PRIME MINISTER
EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY
SPEECH BY THE PRIME MINISTER, THE HON P J KEATING MP
1995 NATIONAL SOCIAL POLICY CONFERENCE
UNIVERSITY OF NEW SOUTH WALES, SYDNEY, 7 JULY 1995
It's good to be at a policy conference.
Policy is the stuff of government. It's why we are here. It's why we came to
government in the first place, it's why we are still here, it's why we will be here a year
from now.
We are still governing because, from the beginning, we have led a decade of
profound social, economic and cultural change.
And our first policy principle in guiding this reform is inclusion. As Samuel Johnson
said, " In a civilised society, we all depend on each other'.
Strange as it may seem for Sam Johnson to be writing Labors slogans, I have not
found a better broad definition of what this Government is about.
We take social policy seriously. We put social into the democratic equation. We
also put it into the economic equation at a time when other governments were
leaving it out.
Over the last 12 years, we have transformed the economic structure of Australia.
We are well known for this. It has been well advertised. What is sometimes
forgotten is that at the same time we transformed the social infrastructure of the
nation. Let me run through just some of our achievements:
the introduction of Medicare;
payments for low income families increased by at least 80 per cent in real
terms; an age pension set at the benchmark of at least 25 per cent of average
weekly earnings;
reforms to superannuation so that close to 90 per cent of the workforce
receive superannuation compared with less than 40 per cent in 1983;
the introduction of the Job Compact which means that everyone unemployed
for 18 months or more will be offered a job;
the establishment of the Child Support Scheme;
a more than five-fold increase in child care places, with a commitment to meet
demand for work-related child care by 2001;
the extension of Child Care Assistance and the introduction of the Child Care
Cash Rebate;
the recognition and protection of native title;
more than 7 in 10 young people completing high school compared with only 3
in 10 in 1983;
more than 50 per cent increase in enrolments in tertiary education;
the establishment of a national vocational education system under ANTA;
a comprehensive network of community care services for older people and
people with disabilities through the Home and Community Care Program;
the enactment of the Disability Discrimination Act making discrimination on
the grounds of disability unlawful; and
the Government's landmark Sex Discrimination Act outlawing discrimination
on the basis of sex, marital status or pregnancy.
And in the last three months, the Government has brought the Budget back into
surplus; introduced a Maternity Allowance; reached agreement with the ACTU on
Accord VIII; significantly improved national savings and retirement incomes through
increased superannuation contributions; and delivered the Justice Statement.
I was interested to read in Stuart Macintyre's paper to this conference his
comparison between the reaction of the Scullin Government to the Great
Depression, and this Government's response to the recession of the early nineties.
It is something some of us have long been aware of that, despite much popular
opinion to the contrary, this Government is more " Labor" in most of its essential
responses and initiatives than its fabled Labor predecessors.
To Professor Macintyre's comparison I might add another one the famous post-war
White Paper and the White Paper of last year we called Working Nation. It is
enough to say. here that Working Nation was a document of at least comparable
breadth and imagination. That is not to belittle the achievements of Chifley and
Curtin, or underestimate the forces at work on Scullin. But it is to correct a common
fallacy about modern Labor's commitment to social policy and social improvement.
It is a measure of our success, and a genuine reward, to think that in today's
Australia no one under the age of thirty has spent a year of adult life without
universal health insurance. It is part of the culture of this place. It is a tangible
expression of our traditional social values. Can you imagine Australia without the
new social infrastructure of the past decade without Medicare; without the Child
Support Agency; without Home and Community Care; without a national vocational
education scheme; without protection for women against discrimination.
The work we have done over the past 12 years establishes our good faith with the
Australian community. We don't think there should be an argument about that, but
it's not the same thing as saying that there are not real problems still to solve.
The policy process is a fascinating and challenging animal.
