don't think the government does, they will tell you the costs of living are skyrocketing. Our wages are not keeping up. And that's why working families are going backwards. The Prime Minister and the Treasurer have said they want the economy to be a feature of the coming election campaign. We say let's do that. Let's make it about petrol prices and real wages and weakness in the labour market. Let's make it about the worst performing economy in the OECD in the September quarter.

GILBERT: I know that that comparison doesn't sound great. But you know as well as I do, the latent demand in the economy and among households is enormous right now. So, we will probably see an economy roaring back to life in the early months of next year. That makes it tough for you.

CHALMERS: Everyone wants to see that. Let's put the economics and more importantly, let's put the people before the politics of the situation (interrupted)

GILBERT: The politics does become more difficult when that's the scenario.

CHALMERS: I don't accept that, I do accept that people expect the economy will recover, we want that to be the case. But it has to be the right kind of recovery where people aren't left behind. It's confronting with this other kind of insecurity and uncertainty around costs of living. The kind of recovery matters, but we want it to be a strong recovery. We're confident in an argument about the economy in the lead up to the next election, we're confident that we can win.

GILBERT: And we're expecting Anthony Albanese this weekend to provide a bit more detail to provide some more meat to the bone, so to speak, in terms of the policy agenda for Labor. How important is it that he does do that to say to and to reassure voters about his own proposition?

CHALMERS: Well, I think it's a crucial opportunity to show people that we can have a stronger economy and a stronger society after COVID than we had before but not under the current government. We've got an alternative vision for the country. We've already laid out large planks of that, and Anthony has a good opportunity to lay out some more on Sunday.

GILBERT: Jim Chalmers, thanks for your time.

CHALMERS: Thanks, Kieran.