Address to the National Press Club of Australia, Canberra
Posted on Tuesday, 31 January 2012
MY PLAN FOR A STRONGER ECONOMY AND A STRONGER AUSTRALIA
Four decades after Donald Horne ironically tagged Australia as “the Lucky Country”, the Gillard government is relying on good luck rather than on good management to secure our nation’s future.
The government often cites the fragile international economic situation but fails to propose any new policies to respond to it. It claims ownership of the fundamental strength of the Australian economy even though its own actions have weakened it. And it boasts of a future return to surplus while actually delivering the four biggest budget deficits in Australian history.
Labor’s economic strategy is to hope that China’s strength will keep our economy growing. It’s lazy, complacent economic management from a government which is much better at deception and dirty tricks than at the hard work of actually running the country.
The Eurozone crisis is a terrible verdict on governments that spend too much, borrow too much and tax too much yet our prime minister is lecturing the Europeans while copying their failures.
In just four years, Labor has turned a $20 billion surplus into $167 billion in accumulated deficits and $70 billion in net Commonwealth assets into $133 billion of net debt. That’s $6000 for every Australian man, woman and child.
At the heart of Labor’s failure is the assumption that bigger government and higher taxes are the answer to every problem.
Emissions are rising so let’s tax the necessities of life. There’s a two speed economy; so introduce a mining tax. Some teens drink too much; let’s have an alcopops tax. People don’t save enough; so increase the superannuation tax. Gambling is a problem so let’s force every club to redesign every poker machine.
The government has completely failed to appreciate the iron law of economics that no country has ever taxed its way to prosperity.
The only foundation for a successful country is a strong economy. The only way to take the pressure off family budgets, to increase job opportunities, and to have the better services and infrastructure that every Australian wants is to build a stronger economy.
That’s why my plan for a stronger economy is to scrap unnecessary taxes, cut government spending and reduce the red tape burden on business.
My plan to reduce the cost of living pressures on families is to take the carbon tax off their power and transport and make government live within its means. That way, there can be lower taxes and less upward pressure on interest rates.
I know how to build a stronger economy because I was a senior member of a government that did so.
As employment minister, I brought unemployment down through the Job Network and Work for the Dole. As workplace minister, I boosted construction industry productivity by $5 billion a year through the establishment of the Cole royal commission which subjected industrial bullies to the rule of law.
And I know how to deliver the social dividend that a strong economy should provide because I’ve done that too.
As health minister, I introduced the Medicare safety net for people with big out-of-pocket expenses and expanded Medicare beyond doctors – a historic change.
Australians can be confident that the Liberal and National parties will provide good economic management in the future because that’s what we’ve always done in the past.
We’ve done it before and we will do it again. After all, 16 members of the current shadow cabinet were ministers in the Howard government which now looks like a lost golden age of reform and prosperity.
Australia was a stronger society because we had a stronger economy. Between 1996 and 2007, real wages increased more than 20 per cent, real household wealth per person more than doubled, and there were more than two million new jobs.
Since then, real household wealth has declined, productivity has stagnated and 2011 was the first year since 1992 without a net increase in jobs.
It does not have to be this way. We could be so much better than this. What Australia most needs now is a competent, trustworthy, adult government with achievable plans for a better economy and a stronger society.
My vision for Australia is to restore hope, reward and opportunity by delivering lower taxes, better services, more opportunities for work and stronger borders.
The government I lead will do fewer things but do them better so that the Australian people, individually and in community, will be best placed to realise the visions that each of us has for a better life.
In 2004, the then leader of the Labor Party often spoke of the ladder of opportunity. It was a nice metaphor, albeit one recycled from conservative leaders such as Winston Churchill. Yes, government can build ladders but it takes motivated people actually to climb them.
The current leaders of the Labor Party have failed to understand what Abraham Lincoln knew in the marrow of his bones that government should do for people what they can’t do for themselves and no more.
Unlike Labor, the Liberal National coalition has achievable plans for a stronger economy, for stronger communities, for a cleaner environment, for stronger borders, and for future infrastructure. In each of these areas our plans will deliver change for the better.
The Coalition understands that Australia has to live within its means, in much the same way that families and businesses do. We also know that countries have to get better at what they do, as businesses do. Finally, we appreciate that all the stakeholders in Australia Inc eventually need to see a dividend as the reward for their hard work.
