It’s a privilege to be here, at this important national forum on ‘pathways to growth’ and the ‘reform imperative’.
I am a reformer.
Because I believe in the things that have to be done to make peoples’ lives better.
But I am also a conserver – a conserver because I want to save what is great about our nation.
Life is not about reforming or not reforming.
Life is not about saving or not saving.
It’s about what you want to reform.
It’s about what you want to save.
That’s the essential choice Australia faces:
What do we want to reform and improve?
Healthcare, education, aged care, equality for women, Indigenous rights, the lives of people with disability, our environment.
And what do we want to save?
Nothing less than the essential model that has made Australia great, defined us, and made us different.
The Australian tradition of moderate, adaptive, inclusive change with fairness and caring.
A tradition of good policy, properly debated, conscientiously advocated and fairly applied – responding to a genuine need for reform.
It’s about
- Building a broad community consensus
- Detailed and consistent advocacy
- Fairness
And each of these elements depends upon the other.
Without community consensus, no reform can endure.
Without a detailed and consistent policy message – there can be no consensus.
And if a policy is inherently unfair, then no amount of consultation can or salesmanship can transform the proverbial sow’s ear.
Meeting the reform imperative requires courage, it requires a long-term view and it demands an ability to empathise with the Australian people.
Australians have never been comfortable with zealotry or extremism, we have never embraced ideology masquerading as policy.
Even before Federation, Australia eschewed the extremes of left and right.
As far back as 1913, Labor’s moderate pragmatism earned us the condemnation of Vladimir Lenin.
Australian Labor, he said:
‘does not even call itself a socialist party. Actually it is a liberal-bourgeois party’
In the grip of the Great Depression, Australia avoided self-defeating radical socialism and divisive proto-fascism.
When rebuilding from the Second World War, Australians rejected Ben Chifley’s push to nationalise the banks.
And in the heightened paranoia of the Cold War we voted down Bob Menzies’ attempt to ban the Communist party.
We shunned Thatcherite austerity – and Friedmanite doctrine.
This is not because of an unthinking opposition to change, or an innate Australian conservatism.
It is, instead, a hard-headed, egalitarian common sense.
A rational capacity to look past the rhetoric and make a decision based on reality.
A national characteristic that has served our society – and our economy well.
It is an instinct that means when the times demand reform, political parties who are prepared to make the case, to explain the need for action, will get a fair hearing.
It also means that sloganeering is not enough – and it never will be.
Governments cannot simply sound the alarm of manufactured crisis and hope that the Australian people will be swept up in the tide.
Responsible Governments put their faith in evidence and argument – not lectures and hyperbole.
The Australian people are up for hard decisions.
They engage in complex transactions every day.
Managing family budgets.
Raising their children, supporting their education and coaching their netball and football and soccer teams.
Attending to their health.
Enjoying a life outside work.
Starting and running small businesses.
Paying their mortgage.
They reasonably expect to live for nine decades, and they save and plan for their retirement and old age.
Smoothing their wealth over long life.
Australians know that in a rapidly-changing global economy, our future national prosperity depends on working smarter, boosting productivity, driving competitiveness and innovation.
Australians understand all of this – they can see the big picture.
They know that, in the end, what is best for our national interest is in their best interests too.
And the great success of the Hawke-Keating generation was to put their faith in the good sense and judgment of the Australian people.
That great reforming Labor Government made the case for their hard decisions, over time, but they never lost sight of fairness.
They appealed to both the common sense, and the generosity of the Australian people.
For instance, the Hawke and Keating governments reduced the top marginal rate of tax from 60 per cent to 47 per cent.
But at the same time, they imposed a capital gains tax and a fringe benefits tax, they brought equity and decency to the tax system while underwriting opportunity.
It was textbook economic reform: broaden the base, lower the rate.
They made cuts to Commonwealth spending as a percentage of GDP – by imposing an assets test on the pension - while simultaneously improving the adequacy of the pension.
The Accord delivered wage restraint, tackling the high inflation and high unemployment of the previous decade.
The trade-off was an unprecedented expansion of the social wage: Medicare, family payments and universal superannuation.
A world-leading safety net that gave people the confidence to embrace change, without fearing they would be left behind or fall over the edge.
And contrary to Tony Abbott’s latest foray into re-writing history, none of this was easy, much of it was opposed.
The Liberal party campaigned against universal healthcare at every Federal election until 1996.
