ABC AFTERNOON BRIEFING
TUESDAY, 1 OCTOBER 2019
SUBJECTS: Interest Rate Decision; Scott Morrison and the US Mueller investigation.
TOM IGGULDEN, ABC AFTERNOON BRIEFING: Joining us, Jim Chalmers. First question to you, rates are coming down all over the world are they not? And if that's the case, why should they not be coming down here in Australia too?
JIM CHALMERS, SHADOW TREASURER: Rates are coming down in Australia, Tom, because the Government doesn't have a plan to turn around an economy which is floundering on its watch. I did want to take issue with a couple of things you just said in your introduction. The Governor actually said in his statement today that global growth remains reasonable. He made it very clear that the primary drivers of the decision today to cut interest rates to the lowest they've ever been, below one per cent for the first time ever, is domestic factors. He says that growth is slower than they expected. He says that wages growth is slow, jobs growth is slowing. There's no sign of wages picking up. So overwhelmingly, the factors driving this decision today are domestic factors.
IGGULDEN: He did say that, but I happen to have, Jim Chalmers, the statement right here in front of me. He said and I quote, interest rates are very low around the world, and further monetary easing is widely expected as central banks respond to persistent downside risks to the global economy and subdued inflation. So that does seem to suggest doesn't it, that part of the fact here were international factors?
CHALMERS: At the risk of duelling transcripts Tom, he says the outlook for the global economy remains reasonable. He says employment growth is likely to slow. He says wages growth remains subdued and there is little upward pressure at present. So the point that I'm making is that we have domestic challenges in the economy which have been around for some time. They've been left unattended by a Government now in its seventh year and its third term. The point that we make is if the Government had a plan to get the economy going again the Reserve Bank wouldn't need to do all the heavy lifting by cutting interest rates to record lows.
IGGULDEN: I want to stay though with the international picture, I mean you look at Japan. Interest rates there officially is still negative. Germany is on zero. We're still well above those levels, even at 0.75 per cent. Doesn't that show that actually Australia's economy is in pretty decent shape - certainly not tip-top shape but pretty decent considering the international headwinds?
CHALMERS: Couple of things about that, Tom. First of all the Australian economy is growing at its slowest rate for the decade since the Global Financial Crisis. Wages are stagnant. Household debt is at record highs. Living standards and productivity are going backwards. The list goes on and on and on. So we've got our share of challenges here in the domestic economy. We shouldn't pretend those challenges away. There are issues in the global economy and we've never said that there aren't, but primarily our challenges are home-grown and the point that we make about the Government not having a plan to turn things around is that that leaves us dangerously and unnecessarily exposed to some of those issues that are playing out around the world. But again, the Reserve Bank Governor makes it really clear in his statement today - couldn't be clearer - that the primary challenges are challenges here at home. Those are issues for the Government to deal with and it's not good enough for the Government under Morrison and Frydenberg to just sit on their hands and leave all the work to the Reserve Bank while the Government itself barely lifts a finger to support jobs and to support economic growth.
IGGULDEN: Well I want to come to that very point in just a minute but at the risk of continuing this duel we're having with the monetary, with the statement from the RBA Governor - and the Treasurer Josh Frydenberg made this point too - he was very careful to say in his statement and again I'm quoting here, that a gentle turning point had been arrived at the Australian economy, that the growth in the economy in the first half of this year while still not super strong was certainly better than it was at the second half of last year. Does that not show that the domestic situation is improving?
CHALMERS: That's a fairly weak prediction that they're making there. I don't want to get into the Reserve Bank necessarily, but they're saying that that may be the case. Remembering of course that, you know, nine months ago the Bank and others were expecting the economy to pick up. I don't quibble with that, but I'll just make the point that the facts of the economy are as I ran through: the slowest growth in 10 years, and all those other stats that I won't go through again. I don't think any objective observer of the economy thinks that things are going well. The only people who seem to be in denial about our challenges in the domestic economy seem to be Josh Frydenberg and Scott Morrison. I think that they are a bit out of touch with what's going on in the retail sector, and consumption, in wages, and all of these areas. The Reserve Bank has rightly identified them as key challenges. The Government seems to be in some kind of dangerous denial or dangerously complacent about those challenges and I think what the Australian people need and deserve from their Government is a plan to turn around what is a floundering economy on the Liberals' watch.