A Plan for a Stronger Economy
At the heart of our plan for a stronger economy is getting government spending down and productivity up so that borrowing reduces, the pressure on interest rates comes off, and taxes can responsibly come down.
The first act of an incoming coalition government will be to prepare the carbon tax repeal legislation to take the pressure off the power prices and transport prices that feed through to every price in our economy.
Australians can have tax cuts without a carbon tax but only if we get government spending down by eliminating wasteful and unnecessary programmes and permanently reducing the size of government.
No good government would ever spend more than a billion dollars putting pink batts into roofs and a billion dollars to take them out again. It wouldn’t spend $16 billion on over-priced school halls while the standards of academic achievement actually fell.
A good government wouldn’t spend $2 billion buying Victorian brown coal power stations only to close them down; or $11 billion buying Telstra’s copper wires only to shut them down too; or $50 billion plus on a National Broadband Network that people don’t need and don’t want to pay more for.
The last coalition government turned an inherited $10 billion budget black hole into consistent surpluses averaging nearly one per cent of GDP. At the last election, the coalition identified $50 billion in responsible savings – starting with a reduction of 12,000 in the size of the Commonwealth government payroll.
Finding savings is a big task but we’re up for it and will release all our costings in good time for the next election.
The starting point will be programmes that have become bywords for waste. Discontinuing the computers in schools programme, which parents are now having to pay for anyway, could save over half a billion dollars.
Not proceeding with the extra bureaucracies associated with hospital changes that no one will notice could save over half a billion dollars. Not proceeding with the so-called GP super clinics which are delivering new buildings not more doctors could save about $200 million.
Big savings could be made in the government’s $350 a throw set top box programme since Gerry Harvey can supply and install them for half the price. Vastly reducing the number of consultancies (which have cost over $2 billion over the past four years) would produce significant savings.
Not proceeding with the carbon tax would deliver $31 billion in savings over the forward estimates period with a net improvement of $4 billion in the budget bottom line. Not proceeding with the mining tax would deliver $14 billion in savings over the forward estimates period with a net improvement of $6 billion in the budget bottom line.
After a quarter century of reform that made Australia one of the world’s miracle economies, the tragedy of the past four years is the damage that’s been done to our fiscal position with almost nothing lasting to show for it; and the changes that have been wrought that are almost designed to make our economy less competitive.
Make no mistake: the coalition supports a high wage economy. My best moments as employment minister were the figures showing ever higher real wages and record job increases. It was possible to have more jobs and higher pay then because there were productivity increases to sustain them.
There are many problems with the government’s so-called Fair Work Act: there’s a flexibility problem, a militancy problem but above all else a productivity problem which is hardly surprising when workplace negotiations are always meant to involve outside union bosses rather than the employees of a business.
A serious review of the Act would have been given to the Productivity Commission rather than to departmental officials even under the auspices of a distinguished committee.
Higher productivity begins with more adaptable and creative workplaces, not with new government programmes.
The coalition will save business $1 billion a year in red tape expenses by requiring each department and agency to quantify the costs of its regulations and to set targets to reduce them.
We’ll give people the chance to show what they can do – not what they can’t – by offering employers incentives to take on young people and seniors who might otherwise become trapped in the welfare system.
There will be tough love too. Why should fit young people be able to take the dole when unskilled work is readily available? Why should middle aged people with bad backs or a bout of mental illness be semi-permanently parked on the disability pension because it’s easier than helping them to experience once more the fulfilment of work?
A Plan for Stronger Communities
At the heart of the Liberal National coalition’s plan for stronger communities is the delivery of better health and education services.
Almost nothing is more important for families than good schools, good clinics and hospitals. As technology improves and the population ages, more spending will be needed but, right now, what’s needed is more intelligent spending as much as greater spending.
We’re going to work with the states to make public hospitals and public schools more accountable to their communities with local boards and councils choosing leaders, employing staff and controlling budgets.
We’re going to work with community organisations and with the private sector to ensure that government funded services are delivered in the most effective way, much as the former government did with the Job Network.
And we’re going to deliver a fair-dinkum paid parental leave scheme, not the government’s re-badged baby bonus.
