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Transcript of address by Dr John Hewson MP national press club



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Leader of the Opposition

Transcript of Address by

Dr John Hewson MP Leader of the Opposition

to the

National Press Club

Wednesday 25 September 1991

E & Ο E - PROOF COPY ONLY

Parliament House, Canberra, A.C.T. 2600 Phone 277 4022

Thank you very much Peter for the very kind welcome that you have given me not only on this occasion but perhaps on another

occasion when we do announce the details of the GST.

I have to tell you that we did think about coming along with a large number of very large boxes today and stacking them all up here and adding a bit of theatre, but I am not known for theatre so we decided not to do that.

I would also welcome I think about 100 year 11 and year 12 young Australians here for the national capital seminar which is organised by the Queen Elizabeth II Silver Jubilee Trust. I hope that your experience with a National Press Club stimulates your

interest in our political system and in the future of our

country.

As Peter said, I became Leader of the Opposition about 18 months ago. In fact as I see it, I am right of the middle - if the

Prime Minister is to be believed - right in the middle of the three year term to the next election.

Over the last 18 months, indeed over the three years, we have been working to two particular objectives.

Firstly, as I said the day I became Leader, we have been running a three year campaign to win the next election. We have done that on the basis of the fact that we will have to be prepared to win in our own right and not rely on the other side falling over. And admittedly the other side is doing a good job right now of falling over, but our strategy has been based over the three years, according to our own agenda, of building our

credibility as an alternative Government.

And secondly our task over this three year period has been to build a constituency for change in Australia. To get a mandate to govern in Australia. To get a mandate to make very

substantial and significant and rapid change in Australia. And I thought today that I would talk to you a little bit about the process of trying to build a constituency for dramatic and rapid change in current Australian circumstances.

It is difficult of course under our three year, even under a four year political cycle in a country like Australia, to build a constituency for change. And you can go back into history and look at the experience of previous governments and you see just

how few opportunities they actually had to make substantial change during their political life. You would say of course that Malcolm Fraser had an opportunity in 1975 when he came in, but clearly he wasn't ready to make the change and in the

circumstances in which he came in, he went for a second mandate in 1977. On that occasion I think he had an historically large 55 seat majority. He certainly had a constituency for change and

on that occasion he didn't have the courage to take the decisions that were necessary to change this country.

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Similarly when you look back over the experiences of the Hawke Government there have been principally two major opportunities for them to make substantial change. In 1983, in the midst of a global recession and a drought-induced recession in Australia,

there was a very real chance to make substantial change. But on that occasion Bob Hawke and his team were not ready. They had no sense of direction for the country. They had no policy. Had a one page statement virtually an accord with the leadership of the ACTU, so in the heat of the election campaign they called an national summit and tried to lock everyone into a strategy which was ill-defined and as it turned out, inappropriately based on

the policies that were adopted at that time.

But again in 1985, this time in the context of a tax reform

debate there was a significant opportunity to make real change. And on that occasion the Hawke/Keating Government didn't have the courage to take the decisions that were necessary to rebuild the tax system as an essential part of rebuilding our economy, and

so that opportunity was lost.

Right through the Hawke Government we have seen no sense of direction. We have seen no clearly defined line of policy

attack. We have seen no conscious strategy to build a

constituency for change. And against the background of those two previous governments we have clearly set out to do precisely that. I know it has annoyed the media on many occasions that I haven't run to their agenda. But an essential part of being able to set about building a constituency for change is to run to our own agenda, and do things in our own time according to our own

schedules.

But we are running, of course, at a time when where the

Australian economy has now moved into an even worse recession than existed in 1982-83. We think it is the worst recession in 60 years. But even in those circumstances to be fair, you would say that at best we have a tolerance to the possibility of

change. Have a degree of openness in the mind of the electorate that change ought to be made, although they are not yet convinced as to what change and how much change, and we are continuing to try and build this constituency for change at a time where there are now a number of other factors working to constrain that process.

Firstly of course, there are a lot of national character traits in Australia which don't readily lead to the acceptance of change or a willingness to accept change.

We have a capacity in Australia, of course, to always focus on the silver lining and never focus on the reality of the cloud. I don't want to be seen to be talking down our country but to

start in current circumstances without recognising the reality of our current economic difficulties and not being prepared to face up to that - it is going to be very difficult to force a

constituency for change.

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We have seen in the last year for example on a number of

occasions, talk - quite a lot of talk - about how we are coming out of this recession. Yet to be frank there is as yet no

significant evidence that we are coming out of recession. It is a national character trait that we tend to look for the silver lining, rather than facing the reality that perhaps this

recession might go on for another six months to a year.

