Committee for Economic Development of Australia
State of the Nation annual conference
MONDAY, 23 JUNE 2014
CANBERRA
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Good evening.
By now many of you will have heard the awful news that Australian journalist Peter Greste has been sentenced to seven years in Egyptian jail, simply for reporting the news.
Our thoughts tonight are with Peter and his family – and Labor stands ready to assist the Government in every effort to secure his release.
Peter Greste is one of over 200 journalists behind bars, and a grim reminder that the freedom of speech so many of us take for granted is something to celebrate and jealously guard.
Tonight, as we meet to discuss the state of our nation I would like to focus on a question that CEDA has a proud tradition of considering in thoughtful detail: the state of our Federation.
A cooperative, productive relationship between the Commonwealth and the States is central to our economy, our society and our nation.
It is not my intention to offer a commentary on last week’s High Court decision.
In government, Labor passed legislation to protect Commonwealth programs challenged by the first Williams decision, and we are prepared to work constructively with the Government if similar action is required.
My focus tonight is not the legality of Commonwealth action, but the important balance between Commonwealth and State responsibilities.
This balance has been severely damaged by the 2014 Abbott-Hockey Budget.
For a great many Australians, the most objectionable – and widely-discussed - elements of the Government’s Budget are the measures that run contrary to our national sense of fairness and our inclination to address inequality with compassion.
- The GP Tax that dismantles universal accessible healthcare;
- The cruel cuts to family support, pensioners, carers and veterans;
- The radical changes to Higher Education that will put the dream of a university degree beyond the reach of children from low and middle income families; and
- The abandonment of Australians looking for work, forcing job-seekers under 30 to survive on nothing for six months.
Taken together, these measures represent the most radical social experiment in Australian history – and Labor stands strong in our opposition to them.
Inevitably, our opponents have sought to paint us as reckless.
In response, let me say this:
I, and Labor, understand the importance of making the Budget sustainable - the need to bring together revenue and expenditure, over the Budget cycle and over the medium term.
It’s why Labor made $180 billion of responsible savings in government.
It’s why we are very critical of the Government’s $22 billion Paid Parental Leave Scheme and their $2.6 billion ‘Direct Action’ policy.
It’s why we legislated reforms to the private health insurance rebate – a policy that will save nearly $25 billion over the next decade, but was fought tooth and nail by the Liberal Opposition.
And it is why we moved to raise an extra $5.3 billion in revenue by closing loopholes on profit-shifting and multinational tax evasion, a position that has since been watered down twice by the Government.
Labor recognises that to be sustainable, a Budget must also be fair and reasonable.
Yet this Budget is designed to hurt the vulnerable and makes those who can least afford it, pay the highest price.
It assigns the heaviest lifting to the weak, and only the lightest touch to the strong.
All the while doing nothing to boost participation, productivity or improve social mobility – the key drivers of economic growth.
Yes, the Government’s cuts will reduce payments in the near term - but only at the expense of growth over the longer term.
And this year’s Budget also contained a surprise attack on the State Governments of Australia.
A dramatic and reckless destabilising of our Federation.
A cut in spending on health and education that grows to around $20 billion by the 2024-25 financial year.
In total, an $80 billion cut to Australian schools and hospitals.
So far, the only explanation the Prime Minister has offered is that health and education are ‘traditionally’ state responsibilities and that he wants the states to be ‘sovereign in their own sphere’.
It is the same argument he uses to justify his refusal to fund public transport infrastructure.
On Budget night, the Treasurer was more pointed.
When asked whether his Budget was designed to starve the States into begging for an increase in GST to fund the shortfall in school and hospital funding, Joe Hockey replied:
Well, that's up to them.
They are responsible for schools and hospitals.
We don't run any schools or hospitals.
Whether you take the Prime Minister’s wording or the Treasurer’s formula, this is an alarmingly narrow view of the role and responsibility of the Commonwealth Government.
Indeed, this is a characterisation of our political structure that goes way beyond what is sometimes described as black-letter law.
It is a reactionary, hyper-literal interpretation of our Constitution.
A view that turns the clock back on more than a century of change and evolution in favour of a model that is fundamentally at odds with the reality of governing modern Australia.
It is true that when our Constitution was drafted, the colonies retained responsibility for a range of front-line services.
And yes, in 1901, there was no Commonwealth Department of Health or Education.
But there was also no Department of Finance, or Transport, Industry, Communications, Indigenous Affairs, Arts, Sport, or Environment.
There was not even a Department of Prime Minister and Cabinet, and for that matter neither Prime Minister nor Cabinet are mentioned in our Constitution at all.
