PARLIAMENT HOUSE, CANBERRA
WEDNESDAY, 4 MARCH 2020
SUBJECTS: Morrison’s ‘delivered’ surplus; Coronavirus; falling productivity; manufacturing.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Good morning. My name is Andrew Leigh, the Shadow Assistant Minister for Treasury. As Warren Buffett once put it, it’s only when the tide goes out you discover who's been swimming naked. Labor has been warning about problems in the Australian economy for many years now. We've been talking about the low productivity problem, the fact that growth has slowed since the government came to office. We've been pointing out that business investment is now at its lowest level since the early 1990s recession. We've noted the slowdown in the rate at which new businesses are being created. Australia has seen a motza of mergers, but a scarcity of start ups. Labor has noted the problems in innovation in the Australian economy. We've pointed out that retail spending is in a bad way, that construction faces significant challenges, that business confidence has taken a whack.
Throughout their nearly seven years in office, the government has done nothing to address these deep-seated structural problems. If anything, they've done harm. Think about the harm that was done to Australian households by the 2014 horror budget, or Scott Morrison's first plan when he became Treasurer of raising the GST to 15 per cent. Labor has been pointing out the need for greater incentives for business to invest for some time now. These were part of plans that we took to last year's election.
The fact is that economic crises are a part of economic management. The Howard Government faced the Asian Financial Crisis. The Rudd Government faced the Global Financial Crisis. So the government cannot simply use as an excuse the fact that it too is facing a challenge in the world economy in the form of coronavirus. The Coalition had a one point economic manifesto. It said it would deliver a surplus. It promised that it was going to be able to cut taxes and still deliver that surplus. In fact, they were patting themselves on the back before they got to the finish line, saying they had already delivered the surplus last year. That isn't the standard that Labor set. That's the standard the Coalition set for themselves, because they are after all the dumb step kids of Peter Costello, whose notion of good economic management was to run razor thin surpluses and forget about serious economic reform.
So if the government fails to meet their own surplus target, they will be on them. They've said they have already met that target. They have set that as the standard. We in Labor have said that there is much more that needs to be done for the economy, and if much more had been done, we'd be in a much better place today. If the government had had policies to raise wages rather than to cut penalty rates, then Australian households would be better off facing down this challenge. If the government had had policies on human capital and infrastructure to address productivity, we would be in a better place there too. We could have a stronger growth rate than we have today. We could have an unemployment rate that looks a whole lot more like America's, Britain's, New Zealand's or Germany’s, where unemployment sits about a point below ours.
So Australia needs greater economic management and needs a government that will take responsibility, rather than shirking, ducking and dodging as they’ve done on everything from sport rorts to economic management. Happy to take questions.
JOURNALIST: The government’s been citing some pretty extreme biosecurity measures as part of the laws that have never been needed to be used before. Do you think that's too much, given that in Australia we haven't seen the widespread outbreak of Coronavirus that we’ve seen elsewhere?
LEIGH: Labor's taken a bipartisan approach to biosecurity. We’ll certainly respond based on the comments that the experts have made. We've had briefings from the chief medical officer. He briefed Labor members yesterday, and we respect the science on this, as we do indeed on issues such as climate change. So we will continue to go with the experts on an issue as important as biosecurity.
JOURNALIST: Andrew, we’ve had 29 years of economic growth without recession. Surely that's not a bad result?
LEIGH: I think it's important to remember that a lot of our economic growth has been on the back of population growth. So if you look on a per person basis, things don't look quite so rosy. According to the HILDA survey, we've seen on a per person basis household incomes go backwards from 2013 through to their most recent numbers. On a per person basis, household spending didn't grow at all last year. The government likes to claim credit for the fact that there's more people in Australia than there were. I'm a fan of population growth as well, but it’s not a measure of living standards. What drives up living standards is productivity growth, and we're actually seeing productivity going backwards. We haven't had capital deepening - we've had capital shallowing. So all of these problems predated bushfires. They predated Coronavirus and they’ve put the Australian economy in a troubling position with which to face down these latest headwinds.
JOURNALIST: What’s the structural problem with the economy? Is it the fact we lack manufacturing? That we don’t actually make stuff anymore, we just sell rocks and education and can’t produce anything or value add? Is that the problem?
LEIGH: It's a great question. I gave a speech to the John Cain Foundation recently about Australia's stagnant economy. We face a significant productivity challenge, which in my view has to do with the fact we haven't addressed issues such as human capital through raising teacher quality and ensuring everybody who has the smarts to go to university gets a place. We also don't have the same calibre of management quality, according to the surveys, as many other countries. So we do have significant productivity challenges, innovation challenges. Our best firms are falling off the global productivity frontier. Ninety five per cent of Australian firms according to Treasury have barely increased their productivity since Sydney hosted the Olympics in 2000. These are problems which didn't just turn up in the last month or two. These are problems that have been there throughout the period of this government, and which they've just ignored.
JOURNALIST: What would you say to all the people right now that are panic buying all the toilet paper at Woolies?
LEIGH: I'd give them the same advice the chief medical officer has been giving. I think we need to go about our daily lives. If you're feeling unwell, obviously you should be self-isolating. Travellers should follow the advice that's available on the Department of Health website. But at this stage, there's no cause for panic or alarm. People should go about their daily lives, practice good hand hygiene, which will stop you getting a cold at any time and frankly is a good way to live regardless of what the global health situation is.
JOURNALIST: But surely you can acknowledge that people are scared?
LEIGH: Absolutely. That nervousness is around, and I think it's the job of all leaders - and Labor's look to be bipartisan on this - to be sensible and calm, methodical and measured about the evidence that we have on the coronavirus so far. There are practical steps people can take to reduce the risk. This is a virus which the experts tell us is extremely contagious, but the mortality rate is lower than on some previous pandemics.
JOURNALIST: [inaudible] question – do you think that the 1974-75 Lima Agreement that was signed by both Fraser and Whitlam was a good idea in retrospect?
LEIGH: Sorry, the ’74-75-
JOURNALIST: -Lima Agreement, which basically said we're going to send manufacturing overseas to third world countries and buy their products. That was a, basically, a deliberate act by the government to actually displace our manufacturing. But way back in 1974-75.
LEIGH: I'm not across every detail of the policies of the Whitlam Government, but certainly under this Coalition government you've seen a significant hit to manufacturing. They goaded Holden to leave the country without a plan as to where the alternative jobs would come from. We've seen apprenticeships and training numbers absolutely crater. And you understand why it becomes more difficult to attract overseas manufacturing firms to set up in Australia when we don't have the apprentices and trainees. Human capital is fundamental to industrial development, whether that's in agriculture, manufacturing or services. And under this Government, we just haven't seen those core investments in Australia's skills which are so critical as the automation revolution advances. Thanks very much everyone.
Authorised by Paul Erickson, ALP, Canberra.