Radio National Breakfast 08/08/19

August 08, 2019

SUBJECT/S: China and the United States; Liberal mismanagement of the economy; Kenneth Hayne; Paul Keating; Skills shortages and wage stagnation.
JOURNALIST: Jim Chalmers is the Shadow Treasurer. He joins me on the line from Brisbane. Welcome back to Breakfast. 
JIM CHALMERS, SHADOW TREASURER: Good morning Patricia, thank you. 
JOURNALIST: Before we get to the Australian economic consequences of the China-US trade war, let me ask you about the extraordinary warning from a key Government MP about China. Andrew Hastie, the chairman of the Parliamentary Joint Committee on Intelligence and Security says this country is facing an unprecedented economic and security test likening the world's approach to containing China to the catastrophic failure to prevent the rise of Nazi Germany. Is he right?
CHALMERS: I don't think so Patricia. I think you're right to describe it as extraordinary, but I'd also describe it as extreme and overblown and unwelcome. The job for either party in our political system is to navigate what are pretty complex and multilayered issues, to weigh up all of the economic and strategic and national security interests, and I think this kind of intervention makes that task harder not easier. I think what we need to see today from Scott Morrison, the Prime Minister, he needs to say whether this kind of language is the Government's view or whether there are divisions in the Government over the management of this really important relationship.
JOURNALIST: He's the chairman of the Parliamentary Joint Committee on Intelligence and Security. His words have weight. He gets briefings from security agencies. Why shouldn't we trust him?
CHALMERS: I just think that his language should be more measured than what it is. There are lots of complex issues at play here, we shouldn't pretend that there aren't. They are multilayered. There are economic issues, security issues, and all of the rest of it. I think the onus is on all of us to use measured, sober, clear-headed language rather than go for a sensational headline.
JOURNALIST: And why should we use that language? Is it because you're worried about the trade relationship with China? Is it because of our economic interests you're worried about?
CHALMERS: Well because it's a difficult management task. As we've seen in the last few days there are issues in the global economy, in particular between the Chinese and the Americans. It's complex enough and difficult enough to navigate all of these issues without further complicating things with extreme and overblown and unwelcome rhetoric.
JOURNALIST: In this opinion piece written for the Nine papers, Andrew Hastie says choices will be made for us and our sovereignty and freedoms will be eroded if we don't come to grips with China's behaviour. This is a strong condemnation of Beijing from a member of the Morrison Government. You think he's risking provoking China into taking some sort of economic and trade retaliation against Australia? Are you worried about that?
CHALMERS: I'm worried that it's making it harder to manage the relationship.  And I think, as you point out he is a key member of the Morrison Government, so what Scott Morrison needs to do is to come out today and say whether this is the Government's view or whether there are divisions in the Government.
JOURNALIST: So that's the political point, Jim Chalmers, with respect that's the political point that you want to draw attention to, to differences in the Government. I'm asking you about the actual warning here which is serious and should be treated as such. Does he have a point though?
CHALMERS: I have answered your question multiple times, Patricia. I think the issues at play are serious.  The issues around currency, the issues around trade, the issues around the broader implications for the economy and for national security. All of these things are very serious and the point that I've now made multiple times is that this kind of rhetoric from Andrew Hastie, and from others like Andrew Hastie, makes what is already a difficult navigational task that much harder.
JOURNALIST: Okay let's go to the US-China trade war. We heard from the Treasurer offering reassurance about the strength of the Government's economic policies. Do you share his confidence?
CHALMERS: What worries me about that clip you played a moment ago, is that Josh Frydenberg said that he thinks the Government's got the settings right. Let's just have a look at what those settings have delivered: we've got the slowest Australian economic growth for a decade; almost two million Australians are either looking for work or looking for more work; we've got record household debt; we've got living standards in decline; we've got stagnant wages. Right across the board there are big challenges in the domestic economy which the Government just wants to kind of pretend away, and because they've neglected those challenges really for six years now - now into their third term of Government - pretending that everything is hunky dory in the economy, that leaves us more exposed than is necessary to some of these big shocks in the world economy.
JOURNALIST: Should the Government be prepared to jettison delivering a budget surplus - because you've been arguing more stimulus is needed - should they be prepared to jettison that surplus?
