Bill's Speeches

STATE OF THE NATION ADDRESS TO CEDA - CANBERRA - TUESDAY, 26 JUNE 2018

Good morning everybody.

I acknowledge the traditional owners of the land, I pay my respects to their elders both past and present.


I don't know how many of you are students of history and metereology at the same time but on fresh mornings like this, I think of King O’Malley.


He wanted the nation's capital to have cold winters because, as he said many times:


‘Cold climates have produced the greatest geniuses’.


So I guess that’s why you always give the Opposition Leader the chilly breakfast slot.


CEDA has a richly-deserved reputation for digging deeper than the headlines and perhaps getting to grips with the substance.


I think your report this year is a stand out and this morning I want to join in the same direction as the report, take a little bit of time to go past the politics and talk about the real policy choices facing our nation.


I want to talk about jobs and wages, I want to talk about taxes and budget repair and the investments we need to sustain the prosperity and the future of our country.


I don't think that the headlines you read tell the full story of our economy, not by a long shot. That’s one of the reasons why I hold regular town hall meetings.


This is nothing new, going out and talking to people is not a radical idea, perhaps it is less usual than it should be in current politics though. 


It's important to get away from the noise of the parliament and hear directly from our fellow Australians about how they're going.
I have to say, in that context, I was terribly interested to see the research published by CEDA yesterday. You got it right. CEDA just nailed it. 


They were talking about the ‘economic disconnect’ between Australia’s long run of growth and people’s sentiment that they're not sharing equally in the promises and the benefits, that their living standards have not improved.


I'm not sure ‘economic disconnect’ is the most Shakespearean of terms to capture the sentiment but I think it is pretty brutal in its direct nature.


I notice that you’ve chosen ‘resilience’ as a theme, we are a resilient people, we Australians.


But I meet, and I'm sure you do, many of our fellow Australians, and perhaps even some of you here, who feel like the economy and politics is not serving their interests, or the interests of their family’s or their community’s.



Many of our fellow Australians think that the deck is stacked and the deal is in. It's all a done deal.


I think it would be wrong of the current government in power to dismiss the very real challenges that people face in their daily lives by simply calling it a matter of ‘envy’.


Since when, in our democracy, is to complain about inequality envy? That somehow saying that our standard of living hasn't advanced is just ‘jealousy’.


As leaders and policy-makers, we need to recognise that rising inequality and stagnating or falling living standards are genuine threats to the fair go, and genuine threats to our national economic success and to the prospects of future economic reform.


The importance of tackling inequality, of growing the economy by including more people in its opportunities, this is not some fringe view - this is the economic mainstream 21st century, from the IMF, to the OECD and our own Reserve Bank Governor.


And it why’s people recognise the importance of ‘inclusive prosperity’.


Because when we invest in childcare, the early years, when we invest in schools, when we invest in TAFE and when we invest in universities - employers and businesses get the benefit of a more skilled, better educated, more empowered workforce.


When we properly fund health care and hospitals – businesses and employers get the benefit of a healthier, more productive workforce.

When we build new infrastructure, roads and rail and ports and airports and a better NBN – we create new local jobs and businesses collect the productivity dividend.


And when we deliver a genuine improvement in living standards: tax cuts for working-class and middle class people, reducing out-of-pocket costs for healthcare and capping private health insurance premium increases, when we can get the energy bills down and when we can get wages up - this drives stronger consumption, more demand. It builds a healthier economy. It creates confidence.


Simply put: Labor's economic proposition is that Australia thrives when working class and middle class Australians get a fair go. When they have growing living standards.

It's why I’ve never bought in to the false dichotomy, the false choice between growth on one hand and fairness on the other, as if they're strangers in two different rooms never to meet.


To me, it’s not an either-or proposition between an economy that creates work for people or a society that looks after them, we need both and each one depends on the other.


It is what Australia is about: common effort, for shared reward.


And lifting living standards starts with a pay rise for working Australians.


Our nation is enduring the longest period of wage stagnation on record. And when the costs of essentials keep rising, historically low wages growth makes it even more difficult to balance the family budget for most Australians.


That's the ‘economic disconnect’ the fact that for all of the hard work which people feel that they're putting in, they feel like they’re falling behind.


The Reserve Bank Governor is hardly a Corbyn-Sanders-‘Occupy Wall Street’ figure but I thought he put it pretty well last week when he said: “slow wages growth is diminishing our sense of shared prosperity”.


