The Australian economy needs leadership - Transcript, Sky News

E&OE TRANSCRIPT
TV INTERVIEW
SKY NEWS FIRST EDITION
TUESDAY, 5 NOVEMBER 2019

SUBJECTS: The Morrison Government failing to manage the economy; the Morrison Government failing to step up on the world stage; Labor election review.

LAURA JAYES: Let’s go live now to the Shadow Assistant Minister for Treasury, Andrew Leigh. He joins me now from Sydney this morning. Andrew Leigh, thanks so much for your time.

ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Pleasure, Laura. 

JAYES: First of all, the RBA is meeting once again today to consider a rate cut, if another one is needed. What’s your tip on what decision they’ll make?

LEIGH: The markets have the Reserve Bank keeping rates on hold, but regardless of whether they cut by another 25 basis points or keep constant at 0.75 per cent, the RBA is running out of monetary policy firepower. We know that there's limited impact that quantitative easing could have, and so really the question is: will the Morrison Government step up and do with fiscal policy what the Reserve Bank can't do with monetary policy? We need structural reform. We need fiscal policy, and we need it now more than ever, given that we've had the worst retail sales numbers in a generation coming out yesterday. On a per person basis, the economy shrank over the last fiscal year. We've got unemployment a percentage point higher than in Britain or New Zealand or the United States. And we've got problems with wage growth being in the doldrums, which is really at the heart of the retail sales problem.

JAYES: Labor has called for the second round of tax cuts to be brought forward. Given what we’ve seen over the last three months, is that still a prudent call to make?

LEIGH: Certainly would be. You could also bring forward infrastructure spending, or you could put in place the-

JAYES: But just on the stimulus and on the tax cuts, why do you make that argument?

LEIGH: The Australian economy is in serious strife, and under normal circumstances you might expect a combination of monetary policy and fiscal policy to smooth the business cycle. But right now the Reserve Bank is hitting that zero lower bound. Thirteen economists were asked yesterday by the Conversation what they think ought to be done. They all said the Government needs to step up and do more on the fiscal front. What-

JAYES: Is there evidence that this first round of tax cuts has actually had the fiscal stimulus that was promised?

LEIGH: They've had much less than the Treasurer promised. The Treasurer said that that would be plenty, that that was all you needed to do, and he's been proven dead wrong. The-

JAYES: Why then would you ask for the second round to be brought forward? That’s what I’m trying to get to.

LEIGH: The impact is going to be larger if you provide larger tax cuts, simply stands to reason. But you can also do things on the business front. So we took to the last election a policy of an investment allowance, which would encourage firms to bring forward investment. The Treasurer has done the absolute worst thing possible with that. He said he might do it in the next budget. In other words, he's effectively saying to Australian firms ‘hold off on your investment, you'll probably get a better deal next fiscal year’. That's exactly the wrong policy. The Treasurer ought to be implementing an investment allowance right now. Bring forward a budget update, and let's get it done.

JAYES: So you’re saying that first round of tax cuts wasn’t big enough?

LEIGH: That first round of tax cuts didn't have the impact on the economy that the Treasurer said they’d have. He said we didn't need to bring on the second round of tax cuts because his first round would cause a surge in consumer spending, and he's been proven absolutely wrong by the figures we've seen out yesterday. We know that the economy needs more help from the government. We're just not getting that though. We're not getting the structural reform, the competition policy reforms, the human capital reforms in making sure our schools and universities work better. They’re things which will turbocharge the economy in the long term. Many people, including on the Liberal side of politics are increasingly saying: what is the point of the Morrison Government? It’s not interested in structural reform. They’re a re-run of the Fraser Government, a government which is very happy to drive around in C1 and have offices in the blue carpet, but has no interest in the issues of everyday Australians and improving Australians prosperity and equality.

JAYES: So given what you’ve just said about the first round of tax cuts, would you now argue that the second round which Labor wants to see far more quickly, should they be more substantial and perhaps bigger?

LEIGH: We believe they should have been brought forward and that's still our view, but that's just one of a suite of things that could have been done, Laura. I look at the opportunities that this government has right now to build prosperity for all Australians. They could be moving faster on the World Trade Organisation dispute resolution mechanism, to improve opportunities for our exporters. They could be doing much more on the competition policy front to spur start-ups.

JAYES: If the Government did that, we wouldn’t be ratifying the free trade deals before parliament now, would we? Because it was take it or leave it.

LEIGH: Well, you’re talking about, in the case the Indonesia Free Trade Agreement, an agreement which was started by Labor nearly a decade ago. It's terrific the government's got that done, but the big action is in multilateral trade liberalisation. The big challenge there is the breakdown of the WTO dispute resolution mechanism, and Australia isn't in there as we would have seen the 1980s and 1990s, actively looking to forge a solution with likeminded openness-oriented countries. This is a moment where the world economy is crying out for leadership, and Australia is looking like we want to play deputy sheriff to the United States rather than stepping up to that role as a serious middle power.

JAYES: Well, given this – Labor lost the election just a couple of months ago and as you point out, in these tough economic times – wages growth is slow and unemployment isn’t as low as most would like it – but people still voted for the Coalition. What do you expect this review on Thursday to say about your loss?

LEIGH: We'll wait and see. I suspect that we underestimated what was needed to bring about change. We might have forgotten that before Whitlam, there were 23 years of conservative lassitude. Before John F. Kennedy took over in the United States, you had eight years of Republican rule. Maybe not enough water had built up behind the dam for people to want the sort of serious changes that Labor took to the last election.

JAYES: But what went wrong, Andrew Leigh? Do you really need a review to tell you?

LEIGH: Absolutely. I think any serious organisation when it makes mistakes carries out a sensible review as to what went wrong. That's what you'd expect in the corporate sector. It's what Labor's doing here. It'll be publicly released, warts and all. We'll have that conversation, and make sure we can do better for the millions of Australians who supported us. Let's not forget, we got over 48 percent of the two-party vote. We managed to get a significant share of Australians to support us. Those Australians are as disappointed as I am in the election result that we saw on May the 18th.

JAYES: Andrew Leigh, thank you. 

LEIGH: Thank you, Laura.

ENDS

Authorised by Paul Erickson, ALP, Canberra.


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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | Andrew.Leigh.MP@aph.gov.au | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.