SKY SUNDAY AGENDA
SUNDAY, 26 JULY 2020
SUBJECT: Budget update; Unemployment; Energy policy certainty; Debt; JobSeeker; Industrial relations; Coronavirus vaccine; China.
KIERAN GILBERT, HOST: Let's go live now to the Shadow Treasurer, Jim Chalmers. He joins me live from Brisbane. Jim Chalmers thanks very much for your time. Do you accept that Australians at the moment would be blaming Coronavirus for this economic situation we're in, not the Government?
JIM CHALMERS, SHADOW TREASURER: I think everybody recognises that this is a diabolical health crisis which has devastating economic consequences. I think the Government has a responsibility, having told Australians how grim things are in the economy, to actually do something about it. That's why I think the budget update was a really badly missed opportunity not just to tell people that things are bad, people already know that, but to tell people what the plan is to deal with the fact that the Government now expects something like 240,000 extra Australians to lose their job between now and Christmas.
GILBERT: Given that outlook on the labour market, will you support the Government in doing what Andrew just flagged there in relation to seeking more flexibility for businesses in the recovery phase? Say for example as Andrew alluded to, a business coming off JobKeeper but still in trouble as it makes its way out of it, and may not necessarily be able to go to the workplace relations that they had previously?
CHALMERS: First of all, these are just smoke signals coming from the Government. We don't yet know what they intend to do. There's not a plan on the table for us to engage with. We'll do that in a responsible and constructive way if and when that happens. Our concern all along has been that we don't want these industrial relations changes to be the thin end of the wedge. We'd be very wary about temporary crisis-time arrangements becoming permanent. We think it would be a bizarre and potentially disastrous conclusion for the Government to draw that the best way to deal with rising unemployment and rampant underemployment is even more job insecurity for Australian workers. That would be the wrong conclusion to draw. We know that the Treasurer draws his inspiration, as he said on Friday, from Thatcher and Reagan. That would send a shudder down the spine of many Australian workers.
GILBERT: I'll ask you a bit about that later in terms of the discussion around reform but on JobKeeper, do you think it's inevitable that that wage subsidy will be there basically for most of 2021, in some form or another?
CHALMERS: It's not yet inevitable Kieran. Certainly weakness in the jobs market will be a feature of the economy for some time. The Reserve Bank, others, and Labor have said even before the most recent Victorian outbreak that unemployment will be higher for longer. That's why the responsibility really is on the Government not just to say that that's the case, but to say what they'll do about it. What I'm really concerned about Kieran is a discarded generation of Australian workers who are left out and left behind and find it very hard to get back on their feet. We cannot afford in this country a lost generation of Australians who've been left out during the recession, and who can't get ahead in the recovery.
GILBERT: When you look at the employment market though, unemployment was at 5.1 per cent in February before the crisis hit. I know you've been critical of the Government over its economic performance, but that's 5.1 per cent versus 5.7 per cent when Labor left office.
CHALMERS: It's certainly the case that the economy coming into this crisis wasn't as strong as it could be. For every number that the Government can quote, we can quote many more. Growth was stagnant last year, wages were especially stagnant, work was insecure, underemployment was absolutely rampant. We had issues with business investment, productivity, household debt. The list goes on and on. The point that we make is this: every Australian, and we're prepared to play our part in this, needs the Government to do a much better job of managing the economy during and coming out of this recession than they did going into the recession in the first place.
GILBERT: But they would also, you know, you said they've got numbers to cite. The other one that they cited repeatedly, is the fact that they had a balanced budget effectively in 2018-19. That's not a bad starting point to go into a crisis, is it?
CHALMERS: They've tried to rewrite a bit of history there Kieran. They said that the budget was already back in the black, they printed the mugs, they made all the self-congratulatory ads, they did all of the slogans and all of the marketing – but it didn't occur. Now we've got these deep deficits, skyrocketing debt that will have to be repaid at some point. We're entitled to point out that the Government said that debt when it was $150 billion was disastrous, that it was a debt and deficit disaster, but now that it's about $850 billion the Government says it's manageable. We think the most important thing when it comes to debt is that jobs are the priority. We need to do what's necessary to protect jobs and to create new jobs. We owe it to the Australian people to play a role in that. That's why we've been constructive with our suggestions. We've said to the Government, bring forward a plan for jobs and we'll engage with it.
