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Tuesday, 17 February 1987
Page: 151


Mr KEATING (Blaxland-Treasurer)(3.33) —Mr Deputy Speaker, whatever the Leader of the Opposition (Mr Howard) may think of me, I will be around long enough to see him rolled in the political dustbin. The speech we just heard had a melancholy quality to it. It sounded like a political valedictory, a recital of objectives once sought by a more ambitious politician who is now seeing those objectives leave him and become unattainable, a recital of objectives without means, impractical views clothed with emotional rhetoric. Why is all this recital of the things that the Leader of the Opposition once stood for relevant today? The answer is that he has lost the political supremacy of the conservative forces in this country. It has been taken away from him. The only reason why Sir Joh Bjelke-Petersen is running wild, pushing his conservative philosophy and his opportunist views, is that Howard is no good. He is not up to the job of leading the coalition parties. That is why. Joh has smelt the weakness and filled the void, and he has pressured a weak Leader of the National Party into denouncing an even weaker Leader of the Liberal Party and all he stands for in terms of his tax policies and his economic program.

Like a dentist going over someone else's bad work, I have gone over the Leader of the Opposition's bad work. He knows I know about the fabric of the Australian economy. I know where the tears and the stitches are because I have had my hands on it for four years. It really makes me sick to read a matter of public importance such as this. The Leader of the Opposition refers to the disastrous impact on families, farmers and small businesses. He then refers to high taxes, high interest rates, inflation and all the rest. Let us recite the facts. In years of massively advantageous terms of trade compared with now, when oil prices were up, when coal prices were up and when iron ore prices were up-when all of our great commodity prices were up-and when we had all of the new revenue from Bass Strait, when this man had an opportunity to remodel Australia, get if off the back of international debt and rebuild its secondary structure, he was quite happy to jump on the rhetoric of the resources boom, he was quite happy to see the secondary structure fall apart, he was quite happy to sit and watch the current account deficit slowly start to grow, he was quite happy not to tell Australians that they could not have a recurrent living standard built upon overseas savings, and he was quite happy that the current account deficit in 1981-82 was 6 per cent of gross domestic product.

He knew that any perceived improvement in 1982-83 and 1983-84 was simply because of his recession, because it cut imports and there was no attendant real improvement in the current account. He knew he had put us on the inexorable road to debt. He had no wages policy, so he overvalued the exchange rate. The farmers he talks about in this cheap matter of public importance were the people who were robbed of decent prices during the 1970s by an overvalued dollar. He knows that. He knows at the same time that his failure to control wages and hence inflation and interest rates robbed Australians of their living standards over the years and pushed three-quarters of a million of them into the poverty of unemployment. That is his record. If this were any other parliament in the world, or, if we operated under almost any other political system, he would not have the hide to show his face and talk about economic policy and no party with any respect would elect him as its leader. But the Opposition has and the fact that it did now matters for naught because he stands bereft of any political authority. That is the truth. Australia is in a period of almost unparalleled problems in terms of its trade accounts. It is in a period when tomfoolery with fiscal policy will not be tolerated on the financial market.

Opposition members interjecting-


Mr DEPUTY SPEAKER (Mr Leo McLeay) —Order! The honourable member for North Sydney will cease interjecting.


Mr KEATING —The thing that the Liberal Party has never reckoned upon is that this Government and this Government alone is the first to live with the discipline of a floating exchange rate, to wear the daily assessment of the international markets. That is something those opposite never lived with. They always cheated on the exchange rate by overvaluing it. They cheated on fiscal policy and they cheated on monetary policy. They would never put interest rates at their proper levels so they could sell the required number of bonds to soak up liquidity. Their monetary policy always ran way over target as they financed one property boom or inflationary surge after another. They always cheated. They went for protection when they should not have. They, as a coalition, always cheated on the fabric of the Australian economy. This Government came along and said: `Right, if we are going to do anything with this country we need to expose it to the fresh breezes of international competition. We will wear the discipline, wear the burden, of a floating exchange rate; we will open it up to the criticisms of fiscal policy, wages policy and monetary policy, and we will silence those criticisms by making the appropriate policy changes'. That is what this Government is doing. But the Opposition parties thought that because they always had the people out there running business, who were once the old Establishment and who all carried Liberal Party tickets in their pockets, they were immune to economic forces. Let me say this to them: Much of what they say now is based on those views, but the people on the Reuters screens in Melbourne or Sydney, or Tokyo or New York, would not care whether people hold tickets in the Gordon branch of the Liberal Party, whether they are born to rule or whether they are just remnants of Australia's failed upper class. They could not care less and they will strike members of the Opposition down in two seconds if they follow a stupid, crazy fiscal policy. The Leader of the Opposition now stands with a $7.8 billion set of tax promises.

The honourable member for North Sydney interjecting-


Mr DEPUTY SPEAKER —Order! I warn the honourable member for North Sydney.


Mr KEATING —A $7.8 billion addition to the Budget deficit would send the financial markets into a frenzy. They would squash this country with interest rates the likes of which we have never seen. They would damn us to a recession the likes of which would only be a repeat of the Great Depression, with an interest rate structure which would be punishing. People will not tolerate the kind of fiscal stupidity which is part and parcel of the Opposition's stated policy, and while those opposite may think there is some cheap support for their chopping the top end tax rate, basically the hard assessors, the international assessors, would give them the thumbs down in 24 hours if ever they thought their policies could become reality.

