Tuesday, 12 May 2020
I table a ministerial statement relating to the economy and seek leave to make a statement.
I thank the Senate.
Australia finds itself at war against a faceless and flagless enemy. The coronavirus has created a one-in-100-year event.
A health and economic shock the likes of which the world has never seen.
So many of our fellow Australians, through no fault of their own, are struggling and doing it tough.
Be they battling the virus, separated from friends and family or worried about their job security and economic future.
Tragically, 97 Australians have lost their lives with many more people, including in this parliament, directly affected.
Our thoughts are with the member for Cooper in the other chamber and all the other families across the country who have lost loved ones.
Many of the things we take for granted, visiting grandparents, taking the kids to weekend sport or having a beer at the pub, have been disrupted.
The Australian way of life has been put on hold.
But once again, Australia and its people are showing remarkable resilience and character.
Having withstood flood, fire and drought, there is a unity and purpose that should make us all proud.
Through strong and decisive action led by the Prime Minister, together with state premiers and chief ministers, Australia has avoided the fate of many other nations.
Globally, more than four million people have contracted the virus.
More than 280,000 have died and much of the world has gone into lockdown. In the United States, 80,000 have died.
In the United Kingdom over 31,000, with Italy, Spain and France not far behind. In contrast Australia's mortality rate is one of the lowest in the OECD.
Early border restrictions, comprehensive and coordinated action by the national cabinet and a world-class health system have contributed to this result.
The pandemic is not just an enormous health challenge but an economic one as well. The IMF is forecasting the world economy to contract by three per cent this year.
In contrast, during the GFC, the global economy shrank by just 0.1 per cent in 2009. China's GDP fell in the March quarter by 9.8 per cent, their first quarterly fall on record. Italy, France and Spain all experienced their largest quarterly falls on record.
In the United States, 33 million jobless claims have been made in the last seven weeks, with the unemployment rate rising to 14.7 per cent.
In Australia, Treasury is forecasting GDP to fall by over 10 per cent in the June quarter which would represent our biggest fall on record. At $50 billion, this is a loss equivalent to the total combined quarterly production of South Australia, Tasmania, the Northern Territory and the ACT.
Treasury is forecasting the unemployment rate to reach around 10 per cent, or 1.4 million unemployed, in the June quarter. This five percentage point increase in the unemployment rate is expected to occur over three months compared to the three years it took the unemployment rate to rise by the same amount in that devastating period of the early 1990s.
Household consumption and business and dwelling investment are all forecast by Treasury to fall sharply in the June quarter. The combination of social distancing, lower incomes and increased uncertainty are weighing heavily on aggregate demand and flowing through to reduced cash flow. Household consumption is expected to be around 16 per cent lower. Business investment is expected to be around 18 per cent lower with falls concentrated in the non-mining sector. Dwelling investment is also expected to be around 18 per cent lower. Over the same period, household savings are expected to increase as a result of the restrictions that have been imposed and an understandably cautious approach by households to discretionary spending.
Overall, the economic data has been sobering. In March, business and consumer confidence saw the largest declines on record. The ASX200 lost more than a third of its value in just over four weeks. In April, surveys showed that job ads halved and activity in the construction, manufacturing and the services sector had their largest ever monthly falls. New motor vehicle sales fell by 48 per cent through the year, their largest ever fall. House sales fell by 40 per cent. Domestic and international air travel is down by more than 97 per cent, with nearly 40,000 passengers moving through Brisbane Airport on Easter Sunday last year, compared to just 31 passengers this year.
Against this backdrop, between 14 March and 18 April the number of jobs decreased by 7.5 per cent and the wages bill paid by businesses decreased by 8.2 per cent. During this period, accommodation and food services saw the largest fall in jobs at 33.4 percent, followed by the arts and recreation sector at 27 per cent.
The scale of the economic shock is hitting the budget bottom line. The monthly financial statements for March provide the most recent report on the budget position. To the end of March, the underlying cash deficit was $22.4 billion, $9.9 billion higher than forecast in MYEFO. Tax receipts were $11.3 billion lower than forecast in MYEFO. While payments to the end of March were still $1.4 billion lower than in the MYEFO profile, this will change from the next statement onwards as the measures we have implemented continue to ramp up. Since MYEFO, the total face value of Australian government securities on issue has increased by more than $50 billion from $560 billion to $618 billion as of 8 May 2020. An updated economic and fiscal outlook will be provided in June, following the release of the March quarter national accounts with the budget to be delivered in October.
In accordance with the requirements of the Charter of Budget Honesty, I am tabling this ministerial statement to set out the reason for the increase in borrowings. The unprecedented speed and scale of the government's economic response has driven a rapid increase in borrowings. While there will be a significant increase in government debt which will take many years to repay, our measures have been designed in a way that protect the structural integrity of the budget. Australians know there is no money tree. What we borrow today, we must repay in the future. Temporary and targeted, the new spending measures were not designed to go forever but to build a bridge to the recovery phase. As Standard & Poor's stated less than four weeks ago, while the government's fiscal measures will 'weigh heavily on public finances in the immediate future, they won't structurally weaken Australia's fiscal position'. With $320 billion, or 16.4 per cent of GDP, in financial support, our focus is getting the country through the crisis and positioning the economy to recover on the other side.