And a decade after the floating of the dollar, Tony Abbott was still unconvinced on the benefits, saying, in 1994, that it:
“[makes] no more sense than altering the price of cornflakes every time a buyer takes a packet off the supermarket shelves”
The Liberals fought universal superannuation – and their latest round of freezing super increases, and their abolition of the Low Income Super Contribution shows they still don’t understand the value, or the importance, of this pillar of the Australian retirement savings system.
None of Labor’s reforms were inevitable.
They depended on political courage and policy resolve, on patient and careful explanation, on coalition-building and leadership from within the union movement, Labor and business.
And if Tony Abbott imagines that he can arrogantly force his unfair Budget through the Senate by division and bullying, he is wrong.
He has learnt nothing from the history he shamelessly seeks to re-write.
The reform journey of the 80s and 90s was also made possible by a media that took a genuine interest in the substantive policy debate and the national interest - rather than acting as a megaphone for sectional interests.
All of this would count for nothing, if the Australian people had not repaid the faith the Government put in them.
But they did, every time.
Today, it is not enough to revere the past, or pay lip service to the legacy – it is the responsibility of modern Labor to take up the task, to fulfil the reform tradition.
Nick Dyrenfurth has said that many members of the Labor movement are captive to a ‘1983 and all that’ view of history.
And that replicating the reforms of the 80s and 90s is as difficult as persuading Australians to swap their SatNav for a Melways.
Yes, Australia has changed dramatically in 30 years - in large part because of Labor’s social and economic reforms.
There is no way for modern Labor to simply update and reintroduce the changes implemented in that famous era.
For example, both the economic conditions that made the Accord necessary and the structures that made it possible no longer exist.
Our economy is not, as it was then, burdened by high inflation or double-digit unemployment.
Our workforce no longer depends upon centralised wage fixing, and - despite the alarmism of some members of the Government - there is no danger of a wage explosion.
The specific closed economy, tariff-protected, highly regulated world of 1983 does not exist today.
My leadership and this Labor generation have different dragons to slay.
We will, however, be guided by their values, their spirit, the process they used to build the consensus for the changes that made our modern, prosperous and fair Australia possible.
This includes a commitment to economic and fiscal responsibility.
Labor is committed to making Australia’s national budget sustainable – of striking the right balance between government expenditure and revenue.
We will support reasonable savings measures – indeed we have already offered our support for stronger means-testing for the Family Tax Benefit B payment, worth more than $1.2 billion over four years.
Support that the Government rejected.
Labor is conscious of making sure that scarce taxpayer resources are distributed fairly, on the basis of need.
It is one of the reasons we have been so critical of the Prime Minister’s extravagant Paid Parental Leave scheme.
Recently Labor have been criticised by some individuals for invoking ‘vague notions of fairness’.
In response, I would simply say this:
Focusing exclusively on cutting spending inevitably leaves the heaviest lifting to Australians least able to carry the load.
For families on $50,000 and $60,000, who are losing more than 10 per cent of their family budget, north of $6000 a year, these cuts are not theoretical - they are dreadfully real.
For Australians under 30 who lose their job and are forced to live on nothing for six months, there is no ‘vague’ inequality – there is only real injustice.
And for older Australians, who have worked hard all their lives and paid taxes all their lives, who have made a contribution to our nation – and yet are losing their seniors supplement and having their pension cut, the unfairness in this Budget is all too real.
At the most basic level, the fairness in our system stems from the fact that Australians who primarily receive benefit through transfer payments are those on low and middle incomes, while Australians in high income households can access benefits through the tax system.
As the OECD – and indeed the Melbourne Institute have again recently confirmed – Australia has one of the most targeted welfare systems in the world.
And any Budget strategy based solely on cutting expenditure will always hit those who can least afford it, the hardest.
To make our Budget sustainable and fair, we need to examine both sides of the fiscal coin – expenditure and revenue.
And any sensible discussion of revenue needs to look at the integrity of Australia’s company tax base.
Unlike some, Labor has not come to this view in the past 48 hours.
Increasingly, companies are minimising costs through technological progress, innovation, outsourcing and automation – maximising their performance through sophisticated software and computer modelling.
And because successful businesses are always looking for a competitive edge, many of the biggest multi-national corporations are leading the way in tax avoidance too.
This substantially erodes a nation’s company tax base – and distorts the market, unfairly disadvantaging local businesses.
This is why, in Government, Labor announced reforms to close these loopholes and cracking down on profit-shifting.
We introduced business tax integrity measures that are now worth more than $5.3 billion.
Yet not once, but twice, the Abbott Government has moved to water down these provisions.
Decisions that amount to $1.1 billion in foregone revenue.
The Treasurer’s claim that the Government will be legislating to close multinational tax loop holes is not a bold statement – it is nothing more than political camouflage.
