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Wednesday, 18 August 1993
Page: 247

Senator GIBSON —Mr President, I congratulate you on your re-election. I offer my congratulations to all senators elected this year, particularly to those, like myself, who were sworn in yesterday for the first time.

  I am delighted and honoured to be a member of the Senate, firstly, to represent all Tasmanians and secondly to represent my party. I wish to thank the Tasmanian division of the Liberal Party and also my many friends and business colleagues who encouraged me to take this step. I also wish to thank Tasmanians who voted me into this position. I pledge to my supporters that I will do my best to pursue the long term interests of Tasmanians and all Australians whilst I am a member of the Senate.

  I am in fact the replacement for former Senator Shirley Walters. Shirley served this chamber, the state of Tasmania and Australia exceedingly well for almost 18 years. She was forthright on all issues, but in particular pursued moral, family and health issues with great vigour. All Tasmanians are proud of her achievements and I am very honoured to be her replacement. But, Mr President, I wish to assure you that you should not expect the same frequency of interjections from this seat.

  I believe very firmly in the philosophy of the Liberal Party which is summarised in individual liberty, the rule of law and concern for the family. At a more practical level, I think this is encapsulated well in Abraham Lincoln's words:

You cannot bring about prosperity by discouraging thrift,

You cannot strengthen the weak by weakening the strong,

You cannot help the wage earner by pulling down the wage payer,

You cannot further the brotherhood of man by encouraging class hatred,

You cannot keep out of trouble by spending more than you earn,

You cannot build character and courage by taking away man's incentive and independence,

You cannot help men permanently by doing for them what they could and should do for themselves.

I repeat that you cannot keep out of trouble by spending more than you earn. All Australians have been spending more than we have earned for a very long time. It is no wonder that we are in deep trouble with our economy.

  One hundred years ago we were the richest country in the world. This was when gold and wool were king. Those commodities were in demand around the world and our people were the most efficient and productive in those industries. It is sobering to think that the Australian dollar was then worth about $US2.45.

  We have slipped steadily down the economic ladder ever since then. So our problems in managing the economy are not just recent ones; though it is now well understood that the economy has not been well managed in recent years and the recession `that we had to have' has been deeper and longer than otherwise would have been imposed on us by the world economy. However, looking behind the recent events and going back to last century, we have suffered a more serious and deep-seated problem. We have failed to keep up with the rest of the world in productivity.

  The exceptions to this trend have been our miners and farmers, who are world leaders and have remained world leaders in efficiency and productivity for the past 100 years or so. It is they who have provided us with the external earnings for the rest of us to live comfortably.

  What went wrong? Essentially, politicians seduced the electorate of the day into thinking that we could pander to various interest groups. The first major interest group to succeed was the protection lobby out of Melbourne, which was led by Alfred Deakin and encouraged and supported last century by David Syme, the founder of the Age. The protection lobby was very successful in inculcating an inward looking attitude within a high proportion of Australians so that many believed that they did not have to be internationally competitive.

  Then came arbitration earlier this century, where the market for labour was severely restricted. These restrictions were effective because of the protective tariff erected around business to keep the rest of the world out.

  In more recent years we have seen the environment movement receive special attention to the long term detriment of our economy, as characterised by the Wesley Vale and Coronation Hill decisions. Mind you, the environment movement has not been all bad

for us. It has successfully widened our undestanding of the need for environmental consciousness, but unfortunately the extremists of the movement have been successful in creating unnecessary concern about particular issues, and the political decisions which have arisen have done great harm to our economy and the investment climate. This has applied particularly to my state of Tasmania.

  In more recent days, we have had the uncertainty over property rights arising from the Mabo High Court decision. Already our investment climate, particularly for our largest export earners, the miners, has been deleteriously affected. This uncertainty must be removed urgently.

  Our economic decline in the world has been a long term problem. In recent years we have been well and truly passed by Japan and Italy, caught by Hong Kong and almost caught by Singapore.

  Even 10 years ago, Singapore and Hong Kong were places where Australians—those fortunate enough to be able to travel—loved to shop, due to the excellent value; that is no longer the case. As Professor Helen Hughes said recently:

It is a sobering thought that an Australian working as bellboy in Singapore earns more in that job than he would here in Australia.

