Interview on ABC, Q+A with Hamish Macdonald

  • Transcript, E&OE
Topics: COVID-19; Unemployment; JobKeeper and JobSeeker.
27 July 2020

[Excerpt]

Hamish Macdonald: Let's put that to the Government. Let me bring in Senator Simon Birmingham who’s in our Adelaide studios tonight, and Katy Gallagher, the Shadow Finance Minister who is in Canberra tonight. You heard it very clearly there, Senator Birmingham – this cut that's coming to JobSeeker, $300 a fortnight from what it is currently, will impact not just those people but the economy as a whole. Why are you taking that money out?

Simon Birmingham: Hamish, we're putting enormous additional resources into the Australian economy. We've seen an injection of some $164 billion of direct financial assistance, the vast majority of that flowing through in terms of direct household assistance through JobKeeper and the additional JobSeeker payments. Now, the additional supplement that was there for JobSeeker continues through, as it currently is all the way through until essentially the end of September, and then continues still as an additional supplement – not at the same rate – but still an additional supplement all the way through until December. Now, be very clear that we-

Hamish Macdonald: And that’s the question. Why are you reducing it? I mean, you're aware of the implications for the individuals but also the broader economy. Why cut it?

Simon Birmingham: Hamish, we've always been clear that these were temporary supplements. Now, we'll have a look at what needs to be the case beyond December as we get closer to that point in time. We've also made further changes to ensure that if people are able to get a few hours of work on top of that JobSeeker payment and JobSeeker supplement, they're able to keep more of that money. It’s an important additional reform, knowing that for many people, just getting those few hours back of a casual job is going to be so important to them, as a step back into the economy. So we're trying to put extra flexibility there, respond to the circumstances, that are there. As always there's still the additional payments of family tax benefit for people with children, of rental assistance for those in rental accommodation that flow through on top of those payments as well, which ensures that for the vast majority of recipients, they do receive additional payments there, in addition to the base payment and the supplement that's continuing right through the rest of this year.

Hamish Macdonald: Katy Gallagher, does Labor support this move?

Katy Gallagher: Well, Labor certainly supports the fact that people aren't going to be cut off at the end of September, which is what the Government originally intended. We argued for it to be extended. The Government has extended it. We welcome that. They've made some changes and tapering off some of those payments, you know, cutting JobSeeker and JobKeeper. We have to understand more about how, what lies underneath those decisions, how Treasury has advised the Government about why that cut is appropriate, what it means. How JobSeeker interacts with some of tho- as Simon said, you're able to earn some extra money. What the likelihood of that is. So, we certainly welcome the extension. We couldn't have a situation where we’ve got 1.6 million people on JobSeeker and 3.5 million on JobKeeper and just have that money stop at the end of September. How it rolls out, based on what we're seeing with some of the issues in Victoria and New South Wales, what that means, whether it's enough in terms of income support, remains to be seen. And we've got some work to do on the COVID Committee, to get to the bottom of some of those Treasury assumptions.

Hamish Macdonald: Okay. Our next question tonight is from Liam Matthews. Who’s live in Abottsford, Victoria. What's your question, Liam?

Question: Hi, everyone. I co-own two small businesses in Melbourne and it's a common feeling amongst my peers that trickledown economics simply doesn't work. And when larger companies are given grants or tax concessions, that money can just be used to build wealth. These opinions, coupled with the changes to JobKeeper and JobSeeker make us feel that the Government is out of touch with broader business and we have real fears about our future. Surely now is the time where the Government is making day by day changes and decisions that they could be looking at future tax amendments that would better suit small to medium businesses and tax larger businesses better?

Hamish Macdonald: Katy Gallagher?

Katy Gallagher: Well, sure. I mean, one of the issues with last week, was we had the Government say: you know, the economy's grim, the budget's under enormous pressure, but here it is, but we don't know what we're going to do about it. And that's one of the issues we had with last week's figures. We think the Government should have a plan. It should put a proposal on the table. Labor will engage with that. Whether it's around some changes to tax, whether it's around extra stimulus, whether it’s around targeted training and extra support to get people into jobs. We want to engage with the Government with a recovery discussion, but at the moment there's nothing on the table and last week, we were told, well, you can wait till October to find out. And in the meantime, 240,000 people – these are Treasury figures – 240,000 more people are going to lose their jobs in the lead-up to Christmas. Well, we say that's not good enough to the Government. What is your plan? How are you going to support small and medium business? And how are you going to get people into jobs, protect those that have them and look after families that are really doing it tough? At the moment, it's the sound of crickets coming from the Government. There just isn't a plan on the table to engage with.

Hamish Macdonald: Senator Birmingham?

