Government needs to change tack to avoid entrenching poverty - Transcript, 2CC Canberra Drive


SUBJECTS: JobKeeper and JobSeeker; Cuts to universities and job losses in Canberra; the Morrison Government’s lack of long term planning; the need to support unemployed Australians and maintain a liveable rate of JobSeeker.

LEON DELANEY, HOST: The battle over whether or not to reduce employment subsidies continues, although that reduction is due to take effect from the beginning of next week. New analysis shows that the ACT will lose almost $17 million a week when the payments are reduced next week. The JobKeeper rate is due to fall by $300 a fortnight from the start of next week for full time employees, by $750 a fortnight for part time employees, and further reduced again in January, Joining me now, Member for Fenner, Dr Andrew Leigh. Good afternoon.


DELANEY: Very well, thanks. Thanks for joining us today. JobKeeper - well, we've said all along it was a jolly good idea. It's done a great thing in keeping the economy supported. It could have been a little better, there were some cracks through which some people fell. But now of course the crunch time has come. We're about to see it start being wound back. There's been a lot of argument and discussion in recent times about whether or not now is the time to do this, but that's what's happening. What do you see will be the fallout when this proceeds next week?

LEIGH: It'll be twofold, Leon. First of all, we're going to have a range of people not getting the support that they used to have, either because their firms aren't eligible or because their amount of assistance is being scaled back from $750 a week to $600 a week. But we're then also going to see the spill over impact to the community, because JobKeeper money is going to people who are living paycheque to paycheque, and so it's all getting spent. It’s all going back into retail, into hospitality, into paying the rent. And so we're going to see millions of dollars ripped out of the ACT economy when JobKeeper gets cut at the end of the month.

DELANEY: Do you believe then if that's the case, winding back JobKeeper will actually perversely cause more unemployment?

LEIGH: It certainly could. I mean, don't forget when was put in place back in March, the Prime Minister was promising that there would be a snap back of the economy. That we’d press the pause button and six months later everything would be back the way it was, anticipating perhaps there’d be a vaccine by now. None of that's come to pass. It's very clear that if there's going to be a recovery, it's not going to be a V-shaped recovery. If anything, it's more likely to be an L-shaped recovery or K-shaped recovery-

DELANEY: [laughter] Now these technical terms, I'm sorry - these economic technical terms are a bit too much. But what the hell is a K-shaped recovery?

LEIGH: So an L-shaped recovery is one in which you flatline, that one's pretty straightforward. A K-shaped recovery is one in which it you diverge. So you've got-

DELANEY: Aaaah - some people going up, some people going down. Okay.

LEIGH: Exactly. And for those who are working for example in jobs that get automated away, or which get significantly affected by the drop off on national tourism, or the cuts to universities that the federal government's leading to, then they end up copping the brunt of it. So we get more inequality than we had before.

DELANEY: Okay. When it comes to terminology for recovery, I thought Paul Keating’s graphic, colourful language was much more readily comprehensible - a dead cat bounce, everybody could understand that.

LEIGH: Absolutely. And that's Paul with the gift of the gab once more. There’s certainly a risk that this is an enduring hit. We've been thinking at the beginning of the year that perhaps there wouldn't be an effect that carried onto 2021. Now, it's pretty clear 2021 growth is going to look lacklustre and that there's going to be permanent effects on the economy. I worry, Leon, that the federal government just hasn't done the long term planning to think about how the economy is going to be changed and then to provide Australians with what they need to survive and thrive in the new economy.

DELANEY: Well, obviously they've been given plenty of advice, including from the Reserve Bank. We've seen the Reserve Bank Deputy Governor Guy Debelle today telling us that it could be about three years before we see interest rates moving upwards again, maybe even a lot longer depending on how things go. The Reserve Bank has been warning us all along that recovery is not going to be rapid - it's going to be a slow, steady climb when we do start to climb. We've seen Treasury projections telling us that unemployment is going to remain significant well into next year. In fact, we're seeing projections that unemployment will be higher at the end of the year than it is now. Although, you know projections being projections, you can't be sure. And yet the government is still pressing ahead as if everything is rosy. It doesn't quite add up, does it?

