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Transcript of Dr John Hewson mp addres to 1991 Queensland liberals annual convention Hilton Brisbane



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Leader of the Opposition

15 September 1991

TRANSCRIPT OP DR JOHN HEWSON, HP ADDRESS TO 1991 QUEENSLAND LIBERALS ANNUAL CONVENTION HILTON, BRISBANE

B 6 OE Proof Copy Only

Thank you Paul Everingham, and congratulations on a fantastic evening last night, Ashley Goldsworthy, Denver Beanland, Andrew Robb, Cassie Solomon, Lynton Crosby, my wife, my Parliamentary Colleagues, Distinguished Guests, Delegates, Ladies and Gentlemen. It's wonderful, isn't it, this introduction business.

I am very conscious of the fact that you think that those who come from down south are quite different - and that is true. As you know we don't have a recession in Canberra but the rest of the country is certainly struggling under the worst recession

that we've seen in sixty years.

Want I want to do today is to talk to you briefly about the

economic crisis that is before us and about the choice that we're giving the people of Australia between a Government that has been there for now eight and a half years and has obviously run out of ideas; has never had a sense of direction and a group of

people who are absolutely dedicated to turning our country around.

The most encouraging thing I've seen since I've been here in the last couple of days is the extent of the rejuvenation of the Liberal Party in Queensland. Our future is very much in

Queensland. I think there are nine seats under five per cent that we can win at the next federal election - assuming we hold Dawson. So there is a real challenge to us all here this morning and we have to do that in the context, as I say, of the worst

economic crisis that this country has seen in sixty years.

COMMONWEALTH P A R L IA M E N T A R Y LIBRARY MiCAH

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

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You don't need me to list the features of this crisis. The

magnitude of the pain and hardship that average Australians are feeling is best summarised, I guess, by the fact that there are nearly one million Australians unemployed. I think that stands as the most fitting monument to Bob Hawke and his team in this the centenary year of the ALP. The group of people that they claim to represent - average working Australians - as Bob calls them - ordinary Australians - he has thrown one million of them onto the scrap heap. And they will stay there right through the next several years under this Government that has never had any clear-cut sense of direction and has never had any capacity to put in place the tough decisions, the necessary policies to turn

this country around,

I was struck by a quote, which I read on the plane yesterday in the Panorama magazine, from Fred Hollows, who, as you know, is Australian of Year and is dying of cancer, and he says that

experience has given him a greater sense of urgency about a lot of things that are important on his agenda. This quote is from an interview with Fred and he says, and I quote, (he's talking about his experience, I guess, with a visit with the Prime

Minister) and he said* I said I am Australian of the Year and you are the Prime Minister and we both come from similar

backgrounds. we both learned at our fathers knee that it is a basic human right to be able work. A Labor Government that can't do that shouldn't claim to be a Labor Government.

The most disturbing thing, though, is to watch Bob Hawke and his team, day after day, fight and scrap amongst themselves rather than focus on the real issues. if you just think about what you have seen in the 18 months since the last election. You've seen a government that has limped from one crisis to the next.

Every single policy decision they've taken, and this to has been a characteristic of their whole time in Government, has not been taken from the point of view of what is in the best interests of average Australians. It has always been taken from the point of view of looking after one of their mates, paying a particular

group a particular favour, but most importantly stitching up votes maintaining their political survival.

The whole raison d'etre in the a l p is survival and they will

survive at all costs, irrespective of the costs that they inflict on average Australians.

You have just seen the Budget brought down, as I say, in the

midst of the worst economic crisis in sixty years and the Budget is already dead in the water because it was s imply a document stitched up as the outcome of a couple of deals. There was a

deal with Brian Howe, of course, the new Deputy Prime Minister.

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He delivered the Left vote in the last leadership challenge. So he got $800 million for his mad cities program and we had to do something, of course, about the new poor that Bob had created in the course of the last eight years.

There was also a deal done with the green movement and the

Environmental Protection Agency and other money allocated in that direction. But most importantly the deal was done with the ACTU, of course, in relation to superannuation; in relation to wages; and they aren't yet able to publicly tell us the precise nature of that deal.