The expanded breadth and depth of the Commonwealth Government properly reflects the eleven decades of transformation and growth that the Australian economy and our Australian society have undergone.
After all, the Australia of 1901 had no social safety net, no minimum wage, no accessible higher education, no universal healthcare, no superannuation.
It was a country where women were disempowered, where migrants were distrusted and Aboriginal Australians were counted as ‘fauna’ and deemed destined for extinction.
This was the Australia that shaped our Constitution: a protectionist, mono-cultural collection of colonies, so very different to our confident, modern, outward-looking and diverse country today.
Tonight, I would argue, that just as our nation has demonstrably changed for the better, the way we govern ourselves has evolved and improved too.
While our Constitution will always be an important set of national organising principles – it is far from an up-to-the-minute handbook for the business of government or the interplay of funding and responsibility between the Commonwealth and the States.
Australia should adopt the pragmatic and practical path – not the theoretical journey.
As the dominant collector of revenue, it is inevitable that the Commonwealth Government will play a role in funding the delivery of essential State services – especially in health and education.
This is not a new concept – or a radical one.
Indeed, last month marked the 50th anniversary of the States Grants (Science and Laboratories Technical Training) Bill.
A piece of legislation that provided capital grants for science laboratories and equipment in Australian secondary schools.
When Prime Minister Menzies introduced the legislation to Parliament, he articulated the principle which has underpinned the last 50 years of Commonwealth support for education:
‘My hope,’ Menzies said, ‘is that Commonwealth moneys can, with great benefit, be used to stimulate activities which could not be afforded previously by either State or independent schools’.
Every Prime Minister since Menzies, from both sides of politics, has subscribed to this idea.
I, and Labor, are proud that the quality and focus of Commonwealth investment in education reached its peak in the historic Gonksi reforms for school funding based upon need.
If we look at health, we can see the same trend.
The Federal Government stepping up to fund the services our citizens depend upon.
The Commonwealth filling the gap created by the diminishing revenue bases of the States.
Or, as a certain T. Abbott put it in his book Battelines:
Commonwealth spending on health and education…[is] all in areas that were once wholly the preserve of the states.
Most of it is not directly authorised by the constitution other than via specific-purpose grants under section 96.
Still, any withdrawal of Commonwealth spending in these areas would rightly be seen as a cop out.
It’s rare for me to quote Tony Abbott and Robert Menzies with approval in the same year, let alone the same speech.
But I think it is worth reflecting on the difference between the Tony Abbott who wrote Battlelines and the Tony Abbott who wrote the Budget.
On the one hand, you have the straight-talking, ‘conviction politician’ who believed that the Federal Government had a duty to support schools and hospitals.
And on the other, the pre-programmed, politically-motivated Prime Minister, captive to his broken promises and unable to explain or justify the unfairness of his Budget.
So yes, tonight I say, Tony Abbott is right.
For the Commonwealth to withdraw any spending from schools and hospitals is indeed a ‘cop-out’.
But it is more serious than this.
It is an abdication of leadership.
Demanding that the States do much more, with much less, will have a catastrophic impact on Australian hospitals and Australian schools.
And this is Labor’s fundamental objection.
Behind the Government’s sophistry, there will be deeply harmful consequences for our society and our community.
By the 2024-25 financial year, the Government will be taking $15 billion out of health.
A total cut of $50 billion to Australian hospitals.
In our climate of accelerated media coverage and shorter attention spans, a number like this can wash through the national political debate without getting the attention it deserves.
Everyone can agree that taking $50,000 million from hospitals is a ‘big’ number.
But the real test is what these cuts will mean and the toll they will take on Australia’s healthcare system.
Over the past month, Labor has analysed the impact that these unprecedented cuts will have on Australia’s public hospitals.
The consequences are truly staggering.
Taking $50,000 million out of our hospital system is the equivalent of removing:
- More than 4,300 hospital beds; and
- More than 25,000 nurses; and
- More than 12,200 doctors for seven years.
It’s the equivalent of:
- Sacking 1 in 5 nurses;
- Sacking 1 in 3 doctors; and
- Closing 1 in 13 hospital beds, in public hospitals for seven years.
In terms of procedures, it’s the equivalent of:
- More than 104,000 hip replacements; and
- More than 1.4 million chemotherapy sessions; and
- More than 241,500 mental health admissions per year, for seven years.
There are most serious questions to be answered:
How much longer will patients have to wait in overcrowded and chaotic emergency rooms?
