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Tuesday, 10 September 1996
Page: 3890


Mr McMULLAN(9.35 p.m) —I rise in this debate on the Appropriation Bill (No. 1) to support the amendment moved by the Deputy Leader of the Opposition, the member for Holt (Mr Gareth Evans). It is a very comprehensive critique of the budget. It lists a substantial number of concerns that various shadow ministers, members of caucus and members of the community are seeing emerge as the detail of this budget is being more critically scrutinised.

I want to speak in this debate about some particular aspects of this budget. Of course I will not have time to cover all the matters included in the amendment because it is very comprehensive. My central approach is: this is a budget that will stall the economy, will divide society and will limit our sense of nationhood. Taken with the litany of broken promises in this budget, it constitutes a budget of deceit, despair and division.

Let me go through those points in sequence. With regard to stalling the economy, I indicate that that point has been made effectively by the Deputy Leader of the Opposition and the Leader of the Opposition (Mr Beazley) in their contributions in this debate. In one sense it is not even a matter of contention. The government in its own budget papers accepts that this is a budget that will have a contractionary effect. The economy will grow less than it otherwise would have as a direct consequence of this budget. I fear the assessment in the budget that the economy will grow by 3¼ per cent is over-optimistic.

The government accepts, almost without mention in the speech by the Treasurer (Mr Costello), that by next June unemployment will still be 8¼ per cent. The budget papers appear to establish that it is expected that unemployment benefit recipients will be at approximately the same level or perhaps slightly above the current level until the middle of 1998 and then it is hoped things might start to improve.

That is a very pessimistic prognosis. That is the government's outline of its estimates. It is not my analysis. My concern is—although I do not wish to pursue it this evening—that the result might actually be worse: that the growth might be less than 3¼ per cent and that, therefore, it will have consequences for employment and unemployment. But let us not pursue that.

Let us assume for the moment that the government's proposals are right with what they have established and claimed is a prescription for slowing the economy, for slowing growth, and in particular employment growth, in an economy with 8½ per cent unemployment. When you look at it, the only possible assessment of the macro-economic consequences of this budget is that, first and on the surface, it withdraws the stimulus by pulling money out of the economy which, by every element of any form of macro-economic analysis, will slow the rate of growth. The budget papers reflect that, and the Treasury analysis reflected in the budget papers reflects and accepts that.

But indirectly the situation is worse—and this is why I am concerned that the growth might be even less than that forecast in the budget papers. The ways in which government has a capacity, apart from its macro-economic management role, to have a positive effect on economic growth immediately, and more particularly in the medium term, is through the education and training of its citizens, particularly of the work force; through assistance to research and development, and in Australia particularly private sector research and development because that is where we have fallen short over the years; through assistance in exports; and through expenditure on infrastructure. And this is a budget with bad news on all those fronts.

The message on education is crystal clear: having the opportunity to access the best tertiary education that Australia can offer—that access which Australians had come to accept as being available for their children, wherever they were born, whatever their parents' status—will no longer be the case; we are moving towards a two-tier education system. But that has been pretty well clearly established by a number of speakers. We have had the problem compounded by the absurd decisions made with regard to research and development in this budget with the slashing of private sector research and development in this country—the very opposite of the objective we should be seeking. We find no positive aspects with regard to Australian infrastructure and a substantial cut in road funding—quite contrary in all those three instances to election promises.

But for a moment I wish to focus on the fourth area that I mentioned with regard to the role of government in stimulating growth—particularly in Australia, when one of the keys to sustained growth is the way in which we cope with our current account deficit—and that is this budget's cuts to assistance for exporters. I spent the last two years seeking to develop policy and represent Australian business overseas in improving our export performance.

In January of this year, I had the honour of presenting a report which showed that, under existing policies, the improved export performance that Australia had achieved, particularly in manufactures and services, had created a situation where we could sustain a rate of growth one per cent higher than previously possible without triggering the current account constraint—and this traditionally had been one of the two constraints on Australia's capacity to sustain growth. The other was inflation, which is substantially under control as a result of the very good policies of the previous government—and I suspect it will stay under control in the short term with this government, but I am somewhat apprehensive a little further out.

