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Thursday, 28 February 1985
Page: 431

Mr DOWNER(8.08) —Mr Speaker, I should like to join my colleagues in congratulating you and Madam Deputy Speaker on your re-election to your high offices.

As a new member of this House, I am deeply conscious of the honour the electors of Mayo have shown me in returning me as their representative. I am also deeply conscious of the very great responsibility they have vested in me to represent their interests. The new electorate of Mayo covers the Adelaide Hills, the Fleurieu Peninsula and Kangaroo Island, as well as the town of Murray Bridge. Mayo is a district which derives its livelihood from farming and from a wide range of small businesses. The farmers and small business people in my electorate are a typical cross-section of those parts of the community which create such a large proportion of Australia's total prosperity. They are the real, but often forgotten, wealth creators.

I shall be a tireless advocate for my electorate and for the interests of its farmers and small business people, but neither my electors nor I shall be pleading for special, uneconomic consideration, which will not be in the national interest. All we shall be seeking from this place is a fair deal and the leadership to allow our industries, our district and Australia to get ahead. That leadership must be based on a clear understanding of the national interest and it must be based on a definable set of values, not a craving for popularity or political survival; values which provide the means to achieve sustained rates of economic growth, values which offer greater stability and security for individuals in a rapidly changing social environment, and values which provide national security in an unstable and unpredictable world. It is not leadership to base policies on deals with selected and privileged interest groups, and it is with some regret that I note that the underlying current of many of the Government's policies carries with it the flotsam and jetsam of those deals.

It is always a danger for any government to become the champion of certain sectional interests. Whilst it is clear that the sectional group with the strongest grip on the present Government is the Australian Council of Trade Unions, it is by no means the only sectional group to which the Government is beholden. I make no secret of my surprise at the way a minority of carefully selected business people and groups have less than vigilantly fought for the interests of the community, just so they can dine with Ministers and promote their selfish and sectional interests.

One of the consequences of embracing sectional interest groups, rather than providing leadership and direction, is that their cries for special consideration are always about wealth redistribution rather than wealth creation. So many of those groups are still singing the tired old rhetoric of the 1950s and 1960s. They are still debating ways of redistributing the nation's wealth, but not ways of increasing it for the benefit of all Australians. In the 1950s and 1960s growth was almost automatic, and it was certainly expected. In that climate the debate about redistribution of wealth may have had some relevance, but that is the saccharin rhetoric of yesterday.

Today the challenge is quite different, yet many have failed to perceive this change. Today the challenge is to provide a climate for sustained and sustainable wealth creation. It is because that problem has not been addressed in the last two years that the economic recovery is sadly now beginning to falter. To generate greater prosperity requires an understanding of the general structure of the Australian economy.

Put necessarily simply, Australia has two almost separate economies, and one is holding back the other. On the one hand is the slow track economy, dominated by the heavy manufacturing sector and labour intensive industries. It is an economy which is uncompetitive and often inefficient, yet it is retained with a safety net of anti-competitive regulations and high levels of protection. On the other hand is the fast track economy, dominated by efficient export-oriented industries, by the rapidly growing services sector and by the new, fast-emerging information industries. I note that many of these industries are based around small, efficient firms producing what could be termed mid-technology products, such as agricultural and mining machinery, and, of course, a very wide range of services. These small firms have become the big employers. In the United States of America, for example, 60 per cent of the thirty million most recent jobs created are in firms which employ less than 20 people. These are, of course, the firms and industries which thrive on a more deregulated market, on hard fought competition, and which depend on a realistic domestic cost structure which takes account of the international market-place.

It is the web of regulations and the network of government intervention which, while propping up the slow track industries, are holding back those in the fast track. It is in the national interest that the fast track economy be given the opportunity to develop and that a substantial restructuring of the slow track economy takes place. Only then will the dead hand of the slow economy be lifted from the shoulder of the fast economy. It is the role of government to ensure that the appropriate framework exists for this change to take place. Any government which is hostage to special interest groups will be unable to manage this essential revolution, and thereby will discard the national interest.