What will happen to the waiting times for elective surgery as a result of these cuts?
How long will Australians have to wait for treatment when they have time-critical conditions like cancer or heart disease?
What kind of medical equipment will hospitals have to shut down because they cannot afford to maintain them?
How many rural and regional hospitals will close?
How many Australians will be turned away, or denied treatment because our system cannot cope?
Will lives be put at risk because people can’t get the help they need?
The consequences for education will be just as severe.
By the 2024-25 financial year, Australian schools will be suffering from a funding cut of $5 billion.
In total, the Budget cuts around $30 billion from Australian schools.
This is the equivalent of taking more than $3.2 million from every Australian school.
- That’s more than $420,000 per school, per year from 2018;
- More than $1000 per student, per year.
It’s the equivalent of sacking 40,000 teachers – or one in every seven teachers.
To look at it another way, this funding could put an extra four teachers in every Australian school – and pay their salaries for seven years.
We could build, from scratch, 1800 new schools.
So again, we must ask what the consequences of these cuts will be for our children’s education:
How fast will Year 12 completion drop?
How many students with learning difficulties, or disability, will fall through the cracks without extra individual classroom attention?
How much wider will the gap in Indigenous Education outcomes be as a result of reduced support for remote schools and Aboriginal students?
How many young teachers will be unable to cope without the right resources and look for work elsewhere?
How many experienced teachers will decide that enough is enough?
What will be the difference between a great school, and a school deprived of the funding it needs?
These $80 billion cuts may be part of this Government’s ‘social experiment’ – but the test subjects are millions of real Australians.
Patients, doctors, nurses, students, teachers and parents.
And the only response the Treasurer can muster is:
‘we don’t run any schools or hospitals’.
Well, Australian students deserve better than shoulder-shrugging and finger-pointing.
Australian patients deserve better than a Government that thinks a mature and worthwhile policy response can be summarised with: ‘that’s not our problem’.
And our nation deserves better than a national Government that is shirking its leadership responsibilities.
The harm caused by these cuts will spread far beyond our classrooms and our emergency rooms.
The massive cuts in Commonwealth funding will have significant implications for every area of State Government expenditure and revenue.
Imagine, if you will, that you are the Premier of your State, making plans for growth in your economy.
You weigh up your total outlays and think about how you can best allocate funding from your narrow revenue base.
You make assumptions on the basis of the global economy and the impact it will have on your state.
You look at your demography and make assumptions on the basis of your population profile.
You think about your industry base and how it will integrate with the rise of Asia, manage the pressure of the high Australian dollar and compete in an increasingly globalised marketplace.
These are the rational and sensible assumptions that inform your decisions.
Above all you would assume that payments from the Commonwealth will continue on the basis of signed, negotiated agreements and decades of precedent.
On that basis, you make plans to expand skills and training and encourage innovation.
You introduce reforms to improve the efficiency of your health system and your hospitals
You focus on student outcomes and providing the best learning environment.
And you pull all these threads together - economic and fiscal - into a plan for your state.
That’s your budget.
Then comes the Abbott-Hockey Budget.
No matter how many times the Prime Minister denies the scale of his cuts, their impact will be felt.
Hospital beds will close, treatments will be delayed or denied and nurses and doctors will lose their jobs.
Learning outcomes will suffer, schools will close and teachers and classroom assistants will lose their jobs.
That’s when you realise that for the first time in Australian history the Commonwealth itself poses a sovereign risk to the states.
This Government isn’t re-writing agreements, it’s tearing them up.
They are shifting the goal posts on you.
Making the efficient and effective delivery of services impossible.
Impossible, that is, without increasing State taxes – or blackmailing the States to carry the can for an increase in the GST.
Ladies and Gentlemen, that is what I mean by a fundamental shift in the balance of Commonwealth-State relations.
I do not doubt the need for a meaningful national conversation about the future of our Federation – in this forum and in others.
It is clear to me, that there are tremendous economic benefits to be gained from a cohesive, cooperative Federation.
I am ambitious for a better way of working together, regardless of political allegiance.
But when we see this Government making huge, unilateral cuts to health and education without a shred of consultation – I doubt their capacity, or willingness to deal with the business of Commonwealth-State reform in any cooperative way.
And I doubt whether they understand just how much pain their cruel cuts will inflict on millions of Australians.
Or perhaps they just don’t care.
Labor still believes that every school should be a great school.
We still believe that every Australian deserves access to universal, affordable healthcare.
We still believe in a Federation that works together to build a stronger Australian economy and a fairer Australian society – for everyone.
We always will.
ENDS
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