This has only been possible because of the position of strength from which we entered the crisis. Growth had risen from 1.8 per cent to 2.2 per cent in the December quarter, and the IMF was forecasting the Australian economy to grow faster than the United States, United Kingdom, Japan, France and Germany in both 2020 and 2021. The unemployment rate fell in February to 5.1 per cent, with the participation rate at near record highs against the backdrop of 1.5 million new jobs being created over the last six years. After inheriting a budget deficit of $48.5 billion, the budget was back in balance for the first time in 11 years and, despite the adverse economic impacts from the global trade tensions, fires, floods and drought, we were on track for the first surplus in 12 years.
Our ability to handle this crisis has once again reminded Australians of the importance of a strong and stable financial position, which must always be a primary responsibility of government. The proven path for paying back debt is not through higher taxes, which curtails aspiration and investment, but by growing the economy through productivity enhancing reforms. Our focus will be on practical solutions to the most significant challenges which will be front and centre in the post-crisis world. Reskilling and upskilling the workforce, maintaining our $100 billion, 10-year infrastructure pipeline, cutting red tape to reduce the cost burden on businesses and the economy, and tax and industrial relations reform as a means of increasing our competitiveness.
The values and principles that have guided coalition reforms in the past must guide us again in the future: encouraging personal responsibility; maximising personal choice; rewarding effort; and risk-taking whilst ensuring a safety net which is underpinned by a sense of decency and fairness. Unleashing the power of dynamic, innovative and open markets must be central to the recovery, with the private sector leading job creation, not government.
We know that a strong economy is the foundation for everything else, and only with a strong economy can you provide the health, education, and essential services that Australians rely on.
The economic response to the crisis
Conscious of the extraordinary health and economic shock created by the coronavirus, the government was determined to act quickly and decisively. We were in a race against time to replenish our personal protective equipment stocks, increase the capacity of our intensive care units and secure a sufficient number of ventilators to deal with the expected surge in demand.
We provided additional funding to our scientists and medical researchers who are participating in a global mission to find a vaccine. We entered into an equal cost sharing arrangement with the states and territories to meet the extra burden on public hospitals. Non-urgent elective surgeries were suspended and we guaranteed the viability of private and not-for-profit hospitals to ensure over 30,000 beds and 105,000 healthcare professionals were available. We allocated more than $850 million to the aged-care sector to provide additional support and services at this difficult time.
On the economic front, in less than a three-week period, we announced three separate support packages, each complementary and building on the other. Combined, they represent the largest fiscal response in Australia's history. Over $25 billion of support has already flowed to households and businesses in recent weeks, with more than $30 billion to flow in the next month. This is the largest and fastest injection of economic support our country has ever seen.
Our economic measures fall into three categories: support for households; support for business and employment; and support for the financial system. For households, our actions are designed to 'cushion the blow' from the income shock and to support consumption across the economy. Given the level of uncertainty, our economic measures provide more than financial relief. They provide a psychological boost as well.
There are so many stories from across the nation about how our measures have provided an economic lifeline to people in their hour of need. Like Luke, the owner of a local restaurant and bar in Chapel Hill, Brisbane, who said JobKeeper 'saved our bacon'; and Adrian, owner of an auto business in Moonah, Hobart, who said JobKeeper has 'turned out to be a saviour'.
We effectively doubled unemployment benefits with the introduction of a temporary $550 coronavirus supplement for jobseekers. We waived the waiting period, adjusted mutual obligation requirements and expanded the partner income test to ensure it reached those in need. With over 1.4 million Australians now receiving the payment, it is providing critical support.
We announced two $750 cash payments. The first payment, totalling $5.2 billion, went out from 31 March to more than seven million income support recipients, including pensioners, carers, veterans, those receiving family tax benefits and Commonwealth seniors health card holders.
We provided tax-free early access to superannuation of up to $10,000 this financial year and up to $10,000 next financial year. To date, 1.29 million early release of super applications have been released by the ATO, equating to about $10.6 billion, with an average withdrawal of $8,000.
We reduced the pension deeming rates, both the lower and upper levels, to 0.25 per cent and 2.25 per cent, at a cost of $876 million. We reduced the superannuation minimum drawdown rates by 50 per cent for 2019-20 and 2020-21 to give those in retirement more control over their savings. We worked with the banks and the prudential regulator to ensure households could get much-needed temporary relief from loan repayments. With repayments on $200 billion of loans deferred, the majority of which are residential mortgages, the financial pressure on many households has been lowered.
An early childhood and education relief package of over $1.6 billion will see over one million families receiving free child care. This has allowed our child-care sector to remain open to support working families and vulnerable children through the pandemic period.
The second set of economic measures has been directed at business and employment. The motivation has been to encourage investment, boost cash flow, maintain the connection between employer and employee and provide a regulatory shield and more workplace flexibility while preserving as much capacity across the economy as we build a bridge to the recovery phase.
At $130 billion the JobKeeper program provides for a fortnightly $1,500 payment to parttime and full-time employees, long-term casuals, sole traders and those working in the notfor-profit sector. The payment is equivalent to 70 per cent of the median wage and is close to a replacement wage for many working in those sectors most affected, like hospitality and retail. Payments began last week for the period beginning 30 March, which was the date the program was announced.
There are now more than 835,000 businesses, employing more than 5.5 million workers, who are formally enrolled in the program. This is in addition to temporary cash flow support to help small and medium-sized businesses keep operating, pay their bills and retain staff. Over 450,000 small and medium-sized businesses have now received over $8 billion under our cash flow boost program. Linked to the size of the payroll, this program will provide between $20,000 and $100,000 to SMEs to help them retain staff and meet their fixed costs. This measure uses the existing payroll systems, so that no new forms need to be filled in, businesses do not need to apply and payments are made automatically in the most efficient way possible. We also introduced a separate 50 per cent wage subsidy for 117,000 apprentices, helping to keep the local apprentice baker and hairdresser in work.
