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Monday, 23 November 1998
Page: 361

Mr COX (1:13 PM) —Thank you, Mr Speaker, and I congratulate you on your appointment to your high office. I thank the electors of Kingston for the privilege they have given me to represent them in this 39th Parliament. Kingston was created in 1949. It covers the outer suburbs and rural areas south of Adelaide. I chose Adelaide's south as my home almost 20 years ago because, like most living there, I recognised that it was an extraordinary place—a coastal strip set between hills and the sea with open space, vineyards and Adelaide's best beaches—a place of such unique beauty that some of its citizens have been moved to establish Australia's richest prize for landscape art, the Fleurieu prize. Its geography, bordered by the Adelaide Hills, the escarpment and the sea, creates a real community of interest. The borders of Kingston closely coincide with both the McLaren Vale wine grape appellation and the Onkaparinga Council area. It also includes part of Marion Council.

The two largest industries are car manufacturing and wine making. The finest cars made in Australia come from Mitsubishi, and they are built not only for Australians but are sold into some of the most competitive car markets in the world. The results of recent international wine shows demonstrate that some of the finest wines in the world come from the vineyards of McLaren Vale. Unfortunately, with the current state of the world economy, the international market for our cars is somewhat softer than the international market for our premium wines. We are a community whose future prosperity will depend on our export performance. That was one of my motivations a few years ago when I decided to become a grape grower.

The region also contains a major oil refinery, sophisticated spectacle lens blank manufacturing, a range of light manufacturing operations, and substantial retailing and service industries. Close to the electorate we have two important institutions, Flinders University and Flinders Medical Centre, a good university and a good teaching hospital. I am particularly indebted to the economics and politics departments at Flinders for my own education. The economics department produced a long line of advisers—of which I was one—to treasurers and finance ministers in the last federal Labor government. I noted with some satisfaction that the present Liberal Treasurer, after having an adviser whom I know well and can comment on positively but who had spent considerable time at a prestigious north American university, reverted to Labor's traditional source of supply.

I was senior private secretary to Peter Walsh, who as Minister for Finance produced four successive budgets in which Commonwealth outlays declined in real terms. That was achieved at the same time as funding was dramatically increased for some fundamental improvements in the social wage, in particular much higher family payments to those on low incomes. That those two things happened together is far more a measure of his success than the size of the budget surpluses that were achieved in those years.

Later I was principal adviser to Treasurer Ralph Willis. He has the unique distinction of having managed without crisis a situation where the current account deficit became quite menacing—it reached more than six per cent. He left the economy in fundamentally sound shape. For him, it was just one of a series of major policy successes that began with the 1983 accord. Now retired, both men are a great loss to this parliament.

Kingston also has some fine state and private schools and excellent vocational education facilities in the Onkaparinga Technical and Further Education College operating from campuses at Noarlunga and O'Halloran Hill. My definition of a fine school is one where the teachers and school community do their utmost to use the resources that are available to them to give every student the best chance in life. I just wish some of those schools had more resources.

Kingston is a representative slice of Australian society, having both affluence and poverty within its boundaries. The rural area is enjoying the opportunities flowing from the present buoyant state of the wine industry, which has been significant in the district since the 1840s. The urban area includes well-established comparatively affluent suburbs, ageing less affluent suburbs, new suburbs with large numbers of first home buyers and suburbs which have a high proportion of public housing with large numbers of single parent families and families suffering long-term unemployment or underemployment. These are also dormitory suburbs where the majority of workers travel north to the Adelaide plains for their employment. Unfortunately, the South Australian economy has for some time been performing poorly—that means there are not enough jobs either locally or to travel to.

The opportunities, challenges and problems facing the people of Kingston are similar to those facing the rest of Australia. We can collectively aspire to and achieve one of the highest living standards in the world, even if we do not necessarily have the highest average per capita income. The major components of that living standard are a job with decent pay and working conditions, quality education for our children, universal access to first-class health care, and aged care which treats the elderly with dignity and respect.