We often talk about policy-making as being like painting on a broad canvas. We
begin with a vision of what the picture will be: that is the first essential no
imagination, no picture. No faith in your ability to realise it, no picture. And, like a
painter with a vision and faith, you begin to fill the canvas in, step by step, layer by
layer.
And there the analogy ends because policy-making, unlike picture painting, is
never complete.
We can never finish the job of reform. We know that, with good policy, other
problems will come along, often uncovered by the good policy itself. And we know
that, with even the best policy, we won't solve all the problems.
But we also know that we will get better answers if we pay attention to the views of
people in the field.
All of you here today, from your varying perspectives of community workers,
lobbyists, public servants and academics, know this. You know your advice or
action or arguments will be better if they are road tested, as it were.
Forgive me for the political intrusion, but that is one reason why there should be a
very strong objection to political leaders who say they will announce their policies
only in an election campaign. That means the only consultation will be consultation
with the Coalition's research groups. The only listening will be to the polls.
Mr Howard has already said he will not be taking any notice of special interest
groups. He has dismissed the role of consultation between governments and representatives
of ordinary Australians as a legitimate part of the policy process.
Included in his coverage of special interest groups is the ACTU, which represents
over two and a half million workers. If he dismisses consultation with the organised
labour movement, what about with organised business such as the BCA; or groups
such as ACOSS, the Australian Conservation Foundation, the Aboriginal Land
Councils, the Australian Consumers' Association, Women's Electoral Lobby, the
Farmers' Federation, the National Catholic Education Commission, or the AMA?
The Labor Government deals with interest groups, accords them status, learns from
them, and acts in partnership with them. We know that in combination they
represent almost every sector of the community.
Research and consultation have been the basis of our major social reforms, such as
Working Nation, the Social Security Review, the Child Support Scheme; the National
Housing Strategy; and the National Health Strategy.
Just now, in the research community and in the general community there is a lot
of interest in income distribution issues. A look at the program for this conference
confirms that.
Let me start by saying that a reduction in poverty and inequality is one of the
benchmarks against which the Government judges itself and will be judged.
And the fact is that under Labor, real wages and household incomes have increased
substantially and living standards have improved as a result. And Australia
continues to have one of the fairest wage distributions in the developed world.
We all know that unemployment is one of the greatest causes of inequality. An even
more certain and profound truth is that nothing a government can do in the way of
social services, or social policies of any kind, will so effectively distribute wealth and
opportunity as employment. Nothing comes close. Nothing is as good as a job.
And nothing increases the number of jobs like high, sustainable economic growth.
Since April 1993, over 600,000 jobs have been created. Over the year to May 1995,
the number of people out of work for more than a year dropped by 26 per cent. The
ABS has recently published figures showing that in 1994 Australia out-performed all
the world's major economies in reducing unemployment. That is a major contribution
to equality, a major contribution to social justice.
The most common measure of poverty in Australia is the Henderson Poverty Line,
which is now more than twenty years old and generally accepted to have some
misleading features. The Henderson Poverty Line is updated according to changes
in household disposable income rather than the CPI or average weekly earnings.
Since household disposable income per person has risen by nearly 20 per cent in
real terms since 1983, in real terms the poverty line has been rising.
Yet under Labor most social security recipients have moved from below to above the
poverty line.
For example, since 1983, the income of an unemployed couple with one child renting
privately has increased from 11 per cent below to 1 per cent above the poverty line.
The income of a sole parent with two children renting privately has increased from 9
per cent below to 2 per cent above the poverty line. The Social Policy Research
Centre has estimated that, if the poverty line had been adjusted in line with prices,
poverty would have fallen by nearly 20 per cent between 1983 and 1990. And this
does not take into account the benefits of the social wage.
The National Centre for Social and Economic Modelling estimates that social wage
benefits from health, housing, child care and education are worth an average of
$ 195 a week for a family with two children. The research also shows that these
benefits are worth far more for the lowest income families than they are for the
highest income families and thus substantially reduce inequality.