I am confident that there is now a growing community-wide recognition that steps towards substantial structural adjustment of the economy, and a process of deregulation and liberation of the market, is necessary. That was certainly borne out by public support for the conclusions of the report of the Campbell Committee of Inquiry into the Australian Financial System and also for the floating of the dollar. But the process must be comprehensive, not ad hoc. It must recognise the conceptual linkages between policy areas, and nowhere is that more true than with the labour market.

While on the one hand the Government has moved to float the dollar, on the other hand it has locked Australia into one of the most rigid labour market regimes in the Western world. As the dollar declines, so Australia multiplies the inflationary impact of the devaluation and of course employers are hit with higher import prices. In addition, they must pay a further estimated $1 billion so far in wage increases due to the devaluation, because wages are not linked to supply and demand; they are linked to the consumer price index. Consequently, the advantages of devaluation are cancelled by inconsistent government policies.

Honourable members are, of course, very familiar with the debate over the liberation of the labour market. We on this side of the House are not advocating the total dissolution of the present industrial relations system. All we are seeking is a labour market which is more responsive to the supply and demand for labour in individual industries and which enables individual firms to bring a sense of personal involvement into these essentially human issues. The linkages between labour costs, company profitability, employment levels, tax receipts and even welfare programs, deserve to be acknowledged, not just by the Bureau of Labour Market Research or the report of the Kirby Committee to Review Productivity and Innovation Programs; they must be acknowledged by the Government.

This same lack of consistency applies in both the transport and communications industries. Until the Government has the courage to cast off the incubus of union regulation and consequent government involvement in those industries, our fast track economy will struggle to find its feet. The irrational regulation of those industries is a serious limit to growth and prosperity in this nation.

I turn now to yet another and fundamental aspect of economic management which, if we are to achieve sustained rates of economic growth, demands the application of those same principles of ensuring that the fast track economy is able to maximise its wealth creating potential. That cannot be done if the overall size of government which is in essence unproductive continues to grow almost exponentially. It is in this context that I note, with some degree of interest, the Government's commitment to what has become known as the trilogy. No one in the business or farming communities would deny that these objectives are laudable, but it will require a real growth rate of 4 per cent for each of the next three years for it to be achieved, and that will not be possible if the fast track economy is not liberated. Even if the trilogy is achieved, the starting point is one not only of massive expenditure but also of public debt which has been escalating alarmingly. Over the last two Budgets the average annual growth in government outlays in real terms has been 6.9 per cent, which compares with an average of 2.2 per cent for the seven Budgets of the Fraser Government. The real average annual growth in the Budget deficit over the last two Budgets has been 14.9 per cent, which compares with a 6 per cent decline during the Fraser years.

The reality of the rapid growth in public expenditure is three-fold. First, the funds are not being deployed in capital investment projects; they are being spent on current consumption, thereby depleting, not adding to, the nation's prosperity. They are, in fact, redistributing wealth not creating wealth. Secondly, it has ensured that real interest rates in Australia have remained considerably higher than rates in our major competitor countries. While in Australia the commercial prime rate is around 9 per cent in real terms, in the United States it is 6.25 per cent, in West Germany it is 5.7 per cent, and in Japan it is 3.2 per cent. Clearly, this has a major bearing on the capacity of the fast track economy to grow.

Equally seriously, expansionary fiscal policies have contributed to a rise in the public debt, from one-third of gross domestic product in 1975-76 to just under one-half in this financial year. Over the same period interest on this debt has increased from 2.7 per cent of GDP to 5 per cent of GDP, and the devaluation of the dollar has only exacerbated this problem. The growth in the public debt is placing unnecessary burdens on the community and again on the fast track, export-oriented economy and industries. Let me once more remind the House that a large public debt may be acceptable to the privileged few who participate in concensus, but it is manifestly not in the national interest; nor are the high levels of taxes and charges which result from massive expenditure and a substantial public debt.