During the 12 months that I campaigned full time for the election these were the things—jobs, health, education and aged care—which most people wanted to talk to me about, either on their doorsteps or in their homes, and these are the things they most want this parliament to focus upon. They know Australia should be the best place in the world to live. When they look at continuing high rates of unemployment or when government services are not up to standard, they ask why. They are aware that Australia's population is ageing and that there will be even greater pressure on health and aged services. This stands in contrast to the general experience of the 20th century which has resulted in an expectation that the world we hand to our children will be a better place than the one we inherited. Certainly as far as the environment is concerned, in the last 30 years we have recognised that as an imperative.

The problem facing Australia of an ageing population with a relatively small number of taxpayers to support them is a problem shared with the rest of the world. How to finance the health services, aged care and aged income security as the number of people aged over 60 trebles by the year 2030 has been a major long-term public finance issue on the agenda of international financial institutions such as the World Bank and the IMF. These are issues which affect every generation, either because they will be expected to finance an ageing generation or because they will be aged themselves and dependent on the income security, health and aged care which is available.

Australia needed to start taking steps to meet these problems 10 years ago, not in 20 or 30 years time. Fortunately, there was a federal Labor government in office at that time and we did start then. The principal actions were the introduction of systems of universal health insurance with Medicare and compulsory occupational superannuation. These are the foundations of a response to the problem of an ageing population which, when properly carried through, can provide income security in retirement and quality health and aged care. Those policies will have benefits now as well as in the future when the pressure on them is greatest. To do so, they must meet the tests of being adequate, sustainable and equitable.

Compulsory occupational superannuation also helped to address one of Australia's most critical economic problems—its chronic shortage of national savings. The provision of an equitable system of funding nursing home care has yet to be achieved in Australia. The arrangements implemented by the current government certainly do not meet that test. The beginning of the solution to provide adequate access to nursing homes is to recognise that it is health care and treat it accordingly.

When the Reserve Bank Act was passed in 1959, it set out the objectives of Australia's central bank: `stability of the currency, the maintenance of full employment and the economic welfare and prosperity of the people of Australia'. At that time the unemployment rate in Australia was around two per cent. Unemployment rates did not begin to move generally upward for more than another decade. The fact that they have in recessions exceeded 10 per cent and now remain at about eight per cent should not be taken to mean the full employment objective was written for an easier time and is now obsolete. Those who wrote the charter had personal experience of the Great Depression and would have been well aware of Keynes' words in his General Theory:

It is an outstanding characteristic of the economic system in which we live that, whilst it is subject to severe fluctuations in respect of output and employment, it is not violently unstable. Indeed it seems capable of remaining in a chronic condition of sub-normal activity for a considerable period without any marked tendency either toward recovery or towards complete collapse. Moreover, the evidence that full, or even approximately full, employment is of rare and short lived occurrence.

Australians today want their government to have a clear focus on creating jobs for them if they are unemployed or, if they are employed, for their neighbours or family or for a greater feeling of security in their own employment. Unfortunately, by their dismantling of Labor's active manpower programs for the long-term unemployed, their destruction of the Commonwealth Employment Service and their day-to-day management of fiscal and monetary policy, the coalition demonstrate that employment is not their priority.

Unemployment in Australia has become so intractable because it is a structural problem. The barrier to economic growth, and therefore to growth in employment, is the current account deficit. The fundamental solutions are, therefore, going to be found in expanding both our export and national savings performance.

There isn't any particular industry that is going to be our saviour. The size of the task requires improved export performance from every conceivable sector. Mining and agriculture, which have always been our strengths and are still where we have the greatest comparative advantage, are likely to make a large contribution.

As a nation there are two things we can do to improve our export performance: go out and find minerals and markets. We will be greatly assisted in the latter by pursuing Australia's multilateral trade agenda because that will help open up more export opportunities for Australia in agriculture, manufacturing and services. Fewer corrupted markets means more opportunities for Australia.