This is a very different picture from the one presented by the Opposition of the poor
getting poorer. I'm sure that the social policy ministers would like to know that their
hard fights within Cabinet have been worthwhile, but setting the record straight is not
the main point of my discussion.
It is important for all of us interested in income inequality to get a clearer
understanding of what has happened and how the Government can help to reduce
inequality. To better understand the issues and to tease out the implications for
policy, the Government has commissioned research from the University of
Melbourne on trends in income distribution. The research presented at this
Conference will also add to our picture.
These days, I am constantly getting into trouble for having the temerity to talk about
John Howard's past. It is not something I want to do. There are much richer and
more diverting historical excursions to take. But with Howard, we talk about the past
because that's all there is to talk about. It's all we know about him.
We know this present Opposition only by what they did when they were last in
government and what they said they would do if they regained government at the
last election. We know them only by their record and what we can infer from it and
the record is, by any local or international measure, abysmal.
The record shows that when they were last in government, with John Howard as
Treasurer, the Coalition:
abolished Medibank, after having promised to retain it, and left 2 million
people with no health insurance;
reduced the value of social security payments in real terms, so, for example, a
single unemployed person renting privately lost $ 15 a week, an age
pensioner lost $ 3 a week, and the most needy families lost $ 4 a week;
slashed spending on health, housing and child care in real terms, reducing
expenditure on the social wage by more than $ 5 billion or nearly $ 500 per
person per year.
And remember if the Coalition had won at the last election, they were committed to:
cutting a total of $ 10 billion from public expenditure, including $ 1 billion from
social security, $ 400 million from public housing and $ 1.3 billion from public
hospitals; introducing youth wages of $ 3 an hour;
establishing a training system under which unemployed people could have
been paid 70 per cent of the award wage with no requirement that their
employer train them;
full fees for university;
the abolition of bulk-billing under Medicare for most people;
a three week waiting period for unemployment benefits; and
removing the sole parent pension when the youngest child turned 12.
We don't know much of what the Coalition plans to do if they get elected next time.
But type generally wins out. And John Howard is a Type A Tory. A Type A
conservative of the eighties. He made friends with the New Right and that weird
specimen of extremism the H R Nichols Society. He has opposed all but two of the
wage rises since 1975.
Over and over again he says he is pro family and over and over again he is anti
wage-earners over and over again anti family support.
We must remember that 16 out of the 19 members of the current Coalition Shadow
Cabinet were members of John Hewson's Ministry.
So nearly 85 per cent of the current Shadow Cabinet put their hands up for slashing
spending on the social wage; for dropping unemployed people off unemployment
benefits after 9 months; for abolishing bulk-billing; for cutting the award wages of low
income workers. They put their hands up for policies which are Thatcherite in
principle and substance and which were most memorably expressed by John
Hewson when he said if we reach back for the weak they will drag us down.
And now we are meant to believe that they care about the " battlers" that group of
Australians they only discovered when their pollsters identified them.
We can see the true colours of the Coalition have not changed when we examine
the social policy areas where they have revealed their basic direction health policy,
family policy and industrial relations. We see the same old signs of regression. And
the policies fly in the face of the best research.
The Coalition's health policy is to provide tax subsidies for private health insurance.
You would expect a Labor Government to be critical of this, but you don't have to
take our word for it. It flies in the face of the research of health economists and
analysts such as Jeff Richardson, Richard Scotton, Stephen Leeder, and most
recently, Kevin Forde, a health economist at this university, who has published an
analysis of the impact of subsidising private health insurance.
In his Headland speech, Mr Howard says that private health insurance deserves
subsidies because private hospitals are under-utilised and there are waiting lists in
public hospitals.
It is untrue that waiting lists are attributable to a contraction in the private hospital
sector. In fact, over the past five years, there has been an increase in both privately
insured hospital days in private hospitals and admissions to private hospitals as a
total of all admissions.
