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Premiers' conference, fiscal equalisation, special Premiers' conference, unemployment



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Leader of the Opposition

12 June 1992 REF: TRANSCR\NM\S0093

TRANSCRIPT OF DR JOHN HEWSON MP MEDIA CONFERENCE 70 PHILLIP STREET, SYDNEY

E & 0 E - PROOF COPY ONLY

SUBJECTS: Premiers' Conference, Fiscal Equalisation, Special Premiers' Conferences, Unemployment

Jrnlst:

What do you think of the agreement reached at the Premiers' Conference?

Hewson:

Well, we don't know what the form of that agreement will be as yet, but I think this Premiers' Conference process is becoming a national disgrace. They spend all day down there bickering when we're in the worst economic crisis in 60 years. Just

think how much better off we'd all be if they'd spent the last 24 hours talking about jobs and abolition of payroll tax.

Jrnlst:

Who's fault is that - the Federal Government or the States?

Hewson:

Well I think they're all at fault. I think most Australians are appalled by the lack of leadership in the worst crisis in 60 years. We had yesterday's unemployment numbers which show that we're in the worst period of unemployment since the Great Depression, and the governments of State and Federal persuasion are down there bickering and fighting amongst

themselves over 20 pieces of silver, which the country can't a f f o r d , when there are major issues like how to create jobs that go begging. And quite frankly, they have the power among themselves to abolish payroll tax, so why didn't they spend

the day deciding how they might abolish payroll tax and create, on the Prime Minister's own estimates, 200,000 jobs.

Jrnlst:

Do y o u agree that the system of be changed?

Parliament House, Canberra, A.C.T. 2600

fiscal equalisation" needs to

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REF: TRANSCR\NM\S0093 2.

Hewson:

We're happy to look at that, but don't forget we propose pretty dramatic changes to the whole area of

Commonwealth/State financial relations. And one of the areas that the States are particularly keen to have access to is a stable revenue source, and we've said that we would support

their proposal for tax sharing. We've also outlined how we would compensate for the abolition of payroll tax, in that context, and a lot of other changes we've listed. We'd be more than happy to look at the process of equalisation.

But it is important now, surely, to get on and do something about unemployment, which is the worst since the Great Depression.

Jrnlst:

You could hardly expect the Premiers of Victoria and New South Wales - the Premiers of the States where unemployment is high - not to go down without a fight and campaign for the maximum amount of money?

Hewson:

But what are they doing? They're campaigning for more money which the country can't afford in the worst circumstances in 60 years. We have a situation today where the mismanagement by government, State and Federal, is the worst in our history. Without any exaggeration, it's the worst in our history. It

is the biggest turnaround in the fiscal policy position into deficit we've ever seen, and in that context they figure that the way out of the problem is to spend more money and then scrap about how to divide it up.

The fact is that people...the average Australian knows that you can't keep putting it on the international bankcard, because you've got to face the reality. And quite frankly, in the worst circumstances in 60 years, surely we can face the

tough decisions as a nation.

The solutions are there. Fightbackl identifies the solutions. The GST is designed to create jobs. The abolition of payroll tax is designed to create jobs. The introduction of youth wages is designed to create jobs. The scrapping of the

Superannuation Guarantee Levy is designed to create jobs, or to save 100,000 jobs that will be lost if it's not scrapped. There are solutions there. There are ready solutions. It's time for national and state economic leadership.

Jrnlst:

Are you also saying though that the deals on the surface look too generous ?

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Hewson:

I have no doubt that the deal is generous. I mean, if you look at the numbers, the turnaround in our fiscal position from about 2% surplus, relative to GDP a few years ago, to now 5 or 6% in deficit for the whole public sector, is staggering. And they've provided no attempt to look at solutions in

relation to that, except spend more. Spend more money. Spend more that you don't have in order to solve the problem. Make things look better, and all Keating's doing quite frankly is trying to push the problem, with the acquiescence of most of

the States, push the problem beyond the next Federal Election, and then he'll deal with it if he gets back into Government.

Quite frankly, the people of Australia want solutions. They don't want political games being played. They don't want deals being done to save political hides at a time where we're in the worst crisis in 60 years.