I want to change Australia for the better. That means change which reflects our best work and family values and our deepest instincts. That’s why paid parental leave is best understood as a conservative reform that makes it more achievable for women to have combine larger families with better careers, if that’s their choice.
Just as every child is a parent’s implicit vote of confidence in our country and its future, likewise, every migrant who comes here is a tribute to the gravitational pull of the Australian way of life.
One of John Howard’s great achievements in stopping the boats was to rebuild public support for a large, non-discriminatory immigration programme. An immigration programme pitched to our economic needs and humanitarian obligations has not only been good for Australia, it’s helped to create Australia.
Every migrant has chosen Australia in a way that no Australian-born person has ever had to.
No migrant takes Australia for granted in the way that some who were born here do. The vast majority of them choose Australia not because they want to change us but because they want to join us.
Nothing makes me prouder to be an Australian than the eagerness of people from all over the world to swap their life for ours.
As far as I’m concerned, there should never be first and second class Australians based on where they were born, how they worship, or the length of time their forbears have been here.
I was part of a government that sent in the army to improve infrastructure in remote Aboriginal communities, launched an intervention to get “the booze out and the police in” to Northern Territory townships, supported the work of Noel Pearson to end the poison of sit-down money, and put to a referendum the first proposal to recognise indigenous people in the constitution.
Now, I want to end forever any lingering suspicion that the coalition has a good head but a cold heart for dealing with Aboriginal people.
Because there’s no substitute for seeing things on the ground, I have been a volunteer teacher’s aide, assisted truancy patrols and helped with a home building project in Cape York.
Should I become prime minister, I will spend at least a week every year in a remote indigenous community because if these places are good enough for Australians to live in they should be good enough for a prime minister and senior officials to stay in.
That way, everyone should understand that the next coalition government’s commitment to a fair go for Aboriginal people is more than just words.
After all, the measure of a decent society is how it looks after its most vulnerable members.
Once the budget is strongly back in surplus, our aim is to provide the additional services that Australians yearn for but know can’t be built on debt. To be sustainable they have to be the social dividend of a strong economy.
The coalition strongly supports the Productivity Commission’s recommendation for a disability insurance scheme but, with an estimated price tag of $6 billion a year (roughly equal to the Commonwealth’s current interest bill) this important and necessary reform can’t fully be implemented until the budget returns to strong surplus.
It’s one of the reasons why it’s so important to return to surplus quickly. And it’s not the only important social initiative that would become deliverable once the budget is back in the black.
One of my final acts as health minister was to establish the Medicare dental scheme to give people on chronic disease care plans access to up to $4000 worth of dental treatment every two years: not check-ups but treatment.
I always envisaged that this would be the precursor to putting dental services more generally on Medicare.
The advantage of Medicare funding is that it supports treatment by private health professionals who don’t have to bulk-bill so there are still price signals to discourage excessive use.
The Medicare system respects the crucial difference between helping to fund services that are privately provided and government directly delivering them.
The big problem with Medicare, as it stands, is that it supports treatment for every part of the body except the mouth. People sometimes spend years on Medicare-funded antibiotics because they can’t get Medicare-funded dentistry. One in three Australians say that they’ve avoided dental treatment because they can’t afford it.
I stress that Medicare funded dentistry is an aspiration not a commitment.
Like disability insurance, this would be an expensive reform at over $4 billion a year. It’s the kind of initiative that can’t responsibly be implemented until the budget returns to strong surplus but it’s the kind of social dividend that should motivate the economic changes that Australia needs.
A Plan for a Cleaner Environment
The Liberal National coalition’s commitment to the environment means more trees, better soils and smarter technology.
We only have one planet and it’s vital to leave it to our children and grandchildren in better shape than we found it. I support reducing emissions, because we should tread lightly on the planet, but it has to be part of the right plan for a cleaner environment, not the wrong one.
No one should be fooled by Labor’s carbon tax which is socialism masquerading as environmentalism and won’t actually start to reduce domestic emissions until the carbon tax is well over $100 a tonne. The best way to reduce emissions is to invest intelligently in the changes that cost-conscious enterprises are already making to become more energy efficient.
That’s what our $10 billion emissions reduction fund is for: reducing domestic emissions by 5 per cent by 2020 by reinforcing what businesses are already doing.