It is also wrong to suggest that people who take out private health insurance will only
seek treatment in private hospitals, and thus free up public hospitals. In fact, many
sophisticated procedures are only carried out in public hospitals. And most people,
including Kerry Packer, when involved in an accident or an emergency, are treated
in public hospitals.
As the researchers point out, there is ample evidence to suggest that the policy of
subsidising private health insurance to move patients from the public to the private
sector does not reduce health care costs, but merely shifts them from the
government to the patients.
Overall health costs are also likely to increase with higher levels of private health
insurance because of higher administrative costs, fewer controls on over-servicing,
and the reluctance of the private health funds to encourage cost-containment in
private hospitals. We would end up with more, not fewer, resources being spent on
health care.
And who would get the extra money? Private hospitals, specialists working in
private hospitals and the health insurance funds.
What people gain in tax deductions they lose in health insurance premiums and outof
pocket expenses. The simple fact is that the Coalition's policy would mean that
patients would pay more for health care.
In short, what the Opposition proposes would be neither an efficient nor an equitable
means of solving health care problems. The major beneficiaries of the subsidies
would be tax-payers who already have private health insurance people we know
are more likely to be higher income earners.
The underlying danger of the Coalition's support for subsidies for private health
insurance is that it is aimed at developing a two-tier health system: a rich, privately
funded health system alongside a poor, publicly funded system.
We take the view that the solutions in health lie in improving the public health
system. It is also where our responsibility lies. It is not our responsibility to spend
over $ 1 billion subsidising the private health system and specialists at the expense
of Medicare.
It is a question of weight and priority. Put the weight in the wrong place and the
whole social balance is upset. And that is precisely what the political equation is
about. Family policy is another case in point.
When it comes to family policy we give priority to low income families. Furthermore,
we make sure the assistance is paid directly to the parent with the most daily
responsibility for caring for the children, usually the mother.
John Howard believes in income-splitting. He has believed in it since 1979. You
have to admire his tenacity, but not his judgement or priorities even his own party
won't take it on, and the tax and social policy experts reject it entirely.
Most recently, we have heard from Professor Patricia Apps from the University of
Sydney, who found income-splitting to be inefficient, regressive, anti-saving and
sexist. Her work clearly shows that tax would increase on the second income
earners in families, who are usually women. Conversely, the tax on the male
partners would decrease.
Dr Peter McDonald from the Australian Institute of Family Studies summed it up well:
" If the aim is to provide very large benefits to wealthy families and to make it very
difficult for women to work part-time then income-splitting is the right option."
The evidence against income-splitting is overwhelming and has been for years.
We know that it is regressive. The more you earn the more you benefit from incomesplitting.
A family on $ 100,000 would have their tax reduced by about $ 7,000 a year
while a family on $ 20,000 would actually pay about $ 200 more in tax under incomesplitting.
And the policy would not come cheap income-splitting would cost about $ 3 billion.
Or alternatively, as Professor Apps points out, if you wanted to introduce incomesplitting
without any loss of revenue, you would have to increase all marginal tax
rates by 3 percentage points.
The Leader of the Opposition who uses the " family" as his own personal mantra;
who says he is " pro-family", as if the rest of us were anti; and who now talks
sanctimoniously about " battlers", in fact advocates a $ 3 billion policy which is
regressive, which gives the greatest benefit to high income families, and under which
many low income families would actually be worse off.
When you look at John Howard's policy beliefs over the years it is a story all
fractured and disjointed. And yet there are these unrelated and almost arcane
elements consistently floating through it like odd socks. They are income-splitting,
employment contracts, pulling Medicare apart and the monarchy.
This is John Howard's policy odd sock bag the ones he keeps in the hope that one
day a matching one will turn up in someone else's drawer and make sense of it all
and renew its purpose in life and, with it, the purpose in life of J. W. Howard.
But as we all know, you only wait a certain time with your odd socks and then you
hang them up at Christmas, or use them as dusters for your shoes, or stuff them with
other odd socks and kick them round the lounge room.