Jrnlst:

Dr Hewson, if you were Prime Minister, how would you

distribute the money to the States?

Hewson:

We have a completely different approach - a fundamentally different approach - which is built on the basis of tax sharing. We would give the States a guaranteed share of income tax. And that's certainly only the first step, but

it's part of a package of measures identified in Fightback! which would give them access to stable revenue bases, which is what they want. We will also give them an annual grant for the abolition of payroll tax as part of the package, and we'd

look at a whole host of other proposals that are around about redistribution if you like, within that context.

We are prepared to make fundamental change, which is the only way to deal with this problem. Tinkering at the edges, doing deals, as l say, to save political hides, is not what this country can afford, and we're going to pay a huge price. As

every day Cfoes by and they don't show the sort of leadership they ought to show, another - what was it last month - 600 jobs per day were lost. That's 600 more Australians, many of them young Australians thrown on the scrapheap, while these Premiers and the Prime Minister try to do a deal to save their respective political hides. Quite frankly, the electorate demands, and deserves better.

Jrnlst:

Would you have Premiers' Conferences?

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Hewson:

Yes, I think Premiers' Conferences are important, but they need to do a lot more than these do. I mean, all we're doing here is, as I say, we've seen them spend today talking about the distribution of money they really don't have, and the Government making offers in order to, in a sense I would

imagine, buy off some of their mates. It would be very

interesting to see when Joan Kirner goes to her election for example, and when Wayne Goss goes to his election, and when Carmen Lawrence goes to her election. I'm sure that Paul Keating's private discussions with those Premiers have been very much about, "please go and get out of the way so that I can go later" type attitude.

And I think you've got to scrutinise this Commonwealth/State area now for the deal that's been done and to who's advantage, whereas in fact what we should be doing is making fundamental change so that the Federation can work properly so that

there's an equitable distribution of tax and spending powers so that those who do the spending, in a sense, are more

accountable for the taxation that's necessary to pay for that, and they are the basic principles on which Fightback! is based. It's designed to give a completely new approach to Commonwealth/State relations.

One other part of what needs to be done, I think, which has unfortunately gone by the boards with Keating, was what was started by his predecessor Bob Hawke - and that is to have these Special Premiers' Conferences which really do provide a

basis for making genuine reform. Now, Hawke didn't take it very far, but the framework could be used to get you genuine reform of the railway system and the road system, and other elements of transportation, waterfront reform, power

generation. And all that's ground to a halt, and of course all that, by grinding to a halt, stops jobs as well.

So there ought to be a much greater sense of urgency right now about what's got to be done. And I'm sure the electorate just cannot understand it - how there's all this bickering going on between the Commonwealth and the States about money they don't

have, and every time they pick up a newspaper they see another dimension of our economic crisis - most recently, the size of the increase in unemployment last month, and the fact that problem is actually much bigger than the statistics tell you.

Jrnlst:

Dr Hewson, every month the unemployment figures continue to rise, yet the only comments we get out of Canberra are "we are disappointed". There doesn't seem to be any action.

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Hewson:

Yes, well it's not good enough. Exactly. As I said before, if you can't take the tough decisions in the midst of the worst employment crisis since the Great Depression...when are these people going to face up to reality? And quite frankly, when you look at the magnitude of' the problem that is the*.a,

and the fact that now over a third of our young people are unemployed. More than 300,000 people have been unemployed for more than 12 months. There's nothing in One Nation to deliver jobs, absolutely nothing.

One Nation is totally dead in the water. They've admitted the forecasts are off the mark. In fact, they're so dramatically off the mark that it ought to be a major embarrassment to the Government, and they ought to be under maximum pressure - you guys in the media ought to be putting them under maximum pressure to change tack - fundamentally change tack and embrace some of the ideas that are there, like the abolition

of payroll tax and the other things that I mention, which will create jobs, and will create them very quickly and we'll mean that a lot of our young kids will actually get a job in the next couple of years, instead of, as many of them look like

having to do, which is live on long-term unemployment benefits which is just a ludicrous situation for a country as wealthy as Australia.

Ends