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Transcript of press conference: Parliament House, Canberra: 4 May 1994: Response to White Paper



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ο IB

Leader of the Opposition

4 May 1994 REF: TRANSCR\WH\AB\AL\JS

TRANSCRIPT OF PRESS CONFERENCE JOHN HEWSON MP PARLIAMENT HOUSE CANBERRA

E & Ο E - PROOF COPY ONLY

SUBJECTS: Response to the White Paper

H e w s o n :

Well the Prime Minister has created an unemployment bushfire in this country, and today he tried to deal with it by throwing buckets of money and buckets of words at it.

He spoke of being in the Chifley tradition. He's in the Whitlam tradition. When they don't have policies they throw your money at the problem. Standard approach of the Labor Party - they created the problem, ignored it, fudged it, and now throw money at it, but they can never solve it.

Quite frankly if you could solve these problems by simply throwing money at them, then they would have been solved a long time ago.

Now like the Government, we share a common objective of dealing with the unemployment problem. We recognise the significance of the problem, we recognise the very genuine pain and hardship that is out there for average Australians.

In those circumstances we recognise that some additional money will need to be allocated but we want to feel confident that the money that has already been allocated - billions of dollars over the last several years - has actually gone to do the job that it was supposed to do and most importantly we want to make sure that jobs are actually

created.

And I noticed in the Prime Ministers speech he talks about giving people training, giving them a chance to get a leg up, but he never talks about giving them a job. Because there is nothing in this that is going to create the jobs.

There's no significant shift in policy, the policy that created the unemployment. And until

Parliament House, Canberra, A.C.T. 2600 Phone 2774022 COMMONWEALTH

PARLIAMENTARY LIBRARY MICAH

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he puts in the second rung if you like, the second prong of this- solution, that is how to actually create jobs, he's never going to deal with the unemployment problem.

I'll take questions:

Jmlst:

How much would you spend and how would you spend it to create jobs?

Hewson:

Look we will scrutinise these spending initiatives. I mean all we've got in here is a series of initiatives. We don't know yet what base they're off. Right? We don't know how they've been funded, and in many cases we still don't know a lot of detail. And the only way I can answer you at this stage is to say that we will scrutinise it.

Undoubtedly in the Budget we will be told the base from which these new initiatives are taken and it will give us some idea of exactly how significant they are in terms of expenditure and where that expenditure might go.

Jmlst:

Well how are jobs created then?

Hewson:

Well the principal way to create jobs is to reduce the cost of employing people and make it more attractive to employ people and a lot of that goes to the very heart of eliminating or reducing the imposts that have been inflicted by government on the cost of employing

people.

We've had Superannuation Guarantee levies, training levies, which we're pleased to see is going to be suspended, it ought to scrapped, and pay roll tax and whole host of other imposts that have been put there to increase the cost of employing people.

But most importantly if you want to get employment growing in Australia, you've got to get investment growing. Now investment is still near a forty year low. It's in this recovery after 2 1/2 years - investment is still down by 10%. In a similar period in the recovery from the '82/'83 recession, the first 2 1/2 years after that, investment was up

30%. If you want to get jobs created, you've got to create the climate in which business is willing to invest in Australia.

I noticed in recent days Government Ministers have been talking about how good it is to invest, that businesses are investing outside Australia and taking the jobs with them.

And so it is working on the cost, you know the imposts if you like on employing people

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and creating the proper investment climate. So they've got to go back and look at the tax policies, their industry policies, their fiscal and particularly their interest rate policies. They've got to look at their labour market policy to get genuine flexibility in the labour market.

Until we see a shift in their approach to those policy areas and others, there's never going to be any evidence that they can solve the problem and indeed as I say they are the policies that created it.

And what we fear is, the bottom line of this spend spend spend strategy is just going to be higher interest rates and higher taxes which are going to work precisely against sustaining the recovery that is so fundamental to creating those jobs or generating those jobs.

Jmlst:

Do you think too much has been allocated here...

Hewson:

Well as I say at this stage we were surprised by the size of the package in terms of how much money has been thrown at it. We are suspicious of all Whitlam style approaches in terms of believing that you can solve the problems by throwing money at them. As I say, they haven't got the policies to solve the problem and so they throw taxpayers'

money at the problem - your money at the problem. If it was that simple the problem would have been solved years ago.

Jmlst:

Do you think this implies there'll be no job levy?

Hewson:

We don't know. We don't know anything about the funding of this and as I say, it's just a list of measures, Geoffrey, that really leave us in no clearer understanding as to where they go. I must say that l am staggered that they've had nearly 14 months since the election after some ten years in Government and a lot of huffing and puffing about the significance of what they were going to do, and it's not evident from this document that

they are any further advanced than they were 14 months ago. And a lot of the proposals in here are apparently not going to take effect for quite some time. Now if the unemployment problem is as urgent as they say it is, and it clearly is, and we believe it to be, then why are the long term unemployed as an example having to wait up to twenty two months before they start to see this job compact.

