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Speech to the Committee for Economic Development of Australia State of the Nation Annual Conference, Canberra

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Good evening.

By now many of you will have heard the awful news that Australian journalist Peter

Greste has been sentenced to seven years in Egyptian jail, simply for reporting the


Our thoughts tonight are with Peter and his family - and Labor stands ready to

assist the Government in every effort to secure his release.

Peter Greste is one of over 200 journalists behind bars, and a grim reminder that the

freedom of speech so many of us take for granted is something to celebrate and

jealously guard.

Tonight, as we meet to discuss the state of our nation I would like to focus on a

question that CEDA has a proud tradition of considering in thoughtful detail: the

state of our Federation.

A cooperative, productive relationship between the Commonwealth and the States is

central to our economy, our society and our nation.

It is not my intention to offer a commentary on last week’s High Court decision.

In government, Labor passed legislation to protect Commonwealth programs

challenged by the first Williams decision, and we are prepared to work constructively

with the Government if similar action is required.

My focus tonight is not the legality of Commonwealth action, but the important

balance between Commonwealth and State responsibilities.

This balance has been severely damaged by the 2014 Abbott-Hockey Budget.

For a great many Australians, the most objectionable - and widely-discussed -

elements of the Government’s Budget are the measures that run contrary to our

national sense of fairness and our inclination to address inequality with compassion.

• The GP Tax that dismantles universal accessible healthcare;

• The cruel cuts to family support, pensioners, carers and veterans;

• The radical changes to Higher Education that will put the dream of a

university degree beyond the reach of children from low and middle

income families; and

• The abandonment of Australians looking for work, forcing job-seekers

under 30 to survive on nothing for six months.

Taken together, these measures represent the most radical social

experiment in Australian history - and Labor stands strong in our

opposition to them.

Inevitably, our opponents have sought to paint us as reckless.

In response, let me say this:

I, and Labor, understand the importance of making the Budget sustainable - the

need to bring together revenue and expenditure, over the Budget cycle and over the

medium term.

It’s why Labor made $180 billion of responsible savings in government.

It’s why we are very critical of the Government’s $22 billion Paid Parental Leave

Scheme and their $2.6 billion ‘Direct Action’ policy.

It’s why we legislated reforms to the private health insurance rebate - a policy that

will save nearly $25 billion over the next decade, but was fought tooth and nail by

the Liberal Opposition.

And it is why we moved to raise an extra $5.3 billion in revenue by closing loopholes

on profit-shifting and multinational tax evasion, a position that has since been

watered down twice by the Government.

Labor recognises that to be sustainable, a Budget must also be fair and reasonable.

Yet this Budget is designed to hurt the vulnerable and makes those who

can least afford it, pay the highest price.

It assigns the heaviest lifting to the weak, and only the lightest touch to

the strong.

All the while doing nothing to boost participation, productivity or improve social

mobility - the key drivers of economic growth.

Yes, the Government’s cuts will reduce payments in the near term - but only at the

expense of growth over the longer term.

And this year’s Budget also contained a surprise attack on the State Governments of


A dramatic and reckless destabilising of our Federation.

A cut in spending on health and education that grows to around $20 billion by the

2024-25 financial year.

In total, an $80 billion cut to Australian schools and hospitals.

So far, the only explanation the Prime Minister has offered is that health and

education are ‘traditionally’ state responsibilities and that he wants the states to be

‘sovereign in their own sphere’.

It is the same argument he uses to justify his refusal to fund public transport


On Budget night, the Treasurer was more pointed.

When asked whether his Budget was designed to starve the States into begging for

an increase in GST to fund the shortfall in school and hospital funding, Joe Hockey


Well, that's up to them.

They are responsible for schools and hospitals.

We don't run any schools or hospitals.

Whether you take the Prime Minister’s wording or the Treasurer’s formula, this is an

alarmingly narrow view of the role and responsibility of the Commonwealth


Indeed, this is a characterisation of our political structure that goes way beyond

what is sometimes described as black-letter law.

It is a reactionary, hyper-literal interpretation of our Constitution.

A view that turns the clock back on more than a century of change and

evolution in favour of a model that is fundamentally at odds with the

reality of governing modern Australia.

It is true that when our Constitution was drafted, the colonies retained responsibility

for a range of front-line services.

And yes, in 1901, there was no Commonwealth Department of Health or Education.

But there was also no Department of Finance, or Transport, Industry,

Communications, Indigenous Affairs, Arts, Sport, or Environment.

There was not even a Department of Prime Minister and Cabinet, and for that matter

neither Prime Minister nor Cabinet are mentioned in our Constitution at all.