He went on to say that low wages growth also means extremely high levels of household debt in Australia and that these will “stay higher for longer”.  It really makes sense and I'm sure describes some of the circumstances of the people in this room.


People who took out a mortgage or a personal loan on the expectation that wages growth would have a 3 in front of it instead of a 2 haven’t made much of a hole in their principal in the last few years. And this, of course, affects their spending in the economy.


I believe that getting wages moving, wages growing, is a first-order priority for the nation and for government. I think it's the right and fair thing to do for people – and it’s essential to growing our economy and growing the confidence of people.


Yet whenever we ask my opposite number about wages growth, he loftily says: “the laws of supply and demand have not been suspended”. And that if you get unemployment down, people’s pay will simply go up.


This wilfully ignores what’s really happening behind the headlines of unemployment.


I speak of course of underemployment.


Underemployment, the number of Australians who regularly record they would like to work more hours but can’t find them, is creeping back up towards the peak it achieved in the early part of 2017.


And let’s be clear: this isn’t about people choosing to work part-time because they’re juggling caring responsibilities, or studying.

There are over a million of our fellow Australians who monthly record they can’t find as many hours to work as they would like.


Underemployment traps our fellow Australians into insecure work and it also affects every worker in the economy, because it depresses wages outcomes.

As Greg Jericho the columnist put it, there “is a lot of extra spare capacity in the labour market - people who would take more hours over a pay rise”.


So if we have this persistent problem of underemployment, if it stays at this level, modest gradual improvement in the overall unemployment rate doesn't help workers catch-up with years of flat wages.


And of course, there’s also more than just underemployment standing between Australian workers and the pay rise they deserve.
We have a damaging over-reliance in this country on skilled visas.


Now, perhaps during the mining boom, this was understandable.


But there's no excuse in Australia for a skills shortage to last one day longer than it takes to train an Australian. That’s why properly funding public TAFE and apprenticeships are core economic business for Labor.


And we need to fix the flaws in the system which will allow some employers to use visa workers as a way of driving down overall wages and conditions.


And when these guest workers are exploited, that reflects on all of us.


The good employers who try to do the right thing by their workforce are put at a disadvantage.


And local people miss out on jobs they should be doing, or they are forced to work for less.


The absence of a wages policy and wages outcomes are not just influenced by underemployment or over-reliance on skills visas but the state of our industrial relations system. 


I spent a decade and a half negotiating agreements between employers and employees.


And no matter how contested the proposition or how high the stakes were, there was almost always a reservoir of goodwill you could draw upon.


You could work through the 10 per cent which you disagreed on between employer and employee, because you knew you had that foundation of 90 per cent agreement, the understanding that the company and the worker shared a common interest, their goals were aligned.


Because a more productive workplace always meant a more profitable enterprise which distributed these profits to better-paid employees. 


But in too many places now, the connection is broken, wage negotiations are simply seen as a cost issue to drive wages down. The spirit of shared endeavour and the search for productivity is lost in too many cases.


These days, too many businesses are encouraged by the system and the lawyers to view their workforce purely as a cost to be minimised.

  • Through the use of skills visas.
  • Through the use of off-shoring.
  • Through cuts to penalty rates and entitlements.
  • Through the aggressive use of labour hire to replace permanent jobs with labour hire workers on lower wages and conditions..

And of course now we see something I didn't think I would see when I first started in the enterprise bargaining process in the early 1990s, we are just seeing the termination of wage agreements altogether.


What I mean by that is, I was brought up in a system where bargaining between employees and employers was to create productive workplaces, profitable workplaces and a better share of the income derived at that workplace. That was the system which I was brought up to believe in.

 
But now we have a system which rewards companies for terminating their agreements, giving ultimatums to their employees: you can have the award or a wage cut.  Because generally the agreements have advanced so far ahead of the award that the threat of a wage cut was more attractive than the threat of going back to the award.


This isn’t an exaggeration.


In 2015, the Fair Work Commission terminated 12 Aurizon agreements covering 6000 workers. This case led to a trigger and a significant increase in the number of terminations and an increased use of the threat of termination as the nuclear option in negotiations.


Many of you have negotiated for a living. You understand that when you have a negotiation with another party, you must always look at the alternative. What's the best alternative to not getting agreement? 