And finally, of course, the whole thing was stitched up to try and stop Paul Keating's run for the leadership. Keating, you might remember, when he stood for the leadership went on the Channel Nine program and said he had a new vision for Australia which consisted of mad cities and superannuation and those two

things were picked up in this document. v

So the whole Budget was much more about saving Bob Hawke's job than it was about saving the jobs of millions of average

Australians. So, in this context, we have a Government that is just going to continue on. It is going to live with about one million Australians unemployed. That will see an unemployment rate of about ten per cent, locked in, for the next several

years. We will see real pain and hardship in there with an

increasing number of Australians becoming long-term unemployed. That is, unemployed for longer than twelve months and we will see a continual increase in the number of principal bread-winners in Australian families - already one hundred and sixty thousand of

them - who will be thrown out of work and will find it very

difficult to get back into work to find a job or to keep a job.

In fact today, the single most important issue is unemployment. People are not just concerned about the fact that they may lose their job or that they have lost their job, but there is a wave of insecurity where they are concerned that they may not get

another job; they may not be able to get another job in the same industry; they may have to change their career to get a job and they may in fact, in many cases, be destined to many years of being out of the workforce.

As I say, that is the monument that Bob Hawke has left the people of Australia. The average Australian is the loser. You can look at the income distribution, the group that have lost under Hawke and Keating, and more recently Kerin, is average Australian

taxpayers - people who earn somewhere above $20,000 a year, somewhere up to $40,000, $50,000, maybe $60,000 family income a

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year. That group has gone backwards while the top ten per cent of income earners, some of their rich mates, have done

particularly well. And, of course, some on the bottom have been cared for but the average Australian has been left holding the can.

We looked at some numbers in the Budget context and found that 91 cents in every dollar of tax paid by the average Australian goes to social security. We have now built a massive system of social security dependence - an attitude that the Government has not only taken through the welfare area but they have carried off to the business community and in other cases the rural sector and

so on.

We have an economy that is centralised; overly controlled; excessively regulated; excessive bureaucracy; dominated by just a few key people today. Bob Hawke does deals with Martin

Ferguson and Bill Kelty about what wage increase everyone will g et.

The debate, right now, about the Fairfax newspaper is much more about how they can get favourable press down the track than it is in restructuring an industry that has suffered a major setback in the course of this recession.

Changes in aviation policy have been the outcome of deals with special business mates. Changes in television ownership rules have been the outcome of deals with special business mates.

A few people have gained but the average Australian has gone dramatically backwards.

So in those circumstances we believe there is no alternative but to clearly differentiate our product and start to fight for what we believe in.

We are opposed to that centralised type of system.

We are opposed to Governments excessively being involved in the economy.

We are opposed to constraint.

We are opposed to a lack of competition and increased

centralisation.

We don't want John Dawkins determining what books our children read.

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We don't want Brian Howe deciding what our cities should look like; or whether we can go to the doctor; or how long we will

have to wait in a hospital queue.

We don't want Bill Kelty determining our wages and conditions at the work place.

We want an economy in which people have every opportunity to work; have every opportunity to save? have every opportunity to open a business, develop a business, or expand a business.

In order to turn from their type of economic system to our type of economic system there is no substitute but for massive and radical structural change. So we are going to the next election as a Coalition of two parties, absolutely dedicated to those

ideals and absolutely dedicated to putting in place the policies we know are essential to turn this country around.

So, in that context, we have listed and detailed, in most cases, a set of policies which we think are fundamental to changing the way this economy operates. In fact, in essence, they rebuild our economy from the bottom up - brick by brick. we propose,

therefore, radical change in the labour market, for example. We don't see how you can ever get a system, like the centralised wage system that we have got, to produce wage outcomes that are internationally competitive.

Deals based in the backroom of the Lodge in Canberra have got nothing to do with the work place conditions under which most Australians work around Australia. We've got to simply move away from the centralised system to the workplace - put employers and

employees together and provide the mechanisms by which they can negotiate appropriate terms and conditions.

The Government is fascinated by the fact, I think, that over eight years of this wonderful thing called the Accord they haven't been able to produce an increase in national

productivity. If you think about the system - how could you reasonably expect there to be any increase in productivity under that system. If Bill Kelty does a deal with Bob Hawke, every year, to give you a six or seven per cent wage increase and you

know you are going to get that year after year, why would you bother to work harder? Why would you bother to raise your game; or take on a promotion or work an extra shift? The system is

fundamentally against the one thing this country needs - which is a massive boost in national productivity.

