E&OE TRANSCRIPT
RADIO INTERVIEW
2GB MONEY NEWS
TUESDAY, 4 JUNE 2019
 
SUBJECTS: RBA interest rate cut; Liberals’ economic mismanagement; income tax cuts; coal; Labor’s vision to grow the economy
 
ROSS GREENWOOD: The man who is going to be opposing Josh Frydenberg in that role during this next period of Parliament is Jim Chalmers, who is newly appointed as the Shadow Treasurer, and he's on the line right now. Jim, many thanks for your time.
 
JIM CHALMERS, SHADOW TREASURER: G'day Ross, how are you doing?
 
GREENWOOD: Very well, thank you. We've spoken several times on the program before talking about economic matters when you were Shadow Spokesman for Finance. But now in this new role, it's obviously an important thing to try and work out how jointly you and the Government - that is, the Labor Party and Government - make certain that the economy doesn't slip backwards; make certain that Australians maintain their jobs. These are all key things that both sides of politics, if there's one message I'd take from the election, is that they need to work together. Is that the way you see it as the Shadow Treasurer?
 
CHALMERS: Well, absolutely Ross. Our highest priority has to be good jobs for people; well-paid jobs. If you look at the statement that the Reserve Bank made today, there in that fourth paragraph they said the biggest problem in the domestic economy is we've got weak household consumption. That's because we've had low income growth or low wages for such a long time now. And I think today's decision by the bank really should be a warning sign to the Government that we've had for some time now slowing growth. We've now got rising unemployment, stagnant wages, weak consumption, weak household saving; debt's more than doubled in the Budget under the life of this Government. So we've got some real challenges here, and it's not enough for the Government just to blame the Labor Party or to pat themselves on the back for being so-called superior economic managers. They can't just talk the talk, they’ve got to walk the walk as well. We're always prepared to play a constructive role in that. That will begin with our enthusiastic support for the first tranche of the income tax cuts, which should have come into place the first week of July which favour people on low and middle incomes. If we get people spending in the economy again, that gives us a bit of a chance to give the Reserve Bank a hand with this big challenge we've got with economic growth flagging.
 
GREENWOOD: One interesting thing about the Reserve Bank today, and you're quite right to talk about the declining sort of growth in wages. But of course the one issue has been out there that there have been more jobs created. Now I've always taken the view that a person who might be not necessarily getting paid as much as they would like to be paid is far preferable than a person who's been paid nothing because they are unemployed. And it's trying to get some sort of balance in here, because what's happened is it seems to me, that as families have felt the squeeze on their on their cost of living, you've seen more, particularly mothers, come back into the workplace trying to seek work to try and manage the mortgage, to balance the household budget. Is that the way you see it as well?
 
CHALMERS: The way I see it Ross, is that we've got all these problems compounding each other at once. We've got rising unemployment. The rate went up to 5.2 per cent in the most recent data.
 
GREENWOOD: But just to jump in there, that wasn't because lots of people became unemployed. That's because lots of people chose to come into the workforce. So the participation rate rose. So it's a different thing, even though the actual rate rose and I get that, it's partly because lots of people were actually chasing a job. The work was out there and so they're chasing money at the same time.
 
CHALMERS: The point I was going to make, Ross, is we've got rising unemployment at the same time as we've got these remarkably stagnant wages for some time now. I think the defining feature of the economy for a lot of people is that their work is insecure. I think we've got a record number of people working a couple of jobs to make ends meet. We've got extraordinarily high underemployment, which is people who are looking for more hours and can't get them. And what that is feeding into, I think, is this broader economic weakness. It's the biggest problem we have in the economy at the moment, which the Reserve Bank pointed to again today. I don't think we have a plan from the Government to address that. We've seen the Reserve Bank do their bit today and I think it's time the Government did their bit as well.
 
GREENWOOD: Okay, but then there's one other aspect of this, and that is if interest rates do get down below one per cent for this cash rate, there's not a lot of ammunition left if say, for example, and God forbid that it were to happen, but if there were some international crises and we know certainly there's also talk about even the US having to cut interest rates because the trade war could significantly weaken its domestic economy. Now if that really spills over into something of a global nature, Australia will not be immune. I guess the Government and the Reserve Bank have got very few options but to try and stimulate the economy by borrowing more money, handing out greater tax cuts and really, potentially, plunging the country even further into debt. So these are some of the options either side of Parliament, either side of the political divide, might have to face over the next 18 to 12 months. On a worst case scenario, should I say.
 