  We have run an inward looking economy for many decades supported by the earnings of our miners and farmers, and today we continue to slip down the ladder of international competitiveness and we are now ranked about 16th in the world.

  Does this matter? I am strongly of the view that it does matter—not for ourselves but for our children and their children. We need to provide for our children and our grandchildren the opportunity of enjoying prosperity and economic growth, so that they have options available to them to devote what they wish to leisure, to the arts and to the environment, to those less well off in the world. Prosperity delivers options to people.

  Fortunately, we have started down the track of reversing the inward looking attitude. Freeing up the exchange rate and the finance markets were the first steps. Since then tariffs have been reduced, and thank goodness there is largely a bipartisan commitment to tariff reduction.

  At long last Australians are being forced to face up to being more efficient and being internationally competitive. In some industries there have been tremendous changes in productivity since the exchange rate was freed up. In others it is taking a long time for the international market to force its pressures. But I note that even in some of the professions, such as law, they are starting to feel the chill winds of competition, and not before time.

  The key to future prosperity is investment. We will not get sustained economic growth without much higher levels of investment. Last financial year investment in plant and equipment was only 5.9 per cent of our GDP—the lowest level since World War II. In times of prosperity, in the 1960s and 1970s and some of the years in the 1980s, investment in plant and equipment was running at 8 to 10 per cent of GDP. So we have a long way to go in order to get our economy running smoothly again.

  Australians' savings—or foreigners' savings for that matter—do not have to be invested in Australia. The investment market is truly an international market, and for the private sector savings can be very readily invested offshore, and this is in fact happening. In recent months many Australian companies have announced investments offshore and warned of the unattractiveness of investment here.

  Investment needs encouragement. Investors need to have confidence that they can make a fair return on an investment. At present in Australia, one would have to conclude that investors are on strike. What do we do about this situation?

  The answers are well known and have been recommended in many reports going back over several years. Well known examples include the Hughes report, the earlier Garnaut report, various reports from the Australian Manufacturing Council, Business Council reports, the recent Fitzgerald report, and even Fred Argy's report for CEDA which was released only two weeks ago. In the words of Gerry Van Wyngen in the Australian recently:

Unfortunately, the formula is as simple and as harsh as it has always been. We have to be able to provide goods and services at competitive rates and quality. That requires elimination of monopolies by government, business or union. No special privileges and sound work practices across the board.

Given that we have made the correct decisions with regard to the exchange rate, the finance markets and for tariffs and that we have commenced the process of privatising government businesses, what should we do next?

  Unfortunately, all the markets that now need to be freed up are difficult and it will take some time to see the results. The labour market is by far the most important but so also are our transport markets—for road, rail, shipping, wharves—as well as electricity and telecommunications markets. Some progress has been made in these markets. To show that competition does work, we have all witnessed the beneficial effects of increased competition in the domestic airline industry in recent times. Whilst progress has been made, much more can be and must be done to achieve best international practice.

  I will quote one small shipping example. A Tasmanian company recently replaced its ship to transport a bulk commodity around the Australian waterfront. The older ship which is being replaced is 17 years old and it was originally designed for a crew of seven. When it was introduced 17 years ago, the company tried to arrange for a crew of 12, which is equivalent to what a sister ship in New Zealand had achieved. Unfortunately it failed and it ended up with a crew of 23.

  The new ship which has just replaced it—sure, it has much greater capacity—is in fact being crewed by 22. The old ship is being sold to Europe where, without any alteration whatsoever, it will be crewed by nine. The new ship should have had a similar sized crew. This would have improved the return on the investment made by that company. Certainly, it would have hastened the time when it would look to making further investments. And we wonder why we have not seen much economic growth and why investment has stalled.

  I come to the parliament with a business background, mostly in manufacturing industry. For nine years, I was chief executive of one of Australia's few internationally competitive manufacturers—Australian Newsprint Mills Ltd. In more recent years I have been an independent director of several corporations, including four years as chairman of the Hydro Electric Commission until the election was called early this year.