In addition to the financial support we have provided business, we amended the bankruptcy and solvency laws to provide temporary protection for distressed businesses during this period.
In the first package we announced two measures to support business investment. An extended instant asset write-off of up to $150,000 which can be used any number of times for any eligible asset and a 50 per cent accelerated depreciation allowance for businesses up to $500 million in turnover.
Other measures included a $500 million loan facility to support exporters recapturing market share and a $1 billion relief and recovery fund with over $500 million already committed. This fund is supporting regional airlines and airports, air freight for essential agriculture, levy relief for Commonwealth fisheries, tourism businesses in Commonwealth national parks, a funding boost for Australia's zoos and aquariums and Indigenous and regional arts programs.
To assist commercial tenants with rent relief during this difficult period we worked with the states and territories on a mandatory code of conduct to govern their relationship with landlords.
In total, there has been more than 80 regulatory changes that the federal government has made to provide greater flexibility and support to those affected by this crisis. This includes significant temporary industrial relations changes to allow employees and employers to vary work arrangements in order to keep people employed.
A great strength of the Australian economy during this crisis has been the resilience of our financial system which has benefited from many reforms under this government, commencing with the financial systems inquiry which led to our banks being required to hold more capital so as to be 'unquestionably strong'.
Global and domestic markets have experienced significant stress during this period, and the government moved quickly to inject liquidity into the system.
The Reserve Bank of Australia and the Australian Office of Financial Management have made $105 billion available to support lending to businesses from both bank and nonbank lenders.
Government has also partnered with the banks in a $40 billion SME loan guarantee scheme, which to date has already seen over $1 billion in loans approved to more than 11,000 businesses.
Regulatory relief has included the clarification of responsible lending laws to help credit flow faster to SMEs as well as changes made to facilitate the rapid recapitalisation of ASX-listed companies.
In recognition of the unprecedented and volatile market environment, the government has also temporarily reduced the FIRB assessment thresholds to zero to safeguard the national interest and to ensure confidence in the foreign investment framework is maintained.
It has been encouraging that, through the combination of our economic measures and flattening the curve, we have seen gradual signs of improvement in sentiment.
Consumer confidence has risen for six consecutive weeks, and key sectors like mining, agriculture and manufacturing have continued to be resilient and contributed to a record trade surplus of $10.6 billion in the month of March.
Significant product innovation, market diversification strategies and the accelerated uptake of digital transformation opportunities have also been pursued by many businesses in their effort to adapt to the difficult circumstances they are in.
This innovation will assist these businesses on the other side.
Lifting of restrictions
Last week the Prime Minister summarised the government's five-point plan in response to this crisis.
First, we made real progress in fighting the virus, buying time to increase our health capacity.
Second, we put in place our economic response to cushion the blow and build a bridge to recovery.
Third, we have begun lifting restrictions, with a clear plan and framework mapping out the road ahead.
Fourth, with restrictions starting to lift, it will be paramount to build confidence and momentum to consolidate these gains.
Fifth, we will continue to grow the economy, create more jobs, guarantee the essential services Australians rely on and keep Australians safe.
Last Friday was a significant point on our pathway back, with national cabinet agreeing to a three-step framework to achieve a COVID-safe Australia and the lifting of restrictions by July.
Treasury estimates that, with the restrictions lifted under the three separate stages, 850,000 people will be back at work.
More than half of those workers will come from three sectors, with 338,000 jobs in accommodation and food services; 76,000 jobs in arts and recreation; and 71,000 jobs in transport, postal and warehousing.
Construction, with 45,000 jobs, and manufacturing, with 20,000 jobs, will also be significant contributors.
Treasury estimates that, as a result of easing the restrictions in line with stages 1, 2 and 3, GDP will increase by $9.4 billion each month.
The lifting of restrictions will see Australians move around more freely. Of the $9.4 billion, increasing demand, including in retail, will contribute $2.9 billion.
The opening of cafes, pubs, clubs, entertainment venues and health and fitness gymnasiums will contribute $2.4 billion, while the opening of schools will contribute nearly $2.2 billion and other industry sectors, like local government, museums and parks, a further $1.2 billion.
The relaxation of travel restrictions is expected to contribute around $700 million. The speed at which restrictions are lifted may differ in each state.
So too will the impact on jobs and GDP from the implementation of each stage.
Treasury estimates that the benefits of just stage 1 being lifted will lead to more than 250,000 people going back to work and more than $3 billion in additional GDP.
This includes 83,000 jobs and $1 billion a month in New South Wales; 64,000 jobs and over $715 million in Victoria; 51,000 jobs and $610 million in Queensland; 25,000 jobs and $435 million in Western Australia; 17,000 jobs and $178 million in South Australia; 5,000 jobs and $50 million in Tasmania; 4,000 jobs and $60 million in the ACT; and 3,000 jobs and $40 million in the Northern Territory.
However, these improvements in the economy depend on us continuing to follow the health advice.
Failing to do so could see restrictions re-imposed at a loss of $4 billion per week to the economy.
If our largest state, New South Wales, had to re-impose restrictions equivalent to those in place before the 8 May National Cabinet meeting, it would cost its economy around $1.4 billion per week.