After delivering a Budget that has targeted: pensioners, families, students, carers, veterans and the sick – the Government needs something to balance the credibility ledger.
But is no additional revenue attached to these measures, because the Government is merely legislating Labor’s policy from the 2013-14 Budget – and the figures are already included in the forward estimates.
This fleeting fashion of talking tough to elements of the big end of town is all the more galling when you consider the only genuinely new action the Government has taken in this area since last year’s election is to weaken Labor’s tax integrity measures.
Their fiscal lethargy comes at a cost to our Budget bottom line – and it comes at a cost to Australian business.
While technological developments will mean that the physical location of some businesses matters less and less with each passing year – the principle of paying tax on incomes earned in a jurisdiction remains.
This is true for the local newsagent, the local tradie and the local pharmacists.
Bricks and mortar businesses earning an income in our cities and regional towns, and paying their taxes.
And our computer games developers, iPhone app developers and software designers that are working domestically and marketing globally.
As we speak, millions of Australian small and family businesses like these are preparing their tax returns.
Small business people taking risks for their family and our economy - creating jobs, driving growth and giving back to our community.
They don’t have the luxury of avoiding tax through complicated international loans.
They do their banking in the local high street, not on some offshore tax haven.
This is just as true for many larger businesses, which operate exclusively in Australia.
These companies employ thousands of Australians – and they pay the full measure of taxation in Australia.
It is not right that Australian businesses, big and small, shoulder an unfair share of the taxation burden, while highly profitable companies who benefit from our skilled workforce, our stable investment environment and our growing economy make only a minimal contribution.
It is not right for companies that report billions of dollars in profit, to pay less than 100 thousand dollars in company tax.
Many of the world’s advanced economies are grappling with this challenge.
That’s why, when the G20 meets in Brisbane this year, it will discuss a new global effort to reduce base erosion and profit-shifting and increase international tax transparency.
But Australia cannot sit at the G20 table and make the case for co-operative international action on this important question, if our national Government is winding back legislation and re-opening loopholes for profit-shifting.
We will simply not be taken seriously – how could we be?
And how can we take this Government’s commitment to a sustainable Budget seriously, while they undermine the integrity of our tax base?
Cracking down on multi-national profit shifting is fiscally responsible - and it is fair.
It’s about giving Australians the best chance to grow their businesses, create jobs and lead innovation.
And it ensures that our Budget is made sustainable, by a fair and proper contribution from everyone.
This is the Labor model for economic reform.
Values and evidence.
Prosperity and fairness.
Principles and pragmatism.
This is our model:
Building business certainty – by consulting widely, and making a detailed and comprehensive case.
Driving growth by extending opportunity, boosting productivity and encouraging social mobility.
Giving people co-operative ownership of change, rather than handing-down decrees from on high.
This is the approach and philosophy I have employed my entire working life.
I believe in empowering people, drawing on their good ideas and constructing the best compromise.
The hundreds of negotiations I was involved with as a union representative taught me that no-one has a monopoly on the good ideas – no individual, no organisation, no side of politics.
And if you don’t consult, if you don’t empower people by taking on their views and responding to their needs, then you are just setting your target very low.
If you are only interested in settling political scores, then any success can only be a pyrrhic victory – and any change can only be short-term.
Because the next time the issue comes up, you will have drained the reservoir of goodwill and trust that sensible compromise depends upon.
And when the balance of power shifts, whatever you have done will be undone.
This is true for employment agreements; it is true for boardroom deals, for negotiating with contractors and clients – and for economic reform.
This is why I, and Labor, are committed to engaging in a constructive dialogue with every sector of our economy.
It is why I will never allow Labor’s relationship with business to be defined by moments of disagreement or points of contention.
There is too much of national importance that we agree on:
- Enhancing Australia’s economic competitiveness by boosting our participation and productivity.
- Encouraging small business and family enterprise
- Putting science and innovation at the centre of Australia’s economic growth strategy.
- Helping older Australians find fulfilling work
- Assisting professional women to balance their career and family responsibilities with affordable, quality childcare.
- Increasing skills and flexibility through our TAFE and University sectors
- Building on our targeted and sustainable social safety net to help Australians transfer into work.
- And guaranteeing the security and dignity of retirement with the world’s best superannuation system.
These are the defining social and economic challenges of the 21st Century – and we have to address them together.
Reform cannot be hostage to partisanship or ideology, it has to come from consensus, from diligent design and extensive consultation.
Sadly, this is not the approach the Government took in framing its Budget.