What now happens with the use of the current workplace laws? Do some employers now have a better alternative to negotiating with their workers, to just reduce the pay and conditions through the system itself.


Enterprise bargaining has meant, and used to mean, a boost to pay and productivity in concert.


But now, let's have a look at what's happened in the last two or three years under the Coalition Government.


Until the most recent quarter, there has been no improvement in productivity in two years.


Last year was the worst year of private sector wage increases and enterprise agreements for twenty five years.


And the September quarter of that year produced the lowest number of approved EBAs since 1995.


How can it be the case that when we're looking for better, more productive workplace relations, we seem to have wound back the clock to before enterprise bargaining. 


And all I ever hear the government say about unions is how bad they are. You don’t need to be a former union rep, though, or even a union member to be affected by this problem.


There are flow-on consequences of a bargaining system that's not delivering for workforces right across the industry.


It affects the whole of our economy by undermining confidence, by dampening consumption.


I think that this nation is long overdue to rebuild the link between the profits, productivity and pay. For the sake of family budgets and for the sake of our national ethos, the national fair go.


I think the final fundamental point about Australia needing a lift in wages growth is in the budget papers.


In the first Turnbull/Morrison budget, they forecast wages growth of 2.5 per cent for 2016/2017, they got 1.9 per cent.


This year so far, we’re stuck at 2.1 per cent. Yet last week, the Liberals and their allies, the One Nation political party, put $144 billion dollars on the national credit card based on the assumption that wages growth would suddenly roar back to 3.5 per cent.


So, the strength of this point is simply this.


This government is writing promises on the national credit card that cannot be sustained in the future based on the overly optimistic forecasts of national revenue.


And what if these forecasts, which have proven to be wrong already, are wrong in the future? How does the nation afford to give away this money out of the nation’s ATM without causing significant and deep cuts to fundamental essential services?


And, of course, the government has said that they'll give $10 a week to people under $90,000 - $10 a week.


But if you're not getting your wages to move, this whole value of this tax cut becomes even less in benefit.


So our wages policy - because Labor believes that a government or an opposition should have a wages policy - is to take clear and positive steps.

  • A plan to get enterprise bargaining off life support.
  • A plan to reverse the arbitrary, unilateral cuts to Sunday and public holiday penalty rates, the second round which will take effect this weekend. 
  • A plan to crack down on the misuse of labour hire and other forms of exploitation which drive down pay.
  • And of course, being the only political party with a wages policy, it wouldn't be a complete wages policy unless it was a plan to tackle one of the most stubbornly unfair examples of inequality in Australia, the gender pay gap.


At our current rate of improvement on the gender pay gap, it will take 150 years for Australian women to earn the same as Australian men.


My youngest daughter is eight, I don't want her granddaughter's generation to be the first woman guaranteed equal pay.


We need to do more to boost the pay of women who work in feminized industries, jobs that are vital to our future of our economy, our society, like health care, like the NDIS, like aged care.


And we need to do a lot more to provide a level playing field for women in the workplace, a Labor government will make this a priority within wages policy. 


At the National Press Club at the beginning of this year, the end of January, I promised that Labor would demonstrate the courage to do what needed to be done, even if it was a politically difficult course.


Last week was one of those moments.  We were happy to vote for stage one of the government's tax plan. We have a better policy but we didn't want to stand in the way of the $10.


That’s why, in my budget reply, I pledged a bigger, better and fairer tax cut for the 10 million people earning up to $125,000.


Under our affordable plan, someone on $65,000 will get $928 back each year, almost double what the government is offering.


When you walk out of this venue today and you see the security personnel and when the waiters who serve you and clean up your plates, understand that what we represent to them is double the tax refund that the government wants to give them.


Let me use another illustration: if you're on $65,000 a year under the first three years of a Labor Government, not in seven years’ time under this government, you will get a $2780 tax refund.


A family with one partner on $90,000 and the other on $55,000 will be $5565 better off under Labor in our first three years - that's about $1900 each year.


$1900 isn't a king's ransom but it’s not bad, and it certainly helps you make ends meet more easily than the current offering from the government.


The other thing about our tax refunds is that they are targeted to the people who need it most. The people who put the money back into the economy, who boost consumption and growth.


I'm sure you would probably agree that if you live on $60,000 and $70,000 a year, as much as you want to save money, most of your income will go in expenditure.