For Victoria, the cost would be around $1 billion, in Queensland $800 million, in Western Australia $500 million, in South Australia $200 million, in Tasmania $100 million, in the ACT $100 million and in the Northern Territory $40 million per week. This is the economic cost we will all bear if we fail to act.
Before concluding, I want to thank my colleagues the Prime Minister, the Deputy Prime Minister, my good friend and colleague the Treasurer, and the health minister for their leadership throughout this period and also the many agencies of government that have worked so tirelessly behind the scenes.
Australians know that, as a consequence of the actions we have taken, we are better placed than most, but there is still a long way to go.
There will be more coronavirus cases, and it is vital we remain vigilant.
The economic benefits from lifting the restrictions will only be realised if Australians continue to follow the health advice and download the COVIDSafe app.
On the economic front, we have put in place a comprehensive range of measures designed to keep people in jobs and to build a bridge to recovery.
Our measures are working, protecting lives and livelihoods. We can be confident about our future.
This virus will not defeat us. We must stay strong.
We must stay together.
We must maintain our resolve.
The fighting Australian spirit will see us come through stronger than ever.
by leave—We sit today, the second Tuesday in May, a day which, in a pre-COVID world, 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 death 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, it has meant less work being available. For others, home has morphed into office and schoolroom. For our essential workers, work has never been busier or more dangerous. Despite this enormous upheaval, Australians have done what was asked of them, by cooperating with the advice that social distancing would save lives and 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. However, in the space of just a few months, and despite the restrictions put in place, thousands of Australians were infected, hundreds of people became critically ill and, tragically, 97 people have died. But, as a country, we have fortunately avoided the heartbreaking scenes of other countries, such as the United Kingdom, the USA and parts of Europe.
From the beginning of the crisis, Labor has taken a constructive approach to the health and economic responses to COVID-19. This includes the positions we've taken in this chamber and the other place, during the two urgent sittings of parliament, to facilitate and expedite the extra support needed by the Australian community and the economy during this time. We've not played politics. When we've disagreed with elements of the government's response we have raised our concerns in a constructive manner. When we've thought that the response could have been improved we've made suggestions. Where we've thought improvements could be made, we've 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 to name a few.
When the Prime Minister and his ministers spoke of an 'economic snapback', 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 and millions of people, workers, vulnerable Australians and 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 been 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 the recovery 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 40 per cent this year—the largest fall ever; house sales down 40 per cent; and air travel down 97 per cent.
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, as this government has been doing. Unemployment is to rise to 10 per cent, we are told, but it could have been 15 if it weren't for JobKeeper, we are told. But there's no Treasury modelling to back this in. Last weekend, the government dropped to the paper the costs of the economy not reopening—again, apparently Treasury figures but no detail released. It's essential that Treasury's detailed forecasts are made available for security. If the IMF, the RBA and private economists can undertake and publish detailed forecasts, with appropriate caveats in place, there is no reason why the Treasury isn't in a position to do so also. Now, more than ever, Australians 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 are doing what they were intended to do. After all, it's the Australian taxpayers who are funding these massive economic response packages, and it is the Australian taxpayers who are going to have to pay off the substantial debt bill that follows.
Whilst Labor accepts that the impact on the economy from COVID-19 is severe, it is also important to acknowledge that the last set of economic figures we got from the government in mid-December last year through the MYEFO already pointed to significant weaknesses across the economy. Seven years in, three treasurers down and the government's 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 level since the 1990s, wages were stagnant, productivity was in decline and government debt had more than doubled on this government's 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, had refused to respond to the weaknesses with any serious fiscal or policy response. Despite the government's spin, the economy entered the COVID-19 crisis in a weaker shape than needed to be the case. We saw this as the COVID-19 virus started to wreak havoc across the world from December last year.
It wasn't until mid-February, some six weeks after the alarm bells went off around a global pandemic with serious health and economic consequences, that the government finally accepted the need for economic stimulus. Treasury told the Senate Select Committee on COVID-19 that work on the first package started at the beginning of March. When the first package was announced, Labor was positive, despite our concern that it was unlikely that 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 that 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. 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, on 12, 22 and 30 March, does beg the question as to whether Treasury would have designed the package 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 and 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 and about getting money out the door fast. The government hasn't really been able to explain why it's taken almost two months, since the restrictions were 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 private savings of Australians—some $10 billion of people's superannuation savings—are the single-biggest injection of funds into the economy? And yet even that program, implemented with no-strings attached and 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.
There are also other issues about the design, timing and implementation of the economic response. Why did the government announce a program that incentivised sacking people on 22 March, only to announce a program that targeted keeping people in jobs on 30 March, just eight days later? If JobKeeper had begun earlier, covered more workers and been announced prior to the boost to the jobseeker payment, would that have saved more jobs? Would it have prevented the confronting scenes of Australians lining up outside Centrelink, thousands of Australians who overnight had their lives turned upside down? Why did the government value some workers over others when they designed JobKeeper? Why are 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 support to casuals employed for less than 12 months, forcing them onto the jobseeker payment instead. There are the 5½ thousand workers who worked for dnata that have been excluded from JobKeeper—Australian workers working in Australia, with families to feed and jobs they want to get back to, excluded. Hundreds of workers at hotel chains are under a similar exclusion and are being notified 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, don't qualify for JobKeeper either?
