SKY NEWS AM AGENDA
WEDNESDAY, 26 FEBRUARY 2020
SUBJECTS: Coronavirus impacts on the economy; Economic stimulus, Labor’s handling of the GFC.
ANNELISE NIELSEN: Joining us live now is Shadow Assistant Treasurer Stephen Jones. Thank you for your time.
JONES: Great to be with you Annelise.
NIELSEN: Now, we know the economy has taken a huge hit. It does seem like the promised surplus is under threat, but it's that not expected when you have a global force like coronavirus impacting your bottom line?
JONES: I think the thing here is that the Government has been caught napping. A few months ago they were having t-shirts and coffee cups printed saying ‘surplus achieved’, ‘economy going gangbusters’ when the truth was very, very different. Growth was flagging, wages were low, company profits, business investment, all of it was showing signs of a lot of weakness and the Government was basically too stubborn, or too blind, to see what was going on. We were calling for stimulus measures. We repeat those calls because we see the capacity of this crisis to spread from just the tourism sector and the higher education sector, which are the most exposed at the moment, through to other areas of the economy. We're repeating our calls for the Government to implement a stimulus package, it is much needed. The Government seems to be too busy patting themselves on the back and looking backwards not forwards. We need some leadership, and we're certainly not getting it from this Prime Minister.
NIELSEN: The IMF has said that the global growth was supposed to go from 2.9% to 3.3%, now it's going to go to 3.2% because of coronavirus that's huge in global contexts. Has Labor done anything to try and prepare for something as seismic as coronavirus?
JONES: We haven't been in government for seven years. So the question is what has the Government done to prepare us for this? The answer to that is very little indeed. Entirely reliant on monetary policy, refusing to do anything to budge demand, refusing to do anything to boost wages growth, watching productivity decline watching business investment decline, which has left us in an incredibly vulnerable position. Do not add worse insult to injury by failing to intervene now. We need a stimulus package. We need to be looking at those sectors of the economy which are immediately impacted, but we also need a plan. So, revisit those suggestions we were putting to the Government at the end of last year, bring forward the tax cuts, bring forward some of that infrastructure investment. On top of that, how about delivering on some of the things that you'd promised to those bushfire affected regions, because when I'm talking to businesses in those regions, not one cent of the money promised is flowing into those areas at the moment. That's a huge problem.
NIELSEN: What specifically are people in bushfire regions saying that they were promised and hasn't been delivered?
JONES: The business assistance grants. Not one dollar has flowed through to those areas yet. What they're saying is the Government is big on the promise, but we're not seeing that assistance flow through to people on the ground. What they need is cash in their tills and cash in their wallets, right now, and they're not getting it.
NIELSEN: When you reference the coalition's been in Government for seven years and so the onus is on them. If we look back just before that seven years, that's the last time we had something this drastic affect our economy the Global Financial Crisis and Labor was able to draw on a significant surplus to get through that particular incident. Wouldn't the prudent thing to do be building up a surplus again, as much as you can, so you can deal with these issues?
JONES: What Labor did was implement a fiscal stimulus package, which meant Australia, almost alone in the entire world, didn't see the sorts of economic devastation visited upon households.
NIELSEN: But you had the opportunity to use that stimulus package because there was a surplus.
JONES: Surely the point is we acted and did what was necessary. Governments aren't households, governments have the capacity to draw down on their extra borrowing capacity, and this government has got a fantastic set of borrowing numbers at the moment. Money has never been cheaper. A great environment for the Government to be investing in infrastructure. They should be bringing forward those tax cuts, as we've already talked about, because people need the cash in their wallets now, business need the stimulus and the confidence now. Now is the time for the Government to be acting like Labor did back through the GFC. We didn't dilly-dally, we took the best advice and we thought we have got to put the interests of households, of workers, of businesses first. What businesses and workers are crying out for now is some leadership from the Government and a sign that the Government is going to put their interests first, the interests of businesses, small businesses, workers, households ahead of its own political interests. Let's forget the marketing, the spin. Let's get down to a real plan and they're not saying that from the Government at the moment.
NIELSEN: Well, if we look at to the two major industries that have been impacted by coronavirus, it's mainly higher education and resources.
JONES: I’d add tourism to that as well.
NIELSEN: Actually, that's a fair point. So what specifically could the Government do to stimulate those particular industries? You need students to stimulate higher education, you need tourists to stimulate tourism and it's just something that they don't have a lot of control over right now.
JONES: I think that there will be two sorts of impacts in higher education. If all we're doing is shifting the demand, when the students are arriving, when they're paying for their courses, when they're spending their money in Australia, that's more likely than not just going to shift it into the later quarters of this year. What universities need is assistance with their cash flow. Government has at its disposal tools to assist the university sector, the higher education sector, with its cash, most likely to be quite contained throughout the course of this year. Tourism is going to be very, very different indeed, because it's not as if people who are planning on having their holiday in Cairns or in outback New South Wales in April, May, June of this year are going to say well I won't do it in April, May, June or this year I'll do it in August or September. They're most likely not to come, and that is a permanent hit to jobs in those regional areas, to those tourism businesses who are already doing it tough. A very different sort of assistance is going to be needed in those areas, particularly if they're already reeling from bushfire, or flood impacts, or cyclonic of events as well. So very, very different sorts of interventions, one temporary one more permanent. What we need is the Government acting on both of those and sending a clear signal to business, we've got this guy's, we've got this, we've got a plan to put in place. What we're getting at the the moment from the Prime Minister and the Treasurer is the exact opposite. Nothing to see here. If there is an intervention will leave it to the Reserve Bank, and they can cut interest rates again and what we've seen over the last four years., that's simply not working.
NIELSEN: We’ve got GDP figures out next week as well. So we'll be keeping a close eye on that too. Stephen Jones, thank you for your time.
JONES: Always good to be with you.