2CC CANBERRA DRIVE
TUESDAY, 21 JULY 2020
SUBJECTS: Changes to JobKeeper and JobSeeker; arts and charities sectors left behind.
LEON DELANEY, HOST: Joining me now the Shadow Assistant Minister for the Treasury, Andrew Leigh. Good afternoon.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Good afternoon, Leon. Great to be with you.
DELANEY: Thanks for joining us today. Well, what's your take on the JobKeeper announcement today?
LEIGH: It's clear that JobKeeper couldn't continue forever, and I think many people will be glad to finally know what's going to happen after September. The Prime Minister should have announced this well in advance the Eden-Monaro by-election but decided to hold off until now, which I know has created a lot of angst among firms and employees in my electorate. So we'll go through the details. It seems to make sense - we've always said that there was something strange about providing $750 a week to a long term casual who'd only been working a day a week but providing nothing to a short term casual who was working full time. So there's a little bit more targeting going on here. I frankly would have liked to see the government do even more to make sure the money goes exactly where it's most needed.
DELANEY: Obviously, as you say, couldn't last forever but the step down from $1500 to $1200 and then subsequently down to $1000 per fortnight as of January - is that fair and reasonable, do you think, as a way of phasing this support out? Or is it too soon for an economy that will remain fragile for quite some time?
LEIGH: Well, I think any forecaster has probably got egg on their faces at the moment. There's not many people that saw the pandemic coming. So we want is policy that remains agile in the face of potentially changing circumstances. We had a decline in caseload a month ago and now we've got a fairly significant increase in caseload, not just in Victoria but also in New South Wales, and potentially - if things go bad - here in the ACT as well. So policy needs to be able to respond to that if the virus takes its head. There's also going to be substantial structural adjustments. Now, we imagined early on the pandemic that the place would just be frozen and then back to normal in a couple of months. I think it's increasingly becoming clear now Leon that there's going to be some changes in the economy. It's going to be a different kind of economy. Probably in a couple of years, people will be less likely to do international flights and crowd into movie theatres and nightclubs then we might have been last year. So thinking about those structural changes and where the jobs of the future come from is really important, and I hope we get a bit more direction on that from the Government later in the week.
DELANEY: Yeah, obviously, people have been using the phrase ‘the new normal’ for quite some time now, but we still don't really know what the new normal is. I think the crucial point here though is that the Government appears to be attempting to chart a course to recovery, on the way emerging out of the crisis. The problem is that around the world, people are not emerging from the crisis. Around the world, on average, the crisis is actually still getting worse.
LEIGH: Absolutely. You look at World Bank and IMF forecasts for what global growth is going to be and they’ve been getting steadily worse and worse. So the IMF now has a 5 per cent contraction this year, 5 per cent expansion next year. The World Bank's a little bit worse than that. Both of them are suggesting that the global economy simply won't grow over the next couple of years on average. And that has got huge implications for Australia, which has benefited from global growth, including growth in China. And so to have the problems in our trading relationship with China at the same time as the pandemic hits really puts a lot of pressure on the economy.
DELANEY: Some elements of the global economy have actually been holding up well and that may well be based on misplaced optimism, because when you look at the medical reality around the world, rates of infection is still increasing.
LEIGH: Yes, that's right. If you look at the restrictions put in place in Australia, we've had relatively mild restrictions compared to other advanced economies. We've simply been fortunate that Australia is not a place that people pass through on the way to other places, and I think it's those transit nations - Britain and the United States - that have really copped it hard. We've got a good testing regime, which I think has been pretty important. You look at the challenges with testing in the United States, and I think that's one of the factors that are driving their relatively high rate of infection per person.
DELANEY: Turning our attention back to today's announcement again. Now, the other part of the announcement was the future of JobSeeker. The decision to reduce the coronavirus supplement by $300 a week was not entirely unexpected. But does it strike you as being a fairly savage cut?
LEIGH: It's pretty significant in an environment in which for every available job there's 13 people wanting it. I think we're a little bit better here in the ACT, but even so, you've got many more job seekers than you do jobs available. So unemployment benefits are not simply going to be something that people are on as they transition from one job to another. They're going to be an enduring state of affairs for many people. And then you've got to ask the question as to whether the $40 a day figure, that we were running on last year, is really the sustainable figure going forward or do we need to be a little bit more generous to people who are seeking jobs?
