‘REFORM WITH PURPOSE’
GRAND HYATT, MELBOURNE
FRIDAY, 6 NOVEMBER 2015
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I acknowledge the traditional owners of the land on which we meet, and I pay my respects to elders past and present.
Australia is coming of age.
- Our climate is changing.
- Our population is growing older.
- Our region is growing fast.
- Women are on the march to true equality
- Digital disruption is re-defining everything we do.
- And our economy is undergoing a step-change, as investment in mining wanes and our services industry in particular surges.
Identifying these trends - talking about the change occurring around us is the easy bit.
Any parrot in any pet shop can do that.
But when we look at these, the defining changes and challenges of our generation.
So often it gets boiled down to one word - reform.
And too often, the word ‘reform’ is co-opted to add a veneer of credibility to lazy thinking and bad ideas.
Reform must be more than a password politicians whisper in search of approval.
Or a buzzword tacked-on to a poorly-crafted policy.
True reform isn’t a test of rhetoric, or salesmanship, or spin.
It’s not just a conversation sitting around the table at a dinner party, solving the problems of the world with a glass of wine in hand, moving the salt and pepper shakers around to make our point.
Anyone can talk the talk - and lord knows we’ve seen a bit of that in recent weeks - it’s walking the walk that matters.
Reform depends on values and it is measured by progress.
So when we pay respect to reform today, let it be reform with purpose.
Let us say what we mean and mean what we say.
For me, the core purpose of reform is this:
- lifting Australia’s output of goods and services with greater productivity
- improving fairness in our society
- and delivering stronger, better-quality economic growth.
From my very first days as Labor Leader, I’ve said I wanted the 2016 election to be a battle of ideas.
A contest of competing visions for Australia’s future.
I’m proud to lead a Labor party that has released more positive policies than any Opposition in a generation.
Not rhetorical flights of fancy – substantial, practical plans.
Policies to fit the times.
Smart investments and necessary efficiencies.
Real plans for greater productivity, fairness and growth.
Infrastructure reform – moving beyond traditional grant funding, and utilising innovative financing to get new projects up and running.
Empowering Infrastructure Australia to create a pipeline for investment, replacing petty political partisanship with businesslike rigour and generational decision-making.
And creating a stronger, more diverse infrastructure market for productivity-enhancing projects, to attract investment from a superannuation pool worth $4 trillion by 2025.
Higher education reform – restoring funding certainty to our universities while preserving and promoting accessibility and affordability .
Building better partnerships between the Commonwealth and universities.
And bringing a new focus on completion – ensuring an extra 20,000 students graduate every year, equipped to compete and succeed in the modern economy.
In Science, Research and Innovation – where we have developed policies for Australians at every age and stage of their education and career.
- Coding in primary schools, including encouraging girls to code.
- 100,000 STEM graduates freed from a HECS debt.
Backing-in entrepreneurs with a Startup year and our $500 million Smart Investment Fund.
Attracting great new ideas with new entrepreneurial visas.
More accelerators and incubators in our universities, helping young people with good ideas work with mentors in business – as they do at the University of Melbourne for example.
And an ambitious target, by 2030, of combined national investment in research and development to three per cent of our GDP.
In Climate Change an internationally-linked Emissions Trading Scheme, enabling Australian firms to engage with one of the world’s largest and fastest growing markets.
Using the market to set the signals, not wasting taxpayer money subsiding pollution - a recipe for fiscal recklessness on a grand scale.
And a bold new goal of 50 per cent renewable energy by 2030 to help drive new jobs, new industries and new technologies.
As well as supporting small businesses and home-owners who want to take control of their power bills through advances in household solar technology and battery storage.
These are some of the economic levers we can use to drive growth and productivity - always with fairness at the heart of what we do.
Throughout 2015, Labor has been adding to the substance of our economic and social policy agenda.
One of the reasons we are relatively advanced in our policy development at this stage of the electoral cycle is that we recognise that this is no ordinary moment in our national life.
Our economy is stuck in the mire.
This is not a question of talking our country down, or a partisan attack - lest we be accused of insufficient optimism or not joining in the mood.
It’s about facing up to the hard truths, so we can make the right decisions.
Being honest about the present, so we can plan for the future.
Because our economy is not intrinsically left or right.
It does not necessarily function more efficiently under a particular banner or slogan.
The fact is, in the past two years:
- Our deficit has doubled.
- Wages are growing at their slowest rate this century
- Economic growth is nearly a full percentage point below trend.
- Annual growth has been below trend, every quarter
- We’ve tumbled from seventh to 19th in the OECD growth ratings.
And at this very conference, the Secretary of Treasury is flagging a downgrade in the medium-term economic forecasts.
We can’t dismiss this kind of warning, just by telling Mr Fraser to be more ‘bouncy’ and to get with the ‘zeitgeist’.