But it is also critical that at the same time we improve our national savings effort so that we can finance investments necessary to achieve that export expansion and to finance them with less reliance on the savings of foreigners than is now the case. By reducing the current account deficit we will be able to sustain much higher employment in the non-traded sector.

One of the larger issues affecting the performance of the South Australian economy is federal-state financial relations. South Australia is one of the smallest states and is highly dependent on the present process of horizontal fiscal equalisation in state-federal financial relations. Put simply, the Grants Commission takes account of each state's revenue raising capacity and its cost of providing services relative to notional national standards. General revenue assistance is allocated to each state in accordance with these standards so that, subject to the choices made by each state government, all Australian citizens have the opportunity to enjoy broadly similar standards of health, education, roads and policing.

There are two schools of thought that challenge the appropriateness of this alloca tion of the federal tax dollar. The first is the largest states, who from time to time seek a larger share of Commonwealth revenue. The second is those who want to correct vertical fiscal imbalance, that is, the supposed problem that the states raise only a fraction of what they spend. Reducing this imbalance is likely to be detrimental to the smaller states. They have relatively lower revenue raising capacity to begin with. The effect of handing over part of the Commonwealth revenue base to the states is likely to make the pool of money available for redistribution smaller.

This has never been a problem for the advocates of competitive federalism. I am not one of them. Redistribution of income is one of the functions of any federation. Australia will be stronger for functioning as a nation and not as competing states. The alternative is for the Commonwealth to directly fund specific services such as health and education to achieve a predetermined national standard. That would be a greater use of specific purpose payments, something not welcomed by the states, which prefer maximum flexibility in their use of Commonwealth funding. This was brought home to me during the last couple of years of the previous Labor government. We sought to increase funding to public hospitals, but found the effort thwarted by states which responded by withdrawing an equivalent amount of their own funding. That experience justifies placing conditions on specific purpose payments so that the states maintain their own funding effort.

The other option is to develop narrow definitions of what are state and federal responsibilities, but again I think that will leave states like my own more vulnerable. Because of its structure, South Australia has only outperformed the national economy for significant periods on a few occasions. The first was the mining boom, which followed the discovery of the major copper ore bodies late last century. The second was during the period of industrialisation which followed the Second World War, when South Australia received a disproportionately large share of Commonwealth loan funds to provide physical infrastructure and housing.

The third was the product of extraordinarily generous financial arrangements that accompanied the railway transfer agreement of 1975. The Commonwealth made an up-front payment for the South Australian railways and then continued to provide general purpose funding as if the states still had to support that major loss making enterprise. This time the funds were applied to social as well as physical infrastructure. This lasted until the Grants Commission relativities were readjusted in 1982. State financial relations remain critical to South Australia because its economic health is dependent upon it. These are issues for the whole of Australia if the present focus on regional policy is to mean anything.

It is appropriate today to acknowledge the efforts of the previous member for Kingston, Susan Jeanes, on behalf of the electorate. There are also a number of people whom I have to thank for the fact that I am here. First amongst these are my wife Karen and our two sons, Sam and Alex. Karen and I have a common view about the kind of free, egalitarian, prosperous, secure and tolerant country where we want our sons to grow up, and it is something we believe all Australians should have the opportunity to share. I want to thank my campaign director, Peter Schulze, who does a great deal for the Labor Party, only seeking the reward that comes from knowing that he has served a just cause. And I want to thank the hundreds of party volunteers in the Kingston electorate and Young Labor who did the leg work. I am particularly grateful to Gary Gray, Cathie King and the other staff of the national secretariat. I also want to thank Don Farrell of the SDA and a great many other friends for their support. And last but by no means least my staff—Sharyn Richardson, Brer Adams and Jenny Hefford—who worked tirelessly for my election.

Honourable members —Hear, hear!