WEDNESDAY, 3 JULY 2019
SUBJECTS: Floundering economy under the Liberals; Labor’s plan for tax cuts for all workers in this term of Parliament; interest rate cut
SABRA LANE: The Shadow Treasurer Jim Chalmers joined AM a little earlier. Jim Chalmers, thanks for joining AM.
JIM CHALMERS, SHADOW TREASURER: Good morning Sabra.
LANE: The economy is disturbingly weak. Tax cuts get money back into the economy. Shouldn't you be embracing this as a stimulus move?
CHALMERS: Well, we're the ones leading the debate, leading the argument, to get more stimulus into the economy, to get more money...
LANE: Really? Aren't you holding things up at the moment?
CHALMERS: Absolutely not. With our amendments in the House last night, we're all about getting more money into more workers' hands sooner so that we can stimulate an economy that you have rightly described as disturbingly weak. We had the Reserve Bank Governor yesterday and the Reserve Bank board cut interest rates to one per cent - record lows - a third of what they were during the Global Financial Crisis. The Reserve Bank is crying out for help on the economy. Those cries for help are falling on the deaf ears of the Government.
LANE: But if you don't pass this package now, aren't you being labelled as damaging to the economy?
CHALMERS: Well, we're seeking to improve the package really in three ways. The first way is to get a bigger boost to the economy which desperately needs it right now. And that's why we are proposing to bring forward part of Stage Two of the tax cuts.
LANE: Which is something you objected to before the election?
CHALMERS: We've shifted our position in recognition that the economy has deteriorated, even since the election, and that we weren't successful at the election. We've shifted our position. We've said we're prepared to cop Stage Two. We've got a better way to deliver it sooner. The Government, remarkably, voted against their own tax cuts being delivered sooner. The so-called "party of lower taxes" voted against a tax cut this year because they've put a higher premium on tax cuts in five years than tax cuts this week. But the point that I wanted to make, Sabra, is our position is guided by boosting the economy, by giving every Australian worker a tax cut in this term of the Parliament. But thirdly, not saddling the Budget with stage three of the tax cuts, which is a $95 billion cost to the economy, which doesn't come in for another five years. This is a Government which hasn't got the economy right at any turn now pretending that they know what the Budget and the economy will look like in five years' time. We don't think that's responsible.
LANE: If the legislation gets through anyway because of the crossbench, will have been worth all the grief for Labor? Because blue collar workers in Western Sydney and Melbourne all think that you're standing in the way of their tax cuts.
CHALMERS: Well, the blue collar workers of Western Sydney and in my community and right around Australia who are listening to the program today should be assured that our priority is to get more money into their hands and circulating through the economy, which desperately needs it. It's the Government which is holding those tax cuts hostage to a tax cut in five years' time. And anyone who's out there listening and wants a tax cut they should know we want you to get a tax cut too. We want more Australians to get a tax cut this week. We don't think it's responsible to tie that to a tax cut which wouldn't come in until 2024-25. We are the party of giving tax relief to more workers to boost an economy which is floundering under the Liberals.
LANE: If it passes, what's your message to Australians? Spend and save Australia?
CHALMERS: It's important that we get the money circulating through the economy. The main reason...
LANE: Do you want them to spend it?
CHALMERS: Absolutely, yeah. I want people who get a tax cut - whether it's Stage One ideally, part of Stage Two if our amendments are successful in the Senate - it is important that we get it flowing through the shops and small businesses and other businesses of this country. Right now we've got remarkably weak consumption, which is a function of having stagnant wage growth for so long now. That's the point the Reserve Bank made again yesterday when they said that they can't do all the heavy lifting on their own. We do need to boost consumption. We need to boost wages. We need to get tax cuts into people's hands to help the economy, which has slowed markedly under the life of this Liberal Government.
LANE: The RBA Governor Philip Lowe said last night the RBA is prepared to cut one more time if needed, but says as you pointed out that stimulus can't come from monetary policy alone and that the Government should borrow money cheaply to fund infrastructure. Do you expect that that will happen?
CHALMERS: Well, it should. They should bring forward some of their infrastructure spending. That's the point...
LANE: Do you expect it to happen?
CHALMERS: It remains to be seen. The Government has been remarkably pigheaded in picking up some of the suggestions that we've made.
LANE: Why do you think that it?
CHALMERS: Because they're always looking for a fight. They're not looking for...
LANE: Are they looking for a fight or are they looking to protect the surplus.
CHALMERS: Well, it's possible for the Government to bring forward part of Stage Two of their tax cuts and to bring forward some of their infrastructure spending without jeopardising the surplus that they've forecast for the current year.
LANE: Do you think that's what it's about? The surplus? And do you think that by keeping the surplus that perhaps they're sacrificing jobs?
CHALMERS: I honestly think that the Government thinks there's nothing wrong with this economy. I've heard Josh Frydenberg say - it's remarkable really - but I've heard him say repeatedly that he thinks the economy is strong. That's news to the Reserve Bank, which had to cut interest rates to record lows. It's news to people in the community who are worried about their wages, worried about their mortgages, worried how they'll pay their power bills. And I think the Government's too busy patting themselves on the back for their election win to notice that the economy has deteriorated on their watch. It's the worst possible time for a Government which doesn't have any plan or any idea how to turn things around. The Reserve Bank has been crying out for help and we've been prepared to play a constructive role. But so far the Government thinks everything's fine, everything's hunky dory, nothing needs to change. That's news to every other rational, reasonable, responsible person who's looking at what's happening in the economy right now.
LANE: Jim Chalmers, thanks for joining AM.
CHALMERS: Thank you Sabra.