- Our terms of trade have fallen 32 per cent from their peak in 2011.
- Unemployment has had a six in front of it for sixteen straight months.
- Youth unemployment is far too high, especially in our regions.
- 770,000 of our fellow Australians are unemployed.
- There’s another 1 million Australians who are under-employed – seeking more hours and greater job security, but unable to find it.
- There are 800,000 Australians on the Disability Support Pension – many of whom are willing to participate, but unable to do so.
- It is tougher than ever before for young people to put together a deposit for a house.
And inequality is at a 75-year high.
One of the central ideas about who we are as Australians and how we have always seen ourselves - as an egalitarian nation where everyone can rise above disadvantage – is out of step with reality, for too many Australians.
Fifteen years ago, Paul Kelly wrote a week-long series for The Australian examining the problem of inequality.
It was a priority for your newspaper then – and it should be a priority for all of us now.
Inequality in all its forms: discrimination, alienation, exclusion and restricted opportunities, exacts a cost on our whole nation.
Tackling inequality would deliver benefits for everyone.
Not just improvements in social justice – but economic dividends.
Consider this: by 2020, it is estimated the consequences of family violence will cost Australia’s economy $15 billion a year.
And of course, the scourge of family violence is merely the most obvious manifestation of gender inequality in our nation.
If Australia can achieve true equality for women – in participation, in pay, in leadership - then we will be the richest country in the world.
Treating women equally is not just the right thing to do, it’s a great economic strategy.
Even if we only increased the participation of women in work by 6 per cent, to the same level as Canada, we would add $25 billion to our GDP.
It’s the same story across the spectrum – ending inequality delivers tangible fiscal savings, and real economic growth.
Take the National Disability Insurance Scheme.
The operating costs of the full scheme are estimated at $22 billion a year.
PricewaterhouseCoopers found that, without the NDIS, government spending on disability would be between two to three times that sum.
The Productivity Commission also found that by 2050, the NDIS will empower an additional 320,000 people with a disability and 80,000 carers to find work.
Adding one full percentage point to Australia’s GDP.
If we could close the gap in Aboriginal disadvantage: in education, jobs, health, housing and justice – we would not only save vast amounts currently spent on welfare and essential services.
We would deliver a $16 billion boost to the regional economies of Australia with new jobs, industries and improved output.
So when we talk about economic and social reform, when we talk about boosting productivity, growing the economy and lifting our national output – we need to need to understand the central role of fairness.
Fairness is not a consequence of prosperity– it is a precondition for it.
Fairness is not merely in the eye of the beholder.
We can measure its presence, and we can measure its absence.
Which brings us to the GST.
I’ve heard some people say that opposing an increase in the GST means Labor is unwilling to participate in the tax debate.
Nothing could be further from the truth.
The Labor Party I lead are ready, willing and vocal participants in any debate about the GST.
We are being upfront and honest about where we stand.
Labor is resolutely opposed to making Australians pay more for what they need most.
We will not support increasing a regressive GST that inflicts the heaviest punishment upon those least able to afford it.
Let’s be really clear on this point.
Jacking up the GST to 15 per cent is not innovative, not agile or creative.
Increasing the GST is not tax reform.
Especially not when the extra revenue is already being spent five different ways.
- Solving the funding crisis the Liberals created in our schools
- And the funding crisis in hospitals
- Compensating pensioners and low-income earners for increasing the cost of everything.
- Cutting income tax
- And cutting company tax
That’s the problem the Liberals have had since the day they got elected – they think increasing the GST is the solution, but they still haven’t decided what the problem is.
This government’s fixation with increasing the GST proves that when all you’ve got is a hammer, everything looks like a nail.
Increasing the GST can’t fix the deficit and save schools and hospitals and cut taxes and fund compensation.
It’s not a magic pudding.
NATSEM modelling shows that even if an increase in the GST was paired with a 5 per cent reduction in every tax rate, this would actually make our tax system more regressive than a simple increase in the GST.
This scenario would see almost two-thirds of households worse off.
Increasing the GST is not the answer, and neither is broadening the base to include more essential goods and services.
Whether it’s increasing the rate or broadening the base, the outcome is the same: Australia’s lowest income households will bear the brunt.
The most well-off families in Australia spend around 75 per cent of their income.
Low income families consume 125 per cent of theirs.
A far greater share of their family budget goes toward essentials such as fresh food and health care.
And it is the percentage of the household budget that really tells the tale of unfairness.
Extending the GST to cover these items would see the GST bill for Australia’s poorest households take up 17.9 per cent of their income - compared to just 7.6 per cent for Australia’s wealthiest households.
Australians who are working hard to make ends meet don’t need another lecture in another form about doing more of the ‘heavy lifting’.
