Government needs to focus on productivity and equity - Transcript, ABC Canberra Breakfast


SUBJECTS: Federal Budget; Budget in reply.

ADAM SHIRLEY, HOST: Dr Andrew Leigh is the Federal Member for Fenner and the Shadow Assistant Minister for Treasury. And he, like many, was watching very closely Anthony Albanese’s words last night. He’s Opposition Leader. Dr Leigh, good morning to you.


SHIRLEY: Given childcare is such a central theme of the Opposition's reply last night, what do you make of Ruth's comments, for instance, on how to structurally make the standard better - not just provide more money and places?

LEIGH: I think Ruth’s spot on. We need to think about early childhood as education, not mere babysitting. Anyone who's tried to look after three of their own children, as I have, will have huge respect for someone who sits down and looks after 13 children for an entire day. Ensuring that you've got a high-quality play based learning is absolutely vital. So one of the things we did when we were last in government was to improve education standards for early childhood educators, to reduce ratios and to ensure that there was real respect around the sector. But there's also this affordability question, and that was what Anthony was going to last night. We know that childcare fees have increased by an average of $3,800 a year since 2013. We know that many families are simply just priced out of childcare, and for families with a couple of kids, then often it's just not worth both parents working a full five days. That burden falls disproportionately on women.

SHIRLEY: Looking broadly at Anthony Albanese’s speech and response last night, it appears as though you - in the Senate, especially, but also in the House of Representatives - will back the at least $50 billion in spending this budget has got contained in it. Does that represent an endorsement, really, of Josh Frydenberg and Scott Morrison's plan?

LEIGH: We thought it was important to get the tax cuts through. That's something that we had called for to be brought forward. The low and middle income tax cuts, we felt, were important for the economy. You know, this isn't the budget we would design. You saw that very clearly in Anthony's budget reply yesterday. Older workers were left out of the budget, women were largely neglected, and there wasn't enough for social housing, nothing substantial for climate change. And so you saw a lot of that in Anthony’s budget reply last night. But we're not going to stand in the way of providing measures which will put money into the pockets of low and middle income earners, which will encourage businesses to hire more people.

SHIRLEY: Looking back at the existing measures that have been brought in, is it fair to say that older workers have been left out of the budget? Because by my read, there is a $10,000 wage subsidy for people who are over 50, and that stands in place at the moment.

LEIGH: That’s quite narrowly targeted. It won't be available for many of the workers who are looking for these sorts of jobs, and they're also going to be seeing their JobKeeper phased out. So right now, if you're an older worker and your firm's getting JobKeeper, then your wage is being subsidised. Now that's going to be phased down and at the same time, your firm is going to have an incentive to hire younger workers and also an incentive to invest in machines, which in some cases can take the place of older workers. So I just don't think the government’s thought it through from a systematic point of view, Adam.

SHIRLEY:You say that this is the budget you wouldn't have designed or put in place, but there is a key element in it for younger workers and that is wage subsidies, encouragement for any companies to bring on people as young as 16 if they've left school. Is that not a key element that Labor would put in itself?

LEIGH: I don't think we would have designed it as clumsily as they have, with an absolute cut off at 35 - saying to a 36-year-old worker that that you don't attract any wage subsidy. I'm not sure we would have been put in place the cliff that exists for the accelerated depreciation measure. So that cuts out entirely on the 30th of June, 2022. It means that really what we're going to get is a bring forward of investment, rather than a big increase in new investment. That's pretty clear from the budget costings, which have this measure costing $27 billion in the short term but only $3 billion in the long term. In other words, the government is not expecting a whole lot of new investment to be created. They're expecting 2023 investment to be brought forward to 2021.

SHIRLEY: But if we think about Labor’s experience with the GFC and what Labor has often said were the right steps, it was short term investment and a big splash of it to keep the economy rolling that was the underpinning economic theory. Why would you critique that same theory being used in an expanded sense in this budget?

LEIGH: Adam, I think the best stimulus at the time of the downturn is something that not only gets short term growth going but also improves the long term productive capacity of the economy. So for example, investing in school infrastructure when we were in government was a long term productivity measure as well as short term benefits. I don't see a whole lot of measures that are delivering that sort of Keynesian double dividend in this budget. Social housing would do that, investment in clean energy would do that. It's something that not only creates short term jobs, but also provides a lasting payoff. Because we know productivity was going backwards last year, we know we've got to do a whole lot more to boost productivity. And that's where the childcare measure is it - that's a productivity measure, as well as being an equity measure. 

SHIRLEY: But if we look at the various employment incentives that are within this budget - if you get someone into work, their foot in the door and then give them the year plus to establish themselves, that surely does represent a longer term benefit, does it not? Because most of those workers could well stay on and become specialists in those industries they otherwise might not have got a foot in the door in?

LEIGH: We’ve absolutely got to get unemployment down. That's the central priority for, I think, everybody in the Parliament-

SHIRLEY: And don’t these measures address just that?

LEIGH: I'm not sure they're going to have the effects that the government is hoping for. You look at the government's own forecasts for unemployment, it's going to be higher right across the four year forward estimates than it was last year. Unemployment is a terrible scourge. It's a productivity hit, but it’s a self-esteem hit as well. To be jobless is to often not feel as though you've got a productive role in the economy. When I was an economist at the Australian National University, one of the people there did a study looking at the impact on your life satisfaction of being unemployed. They found that even aside for the income loss, you'd have to be compensated an extra $80,000 a year to make up for the loss of life satisfaction that joblessness brings. So it's really vital that we get the unemployment rate down. I just don't think this budget has done it as effectively as it could.

SHIRLEY: Dr Andrew Leigh is my guest. He’s the Federal Member for Fenner and the Shadow Assistant Minister for Treasury. Just hours after Anthony Albanese’s budget reply speech at Parliament House last night. Twenty-two past seven, Adam Shirley with you on Breakfast this morning. In spite of some of your criticisms and reservations, is it likely that Labor will clear this budget in its entirety in the Senate?

LEIGH: I think there are certainly measures we need to look at. We know that the government didn't do a whole lot of consultation, for example, around superannuation measures. So we'll be making sure that we look very carefully into those. We don’t simply rubber stamp budgets, Adam. We’ll give them the scrutiny they need. But we're also aware that there is an urgency in some of these measures, which is why we were willing to pass the tax cuts through the House yesterday. We just had one speaker - Jim Chalmers, the Shadow Treasurer spoke on that, and then we allowed that that to go through to the Senate.

SHIRLEY: So to my question, what about the budget in its entirety? Is it likely or not that you clear it?

LEIGH: I think it is unlikely we would support absolutely everything in the budget. We don't simply rubber stamp things, but we're constructive. We're engaged. We're producing new ideas and you saw ideas aplenty from Anthony Albanese’s budget reply. We've spoken about renewables and childcare, but there are also important initiatives around manufacturing that were announced last night. So Anthony is serious about ideas. He wants to be known as the Labor leader, not the Opposition Leader, reflecting his desire to be part of that constructive policy conversation.

SHIRLEY: Dr Andrew Leigh, we do appreciate your time. Thank you for it.

LEIGH: Thanks, Adam.


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.