SKY NEWS SPEERS
WEDNESDAY, 5 JUNE 2019
SUBJECTS: State of Origin; National Accounts; income tax cuts; AFP raids
DAVID SPEERS: As we saw earlier, today's economic growth figures the lowest in a decade - 1.8 per cent is the annual growth rate to the end of March. 0.4 per cent for the quarter. Let's bring in the Shadow Treasurer, Jim Chalmers, for his thoughts on what it all says about the economy. Thanks very much for your time this afternoon. So clearly there's a need for stronger growth. The Treasurer Josh Frydenberg argues... (laughs) before I get to all of that, I've just noticed where you are and what you're wearing. Apologies there Jim Chalmers, it's a bit hard to ignore of course your scarf.
JIM CHALMERS, SHADOW TREASURER: ... The spiritual home of rugby league, we need to devote some time to it!
SPEERS: We do. You're a proud Queenslander obviously and you're going to that match behind you tonight.
CHALMERS: The spiritual home of rugby league here at Lang Park. We're looking forward to the game tonight.
SPEERS: Very good. And I think you'll be sitting alongside your leader. He'll be wearing something a little bit different though, Anthony Albanese.
CHALMERS: We are as one, Albo and I, except on Origin night. I think he's put it best when he says he loves Queensland 365 days of the year and 362 nights. That's entirely understandable. We're looking forward to the game tonight.
SPEERS: Well I'm sure everyone there tonight at halftime will be talking about the economy and today's economic growth figures.
CHALMERS: (Laugh) That's right.
SPEERS: Jim Chalmers, let me get your thoughts. We need some stronger growth that's pretty clear and the Reserve Bank Governor is making some suggestions as well. What do you think is needed right now to drive stronger growth?
CHALMERS: You're right that the Reserve Bank Governor has identified that, but really what we got today in the National Accounts was a really feeble economic growth number and it hasn't come out of the blue. The truth is, that we've had below trend growth in the economy for a number of quarters now and it's very disappointing. In the absence of any plan from the government to get the economy moving again, the Reserve Bank has had to cut interest rates to what are remarkably low levels at 1.25 per cent. What we need in this economy, and this hasn't just dawned on people, what we've needed for some time, is to get productivity going again. That means properly investing in training rather than cutting investing in training. We need to make sure that we get the infrastructure right, not just on the never never, but in the near term. We need to prioritise people on low and middle incomes when you're talking about tax relief, because they're more likely to spend it in the economy. And we know from the Reserve Bank that the big problem we've got in the economy is household consumption. And that's because wages growth has been so low for so long. So we know what the problems are. We know what needs to be done. Unfortunately, we've got a Government which likes to pretend that they're good at managing the economy, but the numbers tell a different story and we saw that again today.
SPEERS: OK, let's go through some of that. So the Reserve Bank Governor just yesterday, Philip Lowe, talked about the need for structural reform. He says structural policies that support firms expanding, investing, innovating and employing people. What needs to happen to allow firms, businesses, to do that?
CHALMERS: Clearly, we need to find a way to kickstart research and development in this economy. We need to help business innovate. We need to make sure that there is a better relationship between our universities and big research institutions, like CSIRO and the corporate community. We took to the last election an idea about getting businesses to invest via the Australian Investment Guarantee. We thought that was a good idea that the Government didn't pick up and run with unfortunately. So there are things that we can do to meet the challenge set down by Phil Lowe in his commentary around the interest rate cut that happened yesterday.
SPEERS: Yeah. But when we're talking about, sure, R&D might help, training people might help. But what about the costs that business face? Is there any need for further company tax relief?
CHALMERS: No, we're not in the cart for further company tax relief, David. We've said repeatedly in the last few months, or indeed longer than, that that the best way to get businesses investing is to give them accelerated depreciation on their investments. That was pretty well supported in the community. Obviously, that policy lapses at the election. But we'll take the time to work up a new suite of policies. I think people will understand we are 18 days from the last election; we might have 1000 days, give or take, until the next election. The focus is on the Government. They're the Government. They're the ones who are responsible and who own these feeble economic growth figures. It's long past time that they took responsibility for it and they came up with a plan for it.
SPEERS: Some might argue this is the first three months of the year when everyone was expecting Labor would win with your negative gearing policies, franking credits policies policies and so on. Was there a bit of caution in households in the first quarter of the year about that?
