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Thursday, 21 March 1985
Page: 620


Senator MacGIBBON(9.45) —The Senate is debating the Address-in-Reply to the Governor-General's Speech. The Governor-General's Speech is written by the Department of the Prime Minister and Cabinet, so it is no disrespect to the Governor-General when I say the the Speech presented this year in this chamber was the worst in living memory. The kindest comment on it came from Senator Chaney when he said it was a speech written for 1964, 1963 or 1962. That is not surprising because it was written very much by yesterday's men. It was written by the people who believe in enormously high deficits because they believe that the only way to solve problems, real and imaginary, is to throw money at the problems. If the problems are not solved by that, they throw more money.

I deal with two points made in the Speech. Passing quickly through the opening part of the Speech which deals with the Australian Labor Party in the usual self-adulatory terms in which it always looks at itself, I come to the first major section which deals with the economy. That Speech does not tell the truth. It does not say that the Australian economy is in a desperate position, which it is. We are borrowing more and more money every year. The Labor Government cannot learn the facts of economic life. Ever since Federation, it has followed a path of big spending and big busts. That is why the Labor Party has been in power for only about a quarter of the time since Federation. With the Hawke Government we see a re-run of the Whitlam years.

I would like to put the deficits in perspective because figures are not a strong point with people on the other side of the House. There is some degree of imprecision over the real deficit position of the last 10 years. The Fraser Government in 1975-76 inherited a mess from the Whitlam years. We had a deficit then of $3.5 billion. The year after, the deficit was $2.7 billion. In the following years the deficit figures were, respectively, $3.3 billion, $3.42 billion, and $1.1 billion. The Fraser Government was all the time bringing in restraint until such time as we got down to a deficit of $0.5 billion. In the last year of the Fraser Government the deficit did blow out as a result of the bushfires in Victoria and the severe drought. However, it blew out to only $4.4 billion. Labor came into office with the breaking of the drought, the lift in commodity prices overseas, and a surge of funds coming into the Treasury, yet it managed to run a deficit of $7.9 billion. It ran a deficit in good times that was about twice that of the worst years with which the Fraser Government had to cope.

Last year in this chamber the Minister representing the Treasurer forecast an estimated deficit of $6.7 billion. That was a rubbery estimate brought in because of the certainty of an election later in the year. I do not know what will be the real deficit by 30 June this year, but it will certainly be a lot more than $6.7 billion. It will be more than the $7.9 billion of the previous year. I saw an estimate from somebody in Hill Samuel Australia Ltd. I have always found Hill Samuel to be a rather conservative and accurate merchant banker. It estimated that the deficit this year could well blow out over $11 billion. If the Government can have that sort of deficit in good times, what will it be in the bad times to come?

The point is that there are serious structural problems with the Australian economy. Those problems relate exclusively to the productivity of the work force in this country. There is nothing wrong with the work force. It can work as hard, as intelligently, and as productively as the work force of any country. The problem is that the systems imposed on it by government and by the unions inhibit that work force and the productivity of which it is capable.

Faced with these serious industrial difficulties, what is the Australian Labor Party doing except borrowing more and more money? It has come up with some cake for the masses and it is talking now about a taxation review. I think a taxation review is necessary, but it is only a supporting measure in fixing the economy. What has happened with the Labor Party? All the Ministers, such as Senator Grimes, Senator Ryan and the Minister for Social Security (Mr Howe) in another place, are talking about the need to redistribute wealth in this country. They make the unquestioned assumption that we are a wealthy country and that all we need to do is redistribute this wealth. Good Lord, how are we a wealthy country when we are running deficits of the magnitude we are running and if we have to borrow money to stay alive, not to build such things as the Snowy Mountains scheme or to undertake capital investment plans that will benefit productivity in the years ahead but to pay pensions and to pay for welfare schemes and things like that, and borrowing to the extent of $7m, $8m or $9m a year? We are talking about tax reform to fix such problems. We have to get to the heart of the matter.

Sure, I think something needs to be done with the tax system. We need to provide an incentive to individuals and to business. In the chamber, even today, a Minister of the Crown told us that we do not need to provide incentives to individuals and that they are prepared to work for less and less money, just as somebody yesterday said that, because a sales tax was placed on wine and wine sales went up as a consequence, it would be a good thing to double the tax and then we would sell more wine. That is absolute nonsense. People will work for reward. They will not work to keep Ministers of a Labor government in white cars, swanning around the country. They just will not work when that happens.

The tax system has to provide an incentive to the work force and to businesses. The second thing that a tax scheme has to do is be fair. It has to be spread across the community. Part of that will involve a movement from a direct to an indirect tax system. When I first became a member of this place nearly seven years ago I was preaching the need to shift some of the taxation load from direct to indirect sources, and the same people sitting opposite me now were deriding me then. It is strange that from Labor Party sources now we are getting information on the need to move to indirect taxation. I am glad that they have learned, but I am sorry that it has taken them six or seven years to pick up an essential point.