But it won't be just enough to change the labour market and to shift the focus of wage determination back to the work place level. We will have to back that up with some institutional change which outlaws compulsory unionism and ensures voluntary unionism. And we have to facilitate the process whereby unions

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can be enterprise based and do, what I think they should have always done, which is represent the interests of the worker at the workplace and not expect to be an aim of Government, as Bill Kelty has become as a defacto Cabinet Minister.

I think it is also important, though, that you see that labour market change as part of a package of a lot of other measures. Tax reform is fundamental to back-up those labour market changes. Our labour market changes will give people a possibility of working harder, of earning more. Our tax system has got to be

dramatically shifted so that it gives people the chance to keep more of what they earn. There has got to be a simpler tax

system, a fairer tax system, and one that is less conspicuously rortable, as is the tax system that we presently have in

Australia today.

The tax system favours the rich, tax is still an option to many of the rich in Australia yet the average PAYE tax payer is the one who suffers. So you need to back up labour market reform with tax reform and it is in that context -that we have got a lot

of attention in recent days about our proposal to change the mix of taxation to move towards a goods and services tax, abolish the wholesale sales tax and dramatically lower personal income tax and a number of other tax changes.

Now in the circumstances of the worst recession in 60 years we have got to be prepared to advocate substantial change like that, even if it is difficult, even if we find it politically difficult or politically risky, the politics of the 1990's demand that we be prepared to stand up and fight for what we believe in. And

just as our labour market changes are fundamental to rebuilding the Australian economy so are our tax changes. But keep them in perspective - they are part of a big package that I am

delineating not the only response we have to current

circumstances.

The goods and services tax is not a panacea for our economic problems but it is an essential part of what we have got to do to rebuild the Australian economy. Now I know a number of people are concerned about the case for a goods and services tax, they

are worried that perhaps we may not be able to sell it so I

though I would just quote to you a few lines that I have taken from one of Australia's great authorities on tax and tax reform. The quote I take is taken from a press conference some time ago where the question iss

"Aren't you taking a heck of a risk in advocating the

adoption of a consumption tax and is it worth it?"

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And the answer is:

"Yes we are taking a risk. What this country has needed desperately for years now is a Government which is prepared to face up to what has to be done to get this economy into proper shape.

What needs to be done is to have a Government in this

country which is prepared to face up to the greater

challenges facing this country.

We are coming to the end of this twentieth century. We

cannot any longer afford to go on, take soft options and say she'll be right mate. The world is not going to say to Australia, she'll be right."

Now I could not have said that better and my source is Bob Hawke.

Or similarly he said:

"You can't have a continuation of a tax system which is haemorrhaging, imposing burdens on those least able to bear them, economically inefficient. If Australia refuses to face up to this issue, we'll slop through, we'll slop

through. Our children will pay an enormous price if

through our self-indulgence and self-interest we refuse to remedy this system." .

From that quote from Bob Hawke we can only conclude that his self-indulgence and his self-interest won out because he didn't deliver those tax changes in 1985.

And finally, my authority says, and I quote:

"I believe that the ordinary people of Australia, the ordinary men and women of Australia and those dependant upon them have increasingly been subjected to a position where they are carrying an infinitely greater, more

inequitable burden than they should.

Now, if I come to the conclusion that the sort of reform that we're talking about and that it has broad support, is the way to go but that there would be certain interests who would try and use that approach to defeat the Government,

then I would still go down that path because I am

dedicated, and the evidence is there that I've been

dedicated from day one of Government - to make the tough decisions that are necessary to get the Australian economy into the best possible shape.

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That's what I believe my obligation is and if, in taking the decisions to achieve that results, I run some political risk, I've said so be it and I repeat that."

My case for a broad based goods and services tax rests. Let me just tell you now briefly how we have handled it and why we have handled it the way we have.

I think the most concern that has been expressed to me about the goods and services tax is the fact that we announced the decision a year ago and we are yet to provide the final details of the

package. Now you should understand this was a conscious,

strategic decision on our part. When I became Leader, the day I became Leader, we did a press conference at which I said that that was the first day of what would be a three year campaign to win the next election and I meant a three year campaign and I meant we would set our own agenda for three years - we would not

be run by the Government, we would not be run the 'animals', you know the National Media Liaison Service which tells some of our media how to think and we would not be run by the media itself, we would work to our own agenda. We are right on time on that

agenda. We always planned to pick about the middle of the three year period. if you go too early you will be under pressure

towards the next election to give another package - we only have one package which we think will solve the problems of this

country, we pick our best time to deliver it. Secondly, as I say we are right on track, we thought post-Budget before

Christmas. Now I notice there is a lot of speculation in the media that seeing I am speaking at the Press Club on the 25th September that this is the date. Well I hadn't received the invitation to speak at the Press Club 18 months ago when I became

Leader, it never has been the date and it isn't the date. It is a nice try by the Government and the media but the Press Club will be used for other purposes. All I can guarantee you is that it will be released before the 25th ... of December this year.

