Worrying trends in the Australian economy - ABC NewsRadio





SUBJECT/S: State of the Australian economy.

MARIUS BENSON: Andrew Leigh, the Government and some substantial economists this morning are saying things aren't that good but at least the economy isn't heading into recession. Do you agree we're not heading into recession?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Marius, I think responsible alternative governments are very, very careful in their language around that sort of thing. Yesterday's numbers are a significant cause for concern. We were told that the election of an Abbott Government would be like a shot of adrenalin to the Australian economy but instead we've got figures which are only positive because of a significant increase in government spending.

BENSON: But the Government says at least we're growing; look at Canada, look at Brazil, look at those other resources-reliant economies that are in recession.

LEIGH: They're casting around for comparisons. Last quarter Joe Hockey was doing his comparisons based on quarterly numbers; now he's doing them on annual numbers. The fact is, Marius, we've got unemployment at a 13-year high, consumer sentiment 11 per cent below where it was at the election, we've had the budget deficit doubled just in the last 12 months and we've got taxes and spending rising, contrary to what the Abbott Liberals told us before the election, that they would be a lower taxing government. 

BENSON: Living standards are declining and that's been a criticism of the Government but they declined more sharply under Labor during the Global Financial Crisis.

LEIGH: The last part of that sentence answers the question, Marius. Labor faced down the largest shock to the world economy that we'd seen in two generations. But we've now got worse unemployment than at that time, and we've got significant evidence that the Abbott Government is much more focused on their internal infighting than on laying out a plan to deal not only with the threats to growth now, but also in the future.

BENSON: But you're not talking in terms of recession?

LEIGH: I'm very careful not to use that word. I think it's important that all parliamentarians are doing what they can to engender a strong sense of confidence in the economy. My problem is with Joe Hockey and Tony Abbott who seem to be fighting for their own jobs rather than being honest with Australians about the challenges we're facing and laying out a set of policies that can make a difference for growth in the future. For example, Labor is talking about investment in STEM skills because it is absolutely vital as we transition out of the investment phase of the mining boom to have young Australians skilled up to take on the jobs of the future.

BENSON: You talk about those schemes but is more dramatic action needed in terms of dealing with those numbers that were revealed yesterday? Is it time for a cash splash along the lines of the one Labor introduced back during the GFC?

LEIGH: Well it was only a cash splash by the Government that averted the growth number not being negative yesterday, Marius. What I think we need is a Government which is not trying to destroy the renewables industry, but recognises the benefits which can come from it. One that isn't attacking wind farms but recognises that solar and wind can be great job generators here as they have been overseas. A Government that wants to do tax reform by looking at something like multinational profit shifting – as Labor's plan has done – rather than increasing taxes on spending. Because let's face it, it would hit retail spending very hard if you were to whack up the GST.

BENSON: A broad point: you and the Government are engaged in this battle over the economic numbers, but isn't the larger fact that in terms of the economy the Government is a spectator and simply watches as China and resources determine the outcomes?  

LEIGH: Certainly the Government doesn't control everything in the economy. But it does have control over the consistency of its economic policies. Just to give you one example from this week, Marius: as recently as 12 April Joe Hockey was out there making the case for a bank deposit levy. This week he's been rolled in Cabinet on the levy and that has blown a $1.5 billion hole in the forward estimates for Mr Hockey. So if he is unable to sell a consistent narrative about how he is going to return the budget to surplus and ensure that we have strong and sustainable growth, you can understand why the financial markets are losing confidence in him.

BENSON: Andrew Leigh, thank you very much.

LEIGH: It's a pleasure, Marius.



Be the first to comment

Please check your e-mail for a link to activate your account.

Stay in touch

Subscribe to our monthly newsletter


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.