Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

Members will recall a former National Secretary of the ALP, Gary Gray, complaining that Labor was increasingly relying on what he called ‘white-bread politicians’ who were coming into parliament—people who had no real experience outside of politics and were bland and insubstantial. That criticism that Gary Gray made, without naming whom he had in mind, was made in relation to Mr Swan, the member for Lilley, and Mr Smith, the member for Perth—two people who came into this parliament out of the ALP machine and had experience in focus groups and polling but never really had any great interest in policy or, indeed, what makes economic policy work.

If you wanted a demonstration of that criticism that Gary Gray made of the member for Lilley, you would have seen it in the speech that he just made—completely insubstantial, offering nothing except rhetorical lines, the kind of rhetorical lines that he would have got a focus group to put together and then retailed around to the Labor Party as lines to use in relation to the budget. The focus group that he obviously got together was the source of this media release, which just about says it all in terms of the depth of thinking of the member for Lilley. I guess just about every word that he used in that speech came from this press release in one form or another. The press release itself came from the focus group, and it illustrates really how insubstantial Labor has now become in relation to economic policy.

Normally in a budget reply a shadow Treasurer would stand up and say: ‘These will be the macro effects of what you did and this is why they are wrong. Maybe the budget surplus, instead of being one per cent of GDP, should have been 0.1 per cent of GDP or maybe it should have been two per cent. This is what we think about the economic forecast. Your economic forecast for growth of 3¾ per cent is wrong because we think household consumption will not be as strong as you are saying, or we think that net exports will detract from growth to a larger degree. Here’s what we think about your inflation forecast. We think that, given pressure arising out of the drought or given pressure arising from international oil prices—because we do not agree with those assumptions—your inflation target will be wrong. Here’s what we would have done on tax cuts. We believe that you have cut tax too far down the scale or too far up the scale or you haven’t cut it enough. You should have changed the mix to move tax cuts off income tax and maybe put them on business tax. Here’s what we think you should have had your investment in. We don’t think an endowment fund is the right way to go because it is a capital fund. We would have gone with recurrent funding; we would have gone for the current amount. Mr Speaker, here’s what an alternative government would do.’

But you will never hear that from the member for Lilley. You will never hear it because I do not think he has ever really understood the nature of economic policy in Australia and he certainly has not done the work. To him it is a question of getting a focus group, running a line and moving on before anybody actually scratches for things that are substantive underneath. He is somebody who is quite voluble, but there is never any substance behind it. There was never actually any substance in his reply. In all of the budget replies I have heard from five shadow treasurers now, that would be the weakest without question. We had Gareth Evans, Simon Crean, Bob McMullan and Mark Latham, but I do not think I have heard a weaker budget reply than the one we have just heard. I think we can deal with it pretty quickly.

He welcomed the Higher Education Endowment Fund, he welcomed the tax cuts and the fact that they were staged and he welcomed the apprenticeships. He welcomed those measures that are going to be done before 30 June, so everything that was done was right. I do not think there was anything that the government did that he said was wrong, but I think the essence of it was that we should have spent more in every area of the budget and ended up with a bigger surplus. I think that was the outcome: ‘You should have cut tax, spent more in every area of the budget and ended up with a bigger surplus.’ Why didn’t I think of that for a proposal? We should have spent more on education, we should have spent more on skills, we should have spent more on climate change, we should have spent more on the environment, we should have cut tax and we should have had more left over.

That is the kind of thing that you would try and get away with at an ALP branch meeting as a machine man, but every now and then you are confronted with facts. The fact of the matter is that, when you are managing a $240 billion budget, there are more demands than can possibly be funded. Sometimes you have to be able to say no. Managing a federal budget requires a bit of strength; you have to be able to say no and sometimes you have to be able to say no to a minister. Sometimes you have to be able to say no to a whole government. Sometimes you have to make very hard choices if you want to get a particular outcome, and when you want to get that particular outcome it is not enough to convene a focus group and ask for a slick line or an insubstantial criticism. It actually takes hard assessment and hard work.

The place where Australia is now did not just drop out of the sky. It was not as if a cloud was suddenly unleashed on Australia or, as he said, ‘Oh, gold bars just started raining on Australia.’ If the member for Lilley thinks that about economic management, it illustrates how ill equipped he is for the great role of being in government. If he believes—and I do not think he believes it for a moment—that you balance a budget, reform a tax system, improve industrial relations, pay off $96 billion worth of debt or set up a Future Fund and it is all just some kind of fluke then he is less prepared for government than I suspect many of us, even in our worst nightmares, thought would have been the case.