Think of the GP tax.
Seven weeks after the Budget, I think the vast majority of Australians are still unclear as to what the GP Tax is meant to do.
We know the money raised is being funnelled into a Medical Research Fund that was only thought of a month before the Budget.
A fund the Government rushed without consulting the CSIRO, Australia’s Chief Scientist or AAMRI.
A fund that is just a shiny needle in the haystack of a Budget that triples the cost of a science degree and cuts billions from research and development and the CSIRO.
And as any scientist will tell you, we won’t find the cures of tomorrow without world-leading mathematics, quantum computing and nano-technology to support our medical researchers.
How can the GP tax ‘fix the Budget’ or make Medicare sustainable –if it doesn’t return a single dollar to recurrent health spending, or the bottom line?
How will hard-working GPs, the front line troops who keep Australians healthy, collect this tax and account for it?
How will the tax apply to Australians with chronic conditions – like diabetes, asthma or osteoporosis?
If the GP tax is designed to deter people from seeing their doctor – won’t it, in fact, add costs and pressure to our health system by overburdening our hospital emergency rooms and reducing access to preventative diagnosis?
Will putting a cost barrier between Australians and their doctor add to the 88 million days of work that are missed a year- at a cost of around $27.5 billion in sick leave and lost productivity?
And, in the bigger context of the reform imperative, how will the Government explain to the Australian people that the new tax it is imposing on their healthcare, without warning or consultation, does nothing to guarantee the future of Medicare?
Make no mistake pushing up the price of healthcare is not health reform.
Medicare was health reform – a reform that rejected the American model of higher costs, lower quality and reduced access.
A reform that took healthcare out of the industrial lexicon and made it a universal right.
A reform that remains a source of national competitive advantage for Australian employers.
If the Government was serious about medical research – then Australian clinicians would have been at the heart of the design process – not consulted five weeks after the Budget.
Australian researchers and scientists would have shaped the focus of the Medical Research fund, not learned of it on Budget night.
And they certainly would not have signed off on the Government’s cuts to science and research.
And Australians should have been treated like adults, trusted to make their judgment on this policy before the election.
All of these important principles were foregone in favour of a page torn from the Hollowmen script: a big ‘surprise announcement’, the ‘showstopper’, the ‘centrepiece effect’.
Every time a Government plays games like this, it feeds the voter cynicism that disturbs and undermines our democracy.
Every time a politician breaks a promise and denies their breach of faith, the Australian people lose a bit more belief in the mainstream of Australian politics.
This voter suspicion, this distrust, makes it easier for extremists to cast themselves as anti-establishment.
Or for populists – and dare I say it, the Pupulists - to present themselves as a legitimate alternative.
To promise everything, to everyone, confident in the knowledge that they will never be called upon to deliver it.
All of this makes it harder for us to focus on what matters – the real reforms that drive economic growth.
The challenge of the reform imperative is timeless – and so is its importance.
Labor has never lost its faith in the value of reform.
Real reform, not reform for the sake of change.
Reform that benefits, and delivers, for all Australians.
Creating jobs, rewarding hard work, raising living standards and extending opportunity.
We believe in reform because our world does not stand still.
There is no comfort in complacency – only peril.
Complacency delivers no return to investors.
There is no recognition of bravery in complacency.
The world is not waiting for us.
If Australia chooses not to change, we will be battered and bettered by a world that is always changing.
Ladies and Gentlemen
I leave you with this promise.
Labor will not waste the next year and a half in Opposition – we will not fall into the complacency trap.
We will not shirk from holding the Government to account for its broken promises.
We will always speak out against unfairness and inequality and speak up for Australians who depend on Labor to be a genuine Labor party.
We will be a strong Opposition – and we will be an alternative Government.
We will do the hard yards, the detailed policy development, the intellectual spadework.
We will offer Australians policies with depth and detail.
Not empty promises conjured up to please one audience, or another.
Not vague pronouncements that devolve into nasty surprises.
Not vacuous slogans more honoured in the breach than the observance.
Under my leadership, Labor is ready to listen, to see things from your point of view, to engage in a constructive dialogue, to look at workable compromises.
We won’t always agree, but we will always give the experts the respectful hearing they deserve.
We will put the people who know at the centre of our policy design process.
Our policy plan won’t be short-term tactics crafted for getting into government – it will be a plan for the next Labor Government.
A Labor Government that understands the reform tradition – and stands ready to fulfil it.
Boldly, completely – and fairly.
ENDS
MEDIA CONTACT: LEADER’S OFFICE MEDIA UNIT 02 6277 4053
