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Kim Beazley’s 1999 Budget Reply Speech

This is the text and audio Opposition Leader Kim Beazley’s Address-in-Reply to the Budget.

Kim Beazley’s 1999 Budget Reply Speech

Kim BeazleyMr Speaker, during the election campaign, we said this government did not have a plan for our nation, it had a plan for a tax.

This Budget shows we were right.

Instead of investing in our future, it invests in its own obsession.

And the price of its folly will be borne by the generations to come, because without the investments needed to make our nation and our future workforce smarter and more productive, we will not have the high wage, high skill future the people of this nation deserve.

The good growth recorded in this Budget stems from the industry and resilience of the Australian people, and hard decisions taken by this government’s predecessor over a decade ago.

We enjoy prosperity today because, more than a decade ago, government saw the priority of restructuring the Australian economy to secure our nation’s future.

Back then, a strong national government with an eye to the future saw the need to diversify our economy because global economic trends were promising a brighter and more prosperous future in new industries. We saw the need to broaden our industrial base from our reliance on cyclical industries such as resources and agriculture, and get into areas like elaborately transformed manufactures to boost trade, growth and jobs.

But the game has moved on yet again.

Today, global economic trends are rewarding those nations supplying high knowledge content products. The new competitive landscape is about software, pharmaceuticals, communications and information technology, biotechnology, education exports and the like.

We have no choice but to engage. Our capacity to do so means the life or death of jobs in this country.

What we achieved in the past was not done with words or by an accounting result. It was achieved by government investing for the future: in education and training; in research and development; in export incentives; in industry plans.

So, too, as we look forward, our success in today’s global economy demands investment in the future. Nothing short of a quantum leap in the education levels, skills and training of the Australian workforce; and the national resources devoted to new industries, will see Australia join the emerging global prosperity.

This – surely – should be the test we set this Budget.

What we needed from the Budget was a strategy for a nation making its way in the world; an understanding of the challenge before us and how together we can rise to it.

This is what the times demand of national government, these are the commitments a Budget must show:

  • Firstly, a commitment to fairness for future generations which demands strong fiscal discipline, centred on a golden rule that governments do not borrow to finance current spending, and save in the good times so that over the cycle the budget balances;
  • It must show a commitment to making every Australian family feel more secure – secure in terms of the income they enjoy; in terms of their jobs; in terms of educating themselves through life; and in terms of their ability, if unemployed, to get back into the workforce;
  • But it must also show a commitment to fairness as the centrepiece of our economic progress. It must show an iron determination that none of our fellow citizens is left behind as part of the bargain of our economic progress in a new century;
  • Both of these ideas – fairness and progress – demand the same thing. They demand a commitment to a high wage, high skill future and opportunity for all Australians to share in that future by developing their talents to the full. Only by pulling together, by pooling our talents, will we progress; and progress with fairness to all our fellow citizens;
  • And a good Budget for these times must also demonstrate a commitment to the goal that good homegrown ideas fall on fertile soil here, rather than go overseas and be lost to Australian business and Australian jobs in the future.

These are the tests Australians in 50 or 100 years looking back will apply to this generation.

On Tuesday night, these were the tests before this Treasurer.

And he was asked to answer them, on television just minutes after his speech.

He was asked on Budget night what the vision was beyond the GST.

He was asked for the vision, and what he gave us was ‘ummm’.

He gave us ‘ummm’ then he gave us the mouth opening and shutting – for once soundlessly.

He gave us the mouth opening and shutting, and then he gave us multiple circular hand movements.

And then he just started in again on the GST.

No performance, Mr Speaker, could have been more eloquent.

No performance could have illustrated more completely the real failure of this Budget: it is not about investing for the future – it is just about a GST.

How, indeed, could it be about anything else?

Because now we have seen the cost of this GST – the cost which means this government can’t afford anything else – can’t afford what the nation really needs.

The Treasurer announced on Tuesday surpluses of $5.4 billion, $7.2 billion, $5.2 billion and $11.4 billion over the next 4 years.

What he didn’t announce was that the attempt to sell the GST has cost the surplus $5 billion next year, $5 billion the year after that, and $7 billion the year after that.

That is $17 billion. And that is the real price tag of this GST.

Now leave aside for one moment whether you’re a supporter or not of the GST. Leave aside the merits for and against.

