RESPONSE TO MINISTERIAL STATEMENT ON THE ECONOMY

SENATOR KATY GALLAGHER.
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1 month ago
RESPONSE TO MINISTERIAL STATEMENT ON THE ECONOMY
SENATOR KATY GALLAGHER
I seek leave to respond to the Finance Minister’s Ministerial Statement on the Economy.

We sit today, the second Tuesday in May – a day in a pre-COVID world which would be budget day but it seems nothing is as it was anymore.
 
Labor recognises that first and foremost COVID-19 is a health crisis - a worldwide pandemic which has caused the deaths of more than 280,000 people including 97 here in Australia.This health crisis has resulted in the imposition of significant social restrictions on our community which have in turn, had massive economic implications.
 
For hundreds of thousands of Australian workers that has meant losing their jobs.
 
For others its less work available.
 
For others home has morphed into office and school room.
 
For our essential workers, work has never been busier - or more dangerous.
 
And yet despite this enormous upheaval, Australians have done what was asked of them by cooperating with the advice that social distancing would save lives.
 
That staying home was the best way to keep everyone safe, particularly those who may be more vulnerable to the effects of the COVID-19 virus.
 
As a community we stood together (albeit socially isolated) and flattened the infection curve.
 
In the space of just a few months and despite the restrictions put in place thousands of Australians were infected; hundreds of people have become critically ill and tragically 97 have died.
 
But as a country we have fortunately avoided the heartbreaking scenes of other countries such as the UK, USA and parts of Europe.
 
From the very beginning of this crisis Labor has taken a constructive and supportive approach to the health and economic responses to COVID-19.
 
This includes the positions we have taken in this chamber and in the other place during the two urgent sittings of the Parliament.
 
To facilitate and expedite the extra support needed by the Australian community and the economy during this time.
 
We have not played politics.
 
When we have disagreed with elements of the Governments response we have raised our concerns in a constructive manner.
 
Where we think the response could have been improved we have made suggestions,
Where we think improvements could have been made we suggested changes.
 
Some of which the Government ultimately took up – including our call for a wage subsidy, better income testing for families, support for students and Telehealth measures just a few.

When the PM and his Ministers spoke of an economic “snap-back” we were surprised at the approach considering the severity of the economic shock playing out in front of our eyes.
 
But when the final vote came on the COVID-19 related legislation- we voted in the national interest.
 
For the millions of families, For the millions of people, families, workers, vulnerable Australians, businesses - large and small -who needed us to make that call.
 
But our job as the Opposition also requires us to hold this government to account.
 
The statement just given by the Finance Minister outlines just a fraction of the information that we would have expected to have be delivered today had it been budget day and most of this information isn’t new.
 
Nonetheless the numbers paint a confronting picture and really paint the importance of getting this right.
 
In the June quarter:
  • Household consumption down 16 per cent
  • Business investment, concentrated in the non-mining sector, down 18 per cent
  • Dwelling investment down 18 per cent
  • New motor vehicle sales down 48 per cent this year to date (largest ever fall)
  • House sales down 40 per cent
  • Air travel down 97 per cent

And whilst today’s statement is welcome it doesn’t replace the need for a full set of numbers to be released as soon as possible.
 
It’s not enough to drop a few select numbers out as this Government has been doing – unemployment to rise to 10% we are told but it could have been 15% if it wasn’t for JobKeeper we are told. But there is no Treasury modelling to back this in.
 
Last weekend the Government dropped to the paper the costs to the economy of not re-opening – again, apparently Treasury figures but no detail released.
 
It’s essential that Treasury detailed forecasts are made available for scrutiny. If the IMF, the RBA, private economists can undertake a publish detailed forecasts with appropriate caveats in place there is no reason why the Treasury isn’t in a position to do so.
 
Now more than ever – Australian deserve to be given up-to-date  information to understand what is happening in the economy in real time, what is happening in the labour market, and whether the economic response packages doing what they were intended to do?
 
Afterall it’s the Australian taxpayers who are funding these massive economic response packages. And its Australian taxpayers who are going to pay off the substantial debt bill that follows.

Whilst Labor accepts that the impact on the economy from COVID-19 is severe it’s also important to acknowledge that the last set of economic figures we got from this government in mid-December last year through the MYEFO- already pointed to significant weakness across the economy.
 
Seven years in, three treasurers down and the Governments complacent approach to managing the economy was there for all to see.                                       
 
Economic growth was below trend, underemployment was rising, business investment had fallen to its lowest levels since the 1990s, wages were stagnant, productivity was in decline and; government debt had more than doubled on this governments watch.
 
Australian households were already struggling to make ends meet with declining household incomes making it more difficult to get by week to week.
 
Monetary policy had been doing the heavy lifting for some time as the Government wearing its ideological blinkers refused to respond to these weaknesses with any serious fiscal or policy response.
 
Despite the Government spin, the economy entered the COVID-19 crisis in a weaker shape than needed to be the case.
 