IGGULDEN: Well you mentioned a little bit earlier that part of the solution here if what you're saying is true, would be for the Government to do a little bit more of the heavy lifting when it comes to stimulating the economy. The classic here, would it not be the case, is lifting Newstart? What's your what's your opinion on that? Is that something that Labor should now put forward as a specific policy?
CHALMERS: We've embraced that, Tom, in recent months. We think that Newstart should be lifted in a responsible and affordable way. We think that that would tick a number of boxes. It would be good for people who are looking for work. It would help them support themselves so that they can find work. But it would also be really good for the economy because every dollar of a Newstart increase would find its way into the shops and into the businesses of our economy and that would be good for consumption and that would be good for economic growth. We think the Government should look seriously at that and also add some combination of bringing forward some of their tax cuts, bringing forward some responsible investment in shovel ready infrastructure. We think that they should be looking at tax breaks for businesses to invest, remembering that business investment is the weakest it's been since the early '90s recession. There are a whole range of things that the Government should be looking at. I think it is concerning that the Government doesn't seem to be coming to the party on those things. They don't need to do all of those things but they could do some of them, some combination of them, and they could do that in a way which doesn't threaten the surplus that they've promised for this year.
IGGULDEN: Well coming to that surplus, I mean the Government has had to work pretty hard to pay off, or to reduce to a surplus the deficit that that Labor did leave it when it left office at the last time it was in office. I mean, having done that hard work it would be a very tough call for the Government to undo some of it by reaching back into the kitty and splurging money, would it not?
CHALMERS: We're not calling for them to do anything irresponsible, Tom. We're making a few points. First of all, I mean when it comes to their management of the budget let's not give them a big tick when you consider that net debt has more than doubled on their watch. In recent times the improvement in the budget has come from largely two things. Firstly, a massive multi-billion dollar underspend in the National Disability Insurance Scheme and secondly, a spike in the iron ore price because some Brazilian mines went offline. So those aren't good things that the Government's responsible for. They're either bad things or they're things that the Government has nothing to do with. But those factors have improved the budget in recent times. The budget should be getting stronger -
IGGULDEN: Well sure but you've got against that as well - you've got against that a trade war between China and the US, again outside of the Government's control but certainly impacting on all the numbers we're talking about today, surely?
CHALMERS: Again as I've explained multiple times now, and made the case for, our challenges are still primarily home-grown. We don't pretend they're aren't issues in the global economy, but they don't explain all of the weaknesses which have been hanging around for some time before those trade tensions flared again. Not doing anything about our economy at home leaves us exposed to some of those issues overseas. I make that point again. The point that we're making is the budget is strengthening for some of those factors I just ran through. It's possible for Scott Morrison and Josh Frydenberg to do some responsible and affordable stimulus for the economy. It's clear that the tax cuts and the interest rate cuts so far haven't been enough to shift the needle on economic growth because we've still got growth the slowest it's been for a decade, so more needs to be done. All we're calling for and I think all the Australian people really expect, is for the Government to stop pointing the finger or shifting the blame for things, and to come up with an actual plan because whatever they've been doing so far, for the last six plus years and into their third term hasn't been working.
IGGULDEN: All right. I want to talk to you before we go, we have got limited time, just about the other big issue today. That being, the request from Donald Trump to the Government here to help him investigate the investigation into him, if I can put it that way, in the US. I mean, the Government's in an impossible position here isn't it? It kind of has to go along with the US President on this request, doesn't it? He's a close ally.
CHALMERS: I don't know about that, Tom. I think it was a big story that broke. I saw it early this morning. I assume it broke overnight. It is an important story and I think the eyes of the world really are on our country as we try and get to the bottom of what's happened here. I think the most reasonable thing for us to expect, and the thing that we should see happen, is the Prime Minister needs to stand up and give an explanation of what's happened here. I think people need an assurance that whatever's gone on here is above board and if it's not then people would be very worried about it. The best thing that can happen is for Scott Morrison to explain in some detail all of the ins-and-outs of this so that people can get an appreciation of what's happened and whether it's above board or not.
IGGULDEN: All right, Jim Chalmers, for that we thank you very much for your time this afternoon.
CHALMERS: Thank you Tom.