TUESDAY, 2 JULY 2019
SUBJECTS: Interest rate cut; Labor’s plan for tax cuts for all workers in this term of Parliament; floundering economy under the Liberals
JIM CHALMERS, SHADOW TREASURER: Today the Reserve Bank cut the cash rate to one per cent, which is a third of what it came down to during the darkest days of the Global Financial Crisis. Today's interest rate cut bolsters the case for Labor's tax cut proposal, which would get more money into the hands of more workers and flowing into the economy sooner. Today's rate cut bolsters the argument that Labor has been making to get more money into the hands of more workers and circulating through an economy which desperately needs it.
Two rate cuts in two months absolutely torpedo this Liberal Government's economic credibility. As I said, rates at one per cent are a third of what they were during the darkest days of the Global Financial Crisis. The problem we have here is that the Reserve Bank has been left to do all of the heavy lifting on the economy. We have a Government overseeing a floundering economy and middle Australia is struggling, and the Government pretends that there's absolutely nothing wrong. If you walk down the main street of any community in Australia, they'll tell you the same thing. They're worried that their wages aren't growing. They're worried about paying their mortgage off. They're worried about paying their power bills and other bills.
We have a Government which is leaving all of the heavy lifting on the economy to the Reserve Bank. We have a government which is just promising more of the same. Economic growth hasn't been this slow for 10 years since the Global Financial Crisis. Wages are stagnant, consumption is a problem. Right across the board, the economy is weak and we have a Government which wants to pretend there's absolutely nothing wrong, a Government which just wants to promise more of the same, whether it be on tax, whether it be on their rhetoric on unions, whether it be on their rhetoric on red tape, more of the same tax cuts on the never never, more of the same infrastructure spending on the never never.
This is a third-term Liberal Government. They've been in office now for six years. They should take responsibility for the mess that they've made of the economy. They should put their hand up and say that they are responsible for the floundering economy. They should stop leaving all the heavy lifting to the Reserve Bank. Today's rate cut torpedoes their claims to be superior economic managers. It bolsters our case to get more money flowing into the hands of more workers sooner so that we can help the Reserve Bank turn the economy around - an economy which is floundering on the Liberals' watch.
JOURNALIST: Jim, was there anything in the Governor-General's speech today that made you think the Governor has anything on the productivity agenda other than tax cuts?
CHALMERS: The Governor-General's speech touched on a number of portfolio areas, I think not necessarily in any depth. But what worries me is not what was in the Governor-General's speech. What worries me is that the Government has no idea and no plan to turn around this floundering economy. What worries me is that they're leaving all of the heavy lifting to the Reserve Bank. What worries me is that when they look at an economy which is growing at its slowest rate for 10 years, which has deteriorated since the election, where we've had two interest rate cuts in two months down to one per cent, which is an extraordinary new low for interest rates in this country. The Government looks at that and they want to pretend that there's nothing wrong with the economy. They want to pretend it can be business as usual. And what we're saying is that there has to be a better way. There has to be a responsible, constructive way to start to turn this economy around and to get it growing in a sustainable way again. That should begin within them picking up and running with our proposals, which would get more money into the hands of more workers sooner and help the Reserve Bank turn around the struggling economy.
JOURNALIST: The rate cut shows we really need fiscal stimulus. Doesn't this show that you need to put your differences aside and vote for this tax cut later this week?
CHALMERS: Labor's proposal is to stimulate the economy by getting more money into more workers' hands sooner. If you read the Reserve Bank's statement, where it talks about issues around consumption and issues around a protracted period of low wage growth, then the only conclusion that a reasonable, responsible, rational person would make is that the economy needs a boost. And our proposal is the only proposal on the table which gives every Australian worker a tax cut from this week. The Government's proposal is to give some workers a tax cut this week. They've already broken the promise to have it in by yesterday. But for a lot of workers they'd have to wait until 2022 or 2024. What we're saying is the economy has weakened substantially under the Liberals, it does need a boost, it does need stimulus. But the best way to do that is to bring forward part of Stage 2 and to pass Stage 1 to get that economy flowing. The Government's argument is that we need a $95 billion tax cut in 2024 and that will somehow miraculously help grow the economy in 2019 and that's a farce.
JOURNALIST: Has the Government started any negotiations with Labor, and has Labor's position changed at all from yesterday?
CHALMERS: Labor's position is the same as it was yesterday, and the Government has not reached out.
JOURNALIST: Will you still vote against the package in the Senate if the crossbench gives it the green light?
CHALMERS: Well what I said yesterday and what Eryk's referring to in his question is, all of our effort is going into our amendments. Clearly, we're up against it in the House of Representatives. So we will do what we can to get it through the House tonight and into the Senate on Thursday morning. We'll put all of our effort into our amendments. If our amendments are unsuccessful, then we'll consider our options.
JOURNALIST: Have you spoken to Jacqui Lambie since she arrived in Canberra?
CHALMERS: I haven't spoken to Jacqui Lambie. My colleagues in the Senate have been responsible for a lot of those negotiations with friends on the crossbench.
JOURNALIST: And how would you categorise those discussions?
CHALMERS: That's not for me to characterise.
JOURNALIST: Jim, could you just outline again what the cost would be to bring forward Stage 2?