The only thing we can be sure of is that, when the Labor Party reforms the tax scheme, it will shift the mix but we will end up paying more at the end of the day. Tax reform stands for nought unless there is this fundamental change in society, unless the serious structural problems in the economy are addressed; and these problems, as I said before, relate to productivity. The Labor Party has never addressed the problem of productivity and it never will, because the heart of it lies in a reformation of the union system. For a government that is beholden for its money, for its support and, to a large extent, for what passes as its ideology to a union movement, there can be no change in that sacred cow.

We have to free up the labour market. That means that there has to be a radical change in union practices. Just as we set up a market for capital-we have done everything we can to prevent monopolies arising with respect to control of capital so that people with money cannot grind off the faces of the poor-we must also set up a market for labour. In simple terms that means that, if people want to work, if a mutually attractive contract can be set between an employer and an employee, those two parties shall be free to enter into the business arrangement that they need without recourse to a union or an arbitration system.

The bottom line is that people simply will not work if they are not satisified with their remuneration in a welfare state such as Australia is today. Creating this market in labour involves getting rid of compulsory unionism. Every government in Australia, this Government, the State governments and the predecessors of this Government, have all practised a de facto form of compulsory unionism. They have collected union fees from members and have given preference to union labour in a variety of ways. There is no necessity for that to be carried out. People should be free to join unions if they wish but they should also be free to decline to do so. It should be possible in any industry to have union labour in some factories and non-union labour in other factories, as in the United States of America. It is a matter of choice for the management and for the individual.

We must also get rid of the centralised wage fixing practices. There is no reason why a profitable employer should be able to impose the wages that he pays his staff and employees on less profitable companies in the same industry. We have to change the Conciliation and Arbitration Commission and reduce its powers to the level where probably all it does is set minimum wages. The community recognises the need for this change.

Two sorts of movements go through a society. The long term one is like the swells in an ocean, the short term one being the peaks running on the swells-the wave motion. The waves are like the pop stars and the Hawkes-things that come and go overnight and disappear-but the swells are long term. I argue very strongly that there is a movement now in the community that has been running since the early seventies, a movement which recognises that we cannot go on the way we are and survive for the rest of this century. The community knows that standards of living in Australia have gone down. It knows that at the turn of the century we had the highest income per person and the highest standard of living of any country in the world. It knows that we have gone back to about the seventeenth or twentieth position and it knows that we are going down further. It recognises that the way we did things in the 1930s, the 1940s and the 1950s is no longer appropriate in the 1980s and the 1990s.

I argue that it was a recognition of this factor that threw the Labor Government out after its wild spending in the Whitlam years. The Australian community voted Fraser in because it thought there was a prospect of change and, when the Fraser Government failed to fulfil the expectations of the community on tax reformation and control of unions, it was thrown out. I think that movement is still running, is far stronger today and will culminate in the removal of this Government. It is part of the world-wide pattern. If one looks around the world, one sees that in Western democracies the movement is towards smaller government, towards less taxation, towards making life easier for people by removing government regulations. We have gone through this great surge towards welfarism that carried us from the 1920s through the 1930s and reached its peak in the 1960s. Now the movement is going the other way. We have recognised that we have gone too far. I was very interested to read an article by Peter Robinson last Sunday in the Sun Herald. He had just spent the last four weeks going around Australia and he sensed this need for a change in the community; and I sense it. Like Winston Churchill, I am prepared to trust the people because I believe this feeling in the community will manifest itself in the removal and rejection of this Labor Government and its policies because the Government is incapable of responding to this community demand which involves a change in the union patterns of the country.

The second point that I wish to speak about briefly is foreign relations. In the Governor-General's Speech there was this wonderful paragraph on page 7:

In its second term the Government expects to continue to enjoy a mature relationship of mutual respect and close co-operation-

savour the words-

with our major ally the United States of America. The relationship between Australia and the United States under the Anzus Treaty remains as firm as ever.

The ANZUS Treaty is now almost extinct. While a large part of the blame for that rests with the socialists in the New Zealand Government, the hands of the Australian Labor Government are in no sense clean.

I would like to recapitulate briefly on the 18 months of this Government and its relationship with the United States. As soon as the Government was elected in March 1983 we had all the anti-ANZUS whinings coming from Mr Hayden and the Ministry-ANZUS needed to be rewritten; ANZUS was unfair to Australia; ANZUS no longer had any relevance to Australia. One would have thought that it was Senator Chipp talking. Then we had the very tense August meetings in Washington between Mr Hayden and Mr Shultz. We had the problems at the end of 1983 when Australia double-crossed the Association of South East Asian Nations by leading it to believe that we would support the recognition of the coalition government in the vote in the United Nations. Then we had Mr Hayden turn around and accuse the United States of having stirred up the ASEAN group to protest about it when the great protest came. We have had the persistent problems of the disarmament talks. I was very interested to see Mr Hawke admit this week that the advice he had been receiving from the Department of Foreign Affairs had been to the effect that the comprehensive test ban treaty had been very badly handled and was discomforting the Americans. That is not surprising. We know that but the Labor Party will not admit to it. Then we had the MX missile test backdown-the solemn contract entered into between the United States and Australia in good faith abrogated at the last minute because of the whinings of the left wing.