And we saw this as COVID-19 virus started to wreak havoc across the world from December last year it wasn’t until mid-February - some 6 weeks after the alarm bells went off about a global pandemic with serious health and economic consequences - that the Government finally  accepted the need for economic stimulus.
 
Treasury told the COVID-19 select committee that work started on the 1st economic package at the beginning of March.

When the first package was announced  Labor was positive despite our concern that it was unlikely these measures would be big enough or implemented quickly enough to prevent job losses, business failures or a more serious downturn.
 
We said at the time that the Government must be prepared to take additional steps if it became clear if the response was insufficient.
 
In just 10 days that insufficiency test Labor had warned about was met - with the Government announcing the second package more than tripling the value of the first package.

And Just eight days after that, following massive job losses in that middle week in March , the Government finally tapped the mat on a wage subsidy and announced the JobKeeper payment.
 
Three economic packages announced in the space of three weeks – the 12th, 22nd and 30th March - does beg the question on whether Treasury would have designed the packages differently with the knowledge of where they ended up by the end of March.
 
Treasury officials have described the Cash Flow Boost as a wage subsidy scheme – why then design two different wage subsidy schemes, particularly one which doesn’t require employers to keep staff on? And announce them a week apart?
 
Did the Government act fast enough, go big enough and with enough urgency from the beginning to stabilise the economy and keep as many people in jobs as possible?
 
From the outset of this crisis we have raised concerns about urgency about getting the money out the door fast.
 
The Government haven’t really been able to explain why it is taking almost two months from the restrictions being put in place for some of these job-saving payments to get out the door and into businesses?
 
Seven weeks since the shutdown started why is it that the private savings of Australians (some $10b of people’s superannuation savings that ) is the single biggest injection of funds into the economy?
 
And yet it even that program, implemented with no strings attached without a verification process had to be suspended last Friday with a police investigation underway into allegations of fraud for at least 150 account holders that the government was warned about.
 
And there are other issues about the design, timing and implementation of the economic response.
 
Why did the Government announce a program that incentivised sacking people on the 22nd of March, only to announce a program that targeted keeping people in jobs on the 30th, just 8 days later?
 
If JobKeeper had been begun earlier, covered more workers and been announced prior to the boost to JobSeeker - would that have saved more jobs?
 
Would it have prevented the confronting scenes of Australians lining up outside Centrelink – thousands of Australians who over night had had their lives turned upside down.
 
And why did the Government value some workers over others when they designed JobKeeper?
 
Why are there some workers on JobKeeper getting a windfall gain – sometimes up to three times what they would normally earn - and yet others by fluke of service time miss out entirely on having their job saved and their income protected?
 
We know that 1.1 million casuals have missed out on JobKeeper because the Government refuses to provide the support to casuals employed for less than 12 months forcing them onto the JobSeeker instead.
 
There's the 5,500 workers who work for Dnata that have been excluded from JobKeeper. Australian workers, working in Australia, families to feed – jobs they want to go back too – excluded.
 
Hundreds of workers at hotel chains, under a similar exclusion being notified that they are now not eligible after originally being accepted by the ATO for the JobKeeper payment.
 
What about the pub staff in Cairns who can’t work but because their workplace is linked to a bottle shop which has continued to operate – they don’t qualify for JobKeeper either.
 
Last week ABS data showed that in the five weeks to 18 April, total jobs decreased by 7.5 per cent – with 1/3 of accommodation and food services jobs and ¼ of all arts and recreation services jobs being lost .
 
And yet, its these industries – hardest hit by the COVID-19 restrictions – the ones with large short-term casual workforces who are missing out on support from JobKeeper.
 
Hospitality, arts and entertainment, tourism, construction - all industries which rely on short term casuals to keep their sector ticking over.
 
Last week the Government was claiming the undersubscribed JobKeeper program as some sort of success.
 
But we know from the letters to our office - eligibility criteria, communication issues and rule changes are making this program confusing and at times hard to access.
 
The Government tells us that Treasury has forecast an unemployment rate of 10% - even with JobKeeper in place.
 
10% unemployment a doubling of the unemployment rate from preCOVID-19 times - this apparent acceptance of 700,000 additional unemployed people as the price of restrictions by the government is deeply concerning.
 
Did Treasury advise the Government on what would be required to bring that rate down and protect more jobs?
 
Looking forward there are big decisions to be made.
 
Choices that will come before this Government.
 
After seven years without an economic plan it’s time to get one in place.
 
A plan for jobs.
 
We are going to need more than a hope to get the hundreds of thousands extra people off the unemployment lines. A massive effort also needs to be paid to the issue of underemployment.
 
Particularly for the new generation of workers - the young people who had just entered the labor market or who were just about to and who will bear a disproportionate impact of any economic slowdown  for years to come.
 
The Government talks of “hibernation” of “snap-back’ of “getting out from under the doona”.
 
Rather than glib marketing slogans – Labor looks to a future where we don’t aspire to “snap-back” or to go back to an economy that clearly only worked for some of us.
 
