ABC MELBOURNE DRIVE
TUESDAY, 8 SEPTEMBER 2020
SUBJECT: China; JobKeeper payments; holding the Morrison Government to account; aged care.
RAF EPSTEIN, HOST: The federal government says it has spent an extra $15 billion widening the criteria for those who are eligible for JobKeeper, and they widened those criteria because of the situation in Victoria. Labor is unimpressed. Dr Andrew Leigh joins us. He's the Shadow Assistant Minister for Treasury, one of the MPs in the city, the capital, Canberra, and part of Anthony Albanese’s team. Andrew Leigh, good afternoon.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Good afternoon, Raf. Great to be with you.
EPSTEIN: Just on the journalists in China, do you think China's singling Australia out?
LEIGH: It certainly feels that way, and I guess we need to remember that the relationship is strongest when there's frank media on both sides. That was something that the deputy ambassador emphasised at the National Press Club when he spoke recently, and I hope that underlies China's approach.
EPSTEIN: Do you think the government can work out what the circuit breaker will be?
LEIGH: I think we need to recognise that China will continue to be critical to Australia's economic and political future throughout our lifetimes, so this is a matter of building a relationship from quite different starting points, different political systems, different economies. But it oughtn't be beyond our wit to work together, as indeed we’ve done-
EPSTEIN: It’s not quite an answer. Do you, and I'm not saying it's easy, but do you think Scott Morrison's government can work out what the circuit breaker is?
LEIGH: I'm not sure we think about a circuit breaker, Raf, as much as finding common ground. Working out shared projects we can cooperate on, being clear about our values and our differences, but also recognising that China is fundamental to Australia's economic future and there's no prospect of wishing that away. Our emergence from this downturn will be slower if we were to cut off our relationship with China.
EPSTEIN: Yeah, you made some significant noises last week about companies using JobKeeper while paying their executives bonuses - which is off colour, obviously. But isn't this the nature of programs? During the GFC, some people got a bit more money, a lot more money out of the Labor government than people were comfortable with. Isn't that an inevitable element of trying to help an economy when times are tough?
LEIGH: Raf, my basic starting point is if you're getting significant subsidies from the government, your CEO shouldn't be getting a bonus. Most firms have taken that approach, but there's a few that didn't. So you look at Accent Group, which gave its CEO a $1.2 million bonus. IDP Education that gave its CEO a $600,000 bonus, a guy who was the best paid CEO in Australia last year. The Business Council of Australia have called it out and said they don't think it's appropriate. What's surprising to me is that Scott Morrison and Josh Frydenberg won’t say a peep. These are taxpayer dollars that are going to firms in order to help low and middle-income workers-
EPSTEIN: The Business Council called it out. On Sunday, Jennifer Westacott said she wished they hadn’t done it.
LEIGH: Yes, that’s what I said. But what's extraordinary is that the government aren't willing to follow even the lead of the Business Council. Last year you had Josh Frydenberg out there saying that companies were paying too much in dividends and should be doing more investment. This year when companies are getting taxpayer handouts and funnelling them back in the form of dividends to billionaire shareholders, he won’t say boo. So it's a double standard, and I think it's really important when taxpayer money is being delivered that people see that the scheme has proper integrity around it. That firms are doing the right thing.
EPSTEIN: I understand the principle of integrity and I think we'd all like that, but to go back to my original question, it's inevitable, isn’t it? Governments need to shovel money out the door fast when we have big problems and big shutdowns. This is just one of the by-products, isn't it?
LEIGH: It's not a by-product that firms need to give massive dividends and pay massive bonuses. Most firms have overwhelmingly done the right thing, Raf, and reason I gave those couple of speeches in Parliament last week was because there was a handful of firms that hadn't. So Crown Casino paying a $200 million dividend after receiving more than $100 million in JobKeeper, I didn't think was appropriate, particularly given that a third of that dividend will go to a billionaire. JobKeeper was designed to keep battlers in jobs, not to keep billionaires in champagne. It's a program which is meant to support employment at a time in which we've just seen our biggest downturn in nearly a century.
