PRIME MINISTER
EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY
THZ NATIONAL PRESS CLUB
CANBERRA 3 JULY 19G7
Members of the National Press Club,
There a~ o two crystal clear issues of overwhelming
importance which the Australian electorate must determine on
11 July.
Who can provide Australia with the responsible
econonic management it needs?
And who can provide Australia with the united and credible
polittcal leadership it deserves?
When I opened this campaign I said that in Australia's
post-waT period there had been no more important election
than thio.
As we near the end of the campaign, that judgewent has been
thoroughly vindicated.
For the last few weeks of campaigning have draiaatically
highlighted what the last four years of Government strongly
suggested that Labor offers Australia the only path to
assured economic growth and political stability.
Let me first address the issue of economic management.
During our four years in office, my Ministers and I have
consistently and responsibly outlined the facts about the
econonic challenge we face the good news as well as the
bad. That's how we've campaigned in this election.
We have addressed the issues. We have not shirked the fact
that sacrifices have been necessary in the past and that the
way ahead will still require tough decisions and hard work.
But even while the campaign itself has progressed, a steady
flow of evidence has emerged to confirm that our policies
are working.
Figures were released showing falling interest rates, a
shrinking balance of payments deficit and rising investment. ( J( JOl 7
Since Februaiy: 90 & ay Treasury note yields have fallen by 4 1/ 2
pe: zent;
the L: year bond rate has fallen by almost 1 1/ 4
pe: : ent; and
the 7aximum prime overdraft rate of the major banks
has : allen by 2 1/ 4 per cent.
Three smaller: banks have already reduced their mortgage
rates. And hank representatives agree that, under Labor
policies, a r:. re general decline in mortgage rates can be
expected before year's end.
Figures for t'-e Ray balance of payments deficit were
released. Th: y came in well below market expectations
the -: tcome this financial year is now expected to
be e 1 1/ 2 billion dollars below the Budget
est z3to and a further fall is expected in 1987-88;
ox-por'ts of imanufactures are up 34 per cent and we
now -vo a surplus on tourism compared with a
large defAcit just 2 years ago.
A most import-. t but virtually unnoticed set of figures was
released rela': ng to investment. These suggest real growth
in new capital expenditure of 3 per cent in 1986-87,
compared'with a 1 per cent fall expected at Budget time.
They also raice expected growth next year by 4 per cent.
This echoed t:: etpac-CAI's survey which showed an improving
outlook for investment in manufacturing. Encouragingly,
that survey aSDin showed an historically high expected level
of exports.
Consumer senticent and retail sales have picked up.
And further evidence has emerged of Australia's enmeshment
with our dynaeic region.
Three years of patient work has paid off with the
announcement that the Channar iron ore mine is to
be developed as a joint venture with China,
entireLy for the Chinese market the first iron
ore nine to be opened in Australia in 15 years,
further opening the door for other mines and other
producers to participate in the rapid expansion of
China's iron and steel industry;
A new ; oint venture, also with China, was announced
by the Victorian Government to fabricate aluminium
products in China, partly using exports from the
Portland smelter; and
data released in Japan shows substantial growth in
.; 00178
primary products.
we will seek further enmeshment of the Australian
economy with our region.
We uill facilitate the expansion of our tourism
industry.
And as a spocial priority, the next Hawke Government will
further address the training and education needs of our
greatest rocource the Australian people.
We will encourage more children to complete school, more
young unempLoyed people will take up training opportunities,
and more aduLts will get vocational help.
Each of these priority commitments will improve our capacity
to compete ti; th the rest of the world in the production and
export of ranufactures and services. Each will help remedy
our balance o5 payments position and help reduce our
reliance on debt.
If we do the hard work, Australia should be able to double
its manufacturing exports by the early 1990s and that will
mean growth 7. nd prosperity for us all.
And I want . o stress that each of these commitments is
achievable, roalistic, relevant to our overall strategy of
building our-national prosperity.
They are not -,, llusory tax cuts. They do not depend on
hypothetical c" incentivation". They do not require us to
tear up the sofety net which supports the needy in our
community. Indeed they are achievable side by side with further
progress in ccnstructing that safety net.
We have prom"' ced in this campaign to introduce a new Family
Allowance Supplement, to help Australia's neediest families
to lift their children out of poverty.
It will direct to the mothers of some half a million
Australian families a payment of $ 22 a week for each child
or $ 28 for teenagers aged 13 to
We will also increase support for those families in private
rented accomnodation, and to those families who carry the
care and responsibility of raising a disabled child.
We will make it easier for pensioners to take short-term
work without losing their benefits.