CHALMERS: I think that's ridiculous, David. I heard the Government putting that about earlier on today. How pathetic. After six years of being in Government, and all these feeble economic outcomes in wages, in growth, in rising unemployment, and insecure work, and weak consumption, weak investment, weak productivity for the fourth quarter in a row. How pathetic that the Government is running around saying it's somehow Labor's fault. When you move around the community, people I think expect better from the Government after six years and all of these rubbish economic outcomes. The Government should take responsibility for it and we'll play a constructive role where we can. But the focus is on the Government. The ball's in their court.
SPEERS: OK, but to be clear you've said you're not in the cart for any further company tax relief. Well, are you in the cart at all for any industrial relations reform?
CHALMERS: We don't know what the Government's proposing. We always approach things in a responsible way. We work out what's fair, what's affordable, what's responsible, what's good for the economy.
SPEERS: So you'd look at it?
CHALMERS: ...and what's good for middle Australia. Go ahead, David.
SPEERS: You'd look at if the Government were to suggest some industrial relations reform, you'd be open to looking at it?
CHALMERS: Obviously, if the Government wants to propose something, we'll respond to that if and when they do. So far their two big policies have been what Mathias Cormann calls a deliberate design feature of their economic strategy, which is to drive wages down. Arguably the biggest problem that we have in the economy is that people don't have disposable income, because wages growth has been so weak for so long. And the other policy they had, which will come back no doubt, is around company tax cuts. And we've said repeatedly that we're not in the cart for that. We don't think the Budget can afford it. We think there's better ways to get business investing again, and we've got other priorities in terms of investing in people and their skills. Those positions are pretty well known. If the Government wants to come to the table with some other proposition, obviously any responsible Opposition would respond to that in due course.
SPEERS: When Parliament does return in a few weeks, the immediate debate will be over the tax cuts the Government did take to the election, which it won of course. So will the state of the economy right now make you more inclined to back those tax cuts in full?
CHALMERS: I think given the feeble state of the economy right now, and that meagre economic growth figure that we saw today in the National Accounts, I think it's absolutely imperative that Labor and Liberal and everybody in the Parliament combine to pass the first tranche of those tax cuts. They are the ones that will come in immediately. They are the ones which will be spent in the economy by people on low and middle incomes. There's an urgency to it. We're prepared to do the right thing. As it relates to stages two and three, we've got more discussion and deliberation to happen there. That's entirely reasonable, given that they wouldn't come in 2022 and 2024. And you would remember probably better than anybody else, except for perhaps Mathias Cormann himself - you remember at the start of the election campaign you asked Cormann how many billions of dollars will go to people on the top income tax bracket in this country? He said he'd come back to you. He still hasn't. That's an indication of the kind of information that we need from the Government before we can come to a concluded view.
SPEERS: But if there's an urgency now about the need for some tax relief, we're in this game of chicken between the Government and the Opposition. You won't back stages two and three at the moment. The Government won't carve it up and just put stage one for a vote. Why not just vote it through, and if we can't afford it later on you repeal those later stages?
CHALMERS: Well, it needn't be this way, David. I guess the point that we're making before we get to those considerations is, if the Government was genuine about tax relief for people of modest means in this country, they'd split the bill. We'd all support it. The economy would get what it needs and the families and workers of Australia would get what they need. I don't think that's an unreasonable position. We've also said beyond that, that we've got more discussion and deliberation to do about the later stages.
SPEERS: Just before I let you go Jim Chalmers, Peter Dutton, the Home Affairs Minister, has released a statement just in the last 10 or 15 minutes in which he says the Opposition Leader, his remarks today about these federal police raids are completely inappropriate. He needs to either produce evidence that they've done something wrong or immediately apologise. Does Labor have any evidence that the federal police have done the wrong thing?
CHALMERS: Peter Dutton always plays politics on these sorts of occasions. I think what we're dealing with here is an issue around freedom of the press. I think it's entirely reasonable that people have expressed sentiments that they are uncomfortable with elements of this. And I think we've gone about it in a responsible way. Kristina Keneally put out a statement earlier today seeking a briefing on these issues on the timing and nature and magnitude of these raids. I think that's a responsible way to go about it, and when we know more about it, we'll respond to any new information that comes to light.
SPEERS: But wouldn't it have been better to get that briefing before criticising what's happened?
CHALMERS: I think it's entirely reasonable that people all around Australia, and not just Anthony, but I think in other sectors - journalists, people in the community who cherish freedom of the press as a fundamental pillar of our democracy, they have expressed their unease about elements of this. I think it's entirely reasonable now that the Government brief Kristina Keneally on the ins and outs of it. And no doubt, the conversation will continue in light of whatever extra information comes to light.
SPEERS: Jim Chalmers, Shadow Treasurer, thanks very much. Enjoy the game tonight. Go the Blues.
CHALMERS: Thank you, David. All the best. Go the Maroons.