SYDNEY
FRIDAY, 26 JUNE 2015
Good morning everyone.
I’d like to acknowledge the traditional owners of the land upon which we meet and pay my respect to their elders both past and present.
I want to thank you very much for inviting me here to talk about really important matters.
It is, I understand, the end of a week of deliberation and it is, I understand, fundamentally important to Australians that you meet and talk about the issues that you do.
I think there are two great tests for a nation such as ours, and they measure our character.
It is how we handle wealth and how we handle poverty.
We are undeniably a wealthy nation, amongst the richest on the planet.
But we have persistent levels of poverty that might bring that might sometimes bring our character into question.
It is not just a handy maxim that the measure of a society, the measure of a nation is how it treats its most vulnerable.
It is a test.
It is a character test.
And are we passing?
I believe it is our mission to tackle inequality.
I believe too often in our politics of this nation, the poor are ignored, relegated to the back, or simply squeezed and indeed vilified.
Now, there are a few gatherings, as I said, more important than ACOSS to talk about this subject.
We have a story in Australia, don't we, that we are a ‘lucky country’.
That we believe that our society should be organised in such a way that it allows an individual's capacity to transcend the destiny that others prescribe by inequality, money and power.
And have no doubt, friends, inequality is on the national agenda.
Ever since the Global Financial Crisis rocked the foundations of our world economic order, a host of leaders from across the political spectrum, titans of industry, respected academics, have urged a rethink of a relationship between equality and prosperity.
Diverse voices, the International Monetary Fund, the World Bank, the Bank of England, the OECD, and the Vatican are all saying the same thing: Inclusion is the key to growth.
Equality is not a dividend of economic growth, it is a pre-condition.
And that we can only plough the fields of prosperity by acting to end inequality.
I make this point that around the world there is another name for the Global Financial Crisis.
It is a name that we don't use in Australia - the Great Recession.
Because it didn't happen here as it happened elsewhere in the world.
The pragmatic, targeted response Labor instituted in government prevented the kind of consequences that we've seen unfold in the United States and Europe.
Double digit unemployment, mass foreclosures, a generation of young people cut off from work.
It is fair to say, and the record reflects this, that Australia weathered the storm and emerged in better shape than any other nation in the world.
But now we face a new set of challenges in the decade ahead.
We must plan for the non-negotiable changes that are heading our way.
The trends which will define our future:
- the economic transformation of Asia
- digital disruption and technological change
- a clean energy economy
- the equal of treatment in women in our society
- the unprecedented demographic change with two generations of retirees living at the same time in Australia
And all underpinned by the constant requirement for social justice.
This is the great task of the next 10 years.
Turning these factors to our national benefit
Smoothing the transition from a commodities-based economy, to a high-tech, high-end serviced-based economy
Competing and winning in the world on our terms with the application of our values.
A strong system of targeted social investment is a pre-condition.
It is essential to the progress of our economy and our society.
People need to be supported to make transitions in and out of the workforce between sectors, careers and industries.
Opportunity must be shared. Growth must be inclusive.
Your latest report confirms that we have sadly known for too long - more than 20 years of economic growth, an unprecedented stretch of national prosperity simply has not delivered for every Australian.
We have more riches than nearly any other nation, but we have less fairness than we should.
In the midst of our great wealth, many Australians do not feel safe, nor do they have secure work, nor do they have access to permanent homes.
There is undoubtedly a growing disparity in wage rates and working hours.
From 1975 to 2014 real wages have risen by about $7,000 for the bottom tenth of income earners, but they have risen by $47,000 for the top tenth.
Put another way, the top 10% of income earners have received a national pay rise greater than the total pay of the bottom 10%.
Now, some argue that this inequality is tolerable because we are a mobile society, that anyone can make it, if they just have a go.
But far too often the socio-economic profile of a person born into disadvantage determines their life chances.
I said earlier, more directly, do we have a myth in this country that individual capacity can transcend the barriers of money, power and discrimination?
Is the Australian dream real?
For all of us?
This kind of pay gap carries serious consequences.
An OECD report concluded:
““The rise of income inequality…is estimated to have knocked 4.7 percentage points off cumulative growth between 1990 and 2010, on average across OECD countries.”
Inequality damages growth.
This is especially significant when we consider annual economic growth in Australia has been below trend for 11 consecutive quarters and in all but three of the last 27 quarters.
And as recent research from the Melbourne Institute has reconfirmed, wages and salaries are by far the dominant source of household income in Australia.
Therefore, a robust and rising minimum wage is always central to tackling inequality.
It is why in 2015 for the first time ever, Labor from Opposition put a submission in the annual wage review in defence of a strong minimum wage.
I believe that the minimum wage in this country is an irreplaceable driver of consumption and dignity for hard-working Australians.
Undercutting our minimum wage does not boost our competitiveness.
It does not enhance this society.
We will never be able to go low enough in wages to compete with some of the economies in our region.
The truth is, as you well know, that the cause of poverty for those wanting to work or working, is when a person receives less than sufficient to satisfy their needs.