Last week the ABS data showed that, in five weeks to 18 April, total jobs decreased by 7½ per cent, with one-third of accommodation and food services jobs and one-quarter of all arts and recreation services jobs being lost. Yet it's these industries, hardest hit by COVID-19 restrictions, that are the ones with large short-term casual workforces, who are missing out on the support from JobKeeper. Hospitality, arts, entertainment, tourism, construction—these are all industries which rely on short-term casuals to keep their sectors 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 offices that eligibility criteria, communication issues and rule changes are making the program confusing and at times hard to access. The government tells us that Treasury has forecast an unemployment rate of 10 per cent, even with JobKeeper in place. That's 10 per cent unemployment—a doubling of the unemployment rate from pre-COVID times! This apparent acceptance by the government of 700,000 additional unemployed people as the price of restrictions 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 probably time to get one in place. We need a plan for jobs. We're going to need more than a hope to get the hundreds of thousands of extra people off the unemployment lines. A massive efforts also needs to be made on the issue of underemployment, particularly for the new generation of workers, the young people who've just entered the labour market, or were about to, and who will bear a disproportionate share of the impact of the economic slowdown for years to come.
The government talks of hibernation, snapback and getting out from under the doona. Rather than glib marketing slogans, Labor looks to a future where we don't aspire to snap 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 to snap back to families who are just scraping by, week to week. As the Labor 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, and we need to recover stronger together. We don't believe that a snap back to higher unemployment, insecure work and poverty for those who are unemployed is what we should settle for.
There will clearly be significant and severe impacts on the Commonwealth budget from responding to COVID-19. As I've 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 just a set of numbers which gets trotted out a few times a year, 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 its response to COVID-19—and as Labor did when responding to the GFC, despite attacks from the then opposition—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 any government, but a budget can and 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, support jobs and support business, as we have seen so clearly from witnessing the queues outside Centrelink in that third week of March and from reading the letters and emails receives into our offices about lives lost, jobs lost and businesses wound up over the past two 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.
The government has 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. With the government having more than doubled the debt over the past seven 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 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 for some time.
The government will have to make choices about how they approach the recovery task. We already see the ideologues on the back bench pushing the PM's snapback agenda, already briefing out about how JobKeeper needs to be wound back even before some of the businesses have even got their first instalment. Talk about getting ahead of the curve! No doubt the October budget will give us a glimpse of these choices, including whether the government will snap back to its natural predisposition to 'classic conservative' with cuts to essential services or whether we will see 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 two 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's broader than that. Across the country, public servants have been on the frontline right from the beginning—from officials being sent into Wuhan, the Chinese epicentre, back in January to assist Australian citizens' return to Australia to those delivering the health response, those delivering the support measures in Services Australia and the ATO, those protecting the borders, the first responders, the scientists and the 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 CSIRO's facility in Geelong isn't lost on those CSIRO workers who've been campaigning against this government's cuts to exactly the same organisation. The redeployment of nearly 6,000 public servants shows the flexibility of the APS and public servants' commitment to our country at its finest. The Australian people's success at flattening the health curve has been supported every step of the way by Australian public servants across every jurisdiction.
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, while 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 and with the needs of young workers and women workers. You need to get the private sector investing again. You need to get wages moving. You need to get household incomes increasing, and you need to be much more than a marketing operation. You are responsible for making sure that the economy that emerges from this 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.'
by leave—I rise on behalf of the Australian Greens, and I thank the Minister for Finance for the economic update on what would have been budget day were we not all in this global health crisis.
The spread of the global COVID-19 pandemic has turned our lives upside down and has driven us into an economic crisis. Thankfully, our governments have largely listened to the scientists and medical experts, and, so far, with the support of the absolute heroes on the frontline of our health system, we've avoided a health disaster like that in the US, the UK and many other countries. But our economy has been shattered, and, for many people, things haven't been easy for a long time. The inequality crisis fuelled by the neoliberal policies of, sadly, both the Liberal and Labor parties has been supercharged by the current health and economic disaster. While we're rightly focused on responding to the COVID-19 crisis, the climate crisis that drove the devastating bushfires earlier in the year has not gone away. What we do next matters.
Right now, we have a chance to map our way out of the jobs and economic crisis and to set up a fairer and more sustainable future. We're facing the worst youth unemployment in history. Unless we put a recovery plan in place now that addresses the challenges faced by young people specifically, the effects will linger for a decade and impact young people for a lifetime. Right up until the very moment that the coronavirus pandemic hit, the government had convinced many people that any increase in funding for public services was impossible, unaffordable or something only the market could deliver, but now everything has changed. Governments around the world have taken drastic and very necessary action to respond to the COVID-19 threat by focusing on saving lives and bolstering our public health systems, but also have been unlocking funding and directing money to where it matters: services for the public, directly to households and people. The big corporations and government are desperate to go back to business as usual, with more cuts and attacks on public services which will just leave us more exposed to the next looming crisis and place an even bigger burden on next generations. But we can't cut our way out of this crisis. We have to invest for the future.
Instead of going back to normal, we can build a better normal. We can tackle this economic crisis as well as the jobs, inequality and climate crises so that everyone can live a good life. If we can remake our society to protect us from a virus, then we can remake it to look after people, our environment and our climate. A plan to do this isn't just possible; it is necessary. Before the COVID crisis, we were staring down the interrelated threats of climate and environment breakdown, supercharged economic inequality and chronic job insecurity. These crises were being left unaddressed by a government that prioritised tax cuts for corporations and the wealthy instead of investing in its people and the community.
What this pandemic and the response to the economic crisis has shown is that the government is able to respond to any big problems that we face, so long as they choose to put people before the private profit of their donors and so long as they listen to the scientists and experts and we mobilise the resources of society for the common good. Australia's COVID recovery plan must renew the economy by putting the community ahead of those big corporations. The Greens would like to see us retain the rate. The rate of jobseeker simply cannot go back to below the poverty line of $40 a day. We need to raise the rate for good and leave no-one behind.
