ABC AFTERNOON BRIEFING
MONDAY, 15 JULY 2019
SUBJECTS: Newstart; Liberals’ economic mismanagement; Frydenberg meeting with RBA Governor; deeming rates.
JANE NORMAN: I'm joined now from our Brisbane studios by the Shadow Treasurer, Jim Chalmers. Jim, thank you for joining us.
JIM CHALMERS, SHADOW TREASURER: Afternoon, Jane.
NORMAN: So as I mentioned there, you've got the Business Council, ACOSS, COTA, the AI Group all calling for an increase in the Newstart allowance. Why won't Labor join their campaign?
CHALMERS: I think the concerns that have been raised by all of those groups are well-founded. And as you rightly said in your introduction, it is Labor's position that Newstart as it currently stands is inadequate. You know that we took to the last election our policy to review Newstart. The reason we wanted to do that properly was because there are big dollars involved in fixing this. And also we wanted to understand the interaction with all of the other payments and programs that governments provide. I think there's something like 35 different government payments or something like that. So we want to make sure that we get it right. Obviously, we weren't successful in the election. I don't think people really expect us to have a finalised policy eight weeks after an election, three years before the next election on something like Newstart. So the ball is in the Government's court and if they want to say that their priority is to get people off welfare into work, that's fine. That's our priority as well. But the question that they need to answer is whether Newstart at this level does act as a barrier to finding work, whether people can genuinely be expected to get themselves into the right kind of condition to look for and to secure jobs on a payment like Newstart.
NORMAN: You have yourself called the payment inadequate during the election campaign. Then-leader Bill Shorten was asked about this review that Labor had committed to and he said: Well you don't review a payment to cut the payments. So Labor clearly is - was at least - heading in the direction of committing to an increase in the Newstart allowance.
CHALMERS: Yeah, we've made that position really clear, Jane. And Bill Shorten, as you said, made that position clear. I think that we all have. We want to make sure we got it right though, because as I said before, we are talking about some billions of dollars and we want to always make sure that we are responsible with the allocation of public money. And we want to make sure that we get those interactions right with the other payments and programs. But obviously, our position for some time being that Newstart is inadequate, we would be working towards trying to fix that in a responsible way. We are at best now three years away from Government, as much as we would like things to be different. If the election had gone the other way, then we'd be reviewing it right now and trying to work out what can be responsibly done. That's not the case. So the ball is in the Government's court and I think that these groups that are pressuring the Government for an increase in the Newstart, the concerns that they've raised are well-founded. And I think it's good that they put that pressure on Scott Morrison and Josh Frydenberg.
NORMAN: Do you agree with welfare groups who say that the Newstart allowance is so low that it's actually a barrier to employment, as you sort of mentioned a few moments ago?
CHALMERS: Yeah, that's a real concern I think, Jane. If you spend a lot of time in communities right around Australia, including mine, but also with the various peak lobby groups - and you're right that there is a pretty extraordinary coalition of groups who are pushing for this change - I think that you can understand, you can get an understanding from people, that if you are on Newstart and you're expected to get yourself into the right kind of nick, the right kind of condition, to go to job interviews, to look after dependents, we need to make sure that that is sufficient to do all of those sorts of things. And I think one of the questions the Government does have to answer, and I did see Josh Frydenberg had ruled out increasing Newstart, I think one of the questions they do need to answer is how do they expect people to get themselves to job interviews and get themselves from welfare into work without a decent standard of living from which to do that.
NORMAN: You're right when you say that the Coalition is in power now, and the ball is certainly in the Coalition's court. But we saw in the last Parliament, the 45th Parliament, that Labor was able to take the lead on some policies and actually convince the ruling Coalition to change their minds and get some change through Parliament. Is this not one issue that Labor could take the lead on to persuade the Coalition to move?
CHALMERS: We certainly intend to be a forceful, persuasive, constructive Opposition on this issue, but on a whole range of other issues as well. But having been asked a few times today whether we could nominate a figure for what Newstart could be and the like, I think it's reasonable for us to say eight weeks after the last election it would be unusual for us to settle numbers and policies three years from the next election. So our role right now, unfortunately from my point of view, is to put pressure on the Government. If that coalition of groups that you've mentioned, combined with the community pressure, Labor pressure, can get an increase in Newstart from this Government, then that would be a good thing.
NORMAN: All right. Well Chris Richardson, as I mentioned earlier in the cross, he's a very respected economist. People listen to him when he speaks. He has said that about a $75 a week increase would cost the Budget around three billion dollars. I know you're not going to nominate a specific figure. But is that in the ballpark of a reasonable increase?
CHALMERS: As you anticipated, I think Jane, I'm not going to pre-empt or nominate any kinds of numbers. I think that Chris' commentary on this is constructive. He does make a useful contribution. It also helps people understand that changing Newstart doesn't come cheap to the Commonwealth Budget. That's why you need to be careful about it and make sure you've got all the interactions right, make sure it can be responsibly afforded.
NORMAN: What do you make of Chris Richardson's argument though that actually $3 billion would be the upfront cost, but because people on Newstart tend to spend what they receive, it would actually provide a bit of a stimulus to the economy? So therefore, it might not actually cost the Government that full $3 billion in the end?
CHALMERS: Yeah, it's a very familiar argument, Jane. We've used that argument when it came to bigger, fairer, tax cuts for people on low incomes more likely to spend in the economy. You'd recall that the last Labor Government, when they gave that historic increase to the aged pension - $30 dollars, I think - the argument then was when people spend all or almost all of their income, whether it's a Government payment or a wage or salary, then it is more likely to find its way into the economy. And the economy desperately does need assistance right now. It's got the tax cuts flowing, it's got low interest rates, it's got other accommodative measures. But the economy is remarkably soft under the Liberals and consumption is arguably the biggest problem, because we've had this long period of stagnant wages growth. So the point that Chris is making is a familiar one. I don't think he's wrong to say that when you direct your assistance towards people of modest means, it is the case that that money is more likely to find its way into the economy, and it's certainly the case that the economy needs help right now.