Ask yourself this: is it wise; is it prudent; is it strategic to spend over $17 billion to secure one public policy objective, when the nation faces so many challenges, requiring many different responses, across a range of fronts?

Because that $17 billion is not just black ink.

That could be the foundation of a new nation, and still see a decent surplus maintained – still see all the surpluses announced on Tuesday night maintained.

But it is to become just so much spun sugar around a failing tax.

What should a mature nation do with such a strong budgetary position – squander it on measures that feed into consumption and do nothing for investment – economic fairy floss?

Spend more on new computers for the tax office’s GST enforcement than on labour market programmes for the unemployed?

No, a mature nation would invest a portion of that in building the knowledge-based economy, and still leave larger surpluses than this government.

The GST is a waste of a strong budgetary position.

It is a waste of a surplus built with a tax system claimed to be broken.

A surplus built on cuts in past years to our national investment in innovation; to our household savings which are now less than 1% of household income, compared to 6% when this government came to power; and to decent industry policy – all of which lie at the heart of a strong future for this country.

It is a surplus wasted on a tax the rest of the industrialised world is trying to escape.

The European Commission today – recognising that they’ve been locked in by their past agreements – is desperately trying to work out ways to break out of their GST and restore job growth in the services sector.

Analysts of Japan as serious as the Reserve Bank of Australia say that the principal problem of the international economy today is the inability of the Japanese to get consumer spending going and growth back in their economy; a problem stemming in part from the raising of Japan’s GST, which in any case is only half of the one proposed for Australia.

And even with all the money the government is spending on trying to sweeten its GST, it still can’t deal fairly with low income Australians.

These Budget papers show its pensioner compensation has an in-built self-destruct mechanism. If you care to do the maths, they show that pensioner compensation will now be completely eroded within 4 years.

By 2003-04, the pension will be worth around $426 a fortnight under the GST – exactly the same amount pensioners would have got without the GST.

But let me return, Mr Speaker, to the dimensions of this Budget’s failure in providing a strategy for our nation to make its way in the world.

The Prime Minister wishes this to be seen as an education Budget. It makes you shudder to think what a bean counter’s Budget would have looked like.

Let’s understand where we start from in this.

37% of our labour force did not finish high school. This compares to 19% in the United Kingdom, 14% in Germany, and just 11% in the United States.

15% of Australians have at least a university level education, compared to 26% of Americans.

We start from behind in the education race, and we have a lot of catching up to do.

The place to start is with our children.

Modern governments should understand that lifting the educational attainment of children is an investment, both in our society and in the future productivity of our economy.

You cannot achieve this simply by spending a little extra on a minority of children, and you certainly don’t achieve it by giving to some children at the expense of others.

But this is the current government’s approach.

The government’s view on education is that its responsibility ceases when it has changed the funding equation of the private school system supporting 30% of our kids.

Let me make this clear: we don’t have a problem with more funding for non-government schools. But when you are a national government, your responsibility is to all schools, not just some.

Prime Minister, do you mean to tell me that when next I go to Safety Bay Primary School in my electorate – as I did a few weeks ago for their ANZAC Day ceremony – that the kids I see there are not deserving of decent attention from their national government?

Let me tell this Parliament something: ever since my father lanced the boil of the sectarian divide which had crippled Australia’s education system since Federation, the national government has accepted that all kids are our kids – the responsibility to meet their needs is shared by us all.

He offered the opportunity for all kids from all backgrounds to exercise freedom of choice and freedom of conscience.

Ever since then, we haven’t seen blazers or sweatshirts, we have seen the kids themselves.

How can this government now say that a child at Safety Bay Primary is worth one-twentieth the amount of extra funding of a child at a non-government school?

We have never divided Australian children into Federal government ones and State government ones.

Have those on the other side never heard of Jeff Kennett, or John Olsen, or Richard Court? Perhaps they endorse their special brand of care and attention to government schools?

We know this: just in case a Liberal Premier had a fleeting inclination to do the right thing by kids in government schools, in the 1996 Budget this government’s new formula meant that, regardless of increasing numbers in government schools, their Commonwealth contributions would be cut.

Prime Minister, you are responsible for every schoolchild in this country. You are responsible for their education now, and their opportunities later in life. You cannot wash your hands of any of them, let alone two-thirds.