The Greens want to see a special package for the arts to keep the creative industries which sustain us alive. We want to see massive government investment in social housing, in health, in education, in manufacturing and in renewable infrastructure—the building blocks of a fair, clean economy. Of course, we want to see early childhood education also remain free as an essential service that begins a child's education and enables workforce participation for parents.
We need to borrow to invest to recover. Together we can lay the foundations for a better future for all of us by fighting for a clearer, cleaner, fairer future through a green new deal. Together we can build a better normal and a better future for all of us.
by leave—As Leader of the Nationals in the Senate, I rise to say that we'd like to associate ourselves with the comments of Minister Cormann and the great work that the federal government has been doing to actually stand out worldwide in our response to COVID-19. I also want to briefly remark on rural and regional Australia's commitment to pushing back against the pandemic and getting the national economy back on track.
We're proud of how our government and our nation have pulled together and stunned the world in our response to COVID-19 through our joint efforts at both a state and a national level. Rural and regional Australians are ready to lead our national economic recovery. As we all know, life has been tough out in the regions for many seasons now, with droughts, fires, floods and now a medical crisis. These challenges might have shaken us, but regional Australia is standing strong. We will be open for business as soon as health circumstances and premiers allow.
Mr President, as you are aware, the Nationals are working with our rural and regional communities to do everything we can to not only help those affected get through this but also get back to normal as quickly as possible. We've worked hard to ensure supply chains were kept open, and, in doing so, to keep our country's supermarket shelves stocked with fresh fruit, vegetables and meat. We've made sure our truckies remained on the road, moving produce from its source to manufacturer to consumer. We've backed our mining sector to sustain our national economy now and into the future. We are safeguarding our airfreight capacity and working hard with industry to re-establish supply chains. The Nationals, in government, are focused on ensuring our regional air services are better equipped to support the return of visitors, business opportunities and freight movement. The Remote Airstrip Upgrade Program will improve aerodromes in remote areas. It will upgrade the safety and accessibility of aerodromes in remote areas to improve the delivery of essential goods and services. It will make sure they're accessible in all conditions.
Over this period, we've also invested in agricultural shows right across the country. I think one of the aspects of life in COVID-19 isolation has been missing opportunities for communities to come together and to celebrate what they do well. We want to make sure that regional shows stay relevant and vibrant. Just last week, I had the opportunity to head up to the north-east of Victoria to thank volunteers in Corryong, in the Upper Murray, who had been struggling with bushfires through January and then with COVID-19 shutting down any hope of a quick recovery post bushfires. Corryong is the home of the Man From Snowy River Bush Festival, and for them to have to cancel that event has been a significant dampener on that community. But they were absolutely stoked that the federal government had not forgotten them. I'm confident that, once this pandemic passes, the Corryong community again will stage great events and shows and will welcome people from capital cities to celebrate rural and regional life in our communities.
Our farmers have not clocked off because of COVID-19. They've tended stock and ensured that crops are planted and harvested and that supplies are accessible. Our 85,000 agricultural businesses are ready to go because they haven't stopped, while other aspects of the economy have. The Nationals represent workers and families on rural and remote properties, and we played a crucial role in securing visa changes and flexibility to remove uncertainty around worker availability for our growers during this health and economic crisis. But that is work that will continue through the recovery phase.
We remain committed to growing our agricultural sector. It's hard to reach the goal of $100 billion by 2030 set by industry—there are challenges, and we've seen ag fall down to $58.9 billion in 2017-18—but it's more important than ever as Australia emerges from hibernation. If we want to see a strong and prosperous Australia post COVID-19, we need a vibrant, dynamic and prosperous agriculture sector. Our produce is there—way more than we need—and, as the world awakens, it will need fresh food and fibre. Regional Australia stands ready to deliver. Our barley producers, for example, operate in a competitive global market and price their products in an entirely commercial way. I'm sure beer drinkers around the world can attest to the malting quality of Australian barley.
We also stand ready to supply the world's markets. On 5 July, we will see the Indonesian free trade agreement come into effect. That will mean more export opportunities and significant benefits for Australian farmers, as well as businesses and investors. As the Minister for Trade, Tourism and Investment has said, it's the most comprehensive bilateral trade agreement Indonesia has ever seen, and it will give a competitive edge to Australian exporters, particularly at a time when many of them are doing it tough as a result of the fallout from the COVID-19 crisis across the globe. Indonesia presents a significant opportunity.
But the drought is still with us, and many of our communities are still struggling with the reconstruction post bushfires. We as a political party stand with them. We've got the Drought Resilience Funding Plan to build resilience and preparedness and also to find ways to boost farm production and profits. We're getting on with building dams, creating regional jobs and more water capacity and security. Our communities do face a major rebuild following the summer bushfires. In my home state of Victoria, the economic impact on the agriculture, tourism and forestry industries from the bushfires was $237 million, and this is repeated across other states. That's why our government has provided $448 million for a Regional Bushfire Recovery and Development Program to deliver extra funding and expertise to revive local economies.
When restrictions on movement and travel are eased under our government's three-step plan, these communities will welcome visitors back with open arms. Treasury estimates that, with the restrictions lifted under the three separate stages, 850,000 Australians will be back at work. The lifting of restrictions will see Australians move around more freely: of the $9.4 billion increasing demand, retail will contribute $2.9 billion. I urge city based senators—we all do in the National Party—to encourage your constituents to visit the regions when the restrictions are lifted. Spend a dollar or two, eat, stay; do your bit to get Australia's economy back on track.