The undermining of the minimum wage - all it will do is create a poverty trap for millions of Australians.
It is not the future that I want for my children, nor for the country.
But as you know, a minimum wage, a fair minimum wage, a strong minimum wage is only part of the story.
Needs-based school funding, aka Gonski, strong TAFE and training, and affordable universities are all instruments of social mobility.
School funding, TAFE, training, university places.
And a decent, sustainable safety net is also essential.
There is a fashion in this area to talk tough about bludgers, rorters, frauds, cheats, double-dippers.
You know the abuse, the people you represent frequently receive it.
In the United Kingdom, the Conservatives talk about ‘skivers’ and ‘strivers’.
Imaginatively our own Conservatives talk about ‘lifters’ and ‘leaners’.
Different words, same game.
The creation of a false division between ‘us’ and ‘them’.
There are, of course, easy points to be scored against the straw man of the bloated welfare system.
Indeed, the word "welfare" itself was almost exclusively used in many parts of our media and conservative government as a pejorative, as a code word for laziness and waste and undeserved income.
It frustrates me.
I'm sure it annoys the heck out of you.
Not because of the cheap, chest-beating rhetoric masquerading as government policy,
Not just because of the bullying of people who are often doing it tough,
It is also because of the facts tell a very different tale.
Australia already has one of the best targeted systems of social investment in the world.
We spend less on welfare than almost every other advanced country in the OECD, and yet our system still works reasonably well.
Forget the long lectures about people living a life of leisure on benefits.
How is it that people who have millions of dollars get so jealous of people getting $20,000?
What is so spiritually bankrupt in our debate, when I watch people who earn more in a week than people with disabilities or the unemployed or carers will earn in a year…people who will claim more on their tax deductions than lots of the people they criticise will ever claim.
It seems that for some people what they have is not enough; they have to worry about what you have, too.
Melbourne Institute HILDA survey showed around 50 per cent of people on income support are back in work within a year – 75 per cent are back in work within three years.
There is a reason, friends why Labor calls this social investment.
Professor Peter Whiteford from ANU estimates that for every dollar we spend on welfare, we reduce inequality twice as effectively as any other nation.
And on the flipside, cutting social security payments in Australia increases inequality twice as fast.
NATSEM modelling has found that the least well off 20 per cent households were hardest hit by last year's Budget, and this unfairnesses that been locked in and entrenched in this year's Budget.
When one considering any aspect of an economic program should be to build confidence and opportunity and hope, it does not matter if it is the grandest manoeuvre or the smallest detail.
The right decisions cannot be made whilst fairness is discouraged.
This morning, I tell you that this Government is fighting for their own power, their own jobs, their own privileges, which I submit to you; it is irreconcilable with the national interest.
Instead of taking steps to address Australia's growing inequality and therefore enhanced growth, the Government is continuing its savage attack on low and middle-income earners.
One of the previous speakers this morning, and I refer not to the Leader of the Greens, wants to slash $8.5 billion from the pockets of Australian families along with his leader, Mr Abbott.
Family payment go to families to help with the costs of raising children.
They help to ensure every child has a good start in life.
Mr Abbott's cuts are bad for families, they are bad for children, they make it much harder for Australian families to make ends meet.
And of course those families with the least, will lose the most.
Mr Abbott and Mr Morrison want to push young people into poverty leaving young job-seekers under 25 with nothing to live on for a month.
‘Quick,’ I can just imagine them saying to their metabolism, ‘Shut down for a month’.
Labor believes these propositions are fundamentally unfair and we will continue to fight against them, as we have in last year's Budget.
Now, it is no secret that ACOSS and Labor took different views on the Government's second incarnation of pension cuts.
I would like to take the opportunity today to explain the reason behind our decision.
You know the Government; they love to find a bad guy to justify their own badness.
And this year much of their rhetoric was focused on the so-called ‘millionaire pensioners’.
All those pensioners out there with the supposedly high asset bases, somehow selfishly drawing down on the pension.
We have new research in from NATSEM today.
The fact is only 0.3 per cent of all pensioners have assessable assets beyond $1 million.
That's less than 9,000 pensioner families out of 3 million people.
And there are only 165,000 pensioners were assessable assets of greater than $500,000.
That's barely 5 per cent.
The vast majority of 330,000 pensioners affected by the Government's cuts do not have high incomes.
Many are living on a superannuation income of $25,000 a year.
That's a modest sum.
Industry superannuation analysis reveals that once these pension cuts are in place, the impact gradually creeps down the income and assets scale.
I submit it will be low-income people, the people who ACOSS serve and represent very well, who will be hit by these changes over time.
There is another powerful factor in Labor's discussions.
The serious long-term problem this round of pension cuts creates for future retirement savings.
Coalition rhetoric aside, the parliamentary voting record shows that it has been Labor who has built the superannuation system and increased mandatory contributions.
And we also made in in the last term of government, historic investments in the pension system.
But when we consider issues around the aged pension, we step back and take a holistic look.