The expanded breadth and depth of the Commonwealth Government properly

reflects the eleven decades of transformation and growth that the Australian

economy and our Australian society have undergone.

After all, the Australia of 1901 had no social safety net, no minimum wage, no

accessible higher education, no universal healthcare, no superannuation.

It was a country where women were disempowered, where migrants were distrusted

and Aboriginal Australians were counted as ‘fauna’ and deemed destined for


This was the Australia that shaped our Constitution: a protectionist,

mono-cultural collection of colonies, so very different to our confident,

modern, outward-looking and diverse country today.

Tonight, I would argue, that just as our nation has demonstrably changed for the

better, the way we govern ourselves has evolved and improved too.

While our Constitution will always be an important set of national organising

principles - it is far from an up-to-the-minute handbook for the business of

government or the interplay of funding and responsibility between the

Commonwealth and the States.

Australia should adopt the pragmatic and practical path - not the

theoretical journey.

As the dominant collector of revenue, it is inevitable that the Commonwealth

Government will play a role in funding the delivery of essential State services -

especially in health and education.

This is not a new concept - or a radical one.

Indeed, last month marked the 50th anniversary of the States Grants (Science and

Laboratories Technical Training) Bill.

A piece of legislation that provided capital grants for science laboratories and

equipment in Australian secondary schools.

When Prime Minister Menzies introduced the legislation to Parliament, he articulated

the principle which has underpinned the last 50 years of Commonwealth support for


‘My hope,’ Menzies said, ‘is that Commonwealth moneys can, with great

benefit, be used to stimulate activities which could not be afforded previously

by either State or independent schools’.

Every Prime Minister since Menzies, from both sides of politics, has subscribed to this


I, and Labor, are proud that the quality and focus of Commonwealth investment in

education reached its peak in the historic Gonksi reforms for school funding based

upon need.

If we look at health, we can see the same trend.

The Federal Government stepping up to fund the services our citizens depend upon.

The Commonwealth filling the gap created by the diminishing revenue bases of the


Or, as a certain T. Abbott put it in his book Battelines:

Commonwealth spending on health and education…[is] all in areas that were

once wholly the preserve of the states.

Most of it is not directly authorised by the constitution other than via specific-

purpose grants under section 96.

Still, any withdrawal of Commonwealth spending in these areas would rightly

be seen as a cop out.

It’s rare for me to quote Tony Abbott and Robert Menzies with approval in

the same year, let alone the same speech.

But I think it is worth reflecting on the difference between the Tony Abbott who

wrote Battlelines and the Tony Abbott who wrote the Budget.

On the one hand, you have the straight-talking, ‘conviction politician’ who believed

that the Federal Government had a duty to support schools and hospitals.

And on the other, the pre-programmed, politically-motivated Prime Minister, captive

to his broken promises and unable to explain or justify the unfairness of his Budget.

So yes, tonight I say, Tony Abbott is right.

For the Commonwealth to withdraw any spending from schools and

hospitals is indeed a ‘cop-out’.

But it is more serious than this.

It is an abdication of leadership.

Demanding that the States do much more, with much less, will have a catastrophic

impact on Australian hospitals and Australian schools.

And this is Labor’s fundamental objection.

Behind the Government’s sophistry, there will be deeply harmful consequences for

our society and our community.

By the 2024-25 financial year, the Government will be taking $15 billion out of


A total cut of $50 billion to Australian hospitals.

In our climate of accelerated media coverage and shorter attention spans, a number

like this can wash through the national political debate without getting the attention

it deserves.

Everyone can agree that taking $50,000 million from hospitals is a ‘big’ number.

But the real test is what these cuts will mean and the toll they will take on Australia’s

healthcare system.

Over the past month, Labor has analysed the impact that these unprecedented cuts

will have on Australia’s public hospitals.

The consequences are truly staggering.

Taking $50,000 million out of our hospital system is the equivalent of removing:

• More than 4,300 hospital beds; and

• More than 25,000 nurses; and

• More than 12,200 doctors for seven years.

It’s the equivalent of:

• Sacking 1 in 5 nurses;

• Sacking 1 in 3 doctors; and

• Closing 1 in 13 hospital beds, in public hospitals for seven years.

In terms of procedures, it’s the equivalent of:

• More than 104,000 hip replacements; and

• More than 1.4 million chemotherapy sessions; and

• More than 241,500 mental health admissions per year, for seven years.

There are most serious questions to be answered:

How much longer will patients have to wait in overcrowded and chaotic

emergency rooms?