We're entering a new era of economic potential. Australians are embracing domestic manufacturing opportunities, which is another thing that I know my Senate colleague Senator Canavan is incredibly passionate about seeing developed. The Nationals are backing small and medium-sized Australian businesses to tap into new markets around the world, supporting 10 export hubs across the nation, many of them out in the regions. Over 450,000 small and medium-sized businesses have now received over $8 billion under our cash flow boost program. Linked to the size of their payroll, this program will provide between $20,000 and $100,000 to small and medium enterprises to help them retain key staff and meet their fixed costs. We also introduced a separate 50 per cent wage subsidy for 117,000 apprentices, to see young people with a career path, helping the local apprentice baker, hairdresser in work. The focus is on industries where Australia has large growth potential, and we're incredibly excited about the potential for manufacturing and mining and, obviously, for food, fibre and agribusiness.
The resources sector is ready to lead our economic recovery. This sector drives our local economies, employing over 255,000 Australians and accounting for eight per cent of our GDP. Even now, during this once-in-100-years pandemic, the sector is powering Australia forward, with resources and energy exports increasing by two per cent to $68.9 billion during the March 2020 quarter. Our world-leading iron ore exporters are surging ahead and are forecast to export over $101 billion worth of iron ore to our trading partners in Asia. That is great news for the regions, great news for our national economy and great news for local jobs. The latest export figures have confirmed the resilience of some of Australia's key resource exports as the COVID-19 pandemic grips the world. It increased nearly 34 per cent in March compared with the previous month. This year our resource energy export sector hit $300 billion for the first time. That is up 40 per cent from five years ago. It really shows what you can do when you have a federal government that is focused on growing and promoting the mining and resource and energy sector and what a ballast that is to our economy through these very, very difficult times.
The next three months will bring some challenges, but it's clear that resources and energy exports will be a key driver of our recovery. I thank the industry and its workers who have kept the sector operating during this crisis and look forward to working with them as part of the Nationals team as we emerge from this global pandemic. I know many of the workers have had to make tough decisions for their families to not return home, often indefinitely, not knowing when they will be able to leave their mining employment and head home during their breaks, due to state boundary closures. Thank you for their efforts.
Rural and regional Australians have answered the call during the COVID-19 pandemic by embracing social distancing, by doing things differently. We hope that our lifestyle and density proves popular for those who live in capital cities to come and join us out in the region, where your neighbours aren't so close and you have a great lifestyle and a great local job as well. That is a vision that we, the National Party, want to pursue in government. Rural and regional Australians are ready, willing and able to lead our economic recovery. I thank them for their diligence.
The recovery will need to focus on building Australia's sovereign capacity. If this has taught us anything, it has taught us that we need to be able to do things here in Australia and not rely on sometimes weak, volatile global supply chains. I look forward to seeing through this recovery phase a vibrant advanced manufacturing sector, really value-adding to our food and fibre industry and our mining industry, building regional jobs for our local communities.
by leave—We've all come a long way since we first spoke of the coronavirus in this place. To a certain extent, we have so far dodged the proverbial bullet. While there is much sadness for those who have died, it is a relief that the potential for widescale deaths has severely diminished. We recognise that many people are suffering hardship and distress, and we won't know the full extent of this until restrictions are fully lifted. In the main, Australia has done exceptionally well, due to the vigilant actions of our governments and the collective will of our people. The federal government and the state governments haven't always been in sync over what needed to be done, and that has caused much public and business confusion, but overall the national cabinet has worked together constructively on the common goal of protecting the health and wellbeing of Australians. Australia is now in a very much better place to contend with the pandemics that most certainly will arrive in the future.
There has never been such a grounding of the economy, of business and of personal liberties as that we have seen over recent months. Everything we have done was necessary at various points in time, and some restrictions will no doubt continue longer than others, but how do we return to the new normal? How do businesses that rely on close social contact—restaurants, cafes, pubs, retailers and the like—survive when they are encouraged to open but have to operate with restrictions? How many businesses that were struggling before COVID-19 and only just hung on because of government payments and jobseeker will rapidly fall by the wayside when these payments stop? How many people will lose their jobs when their employer can no longer rely on government effectively subsidising their payroll?
How many people are afraid of going back into the workplace after many weeks of isolation? How long will it take to lift levels of consumer and business optimism, which are the main drivers of the economy?
All of us here need to play a part in leading our country out of the slump and into a prosperous new normal. We must all be united in the desire to ensure Australia remains economically strong and socially cohesive. This means all of us in this place need to work together to put aside our partisan blinkers and use this rebuilding opportunity to decide how we reshape our nation. I recognise this task is formidable. Hundreds of thousands of Australians have become unemployed, GDP is likely to fall for the first time in 30 years, we are staring down $120 billion of deficits this year and next year, and debt has passed $600 billion. The government's strategy for budget recovery is to go for productivity and economic growth. All options are on the table, but we can reliably assume its strategy will be to drive business investment, which would drive a rapid economic expansion, lift GDP, reduce unemployment and increase tax revenue, enabling us to pay down the debt. I very much see the appeal in this strategy for government and the community, but we need to learn from the past.