And if increasing the GST is just a disguise for making working people pay more for everything, then Malcolm Turnbull’s idea of ‘fairness’ will turn out to be a nightmare for everyday Australians.
When it comes to tax, Australia needs to have a bigger conversation.
Because if everything is really on the table, then we should be talking about:
- Labor’s plan to make multinational companies pay their fair share of tax, delivering $7 billion to the Budget bottom line.
- And our plan to close loopholes on excessively generous superannuation tax concessions for the very wealthy, delivering $14 billion in revenue.
These policies have got nothing to do with the politics of envy.
The principles are simple:
If you earn money in Australia – you should pay tax in Australia.
And if you’ve worked hard and accumulated millions of dollars in retirement savings - good luck to you.
But you don’t need an ongoing hand-up from Australian taxpayers.
Especially not when our superannuation system currently disadvantages low income earners and women in particular.
Superannuation is a great Labor idea, a reform with purpose.
A promise that Australians wouldn’t work hard all their lives, only to retire poor.
And a plan to ensure fewer Australians would rely on a taxpayer-funded pension in retirement.
Superannuation was not designed as a tax haven.
The excessively generous tax concessions only came in under Howard and Costello - they weren’t carved in stone, and handed down by Moses from Mt Sinai.
Superannuation shouldn’t operate as a tax haven now.
Real tax reform also demands we look at the efficiency and fairness of our entire tax system.
A couple of weeks ago, I described our tax system as a leaky bucket, riddled with holes.
That image accurately captures the complexity and inefficiency - but perhaps not the unfairness.
Because lost taxation through income-privileged arrangements isn’t a matter of random flaws with water pouring every which-way.
It’s the same revenue stream, from the same group of Australians, flowing through the same loopholes every year.
The holes in our taxation bucket are two and a half times more likely to be used by the top 2.7 per cent of income earners.
And as Saul Eslake revealed, in 2012/13 fifty-five Australians who earned more than a million dollars, paid no tax at all – not even the Medicare levy.
Through a combination of sophisticated practices they managed to write down an income in excess of one million dollars – to below the tax free threshold.
Let me be clear, I’m not suggesting these people have done anything illegal – that’s the problem with our system.
Gaming our system doesn’t require any illegal behaviour, just a well-paid tax agent.
Other than Italy, a greater percentage of Australians rely on a tax agent to do their taxation than any other nation in the OECD.
My concern is that most of these options aren’t available to the vast bulk of Australians, the pay-as-you-go earners whose taxes are subsidising the minimisation practices of others.
If we’re going to talk tax reform, this should be on the table.
The same holds true for Workplace Relations.
If we’re going to have a debate about workplace relations in this country – then let’s move beyond empty union-bashing.
If we live in a class warfare world waged either by ideological governments, or unions - we will be the poorer for it.
Instead of deciding cutting penalty rates is the solution and casting around for evidence of a problem, let’s talk about how we can ensure the minimum wage remains a living wage for hard-working Australians.
Because a strong minimum wage remains the best defence against an Australian underclass, working people trapped on a treadmill where longer and longer hours don’t help them get ahead.
Let’s have a serious conversation about reducing injuries and fatalities at work.
Including meaningful action on dreadful, people-killing industrial diseases like asbestosis and mesothelioma.
If we’re going to talk about boosting productivity, we need to focus on the growing scourge of workplace bullying.
And the thousands of Australians robbed of the most fundamental workplace right of all, the right to come home safely to the people they love.
We should acknowledge our current system of enterprise bargaining and low-paid bargaining isn’t setting the right standards in competitive contracting industries like security and cleaning.
The spread of sham contracting arrangements, subcontracting scams where people are employed on half of the minimum wage – as we saw most recently with 7-11 – that should be a priority in workplace relations.
So too should be the fact that at a time of high and growing unemployment, 800,000 people are here in Australia with temporary work rights, many of whom are being exploited.
It all comes back to that central idea of reform with purpose.
- Increasing productivity with better safety and job security.
- Growing the economy with a wages system that gives everyone the chance to be a consumer.
- And promoting jobs and fairness by eliminating exploitation at work.
Friends, true reform doesn’t come from tired orthodoxy, or the special pleading of one sector.
It depends on a thorough examination of the debate from all sides, with every piece of evidence carefully considered.
The Labor Party I lead will always be up for a debate about the economic and social future of Australia.
I’m proud that this year we have set the economic and social agenda on:
- Higher Education and TAFE
- Science and Innovation
- Climate Change
- Equality for Women, including Family Violence
There will be much, much more.
Whenever the next election is, Labor is excited for the upcoming battle of ideas.
We will campaign on our positive plans to advance Australia beyond the mining boom.
Our plans to build the productivity, prosperity and jobs of the future, with fairness at the centre.
Our plans for reform with purpose.
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