SATURDAY, 15 JUNE 2019
SUBJECTS: Liberals’ economic mismanagement; income tax cuts; Australian Signals Directorate; interest rates
JIM CHALMERS, SHADOW TREASURER: The economy is floundering, middle Australia is struggling, and Scott Morrison has absolutely no idea how to turn things around. We've got the slowest economic growth in this economy since the Global Financial Crisis 10 years ago. Wages are stagnant. We've got high underemployment. We've got productivity going backwards four quarters in a row. We've got a per capita recession. Public debt has more than doubled. The list goes on and on and on. It's well past time for the Morrison Government to take some responsibility for the mess that they have made of the economy.
We call on the Morrison Government to stop playing pig-headed political games with the tax cuts, which are supposed to flow to workers and into the economy next month; in July this year. We call on the Morrison Government to stop playing those pig-headed political games, so that we can get billions of dollars into the hands of workers and flowing into an economy that desperately needs a boost.
For too long now, the Government has tried to pretend that tax cuts for high-income earners, which wouldn't come into being for another five years, will somehow help the economy now. That is a joke, and people are waking up to it.
It's long past time for the Government to concede that they have already broken a promise to get in place these tax cuts for low and middle-income earners, which were supposed to be in place by 1 July. The Government has broken that promise already, and now they want to hold these tax cuts hostage to more tax cuts five years down the track, which will benefit people on the highest incomes who are least likely to spend it in the economy. So those tax cuts have absolutely no prospect of helping to fix a floundering economy on the Liberals’ watch here in 2019.
The Government should stop playing games here. They should split the bills so that the Parliament can enthusiastically support stage one of the tax cuts, so that we can get that money flowing into an economy that needs it.
They have nobody else to blame for the fact that this economy is feeble and floundering. And if they keep refusing to split the bills in the Parliament, they will have nobody else to blame but themselves if ordinary working people in this country don't get the tax cut that they need and deserve from July, which would do something at least to help fix an economy which is badly floundering on the Liberal Party's watch. Over to you.
JOURNALIST: What do you make of the reports of Liberal Party polling showing the majority of voters in key Victorian seats which Labor didn't pick up at the election want Labor to back the tax cuts (inaudible)?
CHALMERS: I think one of the things we learned from the recent election is that we should be deeply sceptical about opinion polling, but especially so when its so-called Liberal polling dropped out to newspapers selectively. I'm deeply sceptical about that. I think what the Australian community does want is they want tax relief for people on low and middle incomes. They want that to flow into the economy. They do understand that the economy is floundering under the Liberals. One of the ways that we can help turn that around is to give people more disposable income so that they can spend in the shops and they can they can spend in the businesses of this country to try and get the place moving again. The Reserve Bank has called for tax cuts in the near term so that we can boost consumption. The biggest problem in our economy is not actually international conditions at the moment, as Josh Frydenberg has been pretending overnight in the papers. The biggest challenge that we have in the economy is actually consumption and that's because we've had such a long period of weak income growth. And that's what the Reserve Bank itself pointed to when they cut interest rates to record lows only a week or two ago. What the Australian community expects from Labor, and what they expect from the Parliament, is that we will do the right and responsible thing by working people, by the economy, and by the Budget. And what that means is splitting these bills so the Parliament can pass stage one of the tax cuts. Stage one of the tax cuts is the most important, because they would come into being in July. They're more likely to be spent, because people on low and middle incomes are more likely to spend tax relief. And they would give the economy the boost that it so desperately needs after six years of the Liberals, and after it was revealed recently that we've got the slowest economic growth in this country for the 10 years since the Global Financial Crisis.
JOURNALIST: You've got a situation where...
CHALMERS: Just one second Chris. We'll just do the questions here mate and then I'll throw to you. I won't forget you.
JOURNALIST: The Government says a rejection of the full package would mean that Labor hasn't learned the lessons in the federal election. What do you say to that?
CHALMERS: I think it's laughable. The Government is now pretending that stage three of the tax cuts, which would come into being in 2024, are some grand plan to fix the slowing economy in 2019. It's completely laughable. They're trying to claim a mandate for tax cuts which don't come in until after the next election. How did they win a mandate in 2019 for after the 2022 election? I think it's just laughable. I think it's the usual pig-headed political games that we get from this crowd. They need to take responsibility for the fact that the economy has slowed substantially on their watch. That's partly because they have attacked, for six years now, disposable incomes and wages in this country. Mathias Cormann said it was a deliberate design feature of their economic strategy that wages were low. They've taken people's penalty rates. The list goes on and on. That's why we have this economic problem right now. We want to play a constructive role in helping to turn things around. That means supporting enthusiastically stage one of the tax cuts when Parliament resumes next month. If the Government did the right and responsible thing they would split the bill and it may be that the Parliament would pass those tax cuts unanimously, and that would be the right thing for working people, the right thing by the Budget, and the right thing especially for an economy which is floundering.
JOURNALIST: The Government said it won't split the bill under any circumstances. Will Labor stand in the way of people receiving tax relief?
