ABC MELBOURNE DRIVE
THURSDAY, 23 JULY 2020
SUBJECTS: Budget deficit; Morrison Government failing charities; HomeBuilder failing to address economic inequalities.
RAF EPSTEIN, HOST: Andrew Leigh joins us. He is one of the MPs in Canberra. He's a Labor MP, he is part of the parliamentary committee called the Standing Committee on Economics. More importantly for this conversation, he is part of Anthony Albanese's finance team - he’s the Shadow Assistant Minister for Treasury. Andrew Leigh, good afternoon.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Good afternoon, Raf, and thoughts from Canberra to you and your listeners. I know many Canberrans have been thinking of Victorian friends at the moment and all that you're going through there in Melbourne.
EPSTEIN: What number stood out for you today?
LEIGH: I think the real thing that stood out for me Raf was the lack of the long term plan. I mean, certainly we've got a lot of numbers around - we’ve got the figures on the the impact of the budget, the unprecedented - since the Great Depression - hit on the economy. But it was the lack of a long term vision for how we build back better, how we create those jobs that ensure we get to a full employment economy-
EPSTEIN: Can I interrupt, Andrew Leigh. What would you expect? I mean, they’re dealing with pandemic and you want them to come up with more plans on jobs as well? Is that a realistic expectation?
LEIGH: We might very well have levied the same criticism at the Curtin and Chifley Governments at the end of World War II. So they're dealing with a war, what do you expect? The fact is they had a white paper on full employment and they focused on building back better after World War II. I think that's always the challenge in a crisis: to ensure that we use this moment to create renewables jobs, to build a better labour market in which people have sick leave rather than having a financial incentive as casuals to come to work in the hospitality sector when they're unwell. To ensure that some of the inequalities that have been exacerbated by this downturn are restored as we as we build back.
EPSTEIN: Is it really fair to expect them to come up with a tonne more than what they have come up with?
LEIGH: The very minimum we should have gotten was four years of figures rather than two. But I think also we needed some-
EPSTEIN: Sorry, I know I'm interrupting Andrew Leigh - it’s just ideas pop into my head. Four year forecasts - they don't even know what's going to happen in six months. Would there really be any point in a four year forecast?
LEIGH: Forecasts are never perfect, but the the act of forecasting does allow you to plan for the future. The Reserve Bank is giving us those longer term figures, and I think it would have been appropriate for the Government to do the same. It's normal practice, Raf. It's not asking for anything exceptional. Certainly people recognise that you need to be nimble in the current environment, you need to be able to adapt as things move, but if you want businesses to invest and if you want households to plan then you need to provide those longer term figures. But more fundamentally, where is the plan for creating jobs for women? We know women have lost more jobs in this downturn than men, which is unusual - downturns in the 80s and 90s affected men more than women. We know that multicultural communities are particularly hard hit. My colleague Andrew Giles pointed to the the lack of a response to help multicultural communities at the moment. Now this has been a crisis which has exacerbated many of the gaps in Australian communities, whether that's through homeschooling or job loss, and so we need a strategy that helps to make us whole again, to make us a stronger community. I would like to see more of that long term planning in today's statement.
EPSTEIN: Do you think JobKeeper was successful?
LEIGH: I think JobKeeper’s been the critical programme that’s supported jobs. You see that around the world, that wage subsidy schemes have been the critical piece of maintaining that connection between firms and workers. That's why Labor pushed so strongly for it initially, and we were pleased when the Government put it in place. But I don’t think it's been targeted as well as it could have been. Many countries are subsidising actual wages. We're just providing this flat $750 amount, which is too little for some and too much for some, and the program even after September won't be sufficiently targeted.
EPSTEIN: Can I ask what you would do there, because the Government - you know this, but just so for everyone listening - the Government's firmly of the view you keep it super simple, you use the current ATO payment system or refund system to ensure the money goes out effectively and properly. How would you customise it to industries?