The reason though we took this long, there are some very

substantial reasons. Firstly, we had to raise the issue of tax reform and get people to focus on the deficiencies of our tax system and we have to make fundamental change in Australia, we want people to understand the need for that change and then accept the type of changes that we propose. And so we have

worked very hard for a year and many of my colleagues here have worked very hard on that specific issue, trying to raise tax reform as an issue, get people to understand that there are already a range of consumption taxes in Australia, they already

pay a lot of sales tax on goods that they don't naturally believe there is tax imposed on. We have to get them to think about the need for changing personal tax, to recognise that somebody on $20,000 a year almost pays 40 cents in the dollar tax and at

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$36,000 a year you jump to the next tax bracket of 46 cents in the dollar tax - massive disincentives for average Australians to work harder. We also wanted people to focus on the fact that saving under our tax system doesn't carry any particular

advantages. Indeed, in recent years if you had put your money in a bank account as a form of saving, once you take the

interest, deduct the tax and deduct inflation in many cases you went backwards. So we have spent a lot of time over the last 12 months trying to get people to understand the importance of tax reform, to accept how much they pay and to start and demand

change to the system. I am very pleased to see groups like

Citizens for Tax Reform and others now coming forward. I am very pleased to see all the community organisations and business organisations that have introduced themselves into this debate. And finally, after many months of virtually no coverage, we have got the issue of tax reform up there, every time you take a cab they raise the issue. I went to the barber's shop the other day, they incessantly talked about the issue around the barber shop and the barber by the way was in favour of goods and services

tax. I also went to the football a couple of weeks ago, I was

standing in the mens room and even the fellow next to me had to talk to me about it - there is no peace for those who advocate tax reform in Australia.

The second reason that we wanted to take a year or so before we released the details was, not to link to the last story, but to flush out the Government of where they were going to go in terms of this debate because look at the quotes I gave you from Bob Hawke. There are two very useful books that have been prepared by Peter Reith now - the case for a broad based goods and

services tax by R J L Hawke and volume 2 is the case for a broad based goods and services tax by P J Keating. So we wanted to

know what they would do, what they would say, where they would attack us and we have now seen all those lines of argument, they have fired all their shots and we are in a position to deal with them as the package is brought down.

Thirdly though, and importantly, we wanted to contact vested interest groups, people who would be concerned about the change or would want to put positions to us about the change. We have had, I am very pleased to say, dozens and dozens of very detailed

submissions put to us about how we should treat things like education or health or housing, retail sales and so on and a lot of very good work has been done by people who have put in a lot of time studying the tax systems of other countries. The most

rewarding part of all that is that it has been very constructive, people are not damning us, they are saying we want to wait and see your package, we want to help you get the best package you can because there is an acceptance of the need for change in Australia and people, I believe, will vote overwhelmingly for us provided it is fair and it is equitable in terms of the structure

of the package.

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Finally, of course, we wanted to take 12 or 18 months to get the detail right, to make sure the numbers add up and to provide people with the information they need to understand a change of that order of magnitude. It is a massive change, it is a big

package, it is a lot bigger package than people I think expect at the present time, so we have had to spend a lot of time making sure that the information we put out - and we are going to be

delivering information to every household in Australia - we have got to make sure that from that information they can understand what we are on about.

Now in current circumstances we have no alternative but to fight on and to push our case for tax reform. In itself it is

important. As a back up to our industrial relatione policy it is fundamentally important. Over and above that the rest of our package relates to all the infrastructure areas of Australia where industry suffers massive cost disadvantages and which, in the end, all cost jobs. Inefficiencies on the waterfront, are legendary in Australia, our waterfront is a national disgrace. Land transport, particularly rail transport is emerging as national disgrace, take the case of the Victorian railways where I am told it is cheaper to actually close down the Victorian railways and given every regular commuter a small car than it is to try and run the railway. In those circumstances fundamental change is required. In electricity generation, in aviation policy, in airport construction, in the approval of development processes all areas in which there has got to be fundamental change and that is our package - a whole package designed to rebuild the Australian economy from the bottom up and to create the opportunity for average Australians to work harder and earn more and keep more and most importantly, to get a job and to keep a job. I will be delighted to fight Bob Hawke all the way to

next election on his record of unemployment against our policy alternative which will create jobs.