I mean it's a very cynical exercise in terms of the way it's manipulating their hopes and aspirations and not delivering.

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Jmlst:

Dr Hewson do you see anything else in the package apart from the suspension of the training guarantee levy which you would support?

Hewson:

Look, we obviously welcome the move towards training wages. I do remember arguing this case for a couple of years before the last election. I mean, clearly that is a very important step in the right direction. The reform of the CES - another policy that we advocated before the last election, I think that is in the right direction although we'll see exactly what they've got in mind. The dumping of the .... the Training guarantee levy, it's only a suspension, at this stage it ought to be dumped, because that was just in effect a cost impost on business that made it more expensive to employ people and worked against the jobs that had to be generated so they're some principal examples of what's in the package.

The parenting allowance I think is a very good idea. It recognises the realities that they have been ignored for a long period of time and many in our Party, as you know have argued including myself, that we need to look at those sort of family structures as they exist in today's society and that is an effective way, we think on face value anyway of targeting some assistance to the spouse that choses to stay at home. We'll want to make sure that they really are going to do what they say they're going to do and that they are

going to carry with them the incentives that they say they're going to carry and that starts to worry a bit where I'm not at this stage on a quick reading convinced that some of the changes they're making in that area are actually going to give people an incentive to go back to work, or to work., to find a job.

We hope that's the case because that's been an important part of the system as it's run, particularly for lower paid jobs. There hasn't been all that much incentive to go to work. We're also worried about some of the detail of some of the other policies which we'll undoubtedly say a lot more about in due course, but what happens at the end of the parenting allowance when the child turns 16? I mean, does the woman, usually it's the mother, does the woman get thrown on the scrap heap? There are going to be some pretty fundamental questions which we'll have a look at as we scrutinise the detail?

Jmlst:

(inaudible)...target by the turn of the century a sufficient enough rate to look forward to or..

Hewson:

I think the best way to answer that question is to take up the comment made by the Secretary of the Treasury, Mr Evans, where he said that the level of unemployment rate

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of ten or eleven percent was a matter of choice. It was a clear choice by the

Government. If they wanted to put in place alternative policies, they could have had a much lower rate of unemployment and if you just take the specific example of a comparison of Australia now with the United States, a fundamental difference between these two countries is of course the flexibility of the labour market in the United States. Their unemployment rate is about 6 to 6.5%. Ours is still stuck about 10%. As the OECD has warned, it's likely to stay stuck above 10% for quite some time.

So we are worried that after all the talk, that they are principally really sort of living with the problem, churning the unemployed, shuffling the deck of the unemployed with perhaps little net gain in prospect in terms of real jobs and until they shift the policies that created the unemployment so that they can actually put in place policies that will reduce unemployment, you've got to have that suspicion. And as I say, when they don't have the policy to do that and the answer is just to throw your money at us, it's very Whitlam, isn't it.

Jmlst:

Would you accept that something needs to be done for the specific problem of the long term unemployed?

Hewson:

Yes, we raised the issue of the long term unemployed before the last election. I think I actually predicted that it would approach 500,000 people and I was told I was grossly irresponsible.

It is now sitting at, I think, at 470,000 people that have been on the dole for more than 12 months. It is a major problem. And it clearly does need to be addressed.

And as I said before, we agree with that as the significance of the problem. We agree that some money has got to be spent to deal with that whether it's this money or the way this money is spent. That's a separate question.

But more importantly, you want them to have jobs - not to just get a period of experience in the workforce only to lose that experience and go back on the dole. But to make sure that them going back into the workforce - and on some training basis, perhaps if they reduced the training wage, or under whatever subsidy arrangement or whatever. You want to make sure that they come out of that process with a job, not just

getting shed and getting back onto the dole because that churning is not going to be particularly good for anyone.

If you look at the way the job compact is going to work, as I understand it, and you recognise that there's a fairly fixed number of jobs that are going to come forward in any year, under these sort of policies, then you're going to have more long term unemployed people competing for those jobs than would otherwise have been the case - that's what

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they say.

Now I'm worried that that's going to jam out of the system some of the shorter term unemployed. And you churn it - so that more of the longer term unemployed actually take some of those jobs and some of the people who have just become unemployed can't get one of those jobs.

And, in fact, they may have the bottom line the expectation that they'll have to wait 18 months before they get a chance to get back in when they become long term unemployed.

It's that churning without policies to create or expand the number of jobs that really is a major deficiency of these sort of things.

I mean, as they admit, they have been moving some of the long term unemployed off the unemployment roll for quite some time. I think they have said in here in the last three years, they have moved something like 250,000 people off. Those 250,000 people, I mean, a significant percentage of them are still looking for real sustainable jobs.

So I hope they have learnt, not that they're just repeating the past mistake.

Thank you.