We also have a tendency as a nation to accept ' near enough is good enough'. We have accepted a drift away from excellence. We accept the search for the equality of outcome rather than the equality of opportunity. And of course there is still an

overriding feeling in large parts of Australia that we are a lucky country. That somehow something will come along and save us. And of course, in the past that has been true. Something has come along and saved us. There has been a mineral boom or a wool boom or some other type of international event most

normally which has turned our economy around and pulled us out of recession.

So those difficulties persist although they are less than they have been in the past they still persist.

Secondly, of course we are a country - the second constraint is that we are a country - that has very deep seated vested

interests and a government now been in power for nearly nine years that has functioned on the basis of placating vested interests. Doing deals with the leadership of particular groups, looking after the interests of a few to the detriment of the

interests of most in Australia.

And so we tend to have an attitude that has been built up that protects those vested interests. I was at a business dinner last night as I have been on many occasions and I hear the argument, why don't you cut government expenditure. I say, fine I'll start

by the subsidy to your industry. They say, no not our

expenditure, someone else's expenditure. It is always

expenditure restraint in general, it is never expenditure restraint in the particular.

Similarly now we have a debate about selective assistance. That means don't solve the problem, help us live with the problems. Why don't you start by giving the selective assistance to our industry. And they always preface their remarks by saying, now we wouldn't want you to try and pick winners, but I do have a

winner in my pocket that you might be interested in backing.

The third constraint we are operating under is there is something now of a backlash emerging in Australia about so called rational economics, market based economics, level playing field economics. All those sort of lines that have been tagged on to an economic

strategy that pursues efficiency and excellence and choice and competition and market based economic activity and minimum government and so on.

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That back lash at best, I guess, would say that, well, those policies haven't worked in the past and they tend to damn both the Labor and the Liberal/National Party team as having tried it

and failed. At worst, of course, they would argue that those policies in the past have destroyed the very basic social fabric of the Australian society.

The fact is, of course, that nobody has actually really tried rational economics properly. The nearest we came was in the late 70 's and early 80's with the process of financial sector

deregulation. That is now being called a failure. It wasn't the deregulation that was the failure, it was the inability of government to manage the economy in a deregulated financial system. It was the inability of players in the system to make appropriate judgements about how to operate in a market

environment, having previously operated within the cloistered confines of a very inward looking and regulated oligopolistic financial structure.

That back lash is growing, it is there all the time and you hear arguments from all quarters now about how we can't go on trying to create a level playing field or trying to get our economic house in order or to pursue rational economic policies. We have to step back and take the path of selective assistance. And what worries me is that the basic thrust of rational economics is that we should, as a very minimum, try to match best international practice. And what they are arguing for, is in fact to match best international malpractice. Using the argument that if others are subsidised we should be subsidised. If the others are

given a tax break, we should be given a tax break.

I have yet to hear a convincing argument why we shouldn't put our house in order on the lines of rational economics first and then see whether we have the inability to compete internationally, that they claim we would have. And finally of course, there is a whole host of other attitudes that constrain u s . I think

probably most importantly, is what has been a growing dependence on Government. People have become incredibly dependent on Government, to the extent of them happily foregoing the roles that you might otherwise have expected them to play.

And I am not just talking here about people who have become

dependent on welfare and that is indeed part of the problem; but we have welfare state mentality if you like that is spread across other parts of the economy, to the business community for

example. A lot of the early resistance to a move away from a

centralised system of wage determination was because some business leaders didn't particularly won't to take wage

decisions. They were quite happy for the wages to be handed down from on high - the six per cent to come from Bill Kelty and the Accord on an annual basis and not have to get down to the level of the workplace negotiations with their employees.

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From the point of view of the worker, well, the dependence is becoming is extreme. Now a worker is told, basically, under the Accord you will get a wage increase every year, 6-7 per cent, Bill will determine it for y o u . So, why would you bother lifting

your game or raising your productivity in that sort of

environment, you are going to get the 6 or 7 per cent anyway. If you manage to retire from the job, then of course you will be taken care of. We will have occupational superannuation, which your employer will pick up for you and of course if you manage

to drop off at the bottom and fall onto the unemployment scrap heap, well we will look after you there too, but you may not

actually get back into the workforce very quickly.

A total attitude of dependence that has spread through, not only through workers, but through management and it is a constraint on us bringing about the sort change that we want to bring about.

Now, I would put it to you that in current circumstances, our problems are as bad as they have been, as I said, since the

1930's. They are not as bad, but they are the worst since the early 1930' s and we can look at debt, we look at corporate

failures, we can look bankruptcies and so on, but I think the bottom line in terms of the political debate is going to be

unemployment. Here we are sitting, with unemployment now just nudging ten per cent and I think what people will start to

realise in the course of the next couple of years, is that that unemployment isn't going to go away very quickly under the sort of policies and the sort of attitudes that have been followed in this country over the last couple of decades. They certainly won't go away, unemployment will certainly not fall under the

Government's sort of economic strategy, which at best these days is muddling through from crisis to the next.