EPSTEIN: 1300 222 774 is the phone number. Andrew Leigh is with us, part of Anthony Albanese’s finance team. Andrew Leigh, do you think it's that JobKeeper should now be given directly to the people doing the work rather than the employer? There was a Treasury paper a week or two ago, pointing out that if you keep giving money to the business that might not be there once we get past this, that is an economic and structural problem. Is it time we gave the money directly to the employee?
LEIGH: Raf, the rationale for giving it to the firm is to maintain that employment connection. Like romantic relationships, employment relationships are more quickly broken than formed, and so once you start to see a big increase in unemployment it's quite hard to come back from that. So most countries around the world that have put in place wage subsidy schemes have paid it to the firm for that reason. But there's a range of organisations that have been left out - the arts sector, the university sector has again been left out, and a million casuals have been omitted. None of that changes at the end of September. All of those sectors will still continue to be ignored. The workers in those sectors will continue to be left behind from JobKeeper. Now we're meant to have this magical snap back of the economy the prime minister was promising back in March. Well, there's no snap back in the economy, but there is a snap back in support.
EPSTEIN: Do you think that's something worth looking at? It didn't get much attention, that Treasury paper, but at some point a whole lot of the companies receiving JobKeeper will fold. Isn't it a better idea to transition to a payment that just goes directly to the worker and not the business?
LEIGH: Again, I think one of the ways in which JobKeeper works best is by maintaining that employment connection, and having it paid through the for the firm does give you a better chance of sustaining employment. I did my PhD thesis paper on wage subsidies, and so I've looked at the ones which are paid directly to the worker. I think that's appropriate at the time in which you're looking to supplement incomes, as the United States Earned Income Tax Credit does. But when you're trying to save jobs, which is the rationale for JobKeeper, I think this design is more appropriate and that's why most countries around the world have gone for it.
EPSTEIN: Does Labor have a firmer plan on what you want JobKeeper to be? When you say expand it to casuals or you point out the casuals have missed out, do you have a definition of who you would like to receive it who's not receiving it or a level that you'd like to see it at?
LEIGH: Fundamentally the decision’s for the government, but you could certainly do a lot of savings by actually targeting the wage. Many other countries are paying the wage that the employee was on before, but the government says that he doesn't have the data to hand and six months in it still hasn't collected the data that is-
EPSTEIN: Sorry, can I just ask you to explain. When you say targeting the wage, what does that mean?
LEIGH: Oh, I'm sorry. So if you were earning $675 a week, then you'd get a wage subsidy of $675 a week. Whereas at the moment-
EPSTEIN: A direct match.
LEIGH: Yeah, exactly. And then you've got a saving, because you're not paying $750 a week to that worker and you've got more money to extend the program to others. So I don't think anyone ever thought it was necessary to be paying JobKeeper at a level higher than the wage. It was done merely because the government couldn't get the right numbers to hand. It made it more expensive for some workers, and meant that the government then didn't extend the program to other workers. Better to target it more finely at the individual level, and then ensure that you save more jobs in the macro.
EPSTEIN: And is that your idea? Or is that Labor's policy to directly match people's wages that they're not receiving?
LEIGH: We've certainly been urging the government to make sure that they match the wage. We're not taking specific policies month by month. We'll have a set of policies when we go to the next election. We're urging the government to do the right thing, and so you'll hear Anthony Albanese, Jim Chalmers and the economic team constantly putting forward constructive suggestions. People don't want political sniping. They want an opposition that is holding the government to account, and also making positive proposals as to how we can save jobs amidst the first recession in 30 years.
EPSTEIN: Hundreds and hundreds of people have died in aged care homes in Victoria that have rules established by and they are regulated by the federal government. And it's also clear that we're in the situation because of hotel quarantine and contact tracing problems. How do we mark governments in times that we’ve not lived through? How should we criticise them? How should we grade them?
LEIGH: I'm not sure I'm in the business of thinking the government should be graded, more that they should be held to account and we ensure that we save lives. We know that the response was too slow, and that there's been too much of an inclination by Scott Morrison to say, ‘this is someone else's problem’. We've seen Raf, as you well know, workers in aged care centres who are on short term contracts and working on a casual basis working in multiple homes. That was an issue that was identified early on in other countries, but the federal government wasn't alive to it here and that meant that that accelerated the spread of COVID.
EPSTEIN: Thanks for your time.
LEIGH: Thanks so much.
Authorised by Paul Erickson, ALP, Canberra.