And to think that someone once said that politics is a contest of ideas a contest for
ideas and values. John Howard has been hanging on to these ideas for the course
of his political life, and, try as he might, he can't add to them unless it's to go back
to tariffs, or to resist according the Aboriginal flag the same status as that of Norfolk
Island. I am not opposed to all forms of conservatism. I like tradition Labor thrives
on it but I hate regression. In the 1990s we simply can't afford it.
The Labor Government's guiding philosophy is social democratic, by which I mean a
democracy in which the concept of rights and liberties is extended to encompass
both individual opportunity and social justice.
There is no question that successful economies have been free market economies:
it is scarcely less debatable that the most successful societies have been those
which have combined this with democratic freedoms and sophisticated and
integrated social programs.
In saying this I do not mean that we follow any model European or American.
We've developed our own. We do things a little differently, and I think a little better.
It is a model that balances the need for economic efficiency and innovation, with the
imperative of protecting and enhancing the material and social circumstances of the
disadvantaged. It is a model that is seen most clearly in the unique Australian
partnership with the union movement, the Prices and Incomes Accord, which
recently evolved to its eighth stage.
It is a model, incidentally, that shows some influence of academic research, and
indeed, the Accord itself has become a major subject of social science investigation.
It is now well understood by social scientists that countries face clear choices in
industrial relations, and that the choice made has fundamental implications for
macro-economic outcomes and income distribution.
On the one hand, unions can be left to pursue their agendas and will naturally do so
by bidding up the wages of their members, giving relatively little weight to the
broader economic and social consequences of these actions. Research in this area
has shown with great clarity that the results are high wage inflation and high
unemployment.
On the other hand, countries without strong union movements typically deliver
relatively high employment growth with low inflation, but such countries are more
likely to offer less protection to the socially disadvantaged; this tends to be
manifested in growing income inequality. The United States is undoubtedly the best
example of such an arrangement.
The US Secretary of Labor, Robert Reich, recently lamented the strong tendency to
earnings inequality in that country and contrasted it with the social protection offered
in many of the countries of Western Europe. Yet in these countries, critics typically
point to poor employment performance and highlight the US as a superior model.
The Accord represents a middle ground. Under the Accord the ACTU has delivered
restraint in labour costs in order to ensure healthy US style employment growth.
And since 1983 the Government has been able to deliver a real and improved social
wage Western European style reflected in part in many of the policy
achievements I have mentioned today.
That term " social wage" is an instructive one. It makes the point that to go on
talking about the " economic" and the " social" as if they were separate and distinct
defies the reality. The social wage is both a social policy and an economic one. It
serves both social and economic ends. It is an expression of the fact admittedly
not recognised in some quarters that good economic policy has a good social
purpose, that social justice and economic efficiency are not only generally
compatible but generally complementary. This is why, I suppose, some of us grow a
little short-tempered with those who tell us that we are concentrating too much on
social matters, or cultural matters as opposed to economic ones or economic
matters as opposed to these others.
The fact is they are inseparable and properly so. In fact I sometimes think it is the
essence of good policy to find the points at which they fuse that the convergence is
very often disguised from us, and good policy means discovering where and how to
make them meet. Consider how long it took us to recognise that inflation not only
damaged our economic competitiveness but corroded social justice? And then
consider that, perhaps alone among countries today, we have a trade union
movement and the central bank working as one to the same low inflation ends.
And I might say this: I think among our social policy people and our economic
people it has generally been on the social policy side that the leap has been taken.
Our social thinkers became economists far more often than the economists became
social thinkers. That, it seems to me, puts a lot of our academic economists, market
analysts and economic commentators, a little way behind the contemporary reality, a
little way off the direction Australia is going.
I think we can look back on the past decade or more and see a whole new story told
in a whole new way. I think we can see the development here of a much more
sophisticated national equation. We have fashioned a modern Australian social
democracy: incomplete and imperfect, but a very good place to live and work, with
traditions, a spirit and a future that will not be denied.