We don’t support a snap-back to insecure work, We don’t support a snap-back to poverty and living on $40 a day, and we don’t want a snap-back to just scraping by week by week.
 
As our leader Mr. Albanese said yesterday, we are not just an economy we are a society.
 
We need an economy that works for people not the other way around.
 
We need to recover stronger together.
 
We don't believe that a snap-back to higher unemployment, insecure work and to poverty for those who are unemployed is what we should settle for.
 
Mr President, there will clearly be a significant and severe impact on the Commonwealth budget from responding to COVID-19.
 
As I have said today, Labor has supported the fiscal response to date- even though we would have designed and implemented some of the measures differently had we been in Government.
 
Perhaps now more than ever Australians can see that the budget is more than a just a set of numbers which gets trotted out a few times a year and where a surplus is considered good and a deficit bad.
 
This is the simplistic lens that the Government likes to have the budget viewed through.
 
But as demonstrated by this Government in their response to COVID-19 and as Labor did when responding to the GFC - despite attacks from the then Opposition at the time.
 
The budget is an important stabiliser for when a crisis hits the economy.
 
Labor believes that a responsible fiscal strategy which ensures a strong and stable budget position is essential for every government but a budget can also should also be used to quickly inject investment into the economy in times of economic shock or when private investment is withdrawn.
 
It’s to help support people, to support jobs, to support business.
 
As we have seen so clearly from witnessing the queues outside Centrelink in that third week of March, or from the letters and emails into our offices about lives lost, jobs lost and businesses wound up over the past 2 months.
 
The budget doesn’t just exist for its own intangible purpose - it exists for all of us - for the society we create and for the society we want to be.
 
Now the government has also had to borrow extra money to help pay for the economic response and to keep the wheels of government turning.
 
The Treasurer has said previously that this debt burden would be “shouldered by generations to come”. After more than doubling the debt over the past 7 years – that debt burden existed well before the COVID-19 virus hit the budget.
 
We will wait for the delivery of the economic statement next month to see how exactly how the Government will approach the plan to deal with this debt, and with the large deficits that will be a feature of the budget from some time.
 
The Government will have to make choices about how they approach the recovery task.
 
We are already seeing the ideologues on the backbench pushing the PM’s snap-back agenda – already briefing out about how JobKeeper needs to be wound back even before some businesses have even got their first installment!
 
Well that’s talk about getting ahead of the curve!
 
No doubt the October budget will give us a glimpse of those choices including whether the governments natural predisposition to snap-back to classic conservative with cuts to essential services, or the harsh measures included in the infamous 2014 Budget and attempted many times since.
 
Labor wants the Government to put aside their internals and make recovery decisions in the national interest – that means everyone’s interests, not just the interests of a select few.
 
Labor urges the Government to think carefully about the choices ahead  about when and how they withdraw support from the economy - consult widely across the country, in the regions and the cities across industries and sectors.
 
Look at the needs of different demographics, young people, women, people on income support, and approach these decisions with compassion and with an eye on the long term, rather than an electoral term.
 
Over the past 2 months there has been a noticeable appreciation of the value of public services and public institutions.
 
Obviously, our universal public health system with Medicare at its core has been at the centre of that appreciation but it is broader than that.
 
Across the country, public servants are on the frontlines, from the beginning with officials being in Wuhan to assist Australian citizens in the Chinese epicentre back in January to return to Australia, to those delivering the health response, those delivering the support measures in Services Australia and in the Australian Tax Office; to those protecting the borders, the first responders, and the scientists and researchers working on a cure at the CSIRO.
 
I’m sure the irony of the Government’s injection of $230 million to allow CSIRO to continue to undertake important research and upgrade the CSIRO’s facility in Geelong isn’t lost on those CSIRO workers who have been campaigning against these government’s cuts, to exactly the same organisation.
 
The redeployment of nearly 6,000 public servants shows the flexibility of the APS and the commitment of public servants to our country at its finest.
 
And the Australian people’s success at flattening the health curve has been supported every step of the way by Australia’s public servants across every jurisdiction.
 
Mr. President, The challenges that come from COVID-19 are real.
 
And they will be with us for some time.
 
Getting the economic recovery as good as it can be has to have the urgent focus of this government whilst the health experts continue to lead the health response.
 
Earlier this month the Prime Minister said that success will be measured by;
 
Reducing unemployment, getting businesses open, and getting Australians back to work.
 
Labor would say to the Government - yes you need to do all that, but you must do much more.
 
You need a plan for jobs.
 
You need to deal with underemployment, with insecure work, with the dire poverty of people relying on social security, with the needs of young workers, of women workers.
 
You need to get the private sector investing again,
 
You need to get wages moving.
 
You need to get household incomes increasing.
 
You need to be much more than a marketing operation.
 
You are responsible to make sure that the economy that emerges from the pandemic is one that works for all of us, not just some of us.
 
The immediate future of millions of Australians relies heavily on you as the Government of the day getting these decisions right.

ENDS
Treasury