One of the things that the member for Lilley said in his speech is that of course Labor is committed to budget surpluses. Why would he say that? The focus groups would have said, ‘You’ve got to show that you’re committed to balanced budgets.’ It is easily said. Anybody can say that, but I would ask him this question: as an adviser to the Labor Party and a Labor Party staffer in all those years when Labor were in government between 1990 and 1996 when they ran consecutive budget deficits, if he was so committed to surpluses why weren’t there any? I think it is a fair question: why weren’t there any?

For the sake of the record I think we ought not to actually listen to the words, we ought to listen to the deeds, because in 1990-91 the federal government deficit was 2.8 per cent of GDP. In 1991-92, it was 3.9 per cent; in 1992-93, 3.7 per cent; in 1993-94, 2.7 per cent; in 1994-95, 1.9 per cent; and in 1995-96, one per cent. So that is six straight deficits, the highest of which was four per cent of GDP. If we had had a deficit of four per cent of GDP in the budget I brought down last night it would have been $40 billion. We had a budget surplus of $10 billion. If we had had a budget deficit of four per cent of GDP, it would have been a $50 billion turnaround, a $40 billion deficit.

But, in the mind of the member for Lilley, what you actually do in government is not the important thing; what is important is what the focus groups demand that you do, and you reassure them without actually getting into the substantive policy debate. I guess the illustration that brought this home to me more than any other was when this government increased family benefits with an annual $600 payment and announced that we would pay a $600 lump sum in respect of each child where the family was entitled to family tax benefit. The member for Lilley decided that that payment should be abolished. His leader, Mark Latham, said to him, ‘How do we explain that we’re taking $600 a year away from families?’ The member for Lilley said: ‘Tell them it’s not real. Tell them they never had a $600 payment, so when you take it away they won’t notice it.’ This is of course what you would learn as a machine politician. When you are on weak ground, claim that black is white, repeat it often enough and you will get people to believe it. You could not fool the Australian public; they knew they were getting $600 as I said—it went into their bank accounts. It could be spent, it could be drawn out, it could be exchanged for milk and bread, and the line that it was not real did not gel with reality. Of course it turned into a disaster during the 2004 election.

I want to say something briefly about productivity because I was saying this in the course of question time today. What would you be doing if you wanted to boost productivity in Australia? I think investing in schools will boost productivity in the longer term because, if you invest in skills and you train more apprentices, you get more people into the labour force with higher skills. Over the course of time, you would expect that to lift capacity. Of course, you have to bear in mind that an apprentice will take four years to train and the apprentice then has to go into the workforce. I think we have something like 160,000 apprenticeships at the moment, which is some kind of record in Australia, and that will give you benefits in the long term; there is no doubt about that.

But, if you really want to unlock key productivity benefits, you should do it in relation to the existing workforce—not just the future workforce, not just in five or 10 years time, but the existing workforce. I have no doubt that if you improve industrial relations, if you allow employers and employees to directly agree on AWAs, that will be a much more productive industrial relations system in each and every factory, shop, business and company in Australia. But, of course, the Labor Party are against that. If you do not want to take my word for it, you could take the word of the former Governor of the Reserve Bank, Ian Macfarlane. In his testimony before the House of Representatives shortly before he ceased being governor, he said:

The biggest thing in this area—

productivity—

is industrial relations reform. There must be a lot of things that still can be done.

What did the Reserve Bank Governor say? The biggest area is industrial relations reform. What is the major plank of Labor’s industrial relations policy? To get rid of AWAs. So the Labor Party would have you believe, on one hand, that they are critical of the government about productivity and, on the other hand, that they want to abolish the key thing that can drive it. So how would you reconcile those two positions—that you allegedly want to increase productivity and, at the same time, abolish the key thing that would drive it? You do precisely what you did in relation to the $600 payment. You deny the obvious and you repeat over and over again that it is not real, that it does not occur, that it does not happen. Australia needs more than focus-group-driven glib cliches. What we need is real policy. What the government delivered last night was real policy. It is the biggest investment that Australia has ever had. We are going to lock in the gains. We are going to invest for the future. This is the economic path forward and the coalition will lead it. (Time expired)

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