CHALMERS: It's fair enough to hold the Government accountable for previous statements on debt and deficit. But you also during the GFC and post that period said it's far better to spend too much than too little. You were among many economists of that view. The fundamental position is that you would rather go big and save jobs than spend too little. Isn't there an inherent contradiction in that argument from you?
CHALMERS: No, I think we're within our rights to point out the inconsistency in the Government's language. Our position has been consistent, which is that the priority needs to be jobs. We've got 240,000 extra Australians expected to lose their job between now and Christmas. The Government doesn't have a plan to respond to that. We've said that it's important that the Government steps in to protect people's jobs and needs to have a plan for new jobs. That means inevitably that there will be government spending. The most important thing is that that government spending is effective, and we measure that effectiveness by what it means for jobs.
GILBERT: Yeah, but in terms of where they're at, if you're criticising the levels of debt and deficit at the same time as saying there needs to be more spending, don't you think that that's an inconsistency?
CHALMERS: No, we're pointing out the inconsistency in the Government's language Kieran. We're saying that the priority needs to be jobs. We've always recognised right from the beginning that this health crisis will have an impact on the budget. We've also recognised that that requires the Government to step in and respond. That costs money. It’s borrowed money that will need to be repaid at some point. Again the priority needs to be jobs. That's been our clear and consistent position for years now. It's for the Government to explain why they thought that levels some fraction of this was a disaster but now many multiples of that is manageable. That's for the Government to explain. Our position has been consistent.
GILBERT: When will Labor have a definitive position on what the rate of JobSeeker should be, the old Newstart or the dole? You've said for a while it needs to be more than $40 a day, but that's where your argument finishes. When will you have a definitive position on what that payment should be?
GILBERT: Much closer to the election and for this reason, Kieran: the Government itself has said that they will have another look at JobSeeker around Christmas time. We still don't have a full update to the budget. We got barely half a budget update on Thursday of last week. There's a lot of changes and a lot of information that we don't have. We will come to a view closer to the election. We also don't have access to the Treasury advice about the various interactions between payments. That's important as well. The next cab off the rank is the Government to provide some certainty to people on JobSeeker beyond Christmas. We would like to see a permanent increase to the old $40 a day rate which was clearly not enough for people to support themselves, or to look for work, and it was bad for an economy lacking spending power and lacking demand.
GILBERT: Is it feasible for this Coronavirus supplement of $250 post September - it's currently $550 additional for JobSeeker recipients a fortnight. Reducing that to $250 a fortnight, that additional supplements, is that something that could be feasible just to keep that as a permanent arrangement?
CHALMERS: First of all, we welcomed the extension of the supplement because the alternative to that was a hard September snapback which would have been absolutely devastating for the economy. To the extent that they've extended some of that welcome support, that's a good thing. There's not a lot of certainty beyond that. We don't know what the state of the budget is. The Government did half an update as I said on Thursday. We don't know what the longer term outlook is. We don't know what advice the Government is receiving. They're the next cab off the rank. Ideally, they'd provide that certainty sooner rather than later. People are very anxious in the community. Well over a million people, almost two million people, will be relying on this payment who need and deserve a bit of certainty about what it is. We'll engage with that when the Government makes it clear.
GILBERT: Let's go back to that reform discussion now because the Treasurer mentioned Reagan and Thatcher in his Press Club address. In arguing his support for supply-side economics, basically his argument is building the case for supporting business tax incentives and so on. This is something Labor's been arguing for, you know, prior to the last election. What's your fundamental issue with that?
