WEDNESDAY, 7 AUGUST 2019
SUBJECTS: Global economy; Liberals in denial about domestic economic weakness; Reserve Bank interest rate decision; Banking misconduct and profits; Paul Keating; Liberals undermining the Superannuation Guarantee.
JIM CHALMERS, SHADOW TREASURER: We're seeing some very concerning developments in the global economy that's causing big shifts in our own stock markets and that has obvious consequences for our investors, our savers and our retirees in particular. The extent and magnitude of those consequences remain to be seen. We agree with the Government that the issues between the Americans and the Chinese need to be resolved as quickly as possible in the interests of the global economy. As the Treasurer and the Opposition Leader have both said this morning, we do need to make sure that cooler heads prevail in the interest of the global economy because nobody wins in the long-term from a prolonged economic conflict like what we are seeing at the moment, and what is threatening at the moment.
Where we differ with the Government is on this point: the Government should not pretend that all of Australia's economic challenges are global in nature or imposed on us from outside our shores. The last three days of stock market volatility does not explain the last few years of weakness in our own domestic economy in Australia and it doesn't excuse six years of inaction on the economy from this third-term Liberal Government. The Morrison Government's inaction on the economy has left Australia dangerously exposed. The Prime Minister and the Treasurer are in denial about our home-grown economic weaknesses and that's why they have absolutely no idea and absolutely no plan to turn the economy around.
The Treasurer has said that Australians are "certainly better off" than they were in 2013 but the facts tell a very different story. On the Liberals' watch we've got the slowest economic growth for 10 years; wages are stagnant; almost two million Australians are looking for work or for more work; we've got record high household debt; and living standards are actually declining as we learned from the household survey in recent weeks. The Liberal Party is in denial about these challenges. These challenges that I've run through - slow growth, stagnant wages, declining living standards, high household debt - they didn't just emerge overnight. They can't be explained away by global conditions.
I invite you to consider what the Reserve Bank said yesterday when they revised down their expectations for growth in our own Australian economy. They made three key points: they said "economic growth in Australia over the first half of this year has been lower than earlier expected, with household consumption weighed down by a protracted period of low income growth". The second point they made was that there's "been little inroad into the spare capacity in the labour market recently with the unemployment rate having risen slightly". And thirdly, that "wages growth remains subdued and there is little upward pressure at present".
The Reserve Bank and the lowest interest rates that Australia has ever had cannot and will not on their own turn around an economy which is floundering under the Liberals. The Liberal Party under Scott Morrison has a political strategy but they don't have an economic policy. The Liberals need to stop playing silly political games in Canberra, stop banging on about the Labor Party, and actually come up with a plan to turn this floundering economy around.
I'll just make one other set of points before I invite your questions. It's profit reporting season and we've got the Commonwealth Bank today. What that reminds us is as follows: the Morrison Government needs to stop dragging their feet when it comes to implementing the recommendations of the Banking Royal Commission. We need to make sure that banks are not making profits off the back of treating their customers shabbily, particularly vulnerable people and the elderly. When banks are profitable, we need to make sure that that's on the back of performing responsibly. We need to make sure that billions of dollars in bank profits aren't the consequence of treating people badly in the system particularly people who are the most vulnerable including elderly Australians. Over to you.
JOURNALIST: Is the economy bad enough that we should be giving up the surplus and putting stimulus in now?
CHALMERS: It's possible for the Government to fund responsible stimulus for our floundering economy without threatening the $7 billion surplus that they forecast for this year. We call on the Government to bring forward, in a responsible way, infrastructure investment for example which is in many cases in their current budget off in the never-never. It's possible to do that without threatening the surplus that they've projected. The problem that we have with the Government's approach is that they are in denial about these home-grown economic challenges. They seem to think that they can pretend them away and do nothing about them. It's possible for them to bring forward some infrastructure investment, indeed, to bring forward as we had proposed, part of stage two of the income tax cuts. They should be considering all of these options. Unfortunately for Australia and unfortunately for the Australian economy, the Government's denial - the Government leaving everything up to the Reserve Bank to do all the heavy lifting - risks a bigger downturn than would otherwise be the case.
JOURNALIST: Economist Andrew Charlton has said that it couldn't have come at the worse time for Australia because it's in a vulnerable position. Do you agree with that?
CHALMERS: It's beyond question that the lack of a plan from this Liberal Government has left Australia dangerously exposed to some of the turbulence that we're now seeing in the global economy. But our challenges, as the Reserve Bank has pointed out, are principally for the moment still home-grown. Our biggest challenges are slowing growth at home, stagnant wages, high household debt, unemployment and underemployment, slowing employment growth - all of these things - declining living standards. The combination of these factors and the government's denial of them - their failure to come up with a plan to address these factors - are our most pressing economic challenges and in not dealing with those economic challenges what Scott Morrison and Josh Frydenberg are doing are leaving us more vulnerable than is necessary to global economic shocks.
JOURNALIST: Do you agree with Paul Keating saying that you and the Labor Party failed to properly understand the middle-class Australians and that's why the election was lost?
CHALMERS: Well the principal point that Paul was making in that interview last night was that the same people who have been part of cutting the Superannuation Guarantee shouldn't now be whingeing that superannuation is inadequate. That was the main point that Paul was making last night, that the Liberal Party, parts of the Liberal Party, who want to rob Australian workers of that 2.5 per cent increase in the Superannuation Guarantee which they were promised and which they need, they shouldn't be doing that at the same time as they complain about superannuation being adequate. The Liberals have never believed in superannuation. This has become a test of Scott Morrison's authority. Scott Morrison and Josh Frydenberg say that the Superannuation Guarantee will go to 12 per cent on the legislated trajectory. Scott Morrison asked his party room to stop talking about super, and since then the campaigning from elements of his backbench has only intensified. What we don't want to see - and what Paul Keating doesn't want to see, what I don't want to see - is the Government's Retirement Incomes Review become a stalking horse for more cuts to super or more cuts to the pension or to do what Craig Kelly has called for which is include the family home in the pension asset test.
JOURNALIST: Do you think Labor has a better understanding, or a proper understanding of the Australian middle class?
CHALMERS: Certainly, we've got lessons to learn from the election and I have said repeatedly that we will take our time to learn those lessons. Paul Keating is arguably the architect of the modern Australian economy. He's certainly earned a right to have a view about the election and about economic policy. I respect him. I speak to him very frequently about all of these kinds of issues. What we've said is that we will take our time to review the policies that we took to the election. Clearly the policies that we took to the 2019 Election won't be in exactly the same form by the time 2022 rolls around and obviously you wouldn't expect us to finalise policies a few weeks from the last election with a few years to go until the next election. We will listen to people like Paul, we will listen to others, as we learn the lessons from the election.
JOURNALIST: With regard to the US and China, what action do you think the Australian Government needs to take to prevent a potential economic fallout in the future?
CHALMERS: First of all, nobody wins in the long-term from this kind of economic conflict that we're seeing between the Chinese and the Americans. I think it's incumbent on political leaders here in Australia, and indeed around the world, to urge the Chinese and the Americans to resolve these differences in the interests of the global economy. We are as one with the Government in one respect: we do want to see cooler heads prevail, and that's the point that Josh Frydenberg and Anthony Albanese have both made this morning, because nobody wins from this kind of conflict. The job for the Morrison Government is to come up with an economic plan to deal with slowing growth and stagnant wages and high household debt and all of these other issues, because as it stands their denial of these challenges, their inability to come up with a plan to deal with them, is leaving Australia dangerously exposed to the kinds of economic shocks we're seeing globally at the moment.