We did a run in my office of the Murphy model, which is available - the Treasury model - through to 1995-96 and on the assumptions of the Budget and what we know about the Government's policy - their numbers, not ours - unemployment is still over 9 per cent by the middle of the 1990's, locked into unemployment of 9 to 10 per cent for at least the next half decade. And John Dawkins has emphasised and I would quote from his speech here to the National

Press Club, of just how difficult it is going to be to turn

around that situation. He said, for example, just to generate employment necessary to keep pace with population, that is through this decade, will require GDP growth of around 3.25 per cent annum, at that level you can expect imports to grow by 2 to

6 per cent. In order to stabilise the current account at that level of import growth, exports would need to grow by somewhere by $3 billion dollars per year, that is in other words, exports need to increase every year by at least $3 billion or we will

face rising debt and or rising levels of unemployment. Now, just to set the $3 billion in perspective, John Dawkins quite

correctly point out that at the minimum, that is the equivalent to three new North West Shelf projects every year.

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Now, I think the reality of that unemployment situation, the fact that there will be an increasing number of long termed

unemployed, that will top 250,000 - 300,000 people probably in the course of the next few years, that is people who unemployed for more than year. The dramatic shifts that the impact of that will have, continue to have on social values and the fabric of

our society, rising violence, rising crime, rising divorce rates, rising hardship and pain. I think that reality is what is going to start to sink in to the minds of people in the course of the next 12 to 18 months because there is nothing on the horizon, internationally or domestically, that is going to significantly

improve that outlook under existing policies.

So our view has been against that background that you can't possibly tinker anymore with the Australian economy. There is no alternative but substantial and significant and dramatic - whatever word you want to use and I remember the last election

campaign, how people got hung up on words, as to whether interest rate falls were massive or substantial or significant - anyone of those words is fine as far as the magnitude of the task that has got to done in Australia in the course of the next few years

if we are turn our circumstances around. And the Opposition has thererfore, against that background, embarked quite consciously on a program where we have set out to set the agenda of the

political debate.

Where we have set out to raise issues which are traditionally very difficult for politicians to raise, we have set out to indeed, argue the case on some of the "no-no" issues which

everyone said you should leave till after an election. Issues like immigration, issues like the introduction of broad based goods and services tax, because it is absolutely essential that we do that if we are to build the appropriate constituency for

change in Australia. And as I have said many times, if we can't win Government, as difficult as that might be, advocating what we know is right and what needs to be done, then we do not

deserve to be in Government as an Opposition Party aspiring to that office.

And our task therefore, is to continue to explain our position as best we can for dramatic and significant change to be made in Australia as a matter of urgency. And of course the Labor Party is starting to feel the heat, they are starting to try and slide

in behind our agenda. I have been fascinated at how many times in recent days I have read my words in one of their speeches. You hear all these words of a enterprise bargaining, now they don't mean the same thing but they use it. They are now fast

tracking development projects, they are now moving to deal with emerging health crisis, which for years they said to us, you are mad, there is no problem with Medicare, it is the best and the most efficiently run health system in the world and so we can go on. So, there is a real challenge here to get the Government to

fully embrace our policies if you like and get on and do the job so that the unemployment doesn't reach 9 per cent or stay around 9 per cent through the middle 1990's.

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If they are serious about fast tracking development for example, why don't the immediately reverse the Coronation Hill decision, which is an easy decision to reverse in current circumstances. Or why don't they foreshadow that they would approve a pulp mill

of the type of Wesley Vale. Or why don't they go ahead and

approve Koongarra and Jabiluka, uranium mines which the

aboriginal community are in support of at the present time. If they want to stay with the Coronation Hill decision on the

grounds of aboriginal heritage considerations, there is two alternatives they don't need to worry about from the point of view of the aboriginal community. Why don't they put out a

immediate tender, call immediate tenders for the construction of the third runway at Mascot. I mean, we took that decision in 1982, they took it in principle a couple of years ago, it is

about time it was built.

Similarly, but I very concerned of course that none of that will happen and none of those changes that are desperately needed in this country will ever take place under this Government. Let me just give you one example of where we have tried to specifically help them and they haven't been prepared to go along. They came out in the Budget with an electorally difficult decision, to

impose a charge of $3.50 initially on visits to the doctor under the Medicare system. Now, we all know the magnitude of the over servicing problem in relation to doctors, we have an excess

supply of doctors, we have got a bulk billing system that

facilitates over servicing and the opportunity existed to start to charge for that service by way of a co-payment of $3.50

initially, to rise to $5.00 in due course.