NORMAN: Well, yes. Speaking of the economy, last week we saw the Treasurer have some fairly high-profile highly publicised meetings. One of them with the RBA Governor Philip Lowe. I'm sure you're familiar with the happy handshakes and comments afterwards. What do you make of Philip Lowe's language there? Because he seemed to have a pretty positive outlook, which came after weeks of warnings about the economy. What did you make of his language?
CHALMERS: I've got heaps of respect and regard for Phil Lowe, the RBA Governor. I think the Reserve Bank is a terrific institution. So my beef's not with the RBA; my beef is with the Government and their mismanagement of this floundering economy. Some of the things that Phil Lowe said were thoroughly unremarkable. He pointed out that the economy is growing. Yes, it's growing but it's growing at its slowest rate since the Global Financial Crisis 10 years ago. He said that there were more Australians in work now than before. Well that's partly a function that there are more Australians right now - we have population growth. So some of the things that have been interpreted as some sort of glowing endorsement of the economy, I think are unremarkable points to make. Obviously, they've also been calling for infrastructure spending to be brought forward. That is Labor's position too. They've pointed out that consumption is weak, because we've had a long period of stagnant wages growth. That's Labor's position as well. And I think the picture opportunity itself, again not getting into Phil Lowe but to Josh Frydenberg, I think it was a bit unusual and a bit bizarre. And I think if the Treasurer spent less time on those kinds of photo opportunities and more time actually coming up with a plan to turn this floundering economy around, I think the country and its people would be better off.
NORMAN: Do you think it was a bit about confidence, that meeting, Jim Chalmers? Because we saw all the indicators come out last week - business confidence is still really low, despite the fact that interest rates are at record lows, despite the fact that income tax cuts have passed the Parliament. Could that have been the motivation to actually send a signal that businesses can invest? That business confidence should be higher?
CHALMERS: I think the Government's motivation was to probably make it look like they had some kind of idea what was going on and I don't think that's the case. Consumer confidence took a big hit last week, and that's because we've got the slowest growth in 10 years, stagnant wages, weak consumption, high household debt, weak retail sector - I could go on and on - we're in a per capita recession. I could go on and on about the weakness in the economy.
NORMAN: How much does your commentary affect that though?
CHALMERS: I don't accept the argument that you have to pretend that everything is rosy in the domestic economy, otherwise you damage confidence. I think what's damaging confidence in this economy is the fact that the Government spends all its time talking about us, it spends all its time with these bizarre photo opportunities, it spends all its time dusting off age-old rhetoric about unions and red tape. And it does all of that to distract from the fact that the economy has slowed substantially on their watch, even since the election, and they don't have any plan or any idea how to turn things around. If they spent their time coming up with a defensible economic policy, which would deal with wages and consumption and therefore growth, I think the country would be better off, and they'd feel more confident about our economic prospects.
NORMAN: All right Jim Chalmers, just finally on that deeming rate decision, the Government made its move yesterday. Labor says that it hasn't gone far enough. I think the cut was from about 3.25 per cent to 3 per cent. What kind of reduction was Labour hoping for?
CHALMERS: The point we've been making, Jane, is that the pensioners are unhappy because the Government made them wait so long for such little return. And there were five interest rate cuts before the Government moved. They only moved because the pensioner groups did such a good job campaigning for the change, in conjunction with the Labor Party. We think that the change was too little too late. It's for the Government to justify why they only made such a small change to the deeming rate.
NORMAN: But I guess the Government at the moment has a pretty slim surplus forecast for this financial year. So that's a delicate balance. Should they have sacrificed the surplus to provide a bigger boost to pensioners?
CHALMERS: They say that the surplus for this year is $7 billion. It's been propped up really by extraordinarily high iron ore prices and company profits. And so there's no reason why they can't do the right thing by pensioners within the confines of that surplus that they have forecast. I think the actions that they took cost something like $600 million over four years. So we're not talking about changes which would jeopardise the surplus. If they think that doing a bit better for pensioners would have jeopardised that surplus, then they can't be that confident in that $7 billion figure that they've forecast. There are a whole range of reasons why the Government has no excuse not to deliver that surplus, including the iron ore price, but other factors as well. So they should stop using the surplus as an excuse to do the wrong thing by pensioners. They've been balancing the books on the back of pensioners, or trying to balance the books on the back of pensioners, for far too long.
NORMAN: And just finally, Jim Chalmers, there have been calls in the midst of this deeming rate debate for a more transparent process to actually elect an independent body to advise the Government on matters like these deeming rates, which 99 per the population would have no idea about. Do you think that it would be a good sort of governance move, a good transparent move, to have an independent body?
CHALMERS: It's not our policy, Jane, but we certainly listen respectfully to the seniors' groups and pensioners groups who have proposed it. And I think the reason that they've proposed that change is because the Government has treated them so shabbily for so long. If the Government had done the right thing after these five interest rate changes and been responsive to the changes in the economic and financial environment, I don't think we'll be getting these kind of calls for an independent process. It's not our policy to go down that path, but it could be something that the Government could consider as part of their inquiry into retirement incomes.
NORMAN: Okay Jim Chalmers, sadly we've run out of time but thank you for joining us on Afternoon Briefing today.
CHALMERS: Thank you, Jane.