DELANEY: Well, obviously the $250 figure is what we're told to expect until the end of the year. We've also been told that there may be some form of continuation of that support beyond the end of the year. But again, details are vague. As we've discussed before, even before there was a coronavirus crisis going on, there was much debate about increasing the level of what was then known as NewStart. All those arguments still haven't gone away. Are you hopeful that the Government is perhaps setting a price point now where it might be happy to settle afterwards in terms of a permanent level of JobSeeker support?
LEIGH: Look, I certainly hope so Leon. You look around the world and our unemployment benefits are among the least generous in any country. And that's been an issue that's been highlighted not just by Labor - which took a policy the last election of raising Newstart - but also by the Business Council of Australia. Many people have acknowledged that we need to increase unemployment benefits. I think now would be the time for the Government to make clear not just what happens in the transition phase, but what happens long term and how we can ensure that we're a society that is generous to those who were seeking jobs at a time when there's 13 job seekers for every available job.
DELANEY: So that level of $250 above the old Newstart level, in your view would that be adequate and sufficient as a permanent price point going into the future?
LEIGH: Well, I don't imagine that that's going to be where the Government lands at. I think they're looking at that as a transition phase. What I'd like to say is for them to put a permanent figure on the table, to recognise that we've got a headline unemployment rate which is below 10 per cent but everyone acknowledges we have a real unemployment rate above 10 per cent. We're in the first recession in 30 years, and there's just not the same number of jobs around. And this whole rhetoric of ‘leaners and lifters’, this idea that anyone who's without a job haven't tried hard enough, that's just ridiculous in the current environment. There just aren't the jobs out there, and we need to be compassionate to those who are seeking them.
DELANEY: Yeah, my point there of course is that even before all of this, the argument was that the Newstart rate needed to be increased by at least $75 a week. Then the people pushing for that then revised that upwards to at least $100 a week. We're sort of in that territory now. If the government managers should ultimately decide to keep that increase of $250 a fortnight, it would be a reasonable level for them to settle on going forward. You're not convinced that they might consider that?
LEIGH: Look, you're right that we’re in the numerical ballpark of this temporary figure, but it's clear that this is just a temporary figure from the Government and they don't want to put a figure on the long term plan. I think that's a pity because we are in an environment now where job seekers would like a little bit of certainty as to what's going on. We could be in a stage soon where people will start to lose their homes, and the impact on people's mental health will be really tough. This is an extremely challenging time for Australia. Even if we find a vaccine - and this Oxford University phase two trial is pretty promising - we still know that unemployment takes about twice as long to come back down as it did to go up. So we're in this for the long haul.
DELANEY: There's an opinion piece by an academic from the ANU, Adam Triggs, today suggesting that the Government has been guilty of a policy failure here by announcing these as temporary measures rather than announcing some sort of permanent change, because he argues that a permanent change encourages businesses and households to make long term decisions that underpin investment and major spending, whereas temporary changes only encourage people to hide their savings away. Is he right?
LEIGH: Adam’s a very thoughtful scholar on this and many other issues, and I think what he's highlighting there is that the Government is always talking about the importance of long term certainty to business investors, but the same philosophy applies to households. Households need to know what's there for the long term, particularly the time when we've got the lowest employment-to-population ratio in Australia in the post war era. This is a time when so many households are doing it tough. We're seeing retail figures collapsing, and anyone who's reliant on international education or anyone's whose reliant on international tourism is really struggling right now, and will continue to struggle over the next 12 months because the border reopenings will take a long time coming.
DELANEY: They certainly will. And this idea that Newstart – not Newstart, but JobSeeker recipients - will be able to earn $300 in casual earnings before having their entitlements affected in any way, is that just a bit of wishful thinking? Is anybody going to be able to find $300 worth of casual work?
LEIGH: There are casual jobs around, but a whole lot fewer than they were a year ago. It's an extremely challenging environment, and that follows through to particularly the art sector and the charity sector, which I've been watching closely. Alicia Payne, Dave Smith and I recently held a tele-roundtable with Tony Burke, the Shadow Arts Minister, to talk to local ACT arts agencies recently and all of them were talking about the problems that they're facing. You know, they're there to tell our stories. They also provide significant amounts of employment, but they haven't got the support that they need. Likewise charities: you've had a big drop off in donors and volunteers, a huge call on their resources, but haven't got the Government support they deserve.
DELANEY: Indeed. Thanks very much for your time today.
LEIGH: Always a pleasure, Leon. Take care.
Authorised by Paul Erickson, ALP, Canberra.