Every element where the Commonwealth government plays a substantial role in assisting Australian companies to export—whether export market development grants, the international trade enhancement scheme, the innovative agricultural marketing program, the role of Austrade; any of the functions of the role that the Commonwealth has played that have helped Australian companies compete more successfully internationally—has been cut. In public it has been focused most upon the so-called DIFF scheme where I had the opportunity to negotiate, on behalf of the Australian government and Australian companies, access and opportunities for Australian companies to win projects internationally and create jobs in Australia—to see those projects dashed.

It is not that those projects will not go ahead in the countries in question; it is not that they will not go ahead with government financial assistance. It is that they will go ahead in other countries, with financial assistance from other countries—our competitors—and with jobs being created in other countries. Australian companies which could have succeeded will not succeed, and projects which could have gone ahead will not go ahead.

What we have is the government in the face of unemployment, as a gesture of despair, essentially taking its hands off the wheel and saying, `We cannot solve this problem, it will continue at the existing level even on our best estimate.' A statement of despair, too, on the current account deficit—the budget papers say it will still be four per cent of GDP at the end of this financial year. I suspect, unless the economy slows more than we think, the adverse effect on exports is such that it might be worse than that. However, if the economy, as I fear, grows more slowly, that will have an impact on imports and it will probably mean that four per cent of GDP will not turn out to be a bad estimate. Four per cent of GDP at this time in the economic cycle is not a crisis, but it is certainly not a claim for victory because for the 1995-96 financial year the figure was 4.2 per cent. So for all this pain, we will move from 4.2 per cent to a target that we might get down to four per cent of GDP by the end of the year—and we can only succeed in doing this if we slow the economy.

We are approaching this in entirely the wrong way. For any modern economy like ours, the key to long-term solution of our current account deficit is to improve our exports—not in some old fashion sort of mercantilist way that says `everything you do that increases exports is good, and everything you do that impedes imports is good'. That is 200 years out of date and is not a policy strategy that is acceptable to any contemporary government trying to compete successfully internationally. But we have to export, and this budget is going in entirely the wrong direction by attacking everything that will assist our exports.

I come back to my original thesis: this is a budget that consciously, or by accident, is designed to stall the economy and to divide our society. Others will speak on this more than I in 20 minutes—I cannot speak on this at length because I want to make some other points—but I want to say that in this budget we have emerging all the elements of a two-tier health system, all the elements of a two-tier education system, and, with the changes to industrial relations which are promoted in the related workplace relations bill, all the elements for the creation of an Australian underclass, the sort we see in some of the countries that have been pursuing the sorts of policies this government is advocating.

In talking about a divided society, I want to choose one symbol, and I refer to the abolition of the dental scheme. We hear the rhetoric from those who support this budget: `We had to make all these cuts to get the budget back into surplus.' The budget papers make clear that the budget could be back in surplus without abolishing the dental scheme.

If the $100 million was continued each year in the forward estimates, if the pain, suffering, loss and unfairness that will be created by the abolition of the dental scheme had not been implemented, we would still have a budget surplus in the out years—the third and fourth years in this budget. It is not a prerequisite to achieving the government's target; it is a conscious, wilful decision made as a result of a deliberate policy choice.

It is very hard to understand why this policy choice has been made but you need only the most basic level of arithmetic to know that any government setting reasonable priorities could have said, `We can achieve our surplus without this unfair and unreasonable measure.' I would be very interested to hear—I have not yet heard one from the Minister for Health and Family Services (Dr Wooldridge) or anyone else—any objective explanation for this program being abolished. The explanation that the Treasurer (Mr Costello) gave in his policy speech was that it should be abolished because it has succeeded; it has achieved its purpose, therefore we should abolish it. It is not a unique conservative argument—I have heard it before—but it is an unwelcome one.