  Being responsible for managing a manufacturing company is a good position from which to observe and understand the Australian economy, particularly if the business is internationally competitive with no tariff protection. This latter point means that we have to look outwardly at the rest of the world and you measure your team's performance by judging against the best companies elsewhere in the world. The process is continuous; it never stops. I therefore share the concerns of the miners and the farmers and others who are internationally competitive here for the way our economy is managed. We welcome the move to free up the economy and to change attitudes so that all Australians realise that we do have to be outward looking and internationally competitive in everything we do if our economy is not to slip further behind in the world.

  I guess I must be one of the few people in this parliament who has had the privilege of leading a team to initiate, to build and to operate a new factory in Australia. It happened at Albury about 15 years ago. I do understand the investment process and the attitudes of shareholders regarding investment. Again, the message for government is to speed up the micro-economic reform if we want investment, and we do need investment for economic growth.

  In order to illustrate the links between investment and micro-economic reform, let me indulge a little by telling honourable senators of one experience I was involved in. Having built a new world competitive newsprint mill at Albury, which started up in 1981, I found that the New South Wales government of the day doubled the price of electricity in the following 12 months. Electricity is the largest cost input in the process of making that grade of paper. For a factory with a turnover of about $100 million, to have its electricity bill go up by $12 million in one year was a hell of a shock. It forced the plant into substantial losses for many years.

  If there had been a free market for electricity, as is currently proposed by the National Grid Council, it is very likely that the plant would have been able to negotiate alternative supplies of electricity at cheaper rates. If this had happened, I am very confident that the plant would have doubled in size by now but, of course, it has not. So there was a potential capital investment of $400 million or so which was lost as a result of the unintended consequences of a state government action.

  Ironically, after this sobering experience as a major electricity customer, I later became chairman of the Tasmanian Electricity Utility where I am proud to say the management team has, in recent years, changed the direction of the organisation and improved efficiency very substantially, basically in preparation for the eventual competitive market. Such changes are difficult and very time consuming but they can be done. To illustrate the magnitude of the changes at the Hydro-Electric Commission, it had about 4,000 employees when I joined it four years ago and it will be down to approximately 2,000 by the end of this year, a process carried out without any major fuss or trauma. I should explain that about half of that change resulted from stopping further hydro capacity expansions and the other half from efficiency changes.

  I cite these figures because they illustrate what is being done and what can be done in both private and government businesses. I am certain that major efficiency gains can also be made within the budget sector of government. Such major changes must be made if we are to reduce the taxation burden on individuals and business so that people are encouraged to work harder, to save and to invest.

  Having been personally involved in the transformation of two major businesses to make them more market oriented and efficient, I know that all the people who have been involved in such restructuring are in fact very, very proud of their achievements. So I am very confident that all Australians can and will respond to the challenge if they are given the opportunity. In March this year, Professor Helen Hughes wrote:

. . . if government is determined to achieve it, a sustained growth rate of 7% in our economy is feasible.

Two weeks ago in the CEDA report, Fred Argy said we should aim for a growth rate of about 5 per cent. Such targets for the future are achievable. All Australians will respond if given the chance. Let us get on with the task of freeing up the various markets in our economy in order to give our children a chance.

  As a senator I intend to concentrate on the economy and the business of government. With regard to the economy, I wish to influence all the so-called micro-economic reform issues which affect business and hence investment. When one enters a new business, the first thing one has to do is to understand the money flows—where the income is coming from and where the expenditure is going. I therefore hope to get on top of the money flows for the federal government and also the financial relationship between it and the states. I think this is very important for all the states, particularly for smaller states such as Tasmania.

  I look forward to taking part in the deliberations of this chamber. The Senate is a most important bulwark against excessive executive power, as is federalism. My party and I are strong supporters of these fundamental components of our constitution.

  In conclusion, I wish to thank my fellow senators for making me welcome and helping me find my way around this unique city which is Parliament House. I thank you, Mr Deputy President. I thank the whips, the clerk and the staff of the Senate for their assistance. The introductory seminar last month was excellent.

  Finally, I give special thanks to my wife, Pauline, for her support, even though I know my move into the Senate will affect her life more than she would wish. I also thank my three children, including David, who is here today, and my aunt.

  Honourable senators—Hear, hear!

The DEPUTY PRESIDENT —Order! Before I call Senator Woodley, I remind honourable senators that this is his first speech, and I ask that the usual courtesies be extended to him.