ABC Insiders 10/3/19

March 10, 2019

SUBJECTS: Per-capita recession; Liberals’ economic mismanagement; Labor to grow economy in inclusive way; Speculation about Liberals’ desperate tax cuts on eve of election; Liberals’ “deliberate” low wages growth; living wage; bargaining
BARRIE CASSIDY: Jim Chalmers, good morning. Welcome. 
CASSIDY: This per capita recession, how long has that been a thing?
CHALMERS: It's a highly credible number produced by the Bureau of Stats and published in the National Accounts. Economists have discussed it widely for some time. But I think what's more concerning than the Prime Minister's denial of basic facts, which torpedo his record, is that he seems to be entirely out of touch with what's happening to middle Australia in the economy. And whether it's the per capita recession, whether it's slowing growth, whether it's stagnant wages, whether it's low consumption or low confidence, or record debt - all of these things point to an economy which isn't working for ordinary Australians, who feel like everything is going up except for their wages. And these are real concerns which aren't being dealt with because we have a divided Government. And while the Government is this divided, they're not focused on the real issues and that means that the economy is floundering and people are struggling. These will be the issues at play at the election.
CASSIDY: You might be in Government in May, and the economy is slowing. You'll be adding new taxes, changes around negative gearing, franking credits. You'll be restoring Sunday penalty rates. Are people not entitled to worry that you might edge closer to a recession?
CHALMERS: Not at all, Barrie. What we're proposing is to make the economy fairer, to grow it in a more inclusive way, in a way that doesn't rely on giving the biggest tax breaks to the top end of town and hoping that it trickles down to everybody else. We've got a broader, more substantial plan for economic growth, which recognises that for growth to be strong and sustainable in this country, it has to be people-powered and bottom-up. It means investing in skills and education and infrastructure and making sure that when there are tax breaks, that they are given to the people who are more likely to spend and invest in the economy. Because the big challenge we have in the economy is that wages are stagnant, people don't have the take-home pay that they need to spend and invest and look after their loved ones. The Reserve Bank has recognised that. Others have recognised that. It's really just the Government which is too out of touch with what's happening in the economy to recognise and deal with those issues.
CASSIDY: But you talk about making it fairer. In the process, you might make it weaker unless you believe in this theory that you have that it's a bottom-up stimulus?
CHALMERS: What's important is who you prioritise when it comes to tax breaks. The Government's had 5.5 years where they prioritised the top end of town. They tried to give a $17 billion tax cut just to the top four banks; $85 billion to big business and foreign multinationals. We've got a different approach - which is to say that people of modest means should be the first port of call when it comes to tax relief. That's why we've got bigger, fairer tax cuts, for people earning up to $125,000 a year. That gives us a better chance of growing the economy because those people are more likely to spend and invest in the economy and that's good for everyone.
CASSIDY: You talk about those tax cuts, but according to reports in the Oz yesterday, the Government plans to go further with personal income taxes. I presume they mean by that, that they've got a 10-year tax plan and they'll bring some of that forward so that the immediate tax benefits are bigger?
CHALMERS: Well, that remains to be seen, Barrie. It's hard to respond to every story that the Government puts on the front page of The Australian. But what we are certain of is that the Australian people will judge this Government on 5.5 years of cuts and chaos and favouring the top end of town, and not on what they might say five weeks out from an election. The Australian people aren't stupid. They know that this Government has form. They know that they will always prioritise the top end of town at the expense of middle Australia, and that won't all of a sudden change on the eve of an election.
CASSIDY: It sounds like they were in the middle of a tax cut auction? 
CHALMERS: Well, we've already got our tax cuts out there. As I said, we've proposed substantial tax relief for people on low and middle incomes. We're proud of that tax policy. We've had that out there since the Budget last year, and that's because we recognise that there is a problem in the economy with take-home pay. That means dealing with tax relief for people on low and middle incomes, and it also means dealing with the wages crisis that we have in the country.
CASSIDY: On the wages, and your pitch seems to be around the living wage, as opposed to the minimum wage. Can you explain to me how, apart from restoring Sunday penalty rates, how does a Government increase wages?