Simon Birmingham: Well, look, I reject, really, the tone of the question there. The assistance we've provided to date, has been absolutely squarely targeted at either individuals and households or small and medium businesses. We provided payments of up to $100,000, targeted to small and medium businesses. None of that going to big business. All of it going to the smaller end of town, to help those businesses survive. We've provided JobKeeper, as I said, as part of $164 billion worth of direct financial assistance and that's scaled – no matter what the workforce is, it's there for the number of employees. And every single dollar passes through a business, whether it's a big business or a small business, into the hands of those employees to support them.

Hamish Macdonald: But with respect Senator, this was a question about what you will do going forward and the point’s been made by Katy Gallagher, that there is not a clear plan from the Government and we've been told to wait until the Budget?

Simon Birmingham: Well, I reject that too, Hamish.

Katy Gallagher: But, it’s true, Simon.

Simon Birmingham: We’ve got just in place, we've seen in terms of taxes; which was part of the question as well, a tax cut focused on small and medium size businesses for company tax. Not for big businesses, but for small and medium sized businesses. The are other tax cuts flowing through to households and individuals. Now, on top of that, we've announced additional funding for skills, additional funding into the construction sector, additional funding to make sure that Australia is a more attractive place for films and entertainment to occur, as massive employers in those sectors. We have been working through sector by sector carefully, to make sure that we are stimulating future economic activity and we'll build on those plans in the Budget to come, as part of our ongoing consultations. This is not an unwrap it, here is the plan and the solution. This is about dealing with the biggest economic challenge the world has seen, since the Great Depression and we're going to continue to release plan after plan in terms of the details for each sector, the details for the different parts of the economy as to how we lift skilling in this country, to meet the needs of the future and just today, the Prime Minister announcing the new input-

Hamish Macdonald: I can see Katy Gallagher shaking her head furiously there. You say there is no plan; the Senator says there is a plan?

Katy Gallagher: Well, I just think, I mean, Simon's really good with the talking points and rolling off the money and the budgets and how much has been allocated. But at the end of the day, the Government's own figures show that 240,000 more people – that's on top of the 800,000 people who have already lost jobs – are going to lose jobs in the lead-up to Christmas. So their plan, if they have one, according to Simon Birmingham, isn't good enough. Because that's another quarter of a million people who will end up on the unemployment line. And we are saying there has to be a plan around jobs and where is it? Last week, you issued your update and there was nothing. There was nothing, other than a white flag that said: oh well, 240,000 more jobs are going to be lost. And I just don't think that's good enough.

Simon Birmingham: Katy, in the last two weeks we extended JobKeeper, we extended JobSeeker. We announced the plan for the entertainment sector, we announced the skilling package.

Katy Gallagher: But, this is on top of that, Simon?

Simon Birmingham: And we also released- no, this is really important, Katy. We also released the Treasury forecast, that showed 700,000 Australian jobs have been saved as a result of our interventions and actions.

Katy Gallagher: Yes, and we welcome that. We absolutely welcome that.

Simon Birmingham: Now, we created more than 1.5 million jobs before the pandemic hit, as a Government. We're determined to get back on course of doing that. But, this pandemic was certainly not of our making, not something anyone could predict and we're going to work day and night to try and help Australians through the crisis. Save their lives, save their jobs where we can and then rebuild new opportunities in the economy, as we emerge from it.

Katy Gallagher: Well we look forward to hearing about it.

Hamish Macdonald: A video from Year 11 economics class, at Shellharbour Anglican College, in Shellharbour, in New South Wales.

Question: As Year 11 economic students, we will have to pay back the massive amount of Government debt. We want to know by how much the current JobSeeker and JobKeeper payment will increase our tax burden, in our future years?

Hamish Macdonald: Simon Birmingham?

Simon Birmingham: Well, our aim is to make sure that we grow the economy, not to have to increase taxes on Australians. What we want to do is keep that tax burden low because we know that's necessary to grow the economy. That’s what…

Hamish Macdonald: But, the reality is, this is a generation that is going to be, in part, paying off this debt for most of their working life. That's the truth of it, isn't it?

Simon Birmingham: And Hamish, as generations following World War II, faced enormous government debts that had been incurred then and the solution was economic growth, not higher taxes on those generations.

Hamish Macdonald: Let's bring some of our panel in on this, Senator Birmingham. George Megalogenis, what would you say to these young students?