Now, instead of playing politics on that, instead of saying 'well, that is good, we can burn them politically on that', we did the right thing and supported it. And the most amazing thing is they then backed off on the basis of in-house Caucus pressure

in relation to that decision. Much more concerned, as I said in relation to the Budget, about saving Bob Hawke's job than they are about fixing Medicare or doing something about the jobs that nearly one million Australians that have been thrown on the unemployment scrap heap. Now it bothers you, doesn't it, when the political process is made easy for a Government that is in very difficult political circumstances that they can't, even in

those circumstances, have the courage to take a decision like charging $3.50 to go to the doctor and start to get some sense of price and economic rationality into the allocation of health

services in this country.

But it is worse than that. If you look at their statements in the Budget in relation to unemployment, they have just accepted the fact that unemployment this financial year will go to 10.75 per cent. They've just accepted the fact that unemployment will go to 1 million people in the course of that time, or near 1

million people, and indeed, they've compounded the problem by announcing a superannuation system which is just

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another levy on the business community and just another impost on the business community, just another reason why another 100,000 people are going to be thrown on the unemployment scrap heap as a result of that policy through to the middle 1990's.

Similarly, they have agreed, yet we haven't seen the details of it, to a wage increase under some new version of the Accord to give 5% wage increase in the year, 6.5% through the yea r . They have hypothecated a 3% increase in productivity which hasn't been earned yet, and as I said before, under the centralised system, won't ever be earned. They've hypothecated that 3% productivity

as part of that 6.5% wage increase to giving the lot to the

workers, nothing back to the companies in terms of increased profits, nothing back to the consumer in the terms of lower prices, they've committed the lot to the workers. That would rate I think as the biggest wage increase we've seen in a

recession in this country, and that too, is going to create more unemp1oyment.

So not only have they lost their way, not only are they

fundamentally divided, not only are they focussing on saving Bob's job and keeping Paul out of that job, they're adding

hundreds of thousands more to the unemployment rolls, consciously and unconsciously as a result of ill-conceived short-term populist type policy responses.

So what that says to me is that we need to continue with our

strategy of setting the policy agenda in this country and

dragging them screaming and everyone screaming to the reality of what's got to be done. And, I will therefore continue with

issues like the goods and services tax and we will release that detail at a date of our choosing. We are right on time - I'm

sorry to tell you that - we are right on time, there is a story in it and we are going to deliver it in a way we think is most

effective in order to get that message across. But, the point you should understand is one of the main reasons we hung onto the detail for so long is it has been almost next to impossible to get issues elevated in this country to the point where people are

genuinely interested in them.

And, finally with the GST, everybody's talking about it. You can't go anywhere and not be confronted with the reality that somebody wants to ask about tax reform. So we are now getting to the stage where there is a constituency for a reform of the tax system against which we can supply a definitive solution.

That has not been easy. It has taken us a long time to get the

GST up there in lights. We allowed up to 18 months to do it and I'm pleased to see that we are now at the point where that

interest is there and as part of that process a lot in the media have got their knickers in a knot about how long it's taken us to get it out. You've been fundamentally helpful, thank you very much, to building that constituency for change.

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Similarly with immigration - I mean I'm fascinated that today there's a big issue on immigration - "Hewson wants to cut

immigration". He's been saying that for the best part of the time he's been Leader. I raised it as an issue and said we ought to be able to have a mature debate about an issue like

immigration in Australia, it's one of the earliest things I raised. We had a speech delivered by Phil Ruddock, the Shadow Minister to a conference last year. I must have mentioned it dozens and dozens of times in speeches ever since, and low and

behold, last Friday, finally it got elevated to the status of a decent story only because people thought there was a division within Liberal Party ranks not because they had any interest at all in the issue of immigration as part of what is a very

difficult labour market situation in Australia.

I'll finish now as I would want to give the press the maximum opportunity to ask questions.

There's only one side of politics in this country that's

generating ideas. There's only one side of politics today which has got the capacity to change this country, there's only one side of politics that is prepared to stake its political future on its ability to build a constituency for fundamental change and to deliver that change, and that is the Liberal National Party Coalition.

And, we will continue every day between now and the next election to build that constituency for change so that not only do we achieve our first objective of winning the election because we a credible alternative government, but also and most importantly because of the second objective, and that is we win the election with a mandate to make fundamental and significant and rapid

change in Australia. There is no alternative but to rebuild the Australian economy from the bottom up, brick by brick, by brick.

Thank you.

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