CHALMERS: Yep. So what we're proposing in Stage 2 is to bring forward the threshold change from $90,000 to $120,000, which the Government has already legislated to come into being in 2022. And what we're saying, is it could come into being this week. And that would make sure that every taxpayer gets a tax cut. And that would take care of people over $90,000. We anticipate that the cost would be near $3.7 billion. That's what the cost is in 2022. It would obviously be a little bit less expensive than that if you brought it forward a couple of years - less taxpayers and all the other reasons that you are familiar with. And so we anticipate it would be about $3-and-half billion.
JOURNALIST: And just to finish off on that again, so that again just amplifies the fact that you don't want to touch surpluses and mix up deficits and things like this?
CHALMERS: Absolutely. The Government can pick up our responsible proposal to bring forward part of Stage 2 without jeopardising the surplus that they forecast for next year. We're not proposing that the Government go into deficit. The Government has no excuse actually not to deliver surplus budgets that they promised and they've forecast. Because, as you all know, some of the factors which feed into the Budget, whether it be the iron ore price or company profits or other factors, have not taken a substantial beating. In the case of the iron ore price, it's much higher than what they forecast in the Budget.
JOURNALIST: On Government infrastructure, given you talked yesterday about bringing forward some infrastructure projects as quickly as possible. Are there any shovel-ready projects which you believe are ready should be commenced immediately?
CHALMERS: We're prepared to sit down with the Government and work out which of the projects they have funded, in some cases, six and eight years down the track, which may be ready to go, and Anthony Albanese and Catherine King, our infrastructure spokesperson, are responsible for that aspect of it. But what we've said all along, is let's sit down and work out what can happen now.
JOURNALIST: But there's not just one top of mind? For instance, Brisbane's Cross River Rail?
CHALMERS: Cross River Rail has a long lead time. There's some other projects, Linkfield Road in northern Brisbane is one of the ones that Anthony has been talking about should be ready to go. There are other options. There are hundreds obviously of infrastructure projects that we would look to get through. But I think the point that we're making more broadly about infrastructure, and the point that the Reserve Bank has been making, is that it doesn't make a lot of sense, whether it's tax cuts or now infrastructure, to have a lot of the spending back-ended when the needs of the economy are current.
JOURNALIST: If the Government doesn't get the crossbench for their tax cuts, say Jacqui Lambie says no, does that mean you hold the line on your current position?
CHALMERS: Well, we'll consider all the options once we know...
JOURNALIST: So you could actually pass them even if the crossbench doesn't? Is that what you're saying, is that an option?
CHALMERS: No, what we're saying is we're putting all our effort into our amendments.
JOURNALIST: I know, but the Government aren't going to accept it.
CHALMERS: Yeah, but I'm not going to get into the various scenarios that might happen after those amendments are moved.
JOURNALIST: Do you believe that the banks first of all should pass on the full rate cut, and secondly, the Treasurer's told the Coalition party room they need to talk up the confidence in the economy because that inspires more confidence. Is that a reasonable view to be having of the economy at this point?
CHALMERS: There is nothing about the Government's behaviour or their policies which inspires any confidence in the economy. Let's get that straight. We have a Government which wants everybody to think that there is nothing to see here when it comes to the weaknesses in our economy. I've heard Josh Frydenberg say that the economy's strong. The Reserve Bank obviously has taken a different view to cut interest rates to those remarkable new lows - a cash rate of one per cent. A Treasurer that looks at a cash rate of one per cent and tries to pretend everything is hunky dory is a rubbish Treasurer.
JOURNALIST: Should the banks pass on the rate cut in full?
CHALMERS: The banks should absolutely pass on the full value of the Reserve Bank's interest rate cut. If we need this to do the good that we want it to do in the economy, then we need the banks to pass it on. They are very willing to pass on interest rate cuts when it comes to savers. They need to pass on these cuts in full. They need to stop thumbing their nose, not just at the Treasurer, but the broader Australian community. The Reserve Bank’s done its bit here. We need the banks to do their bit. We need the Government to do their bit as well.
JOURNALIST: Just wondering, what responsibility - I don't want to kick you guys when you're down - but what responsibility does Labor intentionally take for the current economic position?
CHALMERS: (Laughs) Are you serious?
JOURNALIST: I just want to put this question to you, you might disagree with it. But what responsibility do you think there is that people who feared Labor's economic agenda and perhaps didn't spend, perhaps held on to the money or perhaps didn't look at buying houses...
JOURNALIST: Is there any role there?
CHALMERS: No. I will take your question seriously. This is a third-term Government. They've been here for six years now. They've spent much of that time trying to pretend that everything was Labor's fault and you shouldn't fall for that. We have a Treasurer who spends all of his time poring over my transcripts - the Treasurer that wrote an opinion piece that was 42 paragraphs long and 31 of those paragraphs were about Labor. We have a big problem here, in the sense that our Treasurer and our Prime Minister, in a third term of office, want to try to pretend that the economic weaknesses that emerged on their watch, in some cases even since the election, are somehow Labor's fault. And I think, as I talk to people in communities right around Australia, up and down the Queensland coast, that the thing that they say about this Government is that it's finally time for the Government to stop blame shifting and finger pointing and pretending that everything is somebody else's fault. It's time for the Government to take responsibility for the fact that we have a floundering economy, for the fact that middle Australia is struggling. We have put a constructive proposal on the table in good faith to try and help them turn things around. And if they vote against a tax cut for every Australians worker this term, as they look like doing an hour or two's time, then they need to explain why. Thanks very much.