CHALMERS: It remains to be seen whether the Government will in the end split the bill. I think that they are playing games with tax cuts and with people's disposable income and indeed with the economy itself. I think that their comments about not wanting to split the bill show that they are more interested in a fight with Labor than they are in getting tax relief into the hands of working people and flowing into an economy that needs it. And I think that is very disappointing, but not especially surprising. They have form when it comes to playing political games with the economy.
JOURNALIST: .What about the argument though that the tax cuts though will stimulate the economy at a (inaudible)?
CHALMERS: I absolutely agree that stage one of the tax cuts would do some good in helping to boost a floundering economy in 2019. What I don't accept is that the tax cuts that they're proposing five years down the track, which flow overwhelmingly to people who are least likely to spend in the economy - that is obviously a con job for the Government to pretend that that would have any impact on the slowing economy today. So I think that is a furphy. I think it's a lie. I think it's a con job. It's a convenient argument that they've tried to construct. I think that stage one does have some prospect of providing some stimulus to the economy that needs it. That's why I support stage one. It's why the Labor Party supports stage one. It's why we need to see the bills split so the Parliament can pass stage one of those tax cuts at the earliest available opportunity.
JOURNALIST: The reports about a greater domestic role for the Australian Signals Directorate are still being considered. Do you have any concerns about those reports?
CHALMERS: I've seen those reports in the press this morning. I think I'd need to know more about what specifically the Government might be proposing. It does sound a bit like what we've seen reported in newspapers, controversially, which led to some of the raids recently. So I'd want a proper sense of what, if anything, the Government is proposing to do here. And if a detailed proposal did come to us formally, then we would obviously carefully scrutinise that through all of the usual lenses - national security, rights and freedoms of individuals, the proper operation of the press in a democratic society. All of those sorts of things which matter deeply to us in the Labor Party. We would consider any formal proposal along those lines.
JOURNALIST: I've got a quick question from my journo. If banks aren't going to pass on the interest rate cut in full, is it time the Reserve Bank was allowed to lend money to stop the banks having to borrow money from overseas?
CHALMERS: We're not proposing a step of that nature yet. We think it's important that the Reserve Bank cash rate cut is passed on in full by the banks. We do understand that there is substantial anger in the community when that rate cut was not passed on in full by at least two of the big players in the last fortnight or so. People are understandably very angry about that. We want interest rate cuts to do the good in the economy that they are capable of. We want more disposable income in the economy for all the reasons we've talked about when it comes to tax cuts. I think the broader point I'd make about the Reserve Bank is that they are doing their bit. They've cut rates all the way down to 1.25 per cent, which is extraordinarily and historically very, very low. It's time for the Government to do their bit, which is splitting stage one of the tax cuts out so we can get that stimulus into the economy. They should also be considering bringing forward some of their infrastructure spending. They like to brag that they've got a lot of infrastructure spending in the pipeline. The problem is, it comes in four and five and six and eight and 10 years down the track, and that won't do anything to stimulate the economy in the near term. They should reconsider the timing of some of their infrastructure proposals. Over to you, Chris. Your turn mate.
JOURNALIST: Yeah, just quickly, Jim. The RBA, we know from the AFR this morning, some economists think it will cut rates to the point of 0.5 per cent by this time next year. What does that tell you about the economy?
CHALMERS: It's certainly true that the market is expecting more interest rate cuts. I don't like to get into the prediction game or to give the Reserve Bank any advice. But I do think it's extraordinary that we have rates at 1.25 per cent, remembering even in the darkest days of the Global Financial Crisis, interest rates bottomed out at about three per cent - so less than half what they were during the GFC. That does give us a sense of just how badly this economy is floundering under the Liberal Party. The Reserve Bank has been forced to cut interest rates to extraordinary lows because the Government has not done their bit to grow the economy in a sustainable way. And that's a big problem. If the Reserve Bank cuts interest rates further, that will be more of a sign that the economy is extraordinarily weak under the Liberals. They like to wander around Australia pretending that they are good economic managers; the facts tell a very different story. And if the economy was strong under the Liberal Party, then the Reserve Bank wouldn't be needing to cut rates to such extraordinary lows.
JOURNALIST: Josh Frydenberg has said that he will protect the surplus. He's going to deliver that proper surplus regardless of the economy.
CHALMERS: I saw those comments from, I think it was a speech in London, or comments made in London overnight. I think it's entirely possible for the Government to do the right thing by the economy, which is to help the Parliament pass stage one of the tax cuts and consider bringing forward some of their infrastructure spending. That needn't necessarily trouble the surplus. The surplus is there because we're getting extraordinary prices for our iron ore in particular and company profits are quite high. And so he has no excuse for failing to deliver a surplus, at the same time as he takes into consideration the fact that the economy has slowed substantially on his watch. Every single quarter that Josh Frydenberg has been the Treasurer of this country, we've had below trend growth. That is a remarkably damning indictment of the policy failures of the Morrison Government and of Josh Frydenberg as Treasurer. These guys don't have any idea how to turn around what's happening in the economy. They will not accept or take responsibility for the fact that after six years, the economy is a mess and it's their mess. The economy is floundering on their watch. It's not enough to pretend you're good at managing the economy when the facts tell a different story. They should take responsibility and do the right thing. OK everyone good? Thanks for that.