It symbolises something else I want to refer to when I talk about this loss of a sense of nation, a sense of our common wealth, of our common purpose. It seems to me that one of the reasons this decision has been made is that this is a government which has no faith in our capacity as Australians to act together to solve our common problems.

It is a government which says that we must each pursue our destiny individually and that, as a consequence—a social version of the hidden hand of Adam Smith—we will find the most desirable social outcomes. It ignores the possibility that there might be a role for us as Australian citizens acting collectively to assist not only our aged Australians but also other Australians in need with, in this particular instance, their dental problems—but the situation can be extrapolated a hundredfold.

The government has no faith in our capacity to act and it is undermining that sense of common purpose, of common wealth, of common destiny by its lack of capacity to show national leadership without central control and stricture. That is not what we are talking about. We are talking about funding programs that can assist Australians in need.

You see in this budget no sense of a national approach to solving our common problems of unemployment, health, industry or exports—areas on which I have already spoken—but also in those areas that give us a fresh view of ourselves, those areas that define what we are and outline what we might aspire to be. I am talking about arts funding, the funding of the ABC, the production fund for new programs for television, and the support for the great Australian film industry. These are successful industries that create jobs, lift our international profile and give us all a sense of pride.


Mr Hollis —They have no vision.


Mr McMULLAN —That is so, and no sense of the fact that by acting collectively we can assist creative Australians who want to say, `This is what Australia might be.' I do not always agree with the picture of Australia that our artists, writers and musicians are painting and portraying, but I recognise that we are a better country because they have the capacity to be out there doing it.

I think it is a great tragedy that we are losing that great sense of common purpose, that faith in our capacity to act collectively to meet national challenges. It is not a uniquely Australian failing. It is common with conservative governments around the western world, most spectacularly with the governments of Margaret Thatcher and Ronald Reagan.

Australia between 1983 and 1996 was an exception. We were able to maintain that level of common commitment, that level of vision and that role for government without creating big and overweening governments. We were able to achieve that while still having a level of public sector outlays, a level of deficit and a level of public sector debt that were some of the lowest in the OECD. We were able to achieve all that without high taxes or big government and without seeking in some way to control the destiny of people. We were able to act together to liberate the destiny of people.

That is reflected in the industrial relations policy with which I spend most of my time dealing in this House and publicly. There also is a sense that there is no role for the institutions of the state in ameliorating the adverse impact of the unfair balance of power in the labour market; no role for the state in providing a balance between flexibility and fairness. I am not arguing that there is no need for more flexibility. The move in that direction is necessary, as is the move to create an Australian economy that is more internationally competitive and successful.

But we do not have to give up on the national ambition for a fairer society in the pursuit of a more flexible labour market. In that area I think we do not need to be so self-effacing or so self-critical. While there continues to be room for change and improvement in our labour market, as Ross Gittins, the economics editor of the Sydney Morning Herald said recently—quite accurately but quite unconventionally for a senior economic commentator—no part of our economy has changed more or more dramatically than the labour market, on both the supply side and the demand side. Who is working has changed, where they are working has changed, what sort of work they are doing has changed, what qualifications and training they bring to their workplace have changed, for whom they are working has changed and the hours those in employment are performing have changed. It has changed at both ends—more people are working part time and those in full-time work are working longer hours.

It raises a very profound question about the distribution of work in our society. While we have an unacceptably high level of unemployment—in fact, some preliminary evidence tends to suggest the actual number of hours being worked per head of adult population is increasing in our society—what is changing is the distribution of that work. Those in work are working longer, while many people are not in work and a significant number of people in part-time work would seek more. Not all people in part-time work prefer full-time employment—that is a bit of a myth—but a lot of people do. Fair distribution of work will be one of the great issues all members of this House will have to face up to into the next century. It is one of the equity issues which we all have to address. I do not pretend that I have all the answers to it; I just know it is a very important issue.

To conclude, the tragedy of this budget is not just that it is not fair—although that is bad enough—but that, even after paying a huge social price, the economic strategy in this budget will just not work. It will not solve our current account deficit, it will not increase growth, it will not reduce inflation and, worst of all, it will not solve unemployment.