But the attitude on schools is of a piece with everything else this government has done on education.

This Budget celebrates an outcome which delivers $800 million a year less in direct Commonwealth higher education funding than in Labor’s last year in office.

The Minister and his Prime Minister had one fig leaf between them to say that they ever cared at all for the smart kid from the bush or from a poor family who deserved a place at university. That was the merit scholarship scheme.

It was paltry, it was parsimonious, and now it’s past tense.

And what is the government’s argument? It doesn’t have $6.8 million for scholarships for smart poor kids. “We have a $5.4 billion surplus, but gee, $6.8 million, we haven’t got that kind of money!”

This government thinks it has done its job for the education of this country, when it restores just $150 million of the $2 billion it cut from the higher education system in 1996.

It declares itself relaxed with the idea of students doing Science and Engineering – the degrees which perhaps more than any others will build a knowledge-based society in this country – paying more than those doing Arts.

The government thinks its job is done when it leaves TAFE funding where it is.

This government’s job is not done.

Similarly, the government paints itself as the saviour of Australia’s research effort.

But know this: taken together, all the Commonwealth support for education, training and for both public and private research and development activity, has fallen from 3% of GDP – not enough – when we were in office, to 2.5% in this Budget. And in all probability, to 2.3% at the end of this four-year period.

And those figures include the government’s one lifebelt in this Budget – its spending on medical research.

Let me make a few points about that:

    • Firstly, the very Wills Review which has prompted this spending says that restoration of the 150% R&D tax concession is more important;
    • Secondly, $600 million for medical research over 6 years compares to $6,000 million over 4 years you are spending on an ineffective failing private health insurance initiative; and
    • Finally, this small increase in medical research grants will scarcely compensate (if at all) for the cash-strapped public hospitals which used to invest in this area dragging their research dollars out;

and the universities who used to do this research from their operating grants, hauling back their medical research grants as their funding has been cut.

Which brings me, Mr Speaker, to health.

We all remember the John Howard of the 1970s. A new health plan every year.

Now we have the ultimate in political nostalgia. A new health plan every year from the John Howard of the 1990s.

This government claimed to have solved the problems with private health care when it spent the initial $700 million on private health insurance in 1996. Remember how that was going to lift membership from 30% to 40%?

No it didn’t.

Then it was $1.5 billion a year for a 30% rebate. They thought they had solved the problem then. But when questioned in Parliament by us and forced to confess, said it was really about lifting it from 30% to 33%.

Now we are told – this time for sure – that the problem will be solved, except the $1.5 billion is now just to tread water.

Just treading water, when half of that $1.5 billion – half of it – would fully meet every single State demand: reopen all the wards closed in public hospitals; reopen the regional hospitals that have closed wards or closed altogether; put on the nurses; put on the doctors; perform the procedures. Half of the $1.5 billion would have been enough to fix the system everyone uses.

And that is the point. We have in this Budget the end of community rating in reality. The introduction of so-called lifetime community rating. I have already indicated we will look at this fairly, but looking at it fairly also means protecting universal health care – not letting it become the next sacrifice to this government’s public policy failures.

One thing we will seek in scrutinising lifetime community rating is a commitment from the government to guarantee universal access to public hospitals. We will not let the next step – the 5th health plan – be means-testing for public hospital access.

In the meantime what about some mutual obligation here from the health insurance funds? Has this government got them all to close the gaps? Has it got them to control premiums? Has it got them to hold their premiums in the middle of this year at least? Has it got them to do any of that? No, nothing at all. It has demanded nothing of the health insurance funds. Nothing whatsoever, except be the cheerful recipients of a Commonwealth blank cheque.

But we know what kind of mutual obligation the Prime Minister has in mind for Australians. Yesterday on television he said that families simply had to re-order their spending priorities to afford private health insurance, and I quote:

“You might say to yourself ‘gee, it’s more important to stop that and go into private health insurance now than to add another country to my next overseas trip.”

Gee, indeed.

So, workers of Australia, if you are having trouble affording private health insurance, what with all the cuts to government services, and a GST around the corner, I have the solution for you: just knock off the stopover in Tahiti on the way back from your skiing holiday in Austria.

Just knock that off and you too can afford private health insurance, don’t you know?