CHALMERS:  A couple of things about that, Ross. First things first, we should pass the first tranche of the tax cuts for the reasons identified before. We need to get people on low and middle incomes spending in the economy again. That will be helpful in conjunction with what the Reserve Bank has done. And you're right that the market is anticipating further rate cuts down the track, and that means that interest rates - or the cash rate - will be extraordinarily low. You would remember probably better than most people - I certainly remember in my history - that when the Global Financial Crisis saw the sharpest synchronised downturn in the global economy since the Great Depression, interest rates in Australia bottomed out at that point at three per cent. Now they're less than half that. So they are extraordinarily low. And you're quite right that we would run out of ammunition if they went much lower than they are right now. Any Government of any persuasion would have to consider the circumstances at that point. But let's get that first tranche of tax cuts passed first. Let's deal with that so that we can give the Reserve Bank a hand with their task of trying to restore some growth in this economy. The economy is floundering at the moment. We've got that wages crisis. We've got a floundering economy. We've got the National Accounts out tomorrow, which most people expect will be soft again. Many people are expecting the growth number to have a one in front of it, which is well below trend. So we've got a big problem. It's the Government's responsibility to come up with a plan. Labor, for our part, will do whatever is responsible; whatever is reasonable in the circumstances that we’re dealt.
 
GREENWOOD: One thing I noticed you talk about in the last little while, I just want to pick you up on this, and that is by saying that coal - and you've said this in the past couple of days - will play an important role in the medium term, even as we transition to cleaner energy forms, you're basically saying at that point, number one, if Adani passes all of its tests it should go ahead. Number two, that people have got to get used to the idea that there will be coal-fired power stations around for decades and decades to come into the future. Because if we don't, we will not have energy security in this nation.
 
CHALMERS: I've actually been saying that for a few years now, Ross. I know that it's got a new prominence since the election and that it's been reported more prominently given I took up the Shadow Treasury role. But I've actually been saying for some years, as have my colleagues, that coal has a role to play. We understand that it's an important part of the industrial base here in Queensland, the best state in the Commonwealth. And so, we have said that repeatedly. When it comes to the Adani mine, I don't think that will be a factor at the next election and we certainly don't have any decision-making powers in the Federal Labor Party; we're not in government. And so I've just expressed the reality; that if it clears the environmental and commercial hurdles, it will go ahead. That's just the fact of the matter.
 
GREENWOOD: Okay. So when it comes to the Parliament itself, the first tranche of tax cuts you would agree to. But of course the Government is going to put those tax cuts through the Parliament in one block. So how do you get around that, because quite clearly those tax cuts might otherwise be needed to help to stimulate the economy in the absence of the ability for the Reserve Bank to really cut interest rates terribly much more than beyond one per cent?
 
CHALMERS: I think it's really important we pass that first tranche of tax cuts for all the reasons I've identified. I think it's disappointing that the Government has said that they won't split the bill. I think that would be the right and responsible thing to do so that we can get that tax relief to people on modest incomes in this country and in this economy. The fact that they are not doing that, I think shows that they prefer to have a fight with the Labor Party rather than actually deliver genuine tax relief and cost of living relief. As for the rest of the package, we've said that we are considering the rest of the package. We still have some questions for the Government which have not yet been answered in terms of the total value of the tax cut for people in the highest income tax bracket. We'd expect that to be answered before we conclude a view. I think that's entirely reasonable.
 
GREENWOOD: Okay. And then here's one thing that I'm sure across the political divide, both political sides could agree that a) we would not want a recession b) we wouldn't want a sharp increase in the number of people unemployed and c) we would want our prosperity to continue for another 20 years if that were at all possible.
 
CHALMERS: Of course Ross, that's our objective, certainly in the Labor Party. We want to see the economy grow in a sustainable way, a broad-based way, so we can create good jobs for people so they can provide for their families. That, in a nutshell, is the task of economic policy. We're prepared to do our bit in that in meeting that objective. I think any objective observer of the economy right now would conclude that it's not working for middle Australia. There are substantial problems in growth, in wages, in consumption, right across the board. And particularly in the people-facing part of the economy. And those sorts of challenges can't continue to be neglected by the Government.
 
GREENWOOD: Jim Chalmers is the Shadow Treasurer and also of course a proud Queenslander. The MP for the seat of Rankin, we should point out as well. And Jim, no doubt we'll be talking again on the program and debating all sorts of bits and pieces, but we appreciate your time on the program this evening.
 
CHALMERS: Look forward to it Ross. Thanks so much. 
 
ENDS