George Megalogenis: It's a very good question. So, the thing I'd say is I wouldn't worry about the debt so much at the moment, because the debt is only about a third of the total size of the economy – it’s about 36 per cent of GDP. The reason I'm using that number, is to put that number in perspective. The interest bill on that debt is less than 1 per cent of GDP. So, the money that the Government has borrowed, essentially, to protect jobs and to sort of, save the health of the nation can, as you look forward to the next 10, 20, 30 years, be reinvested in the economy. And should be able to return something more than 1 per cent. In fact, if they can't get two, three or four or five per cent return on that, they're not even trying. But I think the more fundamental question is what does the Government think comes after this pandemic and the recession that's attached to it? So this is the single biggest shock to our standard of living, since the Great Depression of the 1930s. Now, Simon eluded to what happened after the end of the Second World War. Well essentially, what happened coming out of The Depression is that the Government decided it needed to be more active in the economy. And I think when you look at the last 30 or 40 years, and you might have learnt tin your economics class, that we've gone through a period of globalisation and deregulation, where the government did less and the market was trusted to do more. Now, that era is pretty much over. And it began to fracture and unravel with the global financial crisis of 2008, 2009, and now of course, this pandemic, coming out of this pandemic, the idea that you just turn the tap on again and let the market settle everything after the virus is eliminated or we’ve found a vaccine doesn't seem to add up to me.

So, the question is not, you know, what you do with the debt from one year to the next? It's what the Government thinks its role in the economy is in the next 10, 20, or 30 years? And I think you’d be more confident in the future if they knew what they wanted to do with their part of the economy. And as I say, I think they're going to need to be more active.

And the other point, if you think back to the 30s, the commitment that both sides of politics made, in fact, I do feel for Robert Menzies, if he could hear this conversation, he’d be rolling in his grave at the moment that a coalition government accepts an unemployment rate of 10 per cent. What happened to both sides of politics through the depression and into the Second World War is that they set a goal for full employment and they achieved it for the next 20 years. So, that's the vision you'd be looking for. You wouldn't be arguing the toss at the margin about an extra $10 billion here or an extra $10 billion there, you'd actually be looking for a plan for full employment. Now, if you couldn’t pull off full employment you’d have to [indistinct].

Hamish Macdonald: Okay. Gigi’s nodding furiously here. You agree?

Gigi Foster: Oh, I completely agree. I mean, I think George did a very good job setting out the argument of why we wouldn't worry about debt per se. And indeed, it is the growth and the involvement of the Government in stimulating the economy out of the recession that we need to look for now in the next five years or so. And if I were a Year 11 student, I wouldn't be as worried about the debt as I would about what’s happened to my schooling in this COVID disruption.

Hamish Macdonald: So, Katy Gallagher, are you prepared to consider a totally different role for Government going forward, a totally different view of debt as is being suggested here?

Katy Gallagher: Well, I think in terms of the debt and the debt debate, what we've seen in the last week is the hypocritical status from the Government on debt. You know, it was terrible when it was Labor's debt, but now we have this debt; it's entirely manageable. I would hope that what comes out of this is a bit of more honest political discussion about debt, the role of government, the need to invest in the economy, particularly on- from the public when private investment is weak or disappearing, and that's the situation we're in now. I- the only other point I'd make, Hamish, on that is two-thirds of the debt we've got at the moment was borrowed before COVID-19, so it can't be written off as pandemic related. But also that every dollar that is spent now, that is borrowed, needs to deliver an outcome for people; that's whether it saves jobs, creates new jobs, puts food on the table for families that have no income. That is what we need in terms of government investment and government spending, and we need some honesty about it from the Government and about what's manageable.

Hamish Macdonald: Senator Birmingham, the argument that’s been put by George is essentially you're tinkering at the edges here and sort of failing to meet the big challenge. Do you acknowledge that?

Simon Birmingham: No, I don't accept that, Hamish. I don't accept either George's claim that we somehow are accepting of a 10 per cent unemployment rate. First and foremost, we've tackled this pandemic to save the lives of Australians, and by and large, Australia has been incredibly successful, with challenges as were acknowledged at the head of the program around Victoria. Secondly, we've worked to try to save the jobs and the economy of Australia, ensuring firstly that we help individuals, families, households to get through it, but also that we've preserved that productive capacity by ensuring we haven't had massive business failure. And what's often not acknowledged is that JobKeeper, together with rent relief, together with repayment relief for many businesses has been about trying to avoid massive failure which would have meant, if it had occurred, that when we reopened the economy businesses weren't even there to re-employ Australians. And we're seeing that sort of disruption in other parts of the world; we're better placed to come through that. But there’s a huge task ahead of us, we acknowledge that to get Australians back into jobs, that's why we're turbo charging investment in skilling over the next couple of years, it's why, as I said before, we’ve targeted other sectors to make sure in the construction sector and investment and infrastructure and investment in creative areas of the economy that we are going to be stimulating more jobs. And we're not going to stop there, and we’re continuously working now with industry to see where else we can directly engage through government policy settings or otherwise to make sure we get it right. And that’s not one simple thing or one simple plan, it's lots of different pieces of the puzzle that will be an ongoing piece of work for months and years to come.

Hamish Macdonald: Okay. We'll say goodbye to the politicians at this point, Senator Gallagher, Senator Birmingham, thank you very much for joining in this conversation tonight.

[End of excerpt]

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