Today we saw one of the principal revenue planks of the Opposition-the consumption tax proposal-torn from under the Leader of the Opposition. Notice that today he has already changed the language. Ever adaptable, the India rubber man, he has turned around and he is now talking about a more intelligent balance between direct and indirect tax. There is no more talk about a consumption tax or a retail turnover tax because Sinkers has sunk it, on the word of Joh. The Leader of the Opposition stands there now with basically no fiscal policy. On top of that, he says that what we need is some tax decency. But, in a contradiction in terms, he says: `We will repeal the fringe benefits tax, the capital gains tax, the disallowance of the tax deductibility for entertainment expenses and negative gearing-the lot'. In other words, in gestures of indecency he would wipe out the equitable tax reforms of this Government.

He talked about the need to flatten the tax system-in other words, to give the people on high incomes an increase in their living standards when the nation's national income is going down. That is all it is. If one is talking about a flatter tax system one is talking about lower rates of tax for high income earners, who have already got a tax cut from this Government, when the nation's income is coming down. One is talking about tax cuts and higher living standards when one knows one could never pay for them.

The Leader of the Opposition talked about wages policy. His remarks had a melancholy quality as did those of John Howard at the National Press Club in 1984 when he said that we needed a deregulated labour market. We have the British craft union structure; we do not have industry unions. If one goes, all go. The Leader of the Opposition has not faced that fact. He is still going on with this nonsense as if something different would happen. We would quickly have a situation similar to that in 1981 all over again. The climate of restraint would be gone. When members of the Liberal Party stand up and say that they want to give the rich a tax cut when the country is going through a period of economic problem, when people in the wage system have been making sacrifices for four years-five years if we count 1982-83-and when we are cutting outlays and programs, they try to tear the whole fabric of restraint away. They are sabotaging the whole climate of restraint. Do they not realise that? The more noble objective of trying to get the nation to live within its means is being put asunder by their quest for the response of greed. We have a group of millionaires putting their hands out. They have been paying less than their fair share of tax and through Joh and the Leader of the Opposition they are trying to shanghai the Federal Government into giving them tax cuts at the expense of the poor. That is what the Opposition is proposing. That is not tenable in this country in these circumstances.

The Leader of the Opposition stands up and says that we need a better wage policy and a better tax policy. What does he mean by a better wages policy? Does he mean further wage cuts for those at the lower end while people at the top end, the high income professionals and the millionaires, get tax cuts when the value of their property, their stock on the stock market and the profits of their companies have risen inexorably. Is that what members of the Opposition really stand for?

The Opposition talks about a media policy. I remind the Opposition that it gave Frank Packer and the Melbourne Herald the two-station rule, pretending that two stations in Sydney and Brisbane are the same as two stations at Mount Isa and Broken Hill. They are not. That was a rort. This Government has changed the situation. It is decontrolling the media. No longer will the print barons control television. But the Opposition cannot even see any decency in that. The fact is that members of the Opposition are not-as the Leader of the Opposition said in his opening remarks-a credible, responsible alternative; they are incredible and irresponsible and they have no alternative. That is the fact of the matter.

The Leader of the Opposition talked about my being a craven populist. If anyone wants to be a craven populist he should stay away from fringe benefits tax, abolition of tax deductibility of entertainment expenses, capital gains tax and the hard changes the Opposition never had the decency to introduce. He should stay away from the things that matter. The Leader of the Opposition tried to make cheap points about high inflation. The Leader of the Opposition must know, and I remind him, that the price of imports has risen by 50 per cent in the last two years because of the depreciation of the Australian dollar. That impacts on our consumer price index. It gives our traded goods sector the chance to lift its prices, therefore to draw investment to it, therefore to turn the current account around. It is a necessary part of the process of adjustment. The Leader of the Opposition knows that. He knows that the wage policies in place will pull the present inflation rate down rapidly. At the end of that process we will have a far more dynamic and competitive economy.

Yet the Leader of the Opposition took cheap shots about inflation and high taxes. He sat back with a 60 per cent marginal tax rate and did nothing about it. Now the 49 per cent rate is not good enough for him! He says it has to go to 40 per cent. He did not change the 60 per cent rate. With all the new money out of Bass Strait, he did nothing about outlay changes and he did nothing about the double tax on dividends which had been in place since 1936. For all those years business asked: `Why should we be penalised because we are a company? Why do we have to pay tax twice? Why do you not relieve the double tax on dividends?'. Did the Leader of the Opposition do that? No, it did not happen until the Labor Government came along. It was the second government in the world to take such action. We said: `We will give you a total relief of tax for a corporate rate of 49 per cent'. West Germany is the only other country in the world with a full imputation, for a corporate rate of 56 per cent. But no, that is not good enough! The Leader of the Opposition does not believe in imputation. He did not take such action. He says that the 49 per cent, 40 per cent, 29 per cent, and 24 per cent rates are not good enough; we must grease the tracks for the millionaires whose net wealth has gone up enormously.


Mr Carlton —What is this about populists?


Mr KEATING —This is about fact. The honourable member had his chance. He was a Minister in the last coalition Government. John Howard was the Treasurer. He had the chance to do all this. He was not living through the kinds of fiscal disciplines this Government is living through. He never had to bring a deficit down from 5 per cent of gross domestic product to 1.4 per cent of GDP; we did. We have cut the tax rates, we have got rid of the double tax on dividends and we alone have removed the poverty traps for the poor in the bottom end of the social security system. Right across the spectrum-high taxes, high interest rates, high inflation and massive foreign debt-the previous Government did nothing about these problems. The fundamental problem of our lack of competitiveness springs from the Howard years. The growth of our debt started in that time and has increased inexorably since. We now see an Opposition without any thread of credibility, without any policy framework. I repeat, as I said at the beginning of my speech, that the speech of the Leader of the Opposition was melancholy. It sounded as though it was simply a recital of the things he once wanted and stood for and which he can see all slipping away. He is right. It is slipping away and he will slip away. The right honourable member for New England (Mr Sinclair) will also slip away and if many honourable members opposite are not careful they will slip away with them.