CHALMERS: A couple of things about that Patricia. First of all, the surplus should not be at risk. We've got these extraordinarily high iron ore prices, we've got big company profits - a lot of the factors which feed into the surplus - which means that they've got no excuse not to deliver it. But at the same time, I mean even in the last update the surplus for the current year was about $7 billion. There should be room within that surplus to responsibly act on the economy which is floundering. Things like bringing forward some infrastructure spending, things like what we've proposed in terms of additional tax relief sooner, but other things that they could look at too. The worrying thing is they talk about this $7 billion surplus in a way that makes us think that it may be at risk in some way. It shouldn't be because of those prices and profits I mentioned a moment ago. But even more worrying than that, I think, is that the Government just wants to sit on their hands and hope everything turns out okay and that's been a recipe for six years now for some of those economic outcomes that I just ran through.
JOURNALIST: Some remarks from the Banking Royal Commissioner Kenneth Hayne have come to light. They're from a speech he made in July in which he said reasoned debate about policy is now rare and that three to four words slogans have sprung up in its place. It's an attack on the political establishment - of course you're part of that. Is he right?
CHALMERS: First of all the most important thing is to not be defensive about it. I actually think there's value in what Justice Hayne said. Our politics isn't working as it should. There is something broken about it, and if we reflect on it I think many of us share those kind of frustrations. Some of the points he made: it can be unnecessarily divisive, the rhetoric can be overblown - and we've just been talking about some of that; it can be unnecessarily polarising; it can be captured by the loudest and best funded voices at the expense of middle Australia. There are a whole range of things in our political system which mean that we get focussed and bogged down in some of the old barneys of the past and not some of the big challenges of the future.  I think if we're honest about it and we reflect on it properly, you know one of the reasons to stay engaged in politics even after the recent disappointments that we've had on our side is to try and be a solution to some of these issues and not part of the problem.
JOURNALIST: So you're saying to your side, let's listen to what he has to say.
CHALMERS: I think we should listen to what he has to say, but we should not just listen. We should also be more focussed on the future. We should be more focussed on what really matters. Things like, what's happening in the economy, people's living standards. All of those issues are far more important than the kind of parlour games of politics and the three word slogans. I think we should resist the temptation to be defensive about it, not see it as an attack necessarily, but as an opportunity to do better.
JOURNALIST: Former Prime Minister Paul Keating says Labor lost the election in part because he failed to understand the middle class economy, and that he and Bob Hawke obviously created this for Australia. How do you respond to his critique?
CHALMERS: I talk to Paul regularly about these issues specifically and I think if anyone's earned a right to have a view on these issues, he's essentially the architect of the modern Australian economy. He, along with Rudd and Swan, are more responsible than anyone for 28 years of consecutive economic growth and so I think we should listen to what he has to say and reflect on what happened in the election. Clearly we didn't attract sufficient support for the agenda that we took to the election. We're all reflecting on that. We're all taking collective responsibility for that.
JOURNALIST: Paul Keating also says the top tax rate shouldn't be a jot over 39 per cent. Would Labor consider taking the top rate to that level?
CHALMERS: No that hasn't been my focus, Patricia. As you know we've spent time since the election reviewing the policies that we took to that election. We'll take our time to do that. The focus for me, particularly in this economic job, is what's good for the economy, what's good for middle Australia, what's responsible in the budget. I've spent my time working out what from the agenda from the last election we need to update or revise or discard and we'll take our time to do that but I haven't been focussed on a 39 percent top rate.
JOURNALIST: Just briefly on COAG, there have been calls ahead of COAG for more to be done on skills, the Australian Industry Group raising this issue. What do you want done in this space?
CHALMERS: Well I think what's happening here is we've got this unfortunate kind of double whammy of skill shortages and wage stagnation, which is very unusual. I think it says it all about the last six years. We've seen something like 150,000 apprentices and trainees cut, $3 billion from TAFE and training, and so what business tells us is something like 75 per cent of them are struggling to find Australians to fill jobs. That means that too many jobs are going to overseas workers and that means that by locking people out of TAFE and training the Liberals are locking Australians out of jobs. What we say about that - that's the situation as it stands, it's a factual situation - and what we have said for some time is we need to rebuild TAFE in particular, we need to rebuild the apprenticeship system because it doesn't make any economic sense to have that wage stagnation and the skills shortages happening simultaneously, but that's what's happening right now.
JOURNALIST: Jim Chalmers, thanks for joining me this morning.
CHALMERS: Thank you Patricia.