What will happen to the waiting times for elective surgery as a result of these


How long will Australians have to wait for treatment when they have time-

critical conditions like cancer or heart disease?

What kind of medical equipment will hospitals have to shut down because

they cannot afford to maintain them?

How many rural and regional hospitals will close?

How many Australians will be turned away, or denied treatment because our

system cannot cope?

Will lives be put at risk because people can’t get the help they need?

The consequences for education will be just as severe.

By the 2024-25 financial year, Australian schools will be suffering from a funding cut

of $5 billion.

In total, the Budget cuts around $30 billion from Australian schools.

This is the equivalent of taking more than $3.2 million from every Australian school.

• That’s more than $420,000 per school, per year from 2018;

• More than $1000 per student, per year.

It’s the equivalent of sacking 40,000 teachers - or one in every seven teachers.

To look at it another way, this funding could put an extra four teachers in every

Australian school - and pay their salaries for seven years.

We could build, from scratch, 1800 new schools.

So again, we must ask what the consequences of these cuts will be for our children’s


How fast will Year 12 completion drop?

How many students with learning difficulties, or disability, will fall through the

cracks without extra individual classroom attention?

How much wider will the gap in Indigenous Education outcomes be as a

result of reduced support for remote schools and Aboriginal students?

How many young teachers will be unable to cope without the right resources

and look for work elsewhere?

How many experienced teachers will decide that enough is enough?

What will be the difference between a great school, and a school deprived of

the funding it needs?

These $80 billion cuts may be part of this Government’s ‘social experiment’ - but the

test subjects are millions of real Australians.

Patients, doctors, nurses, students, teachers and parents.

And the only response the Treasurer can muster is:

‘we don’t run any schools or hospitals’.

Well, Australian students deserve better than shoulder-shrugging and


Australian patients deserve better than a Government that thinks a mature and

worthwhile policy response can be summarised with: ‘that’s not our problem’.

And our nation deserves better than a national Government that is

shirking its leadership responsibilities.

The harm caused by these cuts will spread far beyond our classrooms and

our emergency rooms.

The massive cuts in Commonwealth funding will have significant implications for

every area of State Government expenditure and revenue.

Imagine, if you will, that you are the Premier of your State, making plans for growth

in your economy.

You weigh up your total outlays and think about how you can best allocate funding

from your narrow revenue base.

You make assumptions on the basis of the global economy and the impact it will

have on your state.

You look at your demography and make assumptions on the basis of your population


You think about your industry base and how it will integrate with the rise of Asia,

manage the pressure of the high Australian dollar and compete in an increasingly

globalised marketplace.

These are the rational and sensible assumptions that inform your decisions.

Above all you would assume that payments from the Commonwealth will continue

on the basis of signed, negotiated agreements and decades of precedent.

On that basis, you make plans to expand skills and training and encourage


You introduce reforms to improve the efficiency of your health system and your


You focus on student outcomes and providing the best learning environment.

And you pull all these threads together - economic and fiscal - into a plan for your


That’s your budget.

Then comes the Abbott-Hockey Budget.

No matter how many times the Prime Minister denies the scale of his cuts, their

impact will be felt.

Hospital beds will close, treatments will be delayed or denied and nurses and doctors

will lose their jobs.

Learning outcomes will suffer, schools will close and teachers and classroom

assistants will lose their jobs.

That’s when you realise that for the first time in Australian history the

Commonwealth itself poses a sovereign risk to the states.

This Government isn’t re-writing agreements, it’s tearing them up.

They are shifting the goal posts on you.

Making the efficient and effective delivery of services impossible.

Impossible, that is, without increasing State taxes - or blackmailing the States to

carry the can for an increase in the GST.

Ladies and Gentlemen, that is what I mean by a fundamental shift in the balance of

Commonwealth-State relations.

I do not doubt the need for a meaningful national conversation about the future of

our Federation - in this forum and in others.

It is clear to me, that there are tremendous economic benefits to be gained from a

cohesive, cooperative Federation.

I am ambitious for a better way of working together, regardless of political


But when we see this Government making huge, unilateral cuts to health and

education without a shred of consultation - I doubt their capacity, or willingness to

deal with the business of Commonwealth-State reform in any cooperative way.

And I doubt whether they understand just how much pain their cruel cuts will inflict

on millions of Australians.

Or perhaps they just don’t care.

Labor still believes that every school should be a great school.

We still believe that every Australian deserves access to universal, affordable


We still believe in a Federation that works together to build a stronger Australian

economy and a fairer Australian society - for everyone.

We always will. ENDS