LEIGH: Look, I don't want to get too wonkish about this, but the Government has a system called Single Touch Payroll in which firms are providing quite detailed payment data to the tax office. You could use that in order to target the payments, and what that means is you're getting the payments right for people and therefore you can look to include some of the people who've been left out. We know that if you're a casual teacher who has only been with your current school for 11 months, then you're entirely left out. Many in the university sector, the arts sector and charity sector have been omitted entirely. So better targeting JobKeeper would then allow it to go-
EPSTEIN: So then that would be say, if you're not getting your wage, here's 70 per cent of it - your wage in your particular job in your particular industry, as opposed to the blanket payment or a tiered system. Is that what you're suggesting?
LEIGH: Precisely. And that's not rocket science - that’s what many other countries around the world are doing. The Government says that their data systems aren't up to scratch, but they've had months now in order to improve those and improving it would mean that we'd need to spend less on some people and we're then able to then spend more on others. These are the kinds of constructive suggestions we've been making through the crisis. Labor’s very keen to work with the Government. We need a sense of national unity at the moment when we're suffering that double whammy of the health hit and the huge economic impact.
EPSTEIN: And you're also Labor's voice for the charity sector. I know you have been looking at some of the loans that the federal government's been providing. I know you’re keen to attack the Government over this, but how does that loan scheme work?
LEIGH: It’s a subsidised loan scheme through the Government that they’ve put in place to help charities, as well as firms. But when we queried the banks about the share of their loans that have gone to charities, they said that of the 15,000 loans across the country, only 22 have gone to charities.
EPSTEIN: So 22 out of 15,000. Is that loan holidays or extra money, where it's $1 from the Government and $1 from the bank?
LEIGH: That’s extra money, that’s additional loans. And what the points to, I think Raf, is just that loans are not a particularly effective way of assisting the charity sector. But we need the charity sector more than ever. People are turning to their food bank organisations, they’re turning to mental health charities.
EPSTEIN: Should we crank up the deficit even more to help charities?
LEIGH: You need to be thinking creatively about helping the helpers. Charities are seeing a huge drop off in donations and volunteers, because many volunteers have had to self isolate. Social Ventures Australia says we could lose a sixth of all charities if there's a significant downturn in revenue.
EPSTEIN: So what level of deficit would be acceptable to you? Because at the moment, the Government's expecting - you’re looking at net debt around a third of the economy. That's what they expect, the size of the economy. What level would be acceptable to Labor - half the size of the economy?
LEIGH: It's about targeting the programs, Raf. I don’t actually think you need to spend more, I think you need to spend it smarter. That's why I'm suggesting before that we get the actual data on people's wages and therefore are able to better target JobKeeper. I don't think the HomeBuilder programme was good value for money. My guess is it's going to be largely subsidising renovations by people who would have done them anyway, and people at the upper end of the income distribution at that. So it exacerbates inequality without doing anything for growth. That’s money that could be much more effectively used in the economy.
EPSTEIN: Are they quibbles, Andrew Leigh, or do you give the Government sort of a very solid pass mark - like seven or eight out of 10 - for saving the economy? Or is your criticism more substantial than that?
LEIGH: It’s up to commentators to mark the Government. We've tried to be as creative and constructive as possible through this, Raf. That's the right role for an opposition. People don't want us shouting insults. They want us making creative suggestions. And so I think Labor in talking about the importance of dealing with unstable work, building a stronger and more egalitarian country, focusing on charities - is doing that creative work of oppositions. There's also an opportunity to be looking at sensible tax reform at the moment. Insurance taxes and stamp duty have been talked about as reform needs for many years. There is an opportunity now, if we're looking at ways of providing stimulus to certain sectors, of saying “well, how do we do that tax reform at the same time”. It’s a bit like the renewable jobs I mentioned before, how do we deal with climate change at the same time as we're working our way out of this crisis?
EPSTEIN: Yeah, I don't know if stamp duty - I don't think is going to be a stamp duty, but anyway good-
LEIGH: We’ve done it here in the ACT.
EPSTEIN: Andrew Leigh, I appreciate your time.
LEIGH: Thank you, Raf.
Authorised by Paul Erickson, ALP, Canberra.