Jim Chalmers (Rankin, Australian Labor Party, Shadow Treasurer) Share this | Link to this | Hansard source

There is a lot of concern and anxiety in our community about the coronavirus outbreak. We understand that anxiety. That's why we have extended a bipartisan hand when it comes to listening to and acting on the advice of the medical profession and especially the chief medical officers of the Commonwealth and the states. According to our Department of Health, the virus has spread to 65 countries and regions outside mainland China, and it's already impacted more than 88,000 people. Clearly this, along with the actions of governments imposing travel bans and taking other measures in response, will have a substantial impact on the economy here and around the world. We don't yet know how substantial, but it has already damaged global confidence and it's making stock markets jumpy. It's forcing the Reserve Bank to contemplate another rate cut, despite the cash rate already sitting at a record low 0.75 per cent. I know from my own detailed discussions with employers in the tourism, aquiculture, retail and education sectors in North Queensland and Far North Queensland in recent weeks that the impact has already been felt in communities there and right around Australia. It's not that hard to imagine the devastation of losing access to the Chinese seafood market during New Year celebrations, or tens of thousands of hotel room cancellations or the impact of thousands of students missing the start of the first Australian semester.

But the businesses I met with in Cairns and Townsville also know that conditions were weak before the fires hit large swathes of Australia and before most of us had even heard of coronavirus. We need to maintain this perspective. We need to recognise that seven or so weeks of coronavirus fallout doesn't on its own explain or excuse seven years of economic mismanagement and underperformance. We know that the virus and the fires which preceded it exacerbate already existing weaknesses in the economy, which have been obvious and also, unfortunately, unattended for some time now.

Before the virus and the fires economic growth had already deteriorated substantially to well below trend and below budget forecasts as well. The government downgraded its own forecasts for growth in December's midyear update. The Reserve Bank downgraded growth three times last year and the OECD and the IMF downgraded Australia's growth more than they have for other advanced economies. That was before the fires and before the virus.

A big part of the problem here in Australia has been stagnant wages growth, which has been at record lows for the past six years and continued to stall in the December quarter just gone. Weak wages growth combined with record high household debt has fed weak consumption growth, which fell to its lowest pace since the global financial crisis. At the same time, private business investment has been in decline, and it's now at the lowest level as a proportion of the economy since the early 1990s recession. Profits fell again in the data today. As we learned last week, capital expenditure and construction work experienced large declines in the December quarter as well. The domestic private economy contracted for the past two quarters over the year as well, and is the weakest it's been since the global financial crisis. Again, this was before the worst of the fires and certainly well before the coronavirus. Our economy has become less dynamic. Measures of productivity have declined. For example, annual labour productivity in the market sector fell for the very first time ever in 2018-19.

The longstanding weakness in the economy is also compounding some of the challenges we face when it comes to the budget. Over the past six years the government has delivered six budget deficits and has overseen more than a doubling of net debt, which, as we learned on Friday, reached a new record high of $430 billion.

So these are challenging times. They cry out for national leadership. They demand a national plan to support our employers and their workers through a difficult period, to deal with weakness in the economy now, and to attend to challenges which have been obvious to all but those opposite for some time now.