SKY NEWS FIRST EDITION
TUESDAY, 12 MAY 2020
SUBJECTS: Economic reform; the Treasurer’s economic statement; JobKeeper; the opportunity to rebuild the economy to benefit all Australians.
PETER STEFANOVIC, HOST: We are joined now by Shadow Assistant Minister for Treasury and Charities, Andrew Leigh, from Canberra. Andrew, good to see you. Thanks for joining us.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Likewise.
STEFANOVIC: So first of all, the NSW Premier has flagged this morning payroll tax and stamp duty relief. A lot of economic reform does come from the states. Is that something that you would support?
LEIGH: Absolutely. The states have both the most efficient and the most inefficient taxes, and the move that the ACT has made over recent years in transitioning away from insurance and stamp duty taxes towards a land tax base is textbook economic reform. It's sensible as a way of buffeting the shocks during the crisis to look at relief from the most inefficient taxes which could then be phased down.
STEFANOVIC: We did hear from a short time ago Finance Minister Mathias Cormann, who says you know it's all about minimising risk and a strong recovery at the moment. How do you see it?
LEIGH: You look at Australia coming out of World War Two, and that was a period in which we decided we wouldn't just put the place together the way it had been in the 1930s, but we'd build a better country. There was a white paper on full employment put together by the Labor government, and then Robert Menzies to his credit embarks on a massive program of home building and the home ownership rate shoots up. We should be ambitious for Australia not just to return to the pretty stagnant economy that we've had for the last seven years, but to do something better - to invest in the sources of productivity through education and infrastructure, and to ensure that we've got a more egalitarian and a more connected nation. I'm confident that we can do all of that, but it will take a hard focus and a sense of bipartisanship that's been absent in recent years.
STEFANOVIC: And a long time.
LEIGH: Absolutely, it's certainly going to be a long road back. Today, the budget was meant to be coming down. Many of us have been looking forward to this. Budget Day is Christmas for political junkies, but too many Australians are worried they're going to end up with coal in their stockings, that we're not going to have the sorts of measures that are needed in order to look after the most vulnerable. And it's the most vulnerable that have been hit hard - people with less education that haven't been able to telework, young Australians who have disproportionately lost their jobs, people in hospitality where a third of all jobs have been lost. So we need to make sure that as we transition forward it's not the most vulnerable who cop a double whammy. That’s one of the things I'll be looking for in the Treasurer's speech today.
STEFANOVIC: It's reasonable - in your opinion, is it reasonable for JobKeeper to be wound back now that many businesses are coming back online?
LEIGH: The business community doesn't seem to think so, and the idea that you would withdraw supports people were counting on seems pretty rough at a time when people are projecting the unemployment rate could go above 10 per cent this year. The United States has unemployment of about 15 per cent. We've got some of the worst business and consumer confidence numbers we've ever seen. New car sales, for example, are the lowest in 20 years. So this is a very fragile economy. As Deloitte said yesterday, JobKeeper needs to be phased out not cut out. The Government's current plans have a whole lot of programs crashing to a halt in September and October, which could delay the recovery even further.
STEFANOVIC: There are some economists who are suggesting, I noticed in the papers today, that the phase out could include well could go from 1500 a fortnight to 1200 a fortnight, to 900, 600 to 300. Is that something that has merit?
LEIGH: It certainly seems to. Labor’s open to any sensible discussion that the Government's planning to have around how we ensure that we support the economy. We need to get a full set of numbers from the Government, we don't have good economic forecasts from them right now. But Deloitte had budget deficits of 7 per cent this year and next, and ANZ has been forecasting unemployment around 10 per cent. The Grattan Institute are suggesting it could be higher still. So we've got an economy which is in a challenging state. We need to ensure that we're providing support to workers and doing so in a way that boosts future prosperity. Stopping people who've got the smarts to go to university from getting a place makes no sense at a time like this. We ought to be opening up university places to domestic students at a time when universities are struggling for cash and overseas students aren't filling those lecture halls. We need to be investing in housing, which we know has been a huge crunch point for productivity and a burden on household finances. There's a lot of things we can be doing right now which are smart investments in our future and productivity.
STEFANOVIC: But it is right though that JobKeeper should be wound back if those businesses are coming back online?
LEIGH: Ultimately it needs to be phased out – it’s certainly not a program you can have in perpetuity. But it needs to be done with a great deal of care, because the cost to the Australian economy of a recession is dire. You think about the million or so people who have found themselves out of work, and we know from past downturns - whether it's the Great Depression, the 80s recession or the 90s recession – that typically unemployment takes about twice as long to come down as it did to go up. The unemployment rate takes the lift up, but takes the stairs back down. We need to make sure that we're doing all we can to restore Australia to not only the five per cent unemployment rate we had before the crisis, but I think we can do better. I think we should be aspiring for the three or four per cent unemployment rates that many of the advanced world have had in recent years. Full employment doesn't just create more opportunities and better upward pressure on wages, but it also creates great chances for some of the most vulnerable Australians with disabilities, Indigenous Australians, low educated Australians. That's the kind of egalitarian economy I want to see.
STEFANOVIC: Okay. Andrew Leigh, appreciate your time this morning. Thanks for joining us.
LEIGH: Thank you.
Authorised by Paul Erickson, ALP, Canberra.