774 ABC Melbourne Mornings 4/6/19

June 04, 2019

SUBJECTS: RBA meeting; interest rates; income tax; aspiration; Regional and suburban Australia
PATRICIA KARVELAS: Labor's Shadow Treasurer now, in a new role, is Jim Chalmers, and he joins us this morning. Jim Chalmers, welcome.
KARVELAS: Josh Frydenberg has been meeting with bank bosses urging they pass on this cut in full. Do you support the advocacy that he's taken on this?
CHALMERS: Of course we want to see the interest rate cut, if it eventuates at 2.30pm today, we do want to see that passed on. It won't do the good that it's supposed to do in the economy unless it's passed on in full. I think Australians will be absolutely filthy if the banks didn't pass on the full value of any cut that we might see today. They've got no excuse for not doing that. But when it comes to Josh Frydenberg, I'm sure the banks are really shaking in their boots. They know that this is a Government that generally goes pretty soft on the banks. The Liberal Party's got form in that regard. But I think the Australian people are more important here and they want to see the banks pass them on.
KARVELAS: OK, you say go soft on the banks. He's asked them to do it. He's had meetings with them. What else could he possibly do? If you were the Treasurer today, what would you do?
CHALMERS: I think the advocacy matters, but I'm just making the point that for two years, this is a guy who resisted a Royal Commission into the banks. In your introduction earlier on, you rightly pointed out the banks are not exactly in good nick when it comes to people's views in the community. I think this is an important opportunity for them to pass on the full benefit of any rate cut. Not just because it's the right thing to do, as important as that is, but because in the absence of any Government leadership on the economy, we need to do what we can to get the place moving again, and that's what the bank will be considering in advance of their 2.30pm announcement today.
KARVELAS: Let's talk about Westpac for example. The ABC has put this to the CEO, and he's spoken of funding costs and margin pressures. Is that an acceptable excuse?
CHALMERS: I don't think there's any excuse for not passing on the full benefit, Patricia. I think the whole country has an interest in seeing the economy moving again. We've got slowing growth, we've got rising unemployment, weak consumption, low household savings, stagnant wages, insecure work, underemployment. All of these things at once compounding each other in this economy, which is fundamentally quite weak at the moment under the Liberal Party. So what we need to see from the banks, if there is a rate cut at 2.30pm today, we need to see that passed on in the interests of middle Australia, but also in the interests of the broader national economy.
KARVELAS: Are you happy that if it is passed on in full it will stimulate the housing market?
CHALMERS: If there is a rate cut, and if it passed on in full, I hope it does its job in getting the economy moving again. The economy is remarkably stagnant. There are serious issues, particularly in the people-facing part of the economy, in some of those issues I just ran through a moment ago, and we'll get a better sense of them tomorrow with the National Accounts as well. But I think it's important that the economy does get a shot of life. We've had six years of the Liberal Party now talking the talk on the economy, but not walking the walk. They own this weak economy and others, whether it's the Reserve Bank or others in the community, we do want to see some growth return to the economy after a remarkably weak period.
KARVELAS: On ABC Radio Melbourne, Patricia Karvelas with you. The Shadow Treasurer Jim Chalmers is my guest. 1300 222 774 is the number you can call. Should the banks pass on the rate cut in full? Of course, it has to happen first, but we expect it to happen this afternoon. So I asked you before, and I'm going to press you again on this, what you would do differently if you were the Treasurer today, because ultimately the Treasurer doesn't really have power over the banks too really ultimately change their view. You couldn't do anything differently, could you?
CHALMERS: I just don't think the banks take Frydenberg particularly seriously. They know that he will generally, and the Liberal Party generally, will go soft on the banks. They did that for two years when they were running that protection racket on the Royal Commission.
KARVELAS: They called the Royal Commission though. You talk about going soft, but they called the Royal Commission.
CHALMERS: After two years of fiercely resisting it, and then only when they got a permission slip from the banks themselves, who wrote to the Government to request it. I think that history is uncontested, that they didn't want a Royal Commission into the banks. Whether it was Morrison or Frydenberg or others. They called it a populist whinge, they called it all kinds of things. The point I'm making is, of course we want to see any rate cut passed on in full by the banks. I'm just not sure that the banks will do that because Josh Frydenberg's asked them to.
KARVELAS: You're meeting today, this is the Shadow Cabinet, to discuss no doubt a range of issues, but also to discuss the full tax cut that the Coalition will be putting to the Parliament. They won't split the bill. Given this was their central campaign pledge, their central policy pledge. They didn't hide about it, they were very upfront about it. Do you accept that they have a mandate and will you support it?
CHALMERS: We are meeting in Brisbane today, the first meeting of the new Albanese Shadow Ministry, and this will be one of the things that we will discuss when we convene here later today. What we've said all along is that we want to see tax relief for people on low and middle incomes. We have enthusiastically supported the first tranche of tax cuts, which were supposed to come into play on the 1st of July, but which the Government has made impossible. They never intended to keep that promise, as Sam Maiden has written today in her story. So we've said all along that we'll support that part of it. We will discuss stages two and three. We'll come to a view on that before they hit the Parliament in a month's time. We do think it's important that the Government come clean between now and then on how many billions of dollars will go to Australians in the highest income tax bracket. We've been asking that for more than a month now. The Government said they would provide that information and they haven't.
KARVELAS: Sure, but isn't that the message you got from the electorate in relation to aspiration? You're still talking about punishing people at the higher rates of tax, people who earn more. Isn't that the central message you got from the electorate?
CHALMERS: I don't accept that for one second that that's the message that we are sending about aspiration. The point that we're making about aspiration is that aspiration is making sure that people, when they work hard, can provide for their loved ones. We won't cop a lecture from the Liberal Party on aspiration. We didn't learn about it from a focus group. Aspiration is all about making sure that the hardest workers in our community get the tax relief and get the wages they need to provide for their loved ones. And that is entirely independent of a discussion about whether $77 billion or $88 billion or whatever it is - the Government won't tell us - would flow under these tax cuts to people in the highest income bracket.
KARVELAS: Would Labor really stand in the way of the full tax cuts? Will you insist on splitting the bill because Mathias Cormann made it clear to Barrie Cassidy on Sunday on Insiders, there will be no splitting of the bill?
CHALMERS: Their refusal to split the bill shows they're more interested in a fight with Labor than they are on providing genuine cost of living relief for people and low and middle incomes. It's very disappointing...
KARVELAS: You could argue the same about Labor.
CHALMERS: No you couldn't. Because we are prepared to support tax relief for people on low and middle incomes, which is supposed to come into play on the 1st of July. We have said repeatedly that we would support that. The Government's failure to split the bill shows that they would rather have a fight with us than give people the tax relief they need and deserve [transmission interruption] the economy.
KARVELAS: Just quickly, Joel Fitzgibbon was on Q&A last night and acknowledged that Labor treated non-urban or non-inner city voters like Hillary Clinton's "deplorables". Do you agree?
CHALMERS: I didn't see Joel on Q&A last night.
KARVELAS: Convenient.
CHALMERS: (Laughs) Well, I had a couple of things on last night. I didn't see Joel on Q&A. I think the way that I would put it is we do need a big focus on people in the outer suburbs like the ones that I represent, but also regional towns like those in regional Queensland. I think one of the things that we learned from the election is that we need to better represent those communities.
KARVELAS: Jim Chalmers, thanks so much for your time.
CHALMERS: Thank you, Patricia.