And if we give these millions of our fellow Australians a decent tax cut every year for the next three years and beyond, that money will go into the Australian economy, it will circulate and that will build confidence.

When people have money to spend, that is a rising tide that lifts all boats.


But I said that we're willing to make tough decisions.


So when it came to stages two and three which, by the way, won't come into effect until 2022/2023 and indeed 2024/2025 for this stage three.


How on earth could any responsible opposition support such an irresponsible plan from this irresponsible government? This notion that unless you vote for prospective tax cuts more than two electoral cycles away somehow you are practicing class warfare is ridiculous.


If we went out and spoke to most Australians and said do you really think that you’re going to see a tax cut in seven years’ time, when we don't know how we're going to pay for it, when we don't think that the authors of that decision will even be here in the positions they're in.


Do you think most people would believe it?


What we won't do is sell people a false bill of goods for some prospective date down the track when there is no buffer for economic uncertainty.


That does not mean we shouldn't be doing tax reform in two and three terms’ time, but successive parliaments should debate these issues and have a much better sense of what can actually be delivered.


I have to say that, for a start on these future projections, this government can't even get its own wages projections right over two years.
Can any of you here say with absolute confidence what the global circumstances will be in seven years’ time?


Can you say with any confidence who the President of the United States will be? I’m not sure I would have picked the last outcome.
But the point about it is we live in a volatile global environment.


Trade conflict. Uncertainty in the US bond market. There is growing global debt. There are shifting debt dynamics in Europe. There is the potential for interest rate rises. Global debt is increasing.


It is like a sleeping dragon which is dulled by the insulin of low interest rates. But what happens if in the next seven years there is a change?


Our own national debt has doubled, more than doubled, in the last five years. It is half a trillion dollars. That's $21,000 nominally for every man woman and child with an annual interest payment of $18 billion. That is our national debt.


We do not know what is coming next in terms of the next few years, but surely prudential governments don't just try and stimulate confidence in the economy, don't just make promises which can’t be paid for but they also build policy buffers that safeguard our nation to protect us from external pressures.



They don't bet the house on the basis of continued good times for the next seven and ten years.


Stage three of this much-vaunted but I think mythical tax cut, this radical scheme to collapse the tax scales so a cleaner in the office building working here tonight earns $50,000 and pays the same tax rate as an executive on $200,000 will cost the budget $33 billion over just five years.


That’s about $6.5 billion a year. That's roughly what our government spends on public education throughout Australia.


Eighty cents in every one of those $33 billion will be going to the top 20 percent of income earners.


Many of these people are not living paycheque to paycheque. They're not the ones who spend nearly every dollar they get, which will help boost growth.


This support for people on the highest incomes is not part of a broader agenda for genuine tax reform and budget repair.

There's no plan to shut down unaffordable, unsustainable taxation loopholes to limit deductions and reform other concessions like negative gearing and income-splitting.


Instead, the government simply say about their tax promises for the future: “Don't worry it's in the budget”.


Well it's not in the budget. 


How do you take $143 billion in promised personal income tax scale changes and another $80 billion in promised corporate tax reductions, and not pay a price for it?



You simply can't take a quarter of a trillion dollars out of the nation's ATM in the next seven and ten years, without explaining what you do. 


And there's only three ways to pay for these promises which this Government is hoaxing us on:

  • One, increase other taxes.
  • Two, cut services  
  • Or three, pay a bigger interest bill on the national debt which means you've got to go back to options one and two anyway.

Have you heard any government politician explain how they're going to pay for this money?If you take it out of the nation’s ATM, what gives? And they're doing it on the basis of economic uncertainty.


Now, we actually think you do need to invest in the future of this country but we think that you use scarce taxpayer money to invest for the future.


For five years now, Australia has been told that the nation cannot properly afford to fund TAFE or apprenticeships.


For five years now, Australia has been told that we can't afford to invest in schools or ensure that working class kids can go to university through uncapping places. 


We've been told for five years that we cannot afford to unfreeze Medicare, that we cannot do anything about increasing the patient rebate or to help people with their out-of-pocket medical costs. 


We've been told that the Government couldn't afford to spend a couple hundred million dollars to save the car manufacturing industry. 


We've been told that they can't afford to pay pensioners or government payment recipients an extra $7 a week to help with their energy bills. 


We've been told things are so tough, we can't even take the GST off tampons. 


We've been told that we can't afford to do anything for the 100,000 plus people waiting for aged care packages - many of whom have been diagnosed as living with dementia. 


