WEDNESDAY, 28 NOVEMBER 2018
SUBJECT/S: Liberal chaos, division and dysfunction; Election timing; Labor’s united team; Economy not working for middle Australia; Labor’s reforms to unaffordable tax concessions.
TOM CONNELL: What a quiet week in Parliament of course it's been so far! Just a little bit of drama, with an early Budget, and election date pretty much set, another one to the crossbench and Josh Frydenberg having to cancel this trip to the G20. Joining me for more on this is the Shadow Finance Minister, Jim Chalmers. Thanks for your time today.
JIM CHALMERS, SHADOW MINISTER FOR FINANCE: No worries, Tom.
CONNELL: Labor's been sort of saying in various ways, ‘election now’. You can't really have one now, right? What's an early practical date, assuming you don't want one on New Year's Eve?
CHALMERS: We'd want one as soon as possible. We're ready to go. We've done a heap of policy work, as you know. We're a united team, we're a stable team. The other side of the Parliament can't make the same claim. The fact that the Treasurer of Australian can't go to a G20 meeting that he'd already announced that he was going to is really just another example of the shambles that they've descended into.
CONNELL: But in a practical sense, I'm assuming you're not calling for an election on January 15 for example?
CHALMERS: I'm not going to nominate dates for you. The point we're making is that we're ready to go. And the election should be as soon as possible.
CONNELL: When you say as soon as possible though - possible versus practical. Possible would mean do it on January 10.
CHALMERS: I'm not going to split hairs with you about the date. The point that we're making is that the Government's lost legitimacy; it's lost its majority. I think Australians have rightly concluded that they're in it now for themselves, as Julia Banks said, and not for the Australian people. They're a shambles. The Treasurer can't go away. They've got a part-time Parliamentary schedule for next year. All of these things together, I think, are why the Australian people have concluded that Morrison and the Liberals are defined more by cuts and chaos than by anything else.
CONNELL: Interesting line from Kelly O'Dwyer in the Parliament this afternoon, which just took me straight back to the 43rd Parliament. Is that what it feels like overall? You were overseeing as an adviser back then. Does it feel like that?
CHALMERS: No. I think what we're seeing is a new low in disunity. They've had three Prime Ministers, three Treasurers, all of the uncertainty and chaos that brings. They're more divided now than they were before the leadership change. I think most people who objectively look at the Morrison Government just see it as a dumpster fire of personal rivalries and that's not good for the country, and that's why it needs to be resolved. You've got Liberals wandering around the building today talking to Labor people about how they don't think that they'll even make it to the Budget, which is supposed to be on the 2nd of April. And that just gives you an anecdotal sense of the sort of chaos that reigns over there.
CONNELL: But you really don't think that's a parallel to what was happening back in 2013? Personal rivalries, unsure when things were going to actually come to a head?
CHALMERS: The things that occurred under the former Labor Government, I think we've learned from. We've had a period of remarkable stability under Bill Shorten's leadership. That's because he is a unifying leader, he empowers his colleagues, he listens to the community, he leads on policies, and our policies align with the interests of middle Australia. All of those reasons mean that we have learned from that period. But the other key difference between then and now is that the Gillard and Rudd Governments had some substantial achievements. Some achievements that we are very proud of: dealing with the GFC, National Disability Insurance Scheme, school education reform. We were actually getting through a decent policy agenda, which was supported in the community. The difference now is, the smoking ruin that is the federal Liberal Party now, they can't get anything done because they're so consumed by these interpersonal rivalries.
CONNELL: Except in your area - five per cent unemployment, and that's come down very solidly because of more than a million jobs created, beating the sort of very round target that Tony Abbott set that plenty of people were skeptical about, but they've met that as well. You've got jobs growth just starting to tick up, strong economic growth compared to other G20 nations, same-sex marriage you can throw into there as well...
CHALMERS: (Laughs) Come on. Now you're stretching it, Tom.
CONNELL: Economically, right now - you don't want to talk down the economy presumably - economically, the country's going reasonably well, would you agree?