CHALMERS: Well, wages are the defining feature of an economy that's not delivering for ordinary people. And it's important for context to remember that wages growth, every single quarter under this Government, has been lower than any other quarter since the Wage Price Index started being published more than 20 years ago. So that's the context for what we're talking about. And there are things that governments can do and there are things that a Shorten Labor Government will do. In addition to restoring penalty rates, as you rightly identify, we also need to crack down on sham contracting. We need to crack down on dodgy visas. We need to make sure that labour hire isn't used as a means to screw down wages and conditions for the rest of the workforce. We need to deal with the gender pay gap and also in superannuation and in leadership. And on top of that - that's the wages story, but on top of that - we need to prioritise tax relief for people who work in this country. All of those things together, do give us a good chance of shifting the needle on wages. The current Government - we know what they think about wages because Mathias Cormann said on Friday when asked about stagnant wages growth, he said that was a "deliberate design feature" of their economic strategy. Today we had another minister on another program completely back that in and confirm that stagnant wages growth, under the Liberals, is not some accident - it's a deliberate policy objective. 
CASSIDY: But how do you, across-the-board, how do you get a wage increase across-the-board, rather than dealing with the spot fires that you've been talking about?
CHALMERS: I think collectively, all of the things that I've just mentioned do give us an opportunity to deal with what has been an horrific record of stagnant wages growth over the last five-and-a-half years under the Liberals. Obviously, on top of that, the Fair Work Commission has a role to play, and you mentioned before the minimum wage; that's an important part of it as well. And Bill rightly identified during the week that it's hard to see the minimum wage currently as a living wage. So the Fair Work Commission has a role to play, too. 
CASSIDY: Again, how do you get to a living wage from a minimum wage?
CHALMERS: Bill was just pointing out that the gap between the minimum wage and the average wage is widening. That it's harder for people to get by on the minimum wage.
CASSIDY: Yes, but how do you get there? How do you get to a living wage?
CHALMERS: Well, it's partly a function of the Fair Work Commission who would share the priorities of an incoming Labor Government to deal with what is a wages crisis in this economy. And Barrie it's important to remember, this is not just something that's talked about by the Labor Party or people on the progressive side of politics. This is a problem that's been identified by the Reserve Bank of Australia and other serious economists who say that the reason that we've got slowing growth in this country under the Liberals is because we do have a wages crisis. The defining feature of our soft economy is the fact that people aren't being sufficiently rewarded for their effort. We've said that that is our highest priority - wages and jobs. That's what the election will be about. And we will contrast our plans, which I've just run through in some detail, with the plans of a Government which says that a deliberate design feature of their economic strategy is to keep wages low, and that's on top of keeping workers insecure and looking after the top end of town. That's what the election will be about.
CASSIDY: Yeah, but in reality, how does it work? Do you just simply try to persuade the Fair Work Commission of something? Or that they ought to give more weight to the wages for low income workers? Or do you need to change the rules and regulate it?
CHALMERS: The first part of it is part of the story. Obviously, we need to lead on it and we need to make submissions, as we do at the moment. We need to encourage the Fair Work Commission to do the right thing. That's obviously part of it. But also, we've got those other levers that I mentioned before. Very important levers around labour hire, sham contracting, dodgy visas and penalty rates. Right across the board, this is a top priority for Bill Shorten and Labor, and I think that working together, the Fair Work Commission, the Government and others, we can start to turn around what has become the defining anxiety in the community and the defining problem in today's soft economy under the Liberal Party.
CASSIDY: And there's another element of it - introducing pattern bargaining so you're giving more clout to the unions in the negotiations?
CHALMERS: No, we're not contemplating pattern bargaining. We've said that we would consider making the enterprise bargaining system fairer. We've said that there already exists some industry-wide bargaining. That hasn't necessarily been perfectly implemented for people on low wages, but we've said that we're prepared to look at other ways we might be able to apply that. It's obvious to any objective observer of the workforce right now, Barrie, that ordinary working people aren't getting a fair go. And we, as the Labor Party, it's in our DNA, will always do what we can to level the playing field when it comes to negotiating fair wage increases. 
CASSIDY: Thank you for your time this morning. Appreciate it.
CHALMERS: Thanks Barrie.