We've been told that we can't afford to fund successful Indigenous housing programs in remote communities, creating jobs and apprenticeships for Aboriginal Australians. 


We've been told that we couldn't even afford a first-rate technology for the NBN. 


We can't even afford to pay for the ABC cost increases anymore.



But we actually do know the truth after these five years.


Government can afford to invest in these services, they can afford to invest in the future of our nation's infrastructure, in the productive capacity of our people, in our safety net of the fair go all round. They just choose not to. 


The money's there, ladies and gentlemen. It must be, because after all the Government can afford to give $250 billion away, most of which will go to the top end.

This government, this meaningless government - and that's a harsh word - but it is a fundamentally a meaningless government. 


When they talk about health, you know they do so, so they can stop being attacked for health cuts. They talk about health because they feel they have to. 


You know that when they talk about schools funding, you can just see them looking for a band-aid big enough to hide the cuts. 


You know their heart is not in it. 


But get them onto tax cuts, get them onto industrial relations and union bashing - a little bit of personal character assessment on the Opposition - they just fire right up.


Where is that passion on the other things? It is quite funny some days. 


But literally, the full extent, in all seriousness, of their strategy, the full extent of their economic strategy is tax scale reductions for the top end, in the hope that will trickle-down to everyone else.


But they have the money to do all those other things I've spoken about and help reduce the national debt. 


I fundamentally disagree with the priorities of this Government. But I actually welcome the philosophical differences. 


I actually do believe that my opposite number believes in taking the burden off the top, I think he genuinely believes that. It is a clash of values.


In an adversarial democracy like ours, we should produce a clash of ideas, a clash of substance. There are very clear choices for the Australian people.


Now, no one goes into politics hoping for a long spell in opposition. But my team and I have made good use of this time. 


We've spent the last five years developing our social and economic program for the nation. 


We think it's in contrast to this pretty meaningless government, indifferent to the big challenges Australia is facing. They're uninterested in people's daily lives. 


I believe Australia can do better and I'm determined for Labor to be better.


CEDA speaks about an economic disconnect - you're right, there is.


And this economic disconnect leads to perhaps, the real challenge. A sense that the fair go all round isn't the fair go all round. It contaminates our view of politics, our sense of cynicism, apathy and disinterest in politics. And when you see this nation debating the priorities this is the challenge.


We do offer a real policy choice.

We have a demonstrably superior first round of tax refunds for working and middle class people. 


We will fund schools and hospitals better.  


We get excited about funding schools, TAFE and university and the early years.

We are very committed to making our health care system affordable, reducing the out-of-pocket costs.

We are focused on a national energy policy - not just dealing with the civil war in our own party on 'is climate change real?'


And we have a strategy to pay down our national debt faster. 


We have a plan to boost wages. 


We want to make sure your kids get a quality education.


We want to make sure that universities are funded to offer an extra 200,000 places in the next 10 years. 


We are going to fund the upfront fees of 100,000 TAFE courses in our first three years. 


We will reverse the cuts to hospitals. 


We will take up a 50 per cent share of hospital funding with the states. We want people to be able afford the treatment when they need it - we don't want them to have to travel hours and wait years to get attention. 


We will back business and manufacturers with accelerated depreciation for investing on new equipment over $20,000. We will increase whatever your depreciation schedule is by 20 percent on day one you invest in new technology, new productivity building technology.


We will provide access to finance for our tourism industry, for our advanced manufacturing industry. 


We will put a floor underneath which renewable policy and renewable energy can be invested in - and force downward pressure on prices.


We will get the NBN working for people and business, we will make NBNCo accountable.


We'll make sure that older Australians get the care and dignity they deserve in retirement. 


We will tackle the scourge of dementia and we will help families helping a loved one living with dementia get a better deal. 


We will win the battle of ideas.


The next election is close - either side could win it.


We've made the choice not to be a small target Opposition. 


We will run on a clear set of values and ideas.


And they are based not on an envy of wealth but a desire that if we can support working people, the small businesses, the farmers and the pensioners get a fair go, that is a rising tide lifts the fair go all round within Australia.


We think that the best economic plan for Australia is to include all Australians in the economic plan.


Get the safety net right, get the wages policy right, get the productivity humming.


Work with people, not dividing people.


We'll cure the disconnect. 


Thanks very much.


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