Since World War II, there have been two occasions when debt has surged to new heights. In both cases, the Hawke and Howard governments acted to return the budget to a more sustainable position by cutting spending and hiking up taxes. We don't yet know if the Morrison government plans to cut spending. If they do, they must be upfront about where these cuts will fall and what the effects will be. The government have also said that they do not plan to increase taxes as part of the recovery. Whatever it does to repair the budget, the government must always remember its heart. It is on notice that repair cannot come at the expense of those who can least afford it. Repair must be sustainable and affordable and must also very much be fair. We expect it will not squeeze those who are already struggling or cut spending from health and education in order to mortar the huge holes that the pandemic has left in the nation's accounts.
The government needs to level with us about what this recovery is going to take and how we are going to get there. We recognise that the federal government may need to reconsider the company and income tax cuts that were passed in better times and which are still to flow through. When we agreed to pass these tax cuts in the last parliament, we did so on the understanding that they were on a sustainable and affordable footing and that the government would revisit them if necessary. Tax cuts might support growth, but it would be irresponsible to keep them if the government cannot do so without cutting spending in areas of need. We expect that the government will provide us all with a lot more information about the state of the budget in the coming weeks and how it intends to get us back in the black. There is much to be done by all of us, and I know we will all look after the best interests of the country.
by leave—A one-in-100-year event is also referred to as a black swan event—an economic and financial metaphor for an exogenous shock to our economy that is difficult to predict, is dangerous and has extreme consequences. The two words 'black swan' are guaranteed to strike fear into the heart of any capitalist. Let me explain why that is the case. Our capitalist system, which I will just refer to as 'capital', doesn't like risk. Anyone, from a first-year student of finance and economics up, understands that capital doesn't like risk. If capital takes on risk, it does so because it expects a high return. The risk-return trade-off is also well understood by students of economics and finance.
That's why in times of extreme risk, during black swan events, the only institution that can carry the day is the government. That's why the government has stepped in to provide living wages for workers through JobKeeper. That's why government has injected money into the system through a whole range of different measures that we've heard Senator Cormann outline today. That's why it's government's job to provide confidence and the psychological underpinnings to get our communities and economies back on track at times of extreme risk, because governments don't expect a high return. They expect a different kind of return: a social return to their citizens. A government's No. 1 job is to protect its citizens.
The idea that somehow the economy's going to snap back in coming months and somehow the risk of this pandemic is going to disappear is ludicrous. Whether a global pandemic is indeed a black swan event may be debatable, but I can tell you we've been talking about pandemics for some time. I asked questions of Treasury and the Future Fund just in February about what risk assessments they were doing for exactly the kind of scenario we are in now. You can go back and have a look at Hansard, but there's no way in the world that they were predicting we were going to be in this situation we're in now. We are in uncharted territory, a one-in-100 year event.
But we also are confronting another great crisis in our time: a crisis of climate change. We just lived through a couple of the worst months in our country's history this summer, with loss of property and life and damage to our community, our economy and our environment, and we're going to see a lot more of that. While we've been bunkered down in self-isolation, we've got the very sad data out from our scientists about the third mass coral bleaching on the Great Barrier Reef in five years, the sad decline of one of the world's greatest living organisms, at the same time.
I would argue that while this is unparalleled, in many ways—and there are so many risks we need to confront as a parliament, as a nation, as a global community—while there are so many risks we need to confront, it is also a significant opportunity to reform and rebuild and tackle not just the COVID crisis, getting confidence back into our economy and looking after the health needs of our citizens, but at the same time that we inject that confidence back into the system we can tackle the twin crisis of climate change by investing in renewable energy and a blueprint for a different future, a future that saves the planet and looks after people at the same time.
This is exactly what the Greens raised in 2009, when we were the first in the world to talk about a green new deal, which has been heavily debated in the US and in US political circles and will be so in this country as well. This is a green new deal, a way forward to create jobs, invest in the industries of the future and invest in solving the environmental crisis, the climate crisis, the catastrophe that's unfolding right around the planet and that is going to require a strong role for government in our lives.
I would argue, senators, if you look at other periods in our history where we've faced great crises, that governments and government spending is the only thing that's going to get us out of this quagmire. I have heard in this place, especially in the last parliamentary sitting, many speeches talking about post World War II, about the Curtin and Chifley years, about the recovery, a decade of economic reform, a decade of reshaping of Australian society and community and economy. Back then, our net debt to GDP exceeded 120 per cent, and a decade of growth paid that back. A decade of growth paid back that debt.
At the moment, Australia is sitting on a net debt to GDP of less than 30 per cent, if you include all states, likely to go over 30 per cent, including all states and federal spending, compared to a global average of advanced nations of 90 per cent, three times what Australia's net debt position is. Debt is not a dirty word. At times of record low interest rates, where the price of money is close to zero, we have an unprecedented economic opportunity to spend and invest in our community. The Treasurer has said there is no money tree. Yes, there is. Our economy is a money tree and, if you water it, it will grow. Invest in people, invest in infrastructure, invest in communities, invest in clean energy, in transitioning our economies to a better future.
The best thing we can do when we leave parliament this week is give the Australian people hope, hope that we've got their back, that we can take everyone with us and that we all have a plan for the future. What is this government's plan? I ask you to consider that before I finish my contribution today. Somehow, they think things are going to snap back, after a one-in-100-year event, when we face so many other risks to our economy. It's not going to happen. It's up to us as government to put in place a proper plan that looks after people and looks after the planet, and the Greens have that plan. We will be releasing our green new deal soon and Australians will understand it and they will get it. It does provide for a future and it provides for a strong role of government in our lives.