CHALMERS: The point I was making is that in the context of industrial relations, drawing your inspiration for Margaret Thatcher is not something that already-anxious workers in Australia would welcome. That's the point I was making there. On the broader issue about business investment; business investment's been a big problem in the economy for some time now. Well before the Coronavirus broke out in Australia it was a big problem. We have had positive suggestions to make there about how we could incentivise business. The tax system has a role to play there and we'd be very open-minded to proposals about a targeted tax incentives for businesses to get them investing again. The other important missing piece of the puzzle here Kieran is energy reform. There hasn't been energy policy certainty for too long in this country. Businesses tell me that's a big reason why they're reluctant to invest. We should be able to come together as a parliament to clarify that and give businesses the certainty they need to invest because investment in most cases equals jobs.
GILBERT: Most economists would say there needs to be major reform in the October budget. What's the big ticket item for you? Is it energy? What do you see as the key lever here for Government?
CHALMERS: In terms of economic reform I think energy really is the key. We need to get cleaner and cheaper energy into the system. We need to get business costs down. We need to get business investing again, because that investment leads to jobs. That is a really important thing. Anthony Albanese wrote to the Prime Minister and said that we were prepared to do the right thing, to sit down with the Government and try to work something out there. For a decade or so now that uncertainty has poisoned business investment and if we want to get businesses investing again in Australian jobs here in Australia, then we need to clear that up.
GILBERT: Sadly what we've got though - the backdrop right now, and it undermines any move, whether it be on reform or anything really in terms of economic confidence - is this health story, undermined particularly by the performance of the Andrews Government in quarantining, the contact tracing flaws that Andrew mentioned earlier in the program. It's really been a debacle hasn't it?
CHALMERS: Obviously the outbreak in Victoria has been really concerning, and there's no point sugar-coating that. Our Victorian friends have had some very difficult weeks. We think about them as they're as they're locked down. It's not for me to play the blame game. I think on the whole that Premiers and Chief Ministers right around Australia have done their best to act on the best available advice, and to respond to this health crisis as it unfolds. Our position, whether the Premiers and Chief Ministers are Labor or Liberal, is to back them in when they've made those decisions based on the best advice. Things are difficult enough as it is in Victoria without getting involved in the political blame game that particularly the State Opposition has been engaged in.
GILBERT: So much of the nation's economic prospects - I guess not just our nation, but the world - depend on that vaccine, don't they? Just to give a level of confidence? We hope and keep our fingers crossed that that will be achieved hopefully by Christmas.
CHALMERS: It's going to be absolutely crucial Kieran. I had some good discussions actually with some of the pharmaceutical and other research organisations during the course of the last couple of weeks. It's developing an effective vaccine, but also having the capacity to manufacture it and distribute it, who's the first priority there? There are all these really important questions that the world is grappling with. We need to get that right because getting a vaccine is just part of the puzzle here, we need to be really effective with how we deploy it too.
GILBERT: Indeed. Just finally, when we look at our own economic recovery as a nation, China and the economic trade ties there are going to be important, but we are facing real tensions in the bilateral relationship. The United Nations statement by Australia's permanent mission in New York has expressed criticism of China's position on the South China Sea. This is going to, obviously, cause further tension in that relationship. Does Labor support the move by Australia's mission at the UN?
CHALMERS: Kieran, we support freedom of navigation under the relevant UN convention. We said that when our Government took the steps they've taken in recent days. Freedom of navigation is a really important foundation for a stable and prosperous region. We need to make sure that those rules are adhered to.
GILBERT: In relation to the broader ties with China, do you agree with Josh Frydenberg about the need for some sort of equilibrium in the relationship on that?
CHALMERS: Our interests are best served by the adherence to international rules, the clear communication of our values and priorities, and the calm and diplomatic settlement of our differences. This is an incredibly complex relationship. It's become arguably more so in recent times. We need to make sure that we communicate those values and priorities, that we engage with China in a calm and deliberate fashion. The consequences here aren't abstract consequences. If the relationship is mismanaged it has consequences for our farmers, our workers and our businesses. We need to do as good a job as we can.
GILBERT: Shadow Treasurer Jim Chalmers, joining me live from Brisbane. Appreciate it. Thanks.
CHALMERS: Thanks, Kieran.