Let me finish with just a few comments about the task that is before us as Liberals. We have come a long way, I believe, in rebuilding ourselves. We have put that fundamental minus we had on two previous occasions behind us, which is disunity. We now

run a very effective and disciplined team from Canberra, we have a very effective Coalition, I don't think the Coalition has been stronger, we work as a whole, in our policy discussions we no longer think Liberal\Nationals we think as an integrated whole. We now stand in sharp contrast to the other side who are

fundamentally divided and I think irreparably so between now and the next election. But our strategy is not to rely on them to fall over or for them to tear themselves apart and I know a lot of people say why don't you do that, I don't believe we will ever

get there if we do that. I believe there is only one way we will the next election and that is that people want to vote for us

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because they want us to govern this country· We have to win the next election in our own right. We have relied in the past on them falling over and you have seen how good they are at

stitching up deals and buying votes and tying up second

preferences and so on. We want people to go all the way across from Labor straight through to Liberal and National and we don't want them parking their first preference vote with the Democrats or any one else on the way. The way we are going to do that is

to convince that we are fundamentally different and that we are prepared to fight for what we believe in. Our whole package is based on that basic premise. Sure, it is high risk but we have no alternative in current Australian circumstances. Our capacity to sell that package, our capacity to sell the goods and services tax will be very much seen as a barometer of our capacity to

govern this country. If we can advocate the tough decisions from Opposition, if we can sell the tough decisions from Opposition than we are going to be unbeatable at the next election.

To be realistic the electorate is justifiably cynical. When a politician in the past has talked about tax they have always assumed he meant more tax and we have to convince them that we are about less tax. They are justifiably cynical about

politicians generally and there has been a very clear message in some of those recent elections and by-elections about the extent to which they look down on politicians, the extent to which they expect us to lift our game. Now in that context they will test us every day to the next election. I have no doubt we will be

incessantly tested, every day there will be pressure put upon us from every conceivable angle to see whether we will back down on the policy change we are advocating. We have already had dozens of instances where I have been asked questions about would you back down on this basis or that basis. For example, would you back down if all the branches in Australia wrote to you and said

that you would lose on the basis of the goods and services tax - the answer is no, we would spend a lot more time educating our own branches. I have been asked, would we back down if the polls showed that we would lose unless we got rid of the goods and

services tax - the answer is no, if we aren't prepared to fight for what we believe in and if we can't convince the electorate that we can do that then we don't deserve to be in Government in my view. In the past our greatest weakness has been ourselves.

You think about it, when they have turned the heat up on us, you have quite often seen some of our people start to nod their head. They get stuck into one of my colleagues or myself you quite often see some of our people saying, that is not a bad point, he was a bit stupid doing that and so on - we can't have that, what we have got to do is turn the heat back on them. Sure we wrll

have in our Party - organisation and Parliamentary Party - every opportunity for debate and discussion but once we go out to the outside world we have to be a unified whole and we have to fight them and every time they hit us we have got to hit them harder.

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As they keep raising the high jump bar, we have got to jump it and raise it ourselves again. The harder we fight the better we will win, I can absolutely assure you of that, because they have never seen us fight and now we have a policy package that

crystallises the fundamental ideological things we believe in - freedom of choice, equality of opportunity, private enterprise, low Government, competition, markets - all the things that they don't understand and they don't believe in. If we can't win on the basis of a all out dog fight for those principles then we don't deserve to be in Government.

My final point is challenge and I have here on this small piece of paper a list of the seats that we can win in Queensland on the provisional boundaries. The new seat of Dickson with a swing of 0.7% in our favour; the seat of Fisher, presently held by Michael

Lavarch, would be a nice one to win, 1.7% notionally in our

favour after the redistribution; Dawson has moved against us by 0.8%; Rankin, with that genius Bed^all, 1.7%; Moreton with Gibson 2%; Kennedy with Hulls 2.5%; Hinkler 3.8%; Leichardt 4.0% - Gaylor would be a nice one to win wouldn't it, to beat Gay lor would be a wonderful victory in Leichardt; Brisbane 4.7% and

Herbert 5%. There is your challenge, nine seats under 5% - we want them all.

Thank you.

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