JIM CHALMERS MP
MEMBER FOR RANKIN
SUNDAY, 9 MAY 2021
SUBJECTS: Australians stranded in India; Scott Morrison’s vaccine and quarantine debacle; Labor’s tests for the federal Budget; Full employment; Wages; Aged Care Levy; Income tax cuts; Multinational tax evasion; Josh Frydenberg’s JobMaker failure; Negative gearing and housing policy
DAVID SPEERS, HOST: Jim Chalmers, welcome to the program. Just on that point, what does Anthony Albanese mean here? Does Labor believe all Australian citizens have a legal right to come home to Australia?
JIM CHALMERS, SHADOW TREASURER: We believe the Government's got the responsibility to get vaccinations and quarantine right, to make that possible. What we're seeing in India is incredibly distressing. Thousands of Australians have not just been abandoned there to those horrific scenes, but threatened with jail time as well. So the point that we've been making throughout is that we wouldn't even be having this conversation if the Prime Minister hadn't comprehensively stuffed-up vaccinations and quarantine. What we want to see in the Budget next week, is the full costs and consequences of that debacle.
SPEERS: I understand your point on vaccines and quarantine but again, should there be a right for Australian citizens to return home?
CHALMERS: I think there's certainly an expectation. I think, whether you describe that as a right or some other way, I think Australians have got the right to expect to be able to come home when they're in difficulty. The Prime Minister has a responsibility to those thousands of Australians stuck in India. If there weren't so many mistakes made with the quarantine arrangements, and with vaccinations and all the rest of it, then we wouldn't even be having this conversation.
SPEERS: So should it be cleared up in law, so that no government can do this?
CHALMERS: Well, let's fix vaccinations and quarantine first, before we think about legislation. I think, under the Biosecurity Act that Greg Hunt invoked, that will override any legislation on this front anyway. So, let's get the big pieces right, which are vaccinations and quarantine. Let's make sure that Australians have got a safe way to come home. If the Prime Minister hadn't stuffed up those two things, we wouldn't be in this position.
SPEERS: Let's turn to the Budget then. What is the test to this Budget? What does it need to do?
CHALMERS: Well, it can't just be another trillion dollar political patch and paint job. It can't just be another missed opportunity to invest in people, and their jobs, their opportunities, and their future. It can't be the type of Budget which is just geared towards the next election, and not the next decade of more jobs, and more opportunities, for more people. Unfortunately, what we've seen so far, it just looks like it's a lot of money thrown at a lot of political problems, to get the Government through another election, when the country needs, and deserves, better than that, given the sacrifices that people have made for each other to get ourselves into this position.
SPEERS: On jobs, you mentioned that as a priority. The Treasurer wants unemployment to get down between four and a half and five per cent before any Budget repair begins. Is that about the right target? Should it be lower than that, as perhaps even the Reserve Bank suggests?
CHALMERS: Well, it’s hard to take him seriously on jobs, David, given this Government's been in office for eight years now, and at the next election they'll be asking for twelve, and much of that decade has been defined by stagnant wages, rampant job insecurity, and underemployment. So, it's hard to take them seriously on the jobs target. We obviously agree with the Treasury and the Reserve Bank that full employment probably has a four in front of it. Somewhere in the low to mid fours, that seems to be an appropriate target. But what needs to be recognised too, is it's not just the unemployment rate that matters. There's a lot of people who are working but can't find enough hours to support their loved ones. So, any jobs policy, if we're looking for that growth in wages which has been more or less absent over the past eight years of this coalition Government, we need to address unemployment, but we also need to address underemployment, that's important too.
SPEERS: You are signalling the rate should be between four and four and a half percent before we begin budget repair?
CHALMERS: We've said for some time that the Government needs to be more ambitious and get closer to full employment. Various economists, including those at the Treasury and the Reserve Bank, have said that's got a four in front of it. We think that's appropriate, but it's only part of the story. There's also a substantial problem with job insecurity and underemployment, which needs to be addressed as well.
SPEERS: On wages, which you also identify as a priority, or a problem, do you think getting our employment down to that full employment level, whatever it is, is enough? Do the old rules still apply here, that will automatically spark some inflation and wages growth?
CHALMERS: Look, it's a really big part of the story, but it's not the full story. Getting unemployment closer to full employment will have a positive impact on wages, but that's the cyclical part of it. That's the part of wages that relies on the strength of the economy, or the strength of the labour market. There's also a number of structural issues which have arisen over the last eight years of this coalition Government, which have been either unaddressed, or made worse. So, think about things like childcare and participation, think about concentrated disadvantage and long term unemployment, skills and training and skills mismatches, the industrial relations system and labour hire. All of these issues together are structural impediments to people getting back to work and getting those good wages outcomes. The Government has been talking about the cyclical side of things, getting unemployment down, obviously that's what we want to see - more jobs and more opportunities - but we also need to address those other impediments to getting people into work. Unless we do that, we won't get that growth in wages that's been missing for the last eight years.