The government’s carbon tax fixation has meant that every other environmental challenge, like water quality, soil conservation and invasive species has been neglected. That’s why the Green Army providing a reliable, substantial workforce to support the land care efforts of local councils, farmers and volunteers should turn out to be one of the next coalition government’s signature policies.
A Plan for Strong Borders
For a decade, the coalition has been entirely consistent on border security.
Our plan for strong borders starts with temporary protection visas to deny the people smugglers a product to sell, rigorous offshore processing for illegal arrivals so that bad behaviour has consequences, and turning boats around where it’s safe to do so because sovereign countries don’t allow themselves to be played for mugs.
The coalition will ensure that Australia continues to play a role in global security working with our principal allies in the fight against terrorism. We won’t lightly put our soldiers in harm’s way but withdrawal from Afghanistan should happen when our objectives have been secured not when a fixed date has been reached.
We will stand up for Australia’s values as well as for our interests but will avoid big talk without actions to match. We will concentrate on the areas that are most important to Australia and where Australia can make the most difference, so our foreign policy will have a Jakarta focus rather than a Geneva one.
A Plan for Infrastructure
Finally, the coalition’s plan for a more prosperous future will try to ensure that our children and grandchildren look back appreciatively on the big decisions this generation has made.
We have a responsibility to ensure that our land is as productive as possible, that’s why we are looking at new dam sites especially in northern Australia which could become a food bowl to Asia.
We have a responsibility to keep a diverse five pillar economy: with a capable manufacturing sector, a growing knowledge economy and a sophisticated services sector as well as strong resources and agricultural industries.
This doesn’t mean “picking winners” or second guessing the private sector but it does mean low taxes, competitive interest rates, user-friendly government and first world infrastructure so that creative businesses can flourish.
A rolling 15 year plan for major infrastructure priorities based on rigorous, published cost benefit analyses should be the starting point for decision-making on the better roads, railways and ports that Australia needs for the years and decades ahead.
With abundant coal and iron ore, Australia should have a natural advantage in making steel. With abundant bauxite and cheap power, Australia should have a natural advantage in making aluminium. With greater export orientation to drive higher production volumes, there’s no reason why Australia can’t sustain a viable motor industry.
The demands of the resources sector should help to sustain a sophisticated heavy engineering capacity in Australia. In this case, the tyranny of distance should actually be working for us, not against us.
The threat to Australian manufacturing industry doesn’t come from lack of subsidy but from ideologically driven taxes, union-brokered labour market changes and governments fixated on scoring political points ahead of good long-term policy.
The ministers in the next Liberal National government will be responsible reformers. We will take advice because we understand that good intentions can have unanticipated consequences. But we also understand that Australians are an optimistic people who want a government that sees potential rather than just problems.
We will be a pragmatic, problem-solving government but it will be pragmatism based on mainstream Australian values. I know how important giving everyone a “fair go” is to Australians. That’s why we need to “have a go” to build a stronger economy.
By the close of the next coalition government’s first term, I am confident that waste, mismanagement and reckless spending will have been brought under control; more tax cuts will be in prospect; there will be community controlled public schools and hospitals; and just about every fit working age person will be in work, preferably for a wage but if not for the dole.
Small businesses, in particular, will have a government that wants to make their life easier, not harder. Illegal boat arrivals will be no more common than in the last five years of the Howard government. Better broadband will once more be delivered through market competition freeing more money to tackle traffic gridlock. The carbon tax will be gone and, with it, some of the upward pressure on prices.
Instead, as the new parliamentary year dawns, it’s hard to be confident about our country when people can’t have confidence in a government whose parliamentary survival depends upon Fair Work Australia stringing out its investigation of Craig Thomson into a fourth year.
The best way to help the country right now would be to change the government and the best way to change the government would be to give the people their choice at an election. Changing the government, of course, is but a means to an end: to bring out the best in our people and in our nation.
In his famous “light on the hill” speech, Ben Chifley said that the purpose of public life was not to make someone premier or prime minister or even to put an extra sixpence into people’s pockets but to “work for the betterment of mankind, not just here but wherever we can lend a helping hand”.
People should be in public life for the right reasons. Mine are to serve our country, to stand up for the things I believe in, to do the right thing by my fellow Australians as best I can, to build a nation that will inspire us more and to lead a government that will disappoint us less.