LEIGH: Yeah, they're running on a timetable they set back in March and we've seen significant changes to the economy since then. And one of the things that I worry most about, Leon, is the cuts to universities. Now for the ANU, University of Canberra, Australian Catholic University, this means direct job losses. But it also has a longer term impact on young Australians, who will otherwise be facing unemployment when they could be getting productive qualifications that are good for them in the long run. We ought to be expanding university places right now. That's the smart move. That's what we saw in the last downturn, the early 90s recession, when the school completion rate surged. A generation on, we want to be looking to have many more young Australians going into vocational training, going into university training, using this time when the labour market is lousy to pick up the skills that they're going to need in the future. But there's none of that from the government. It's back to the old Liberal Party culture wars, attacking the universities as though they're not one of our main sources of productivity for the economy in the long run.

DELANEY: I read an interesting opinion piece today suggesting that the Liberal National Coalition Government is not particularly interested in propping up universities because the people who work there don't vote for them.

LEIGH: It's just bizarre, isn't it? You know, we had a forum on recently with John Hewson, former leader of the Liberal Party, just expressing his concern about what impact that will have on Australia in the long run. If you want us to be more productive - and productivity was in the doldrums before coronavirus hit - then you've got to have a more educated workforce. We know that automation is coming fast. We know it's been accelerated by the pandemic. The best way to greet the robots is with a better educated workforce than we had before.

DELANEY: [laughter] I come in peace. I've also read that there have been thousands, literally thousands of people, who are in fact millionaires who have been pocketing JobSeeker because of the temporary suspension in the assets test. Is that true?

LEIGH: Seems to be. I mean, I haven't seen the figures directly. But the government has had the opportunity for the last six months to close this loophole off and they’ve chosen not to. The JobSeeker and JobKeeper legislation gives the Treasurer extraordinary discretion to be able to crack down on events like this. But he's just chosen not to. You know, changing the assets test back in March made some sense, but opening it up completely like this doesn't make any sense to me. I don't think it passes the pub test, or wherever else people are going rather than pubs in the era of social distancing.

DELANEY: And in terms of JobSeeker again, that's another debate that's been ongoing now ever since JobSeeker was introduced as a coronavirus supplement. But again, despite widespread support for the idea of maintaining a higher rate of JobSeeker, the government appears to be maintaining its deaf ear stance.

LEIGH: It's going to be cutting JobSeeker, and that's going to have a huge impact on the many Australians who are out there looking for work. For every available job at the moment, there are 13 job seekers, many more than that in rural and regional Australia. So there simply aren't the jobs out there and dropping the JobSeeker rate back down to $40 a day where it was before is just unliveable. It's not just us saying this - the business community has been out making this point, we had John Howard making this point. Many people have recognised that we need more generous unemployment benefits, especially at a time like this when we know that that money is going back into the economy, that it’s an effective form of fiscal stimulus that doesn't get saved. Unlike high end tax cuts, about a quarter of which would just get saved and wouldn't stimulate the economy.

DELANEY: There have been some whispers from the government that they might extend the JobSeeker supplement beyond December, if they see a need for it. But still, that's not a permanent commitment to long term recipients of unemployment benefits, is it?

LEIGH: No, and it doesn't take into account the fact that people are likely to be falling into poverty if they don't get the payments that they need. Right now there just aren't those part time jobs around to enable people to supplement unemployment benefits as they would have otherwise. And if the government continues its callous attitude here, that's going to entrench poverty further. That K-shaped recession I talked to talked about before, you know, that's the risk - that the most vulnerable get left behind by a government that says ‘well, we're gonna worry about recovery for the top and the bottom can look after themselves’.

DELANEY: I was going to ask you about your mito - I'll get to this in a moment - mitochondrial research project, but I'm so out of time. I don't think we can fit it in today. Can we do that another day?

LEIGH: I'd love to talk about deliberative democracy.

DELANEY: Fantastic.

LEIGH: It’s a great exercise. Some of your listeners would have been involved directly. We've had some terrific conversations. I think it's a democratic innovation where Canberra can really lead the world.

DELANEY: Indeed. Thanks very much for your time today.

LEIGH: Pleasure, Leon.


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.