CHALMERS: At a headline aggregate level, we've done our best to welcome when we get figures which are relatively strong. They're not out of this world, but they're relatively strong. The headline GDP figure that you mentioned and the unemployment rate that you mentioned, we have welcomed those numbers. But I think one of the reasons why Australians have concluded that Scott Morrison is so out of touch is because he wants a pat on the back for the economy when, for most people, their experience of the economy is not those numbers. Their experience is in the people-facing part of the economy. Things like stagnant wages, high household debt, underemployment - a lot of people want to work more hours and can't find those hours - insecure work. Those are the things that define the economy in lots of ways for people out in the suburbs of Australia. So when Morrison or Josh Frydenberg or others want a round of applause or a pat on the back for these kind of economic outcomes, I think a lot of people think ‘they're from another planet, they don't understand my life’.
CONNELL: Alright, just on your changes as well that you're planning on making. The share market has been pretty soft of late - a few pretty bad days for Australia. Have you taken into account the double whammy of the policy - so you reduce the capital gains tax discount from 50 down to 25 per cent. That makes shared less attractive to buy, if that's how you're doing it, and when you sell them regardless. And also, not being able to negatively gear shares in the same area, but also the franked dividends cash refund going for people that do get that refund, Australian shares specifically, are less attractive. That's a double whammy on a soft market.
CHALMERS: I don't accept that characterisation of it. But I think more broadly, when you make economic policy at the federal level, you make it for the medium and long term. You can't make policy every couple of months based on a couple of days of share market moves or movements in other markets. We have to take the longer-term view, and the longer-term view demands that when we have a Budget which is defined by record levels of debt - net debt has doubled under the life of this Government and gross debt has almost doubled - and when you've got a Budget as tight as that, even when you've got all these dollars rolling through the door courtesy of the global economy, you need to work out what you prioritise most. We want to have the best hospitals and schools in the world. The other guys want to have the most generous tax loopholes in the world, and that's really the choice. Whenever the election is, that's really the choice that people will make. Can we afford to continue to give in the dividend imputation case almost $6 billion away in these tax loopholes, which overwhelmingly favour people with high balances? Or would we prefer to spend that money on hospitals and schools and TAFEs and apprenticeships?
CONNELL: Right, I understand that choice that's been set up between you and the Government, fair enough. But is there any modelling - because we've heard about Grattan modelling on the impact on housing - what about on the share market on now those two policies together?
CHALMERS: You can't remodel every day based on a different level of the share market. The share market bounces around. You're right to say there's been a couple of weaker days, but our responsibility is not to respond week to week to those movements. Our responsibility is to get the Budget right. From our point of view, my job in the Finance portfolio working closely with Chris Bowen is really three things: you make the tax system fairer, you pay down the record debt which has accumulated under the Liberals, and you make room for things we should truly value as a society; things like preschool for three and four-year-old kids, better schools, TAFEs, apprenticeships and the like.
CONNELL: Right, and I'm not expecting you to say, well, you know, it might go to 5,600 points three weeks after we do it. Sure, I understand that. But do you accept those two elements will both have an impact, a lowering impact on the ASX?
CHALMERS: Not necessarily. The modelling that is out there, say on negative gearing and the CGT change - the Treasury says that there'll be a modest impact on house prices, for example.
CONNELL: Why not do it on shares as well then?
CHALMERS: I don't expect there to be a dramatic change.
CONNELL: I'm not saying dramatic, but if it's modest on housing and you're taking away the same benefit, why not a modest impact as well?
CHALMERS: The point I'm making is that none of the changes we are proposing will make a dramatic difference to our markets, including our share markets. We're confident of that, and we're doing it because we've got our priorities right. These are difficult changes and we get questions like this all the time, and the Government ramps up the scare machine to distract from their own internal problems, but we've got a carefully considered, carefully crafted set of policies to make the tax system fairer, pay down Liberal debt, and make room for the things that we want to invest in.
CONNELL: I know you've got a tight schedule, a busy sitting day, so thank you for your time, Jim Chalmers.
CHALMERS: Thanks Tom.