Senator Peter Baume —Abrogated on its merits?


Senator MacGIBBON —No, not on its merits at all, just on the ideology of the Left. The Soviet-line Ministry got into Mr Hawke and said: 'You break that contract or we will break your neck'. It was as simple as that. Then of course in the recent ANZUS debate we have had the failure of the Australian Government to support the United States and to argue the case for New Zealand participation in honouring the Treaty.

A minor point that has come up-although I expect it to be a major point in the years ahead-is the rejection of the strategic defence initiative. Only today in this chamber we had the Minister for Resources and Energy (Senator Gareth Evans) telling us how terrible it was to have a strategic defence initiative and how the Labor Government would not support it. What is wrong with having a defensive position? What is morally correct about living under the doctrine of mutually assured destruction? That is a doctrine which says: 'If you attack us and kill us, we will kill you before we die'. That is exactly what we are reduced to with the mutually assured destruction theory. I would rather live by that theory than have none at all. But the strategic defence initiative raises the possibility for the first time that, instead of ensuring our safety by having the means of delivering a fatal blow to someone else before we die, we will have the capability of a purely defensive system. If it works, we will have the capability of putting a curtain around the countries that are party to the agreement, denying the entry of any sort of nuclear missiles to them and being able to deny the entry of those missiles without resorting to nuclear weapons in return. We might be able to do it by particle-beamed weapons or by high velocity, high energy missiles or something like that. Conceptually, it is a far preferable path to follow than the path of mutually assured destruction. It is also a far more moral position because we pose no threat since it is purely a defensive system and not an offensive system. If the strategic defence initiative works, there is no way in which it will be possible to take any retaliatory action of a harmful nature against any other country. The moral argument, as well as the intellectual argument, is overwhelmingly in favour of the strategic defence initiative. What has happened? The Labor Party will not have a bar of it. It will not have a bar of it because the Soviets are upset and they are concerned that the Americans might get ahead of them. Of course, anything that upsets the Soviets also upsets the present Labor Government.

Some of the arguments against the strategic defence initiative need to be demolished in the few minutes that I have left. First of all, the Labor Party says that it is wrong to militarise space. From the first day that the Soviets launched Sputnik many years ago, the Soviet activities in space have been directed primarily to military purposes. Since the early 1970s they have perfected hunter-killer satellites, something that the Americans have not done. They have even experimented with orbiting nuclear bombs. One of the other arguments used against the SDI is that it is only a sectional defence; it will only protect against intercontinental ballistic missiles. As I understand it, conceptually-it is still in the planning and research phase-the strategic defence initiative will explore the possibility of surveillance of and counters against armed or manned aircraft, cruise missiles and submarine-launched ballistic missiles.

Another argument used against the SDI is that it may be and almost certainly will be an incomplete system. In other words, it may not be able to guarantee 100 per cent defence against missiles that are launched against the countries involved in it. That may be true. But the thing about the SDI is that it can be progressively introduced. As it is progressively introduced, the second strike capability can be run down quite safely with intercontinental ballistic missiles as the technical problems are overcome until such time as 100 per cent capability is reached with the defensive powers. This business of having a staged introduction is a very attractive feature. Another argument used against SDI is that it might infuriate the Russians and encourage them to resort to a first strike capability before the system is in place. That argument shows a complete lack of understanding of what the mutually assured destruction philosophy is about. Mutually assured destruction envisages a second strike capability, and a second strike capability will be in place in any case. If the Russians double, triple or even quadruple their number of ICBMs, there will be enough residual power left in the American ICBM capability with the triad they have of land-based ICBMs, sea-based missiles with their nuclear submarines and the Strategic Air Command manned bomber system to guarantee an effective and punishing second strike capability.

Over and above everything else, the proposal for the SDI is just to investigate and set up a research program-a very comprehensive and a very expensive research program, but something that Australia is morally bound to support. It will not cost us anything but it has enormous benefits for humanity because it is the only practical way we can see to run down the dangerous arms race, run down the supply of nuclear weapons and ultimately, if it can be made to work, reduce to a minimum the number of nuclear weapons on this earth.

As I said at the outset, the Governor-General's Speech is a speech for yesterday by yesterday's men. Nothing of relevance to the future of Australia has been touched in that Speech, nothing that in any way deals with the serious structural problems of the Australian economy. It will be left to the Liberal and National parties, whenever this Government fails, to rectify those matters and put Australia on a path to recovery and prosperity for the decades ahead.

Debate (on motion by Senator Grimes) adjourned.