As an election promise our commitment to Australia's
families is everything the Liberals' tax cuts are not.
It is affordable, where their tax cuts would bust the
budget. it is directed to those most in need, where the 00 180
Liberals would most help those who are better off. And it
will be delivered..
But the surest ways a Government can lift the living
standards of A\ ustralian families are by creating jobs for
them, by creating the climate for greater productivity and
by creating tio social infrastructure that will allow the
fruits of growth to be distrib~ uted fairly.
Let me briefl~ y compare the records of Hawke and Howard in
job creation.
In just over sour years we have created nearly 800,000 new
jobs. That represento four times the annual growth in jobG under
the Coalition and about twice the average for the OECD.
And if we stick at the hard task of reconstructing the
economy we can expect a continued steady growth in the
number of job3.
All this leads directly to the great tax deception which iG
central to ouK opponents' campaign and central to the great
issue of res? onsible economic management.
For it ir. no understatement to say that any serious attempt
to implement th~ e Liberal tax cuts would destroy the economic
foundations wo have built and tear apart the social fabric
of this nation.
Look at how tho Liberal tax cuts were discredited.
First there was the revelation that the proposed tan rate
for average income earners was not 25 per cent as claimed,
but 38 per c. en'. which forced the Liberal to withdraw their
brochure publicising their Bicentennial tax scales.
Second there was the massive double counting in their
spending cuts an error which by itself should have been
enough to flaw fatally the whole illusion of tax cuts.
Third was the discovery that the promised tax cut of $ 26 a
week for the zo-called average family in fact would in fact
cost moot single income families on $ 19,000 a year some $ 14
a week.
But there was more. Fourth came the fib that the tax cuts
could be paid gor by cutting 3 cents in every dollar of
Government spending a claim which under pressure John
Howard agreed was 9 cents but which in fact requires at
least 16 cents in the dollar.
That prompted the unprecedented call by the Financial Review
for Mir Howard to withdraw his " disgraceful' TV advertisement
which persistod with the 3 cents claim.
Next came Ian Sinclair's declaration that tax cuts would be
Jot,"! 1 l
the third cab off the rank after reductions in the deficit
and interest rates, John Howard said no all the cabs would
leave at cncel
And yesterday, the Liberals produced a sixth stunning
revelation I. o discredit themselves.
The Opposition'a health spokesman, Senator Baume, claimed
the tax cuto would be phased in over a three year period
and not, ac John Howard had said, introduced from the first
of February next year.
In other words, the very basis of the Liberals' tax bribe
the $ 26 a o. eet tax cut is fast becoming a case of tax cuts
on the nevor never.
In 1977, PL: Koward grabbed their fistful of dollars back
after the oLcction. In 1987 they have excelled themselves
they have Vrabbod their tax cuts back before the election.
So here is tho great conjuring trick the Liberals say they
will cut inccme tax and abolish the capital gains and fringe
benefits t;: oG while cutting an unprecedented slice out
of government spending while protecting the pensioners
and the dicsdvantaged and protecting the defence budget
while graduvlly elininating the budget deficit!
Nr Howard said he wouldn't put his name to a tax policy that
didn't add up. out this doesn't add up. It can't add up.
The net impact of the Liberals' tax cuts would be to make
most people worse off. But let's just take them for a
moment at their face value.
Their claim ic based on the offer of incentives to workers
to stay lonor at work
but Cor two million taxpayers Mr Howard offers a I
cent increase in their marginal tax rate and, for a
further 2.7 million people he offers only a 2 per
cent cut; and
for half of the group most likely to respond to
such opportunities, that is, women, there will in
fact be no added incentive. For one in ten there
will he a marginal gain of two cents in the dollar
while two in ten would actually lose.
That is hard-y a basis for an incentive led economic
reconstruction.
Nor is it a basis for the $ 900 million of incentive effects
which he has claimed to finance his promises.
So if incentive-led growth is not the product of Liberal
policies, what is?
The sad reality is that a consumption boom financed by tax 000132
iiuihim i~ 7
cuts, if del. ivered, would blow out the current account
deficit by an estimated $ 1 billion.
Among other things that would weaken our currency and pump
up our external debt which, as the EPAC Office has shown,
" would be paid for in a sustained reduction in the share of
resources available for domestic expenditure in the longer
term"; that is, in plain language, and contrary to Mr
Howard's clEAi, lower living standards.
Let's recall the assessment of the New York investment
house, Goldaan Sachs, that the Liberal tax cuts are
" dangerous". This is the institution which John Howard
himself described as highly reputable. Goldman Sachs
expressed a preference for the continuation of the Labor
Government, Qointed to the disunity in the Opposition
parties and a~ plauded the distinct improvement in tho major
economic indicators over the last few months under Labor.