SPEERS: You mentioned some of those structural issues, and certainly childcare, which you mentioned as well, one sector where, yes, there's a shortage of workers, but wages have not increased. Aged care is the same. The last election you did take a plan to directly subsidise, an extra twenty per cent for childcare workers’ wages, using taxpayers money. Is that an approach that should be taken when it comes to aged care?
CHALMERS: Well, the difference this time, David, is that we've got a Royal Commission report that the Government needs to respond to in the Budget. The aged care system in this country is a disgrace. It's been letting down older Australians for far too long now and it needs to be comprehensively addressed in the Budget. What that Royal Commission said, was that there is an issue with wages in the aged care sector. One of the reasons we've got stagnant wages growth in this country, overall, is because some of the larger growing workforces, often workforces dominated by women, are not getting the kind of reward for effort that we want to see for some of our most important most essential workers. What the Royal Commission said - and the two Commissioners didn't agree on everything in that report, but they did agree that there's a problem with wages. They said it's fundamentally an issue for Fair Work Australia. So, whatever a Government would do to fund that, if anything, would be contingent on what Fair Work Australia decided. In the first instance, it's for the Government to respond to those workforce issues, including the wages issues. We’ll see what they announce during the week. We want to see those workforce issues addressed. If they're not, we'll have more to say at some future point.
SPEERS: So the idea of taxpayer subsidies for wages, is that on the table for Labor? Or off the table?
CHALMERS: Well, in the first instance, it's a matter for Fair Work Australia. That's what the Royal Commissioners have recommended, both of them, in that report. The next step is for the Government to respond to what are serious workforce issues, whether it's minimum staffing, pay issues, some of the other issues around training, or some of the issues that Anthony Albanese identified in his speech during the course of the last week. Let's see how the Government responds to that. Let's see what system we would inherit from the Liberals and Nationals. We'll have more to say between now and the election.
SPEERS: What about an aged care levy? Again, this was recommended by the Commissioners, the Royal commissioners. Is that something Labor supports?
CHALMERS: Well, there are a range of recommendations made in the report about the funding of aged care. Again, it's a bit difficult to make concrete proposals a few days before we know what the system would look like that we inherit. Clearly, there needs to be a big investment, and big reform, in aged care. We can't have a situation in aged care where older people have got maggots in wounds, and are being left malnourished. There's a big task here for the Budget. We'll respond to what the Government does in due course.
SPEERS: Okay, but you're open to an aged care levy?
CHALMERS: Well, obviously it depends on what we inherit, David. It may be that the Government comes forward with an innovative way to fund aged care in the Budget. We don't know that for sure. So, it doesn't make a lot of sense to make a concrete proposal in advance of seeing that.
SPEERS: Well, broadly, when it comes to tax, whether it's a levy or increasing tax generally, we are seeing the US, the UK, New Zealand, adopting various approaches to increase tax on corporates, and on high income earners. Do you think Australia should be at all increasing the tax take?
CHALMERS: Well, a couple of things about that, David. I think the priority for tax relief should be low and middle income earners in the Budget. We've said that over and over. The thing that makes us a bit different in this country, is we've got legislated tax cuts for the highest income earners which still don't come in for a few more years. And what we've said all along, is that that wasn't the responsible way to go about that, to lock-in tens of billions of dollars for the highest income earners, some years down the track. We said we'd come to a view closer to that date.
SPEERS: Have you reached a view on the stage three tax cuts?
CHALMERS: No, but people know where we're coming from on those tax cuts. We haven't reached a final view, we will make our views known between now and the election, but our view has been vindicated already. We've said that in the Budget, that has a trillion dollars in debt, all of these other rorts and wastage in other areas, that it didn't make sense to make that big commitment, And our view on that's been vindicated. In the broader sense, there has been some movement internationally on tax. We are heartened to see the progress under President Biden's leadership, when it comes to multinational tax fairness in particular. We've been doing our own work in the federal Labor Party on that. I think that needs to be an important consideration of the Government, too.
SPEERS: There may be a case for increasing some tax on multinationals?
CHALMERS: Our focus, as it has been previously, is on making sure that multinationals pay their fair share of tax in Australia. There has been some movement, globally, on that. We commend President Biden for his leadership on that. It would be the best outcome if the world moved as one on some of these issues, but we've been doing our own work as well. We hope to say more about multinational tax avoidance, in particular, before the election.
SPEERS: On spending, Anthony Albanese gave a speech during the week, in which he said, he would be cautious about spending. Yet Labor wants to spend significantly more than the Government on childcare, manufacturing, more generous unemployment benefits. There are reports this morning about a $10 billion social housing plan from Labor. A more generous paid parental leave plan. Will Labor seek to cut spending anywhere? Where does the caution come in?
