Economic snapback can't be throwback to bad policies - Transcript, ABC News Radio




MONDAY, 11 MAY 2020

SUBJECTS: Australia beyond the coronavirus; JobKeeper; the Coalition tripling Government debt.

GLEN BARTHOLOMEW, HOST: Labor MP Andrew Leigh was in that caucus meeting for that speech from Anthony Albanese. He's the Shadow Assistant Minister for Treasury and Charities, and joins us now. Good afternoon.


BARTHOLOMEW: Not bad. Mr Albanese says the coronavirus crisis is an opportunity to reshape the economy. What more can you tell us about what specifically he might want done?

LEIGH: We need to ensure that the snapback isn't a throwback, and that we build a nation which is stronger, fairer and more committed to tackling the challenges of the future than we were beforehand. It's not as though we entered the crisis from a position of strength. The Reserve Bank's statement on monetary policy last week said private demand had been weak. People have been saying for many years that productivity was in the doldrums, and noting the problems with languishing wage growth and stagnant household living standards. So there’s a lot we can do in order to invest in social housing, to make sure we get a more cooperative relationship between business and unions, and to create an environment in which our scientists and our academics are working to boost research and development in Australia, so we're a more diversified, more productive economy.

BARTHOLOMEW: You said we shouldn't snap back to insecure work. How do we do that in a fractured economy where employers will be keen to save every dollar?

LEIGH: It's vital that we have a mix of employment that recognises that workers need salaries that can support a family and can pay a mortgage. At the moment we've got too many Australians working in fragile insecure work, which while it might be fine for a couple of years when you're a teenager, but really doesn't serve people who are in middle age trying to support a family. We need a better balance of fairness across for example areas like temporary work, which has expanded not just to fill temporary vacancies but has become a way of life for too many employers.

BARTHOLOMEW: That's it. It’ll be going against the trend a bit. Mr Albanese also said he didn't want us to return to the job seekers stuck in poverty. Where do you stand on the future of that JobKeeper program? Should it be amended as people start to return to work or at least be better targeted?

LEIGH: I thought Deloitte put it nicely today in saying the JobKeeper should be phased out rather than cut out. The problem with the Government's plans right now is that almost all of its proposals have an end date sometime around September/October. So that could really slow the economy at a time in which we're really trying to boost growth. We know that recovering from past crises takes some time. Unemployment tends to come down about half as fast as a went up – it takes the lift up and the stairs down. And so as a consequence, we need to be investing in sources of growth but also supporting those who find themselves without jobs. This is a particularly tough time for young Australians who disproportionately lost jobs, and for the people in the hospitality and arts sectors where one in three jobs and one in four jobs respectively have gone. It's going to be a challenging time for many Australians and we need to ensure they've got the support there that they need.

BARTHOLOMEW: So that's a yes to it being tinkered with as required, to make sure the people who do need it get it rather than people who might be actually profiting from it, making more money now than they were when they were in work.

LEIGH: Yes. Glen, we argued in Labor that it should be turned on faster. We were arguing for a wage subsidy scheme straight out of the blocks and it took the Government a couple of weeks to get that in place. We were pleased when they did that, but they need to also recognise that the impact of suddenly turning off the JobSeeker and JobKeeper programs could be wrenchingly painful for the economy.

BARTHOLOMEW: You mentioned Deloitte Access Economics. They're predicting the nation's budget deficit could blow out to more than $140 billion this financial year, the worst blowout in history. It says the hangover from the traumas of COVID-19 will see us in dire straits for years to come. The Treasurer Josh Frydenberg’s delivering something of an economic statement tomorrow in lieu of the scheduled federal budget. What do you hope it will contain?

LEIGH: It needs to contain some admissions around debt. It needs to acknowledge that debt had been doubled by the Coalition before this crisis came along and will now go to probably triple the level that the Government inherited in 2013. So the government needs to be clear with the Australian people about the economic and budget figures. They would have normally been announced at the time of May budget and should be released now and then updated again in June. We need full transparency from the Government about the state of the books at a time in which Australians are taking on more government debt than ever before, and when households are also facing considerably higher levels of debt. We're fortunate that global interest rates are about as low as they've been in ten thousand years, but we've also seen a pretty unprecedented run up of debt.

BARTHOLOMEW:  We may recover faster than the rest of the world. What's your reaction to claims that our assistant spending should be wound back, that overall we have the world's biggest stimulus package at around 16 per cent of GDP? Do we need to reconsider its scope given our success in suppressing the virus so as to save tens of billions of dollars? Should it change as the circumstances change?

LEIGH: That figure I think includes a monetary stimulus there, Glen. The figures that I've seen which compare packages simply looking on a fiscal basis put the United States package a little larger than Australia's. We've had probably the biggest shock to the economy in many decades. We're at a stage now where consumer sentiment is the lowest since the 1990s recession, business sentiment again the lowest on record, the new car sales figures the worst in 20 years, and the forecasts for unemployment have it going to potentially double digit this year and still being high by the end of next year. So in that environment, it would be a mistake to be withdrawing stimulus too quickly. But at the same time, we should look at ways in which we can invest in the productive capacity of the economy, and that was why Anthony Albanese was speaking today about the importance of investing in projects ranging from green energy to manufacturing, ensuring that we're using up that surplus labour. Unemployment is a terrible waste of human resources, and so any way in which we can ensure that people aren't left on the sidelines at this time is vital, including opening up of opportunities for university education.

BARTHOLOMEW: And you'd agree that a co-operative approach rather than a combative one is what's needed right now?

LEIGH: Absolutely. I think that holds not only within the parliament, but also more broadly. The battles that the Coalition has been waging against the union movement, now’s the time for them to down swords and recognise that unions have played a really constructive role in the economy and can continue to do so going forward.

BARTHOLOMEW: Let's see how long that co-operative spirit lasts. Andrew Leigh, thanks very much.

LEIGH: Thank you, Glen.


Authorised by Paul Erickson, ALP, Canberra.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.