We clearly carnot afford the Howard experiment. Neither can
our kids.
The Liberals claim to have policies to boost living
standards tthey don't.
Mr Howard said last November
whcn I unveil the ( tax) policy I will explain where
the noncy is coming from. I accept the responsibility,
I always have, to explain to people that if you are
offering lower tax you have to explain where the
money's coming from."
And in February this year he said
" Any politician who thinks he can be a credible national
figure without telling the people where the money is
coming from is absolutely kidding himself."
And that lezds me to the second great issue for
determination by the Australian electorate on Saturday: the
credibility of the political leadership offered by Labor and
the Opposition parties.
For the Opposition parties suffer a disability more
crippling than even their weakness on the tax issue.
It is not just a question of the impossibility of their
carrying out any particular proposal.
They have proved incapable of governing themselves they
could not govern the nation.
This is their real credibility gap.
Not only did the Liberals spend their time in
Opposition squabbling over the mantle of leadership
and dividing into factions of wets, dries and 000) 1 3 3
8
innumerates;
Not only did the foundation stone of conservative
politics, the coalition, shatter into fragments;
Not only did the National Party split in half;
ot only all this but when they came under the
bright spotlight of the election campaign their
hastily drawn up truce collapsed and thay went back
to fighting their battles among themselves again.
Ian Sinclair declared a conservative victory would be
followed by a period of closed-door negotiations with the
Liberals to work out which of their promises to implement
and which to abandon.
john stone then declared that the Queensland Nationals were,
simply not prepared to accept the policies of tho Liberal
Party.
And yesterd:, iy a senior Queensland National Party source was
reported to say that Party would not join a Coalition
without recciving concessions from the Liberals on tax
policies c nd leadership positions. " We are not going to be
part of a coalition which refuses to embrace our policies
and belie % s6that source said. The Queensland Nationals
would. tell ; qr Howard to embrace Joh's 25 per cent single
rate tax.
This is a '. au which M-r Howard has called " phoney" because it
would eithe,: mean 20 per cent of the community getting a
huge tax cut and 80 per cent being left for dead or sending
the country " bankrupt by adding $ 8 or $ 9 billion to the
deficit'. The logic o this is clear: the conservatives could not
form a Coalition Government.
Has there 2ver been a clearer choice placed before the
Australian people?
on one sida stands a government with firm policies in place
' 1 realistic, responsible, achievable policies;
policies which are already yielding their success,
as interest rates fall, as the deficit falls, as
inflation falls; and
policies which will be extended, in the ways I have
q outlined, to enable Australia to complete the task
of rebuilding and revitalising our industry to meet
the challenge of open and vigorous competition with
the rcest of the world.
on the other side stands an Opposition producing policies on
the run 0001841
An opposition whose leader, three days before the
end of the campaign, haG still not confirmod any of
hic shadow o~ inistry in their jobs.
Against the Government's united, competent team stand
john Howard, 26 faceless men and Ian Sinclair.
But even here, perhaps there is something to thank Joh for.
Because he hao ruled out Ian!
The Opposition goes to the people incapable of teamiworkeven
for tho purposes of an election campaign, much less the
heavy respons-Ibility of Government.
It is an Oppooltion whose political compromises won't work
and whose tant cut fantasies can't work.
Ladies and Gentlemen,
Australia io m~ id-way through meeting the historic challenge
of reconstruction.
But we're on way
Trancforming the nation from the complacent Lucky
Country to the Productive Country, the innovative
anc: E-" ard-torking Country.
Under Labor, wie're moving
To the challenge of open and vigorous competition
with the rest of the world instead of the security
blanket of protected introspection;
To enmeshment with our region rather than
insularity; To the resilience derived from economic diversity
ane. productivity instead of the vulnerability born
of our over-reliance on commodities;
To the shared rewards of constructive co-operation
inctead of the fruitlessness of confrontation; and
To a society whose hallmark is equality of
opportunity for all instead of one in which the
dice were loaded in favour of a privileged few,
right through from the tax system to education.
This is a massive transformation and it will require yet
more hard work.
And it is becaiuse we still have work to do as a nation that
the issues of responsible economic management and credible
political leadership are so crucial in this election.
Ladies and Gentlemen, 000135) i
it is with eptitmica an a firmI bolief in Labor's unique
ability to provido that manalguont and that leadership that
we are secking a renowed mandato from the Australian pe2ople
on 11 July. 000136