CHALMERS: Well, the point that Anthony made, very effectively, in that speech last week, was to say that there is a trillion dollars in debt so need to be cautious about spending. We need to be responsible, and we will be. The best way to measure that caution, and that responsibility, is to make sure we're getting maximum bang for buck in any new spending that we propose. The proposals that we've made so far, and any proposals that we consider between now and the election, will be measured for their effectiveness. We won't be taking lectures on fiscal responsibility from the party of sports rorts, dodgy land deals and billions wasted on JobKeeper for profitable companies that didn't need it. We will have a better budget position than the Government in this regard: our spending will be more responsible, it will be more geared toward creating more jobs, and more opportunities, for more people. We compare that with the fiscal irresponsibility of the party of sports rorts, dodgy land deals, and all of those other rorts, which riddle a Budget which is weighed down with waste.
SPEERS: You mentioned JobKeeper there. You were quite critical of ending JobKeeper. Just over a month ago, you said it would have diabolical consequences and for too many Australians, the end of JobKeeper will be the end of their jobs, and that will be on Scott Morrison and Josh Frydenberg's head. The Reserve Bank, however, has said that households and businesses are adjusting well, in their words, to the tapering of stimulus, and there's been a snapback in activity, that's broad-based, and there's a positive outlook for employment. Do you think you might have been wrong about ending JobKeeper?
CHALMERS: Well, first of all, we want to see people find jobs. We want to see jobs created. We want to see all of that job insecurity and wage stagnation dealt with. To the extent that there's a recovery in the economy, that's a good thing. It's a credit, not to the Government, but to Australians, who did the right thing by each other to limit the spread of the virus.
SPEERS: Was it wrong to end JobKeeper?
CHALMERS: We think that there was a case, and there is a case, for a targeted and temporary extension of JobKeeper, for the hardest hit industries. I think, if Josh Frydenberg thinks that no jobs were lost by his cuts to JobKeeper, I think he's even more out of touch then we feared.
SPEERS: He said this morning that 105,000 people, in net terms, have come off income support during April, since the end of JobKeeper. So, in net terms, that's fewer people relying on support?
CHALMERS: Well, first of all, it was his Department that said up to 150,000 jobs will be lost from the JobKeeper cuts, so let's not forget that. Secondly, we want to see other jobs and opportunities created in the economy. When the labour market has performed relatively well in recent months, we've said so. We want that. That's a pleasing outcome, but we can't forget there are almost two million Australians who still can't find a job, or enough hours to support their loved ones. This recovery in the economy is welcome, but it's patchy, and it's hostage to uncertainty, including the Prime Minister's vaccines debacle, but not just that, quarantine. The Treasurer admitted that the JobMaker program, which was the centrepiece of last year's Budget, only created a thousand out of the 450,000 jobs he promised…
SPEERS: It may not have been needed?
CHALMERS: The point we're making, is that even if the recession wasn't as bad as many economists feared, it doesn't mean that the recovery can't be better. And the economy would be recovering more strongly, were it not for the vaccines debacle, and other mistakes that the Government has made. And the Budget would be in better condition, if it wasn't riddled with rorts, and weighed down with waste.
SPEERS: A final one, on housing. We've seen house prices really take off in the last few months, in particular investors have been pilling into the market. March saw the biggest jump in mortgages for investors in nearly 20 years. Does it concern you that investors are fuelling house prices and locking many people out of the market?
CHALMERS: Well, the housing market has been incredibly strong. We have seen rising prices, we have seen lots of credit, and obviously that makes it harder for first time buyers. For much of that growth in housing in the last few months, it wasn't an investor story. But you're right that the investors have come back a bit, in the most recent data. That is concerning for first time buyers. There are a range of levers available, the regulators will obviously look at the lending side, clearly we've got an issue with supply as well, which is why Jason Clare, and Anthony Albanese, and others, have been calling for the uncapping of that First Home Saver scheme. These are the sorts of things that should be contemplated. There is a an issue with housing. People are finding it harder and harder to get a toehold in the market, that hasn't been an investor story until very recently. Obviously, we're keeping an eye on things as they develop.
SPEERS: You're keeping an eye on things, are you still considering changing negative gearing rules?
CHALMERS: We haven't come to a final position on the negative gearing policy. We've said, overall, that we won't take exactly the same suite of policies to the next election, that we took to the last one. That's unsurprising. We will make our position on negative gearing known before the election, but one of the reasons why it's been important to monitor the housing market as it develops, is because it has been volatile, we have seen that extraordinary growth, but negative gearing is not the only lever. There's a role for regulators and there's a role for supply. We'll have other things to say about housing in the coming weeks and months.
SPEERS: Jim Chalmers, thanks very much for joining us.
CHALMERS: Thank you, David.