I welcome the commitment made in the Governor-General's Speech to taxation reform, for there is no doubt that our taxation system is too complex, it is unfair and it is insufficiently neutral. I very much hope that once the Government has dispensed with its tax summit publicity it will act with both courage and determination, ignoring the squeaks and squeals of the special interest groups, and will introduce a fairer and more neutral taxation system. While, ipso facto, taxation has a redistributive function, taxation must also be geared in such a way as to maximise our economic growth potential. But in a sense, these issues are secondary to the urgent need for substantial reductions in expenditure. If the Government really wants another summit, I call on it first to hold an expenditure summit, to put together a package of proposals which will significantly cut spending, thereby opening the way not just for more efficient and fairer taxes, but also for a much smaller overall tax burden.

Many other aspects of regulation and taxation need carefully to be examined if the Government is to give the fast track industries a chance to sprint ahead while the slow track industries jog along and in some cases, sadly, finally drop out of the race altogether. Never has there been a more explicit expression, though, of the Government's failure to open the path for the fast track industries than in the latest balance of payments current account figures. They quantify at a stroke how much work there is left to do to fire up our fast track export oriented industries.

Australia is also looking for leadership in the field of social and welfare policies. To date we have found governments locked into the post-war welfare state mentality which is economically unproductive and socially disruptive. The only solutions offered to the unemployed, for example, have been publicly financed short term job creation schemes or the dole. Both sap the economic vitality of the community as a whole and the self-esteem of the unemployed. More thought should be given to how the dole can be paid not as compensation for failure but as an opportunity to achieve. Public funds should be used, as the report of the Kirby Committee to Review Productivity and Innovation Programs suggests, to help train young people for jobs in the rapidly changing economic environment or in return for constructive and socially beneficial community service. In that context there is scope, in my view, for much closer co-operation between Federal and local governments in the area of dole payments and community work. By doing that, we would begin to move away from the disruptive and debilitating welfare mentality towards socially and economically constructive solutions to our society's enduring problems. While such changes in strategy may not win the approbation of those partners of consensus, they would enhance the national interest.

As a former member of the Australian diplomatic service I would feel negligent in this, my maiden speech, if I said nothing about the security of our nation. I do so not because it is currently an issue of public controversy, and of very serious public controversy, but because it stands as the grandest illustration of what I and my electorate believe to be the national interest. At no time since the inception of the ANZUS Treaty has it been under greater threat, not just as a result of the recent disastrous decisions taken by both the Australian and New Zealand governments but also because Australia has been buffeted by the waters of pacificism which have flowed across much of Western Europe and to a lesser extent the United States. The emergence of the Nuclear Disarmament Party underlines the reality that, particularly amongst the young, the political, moral and intellectual basis of the alliance is being challenged. It is a serious error to treat this phenomenon lightly. That this situation exists in Europe, and is emerging in Australia, is largely due to the failure of Western leaders, including our own Government, to articulate the meaning and purpose of the alliance in terms which will impress upon the imagination of ordinary people. In particular, leaders have failed to convince, or even try to convince, those who were brought up between the 1960s and 1980s and who have been searching for new horizons. Those people have not found those new horizons amongst the military acronyms and technicalities of the Western defence debate.

ANZUS and the alliance should be seen in terms of the preservation of a way of life-a way of life which is, and always has been, under threat. The Government's failure to address the fundamental political and moral bases of ANZUS has led to an intellectual vacuum which has been filled by naive cries for unilateral disarmament. The reality is that the security debate is not between those who want war and those who do not; obviously no one wants war. The debate is between those who are prepared to guarantee peace through strength and deterrence and those who just hope war and conflict will go away. The generation of the 1930s in Britain and France which demanded peace through unilateral disarmament ended that decade fighting the world's bloodiest and most destructive war. Determination and resolve by the present Government will in our own country ward off the pacifist movement. But such determination requires so far unseen courage to place in all fields of government endeavour the greater interest of our nation before the squeals and cries of special interest groups.

Before I conclude, like many speakers in this debate, I would like to pay a brief tribute, in this case to my own father, who sat in this House before me, until 1964. He represented the seat of Angas in South Australia and part of that seat is now covered by my own electorate. I would like to say for the record that he provided a great deal of inspiration and had a great influence on me and it is partly through his influence and encouragement that I stand in this House today. I also thank the House for the very warm messages of condolence that it paid to my family, in particular my mother, in 1981 following the death of my father. I thank the House for its courtesy on this occasion.