So we say to the Prime Minister and to this government, you have not done your job. You’ve not done your job, above all, for the families of Australia. You have forced them to be responsible for their young unemployed adults and you have cynically failed – despite your promises and undertakings to the Senate and Senator Harradine – to give them the relief they need.

And why on earth not? To build back in the money that Senator Harradine demanded would require an extra $50 million a year from your Budget surplus of $5.4 billion.

Here is your challenge: the youth allowance legislation is before this Parliament now. Amend it now. We will support you.

And finally Mr Speaker, as with every Budget this government has produced, its greatest failing is on jobs.

The Budget forecasts unemployment stuck at 7.5% through to the year 2000.

But, of course, 7.5% isn’t really 7.5%. It has only been achieved off the back of thousands of Australians giving up the search for work, and continuing to do so in future.

If this government had not pushed so many people out of the workforce entirely, the unemployment rate today would be over 8%.

Unemployment in this country should be well on the way down to 5%. Even the Treasurer himself briefly flirted with decency on a 5% target, but has come over all agnostic again.

We are nowhere near 5% and with no hope in sight, because employment growth is forecast to fall in this Budget.

That is the fault of a government which cares not a jot for employment, and so is this: long-term unemployment is higher today than when the Coalition began to cut jobs programmes, despite 3 years of economic growth in between.

It is higher because this government has actively determined against sharing the benefits of economic growth with all Australians.

The so-called ‘new’ spending on labour market programmes in this Budget is a calculated insult to unemployed Australians:

  • Firstly, it is a tiny, tiny fraction of the $1.8 billion cut from labour market programmes since 1996;
  • Secondly, it is not new money at all, but an undignified recycling of money cut from the government’s failed Job Network and hastily re-badged;
  • And thirdly, the so-called ‘new’ spending on job programmes is less than the amount spent on new computers for the Tax Office for GST enforcement.

And finally, the government chose employment to break another election promise in this Budget. It promised $90 million for Dr Kemp’s New Apprenticeships, but has lost $40 million of that along the way.

But I know this, Mr Speaker.

I know that people look to the Opposition for an alternative strategy.

Well, we are offering one.

I return to what I said at the beginning about what this Budget could have achieved.

If the GST were not implemented, contemplate the investments among which you could choose for a better future.

With no GST, you could provide balanced funding for government and non-government schools. Not $210 per student in non-government schools and $10 for government students, but fair and balanced treatment for all Australian kids, and a bit of relief for those schools suffering under Coalition State governments. That would cost just a fraction of the GST compensation and the benefit would be not miserly compensation for an unfair tax – but better educated children.

With no GST, you could provide planned pension increases that would last, rather than compensation which disappears within 4 years.

With no GST, you could double what the government has merely recycled from its failed Job Network into Work for the Dole. You could make it real new funding, and a real labour market programmes while you were at it – with training, wage subsidies and in-work benefits, and the hope of a job at the end of it. Some hope, perhaps, for the 200,000 long-term unemployed in this country, including those in regional Australia.

With no GST, you could have kept the university scholarship scheme for disadvantaged kids which this government axed in the Budget. Indeed, you could even make it a little more generous.

You could start to redress this government’s failure on private saving. The average 35 year old worker has lost $100,000 from his or her eventual super payout through government cuts alone. A new superannuation co-contribution would lift national savings and improve retirement incomes.

You could contemplate tax reform without a GST. Remember, we are supporting proposals by this government to ensure people pay their fair share of tax not involving the GST. You could deliver fairer tax cuts and implement the tax credits that this country so badly needs. You could reform business taxation so that it rewarded innovation and investment in new industries. The R&D tax concessions could be restored.

You could do most of these things, and still have a surplus greater than this government announced on Tuesday night.

Greater than the surpluses it expects over the coming years.

You could spend far less than this government, and achieve far more for our nation.

I say all of this to highlight the road not taken – the real cost of a GST, even before it arrives.

The real cost in terms of the national ambition we are about to lose.

This – as much as the unfairness of the GST – is what Labor, and Australia, have at stake in this tax debate.

This is why we are keeping our election promise to oppose the GST.

But we are keeping something else, too. And that is the idea that a Budget is about all Australians – about a national ambition we used to have, and which still burns brightly among our fellow citizens.

We are keeping that ambition alive. It will not die these three years, and it will return again to those government benches.

Thank you.

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Malcolm Farnsworth
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