The latest NATSEM report released today shows that under the asset taper, pensioners now lose $78 per year for every $1000 in assets beyond the threshold.
Double the previous loss of $39 per year.
The loss of pension income is likely to be greater than the typical returns a pensioner could expect on their superannuation assets.
So you lose more on your taper than you will gain on the income from your superannuation assets.
So under the Government's new policy, a pensioner has a lower annual income from the aged pension at equivalent annuity on their asset base on $900,000, than they do at $400,000.
Now you might say, "Who cares?"
But we do want to create a system where some people have some incentive to save for their retirement.
Because what it now means is that the system has built in a magnet, an inbuilt incentive to draw down on assets in the short term so you can claim the full pension over the long term.
The immediate consequence is to reduce assets more quickly or move assets to non-assessable assets like the family home.
Do we think humans won't change their behaviour based upon this Government's measures?
This is introducing a new and massive shift of incentives in the system away from funding your own retirement to relying more heavily on a full pension.
That's the wrong message.
And with half of all retirees set to be affected by these changes in the next 10 years, I think this perverse incentive will place massive new pressures on our pension system.
What this proves to me and my team, is that when we formulate retirement policy, we must always look beyond the headlines and map out the true consequences.
This is the clear principle behind Labor's policy to tighten excessively generous tax concessions given to the very wealthy superannuation account holders.
This measure alone will return $9 billion to the bottom line and based on average long-term rates of return, it will only affect people with more than $1.5 million in their superannuation account.
I am pleased that ACOSS has been very strong in its support for this and probably encouraging us to go even further.
But our measure is sustainable, it is fiscally responsible.
The Government loves to dumb a debate down to its crudest slogan.
They say Labor wants to put your hands - I think the verb which the Prime Minister seems unhealthily addicted to is ‘trouser’.
He says that people want to ‘trouser’ people's superannuation savings.
We don't.
But when John Howard and Peter Costello in the 2006 Budget, said that unlike other forms of income which you might earn when you work, if you put all your money into the superannuation phase, the income can be tax-free, they created an unsustainable proposition.
Because what it means is if you have $5 million or $10 million, put it into your super in retirement; draw down on the income from that and you get a full tax concession.
Superannuation tax concessions in the next four years are going to pass the price of the aged pension.
So somehow we have this Government who likes to make out they are an ill-fitting Robin Hood and the Merry Men of Sherwood forest sort of garb when they talk about the pension.
But as soon as they can get to the policy issues, off comes their costume in their disguise, far more Sheriff of Nottingham than Robin Hood, this crew.
They won’t tackle the big issues.
We are not anti-superannuation.
I just don't think that tax concessions funded by the taxpayer, when you have a very big comfortable pile, needs to be as high as they currently are.
Now, all of this though, goes to the issue of the broader policies in the next election.
In the broad social policy, many of you will know that I've asked Jenny Macklin to lead a comprehensive review of Labor's approach.
She will deliver that report towards the end of the year.
She and I intend to focus upon investing in the early years, workforce participation, helping families manage care and work responsibilities, and dealing with the challenge of insecure work.
From my own travels, and discussions around the country, there are certain recurring themes.
The importance of targeted support for low-income and disadvantaged Australians to get job-ready and to connect with potential employers.
The need to support people in and out of the workforce, particularly regarding the need for skilling, re-skilling and life-long learning.
A strong and sustainable system of family payments and childcare support to help low and middle-income families with the cost of raising children.
I must say there is a critical need for a properly supported community sector that is free to advocate without fear of retribution or losing government funding.
The culture of bullying has to stop.
But what I would also say, to borrow and paraphrase - someone once said our democracy is not a spectator sport.
And the future is not pre-ordained.
There is no cycle in politics which means that conservativism has a go, and then progress has a go.
There is no ‘inevitable’ change.
Our democracy is something which every person has the ability to make a contribution to.
That every one of us has the chance to decide what will happen in the future.
Because sadly too many people in Australia, too many people feel alienated in Abbott's Australia.
Alienation, you understand this well.
It is the feeling of people who are excluded from the processes of decision-making and disempowered by insecurity, lack of income, discrimination, unemployment, family violence.
As has been observed by others, too much alienation is dehumanising.
It creates divisions.
It wastes people's potential.
It devalues human relations.
Profit without fairness cannot be the driver to evaluate national progress.
Simply telling people, in their late 40s and 50s, that they are redundant, with little prospect of another job, is cowardice.
No Australian is expendable.
Simply telling the homeless, the substance-addicted, the battered wives, the disability pensioner, the underprivileged, simply telling them to ‘have a go’ is not enough.
It is time to unleash the possibilities, the unharnessed possibility of all Australians.
This means treating people with respect, not finger-wagging blame.
The mining boom is nothing compared to the potential of the Australian people and the potential they offer the future of this country.
Simply letting Australians believe that they should journey through life with no prospect of faith in what they can contribute to their fellow Australians is weak, is wasteful and it is a tragedy.
We can do better.
ENDS
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