ADDRESS TO THE

LIBERAL PARTY NSW STATE COUNCIL

SYDNEY HILTON

21 JULY 2001
8.30 PM

Last weekends result in Aston was a heartening one for the Government. By-elections tend to swing against the Government because people know its a by-election and a protest vote costs nothing.

And for a Government in office that has to make tough decisions there are lots of irritating things to protest about. We should bear in mind that our primary vote was down and work hard to neutralise issues that are irritants.

But the interesting thing is that there was nearly a 2% primary swing against the Labor Party. Now the public is not irritated by any tough decisions made by Labor. Labor has made no decisions. What Aston shows is that when the public got the chance to have a close look at Mr Beazley they were not impressed.

Noodle Nation

Aston was the first testing ground of Knowledge Nation.

The most notable aspect of Knowledge Nation was the spaghetti and meatballs diagram designed to “simplify” and “explain” what it was all about.

Knowledge Nation, or Noodle Nation as it is more aptly known, is based on the false premise that Australia is second rate and our businesses arent up there with the rest of the world.

Utter rubbish of course. On any measure of education standards Australians are in the top rung, and our economy has recently been nominated by the OECD as one of the six “new economies” in the world.

The Noodle Nation report was full of big words and jargon like “dematerialisation”. It recommended a national cadastre, which according to the Collins dictionary, is “an official register showing details of ownership, boundaries, and value of real property in a district, made for taxation purposes.” No wonder they wanted to use a word no-one understood.

Rollbackwards

The other Beazley Bungle has been his response to tax reform Rollbackwards.

Beazley used to talk big all the time about Rollback. Originally Rollback meant exemption after exemption on GST turning the indirect tax system right back to where it came from a narrow base, multi-rate, Wholesale Sales Tax on goods.

Business knows that exemptions mean complications and what they want is certainty and stability. Even John Della Bosca said Rollback should be abandoned. He got sacked for saying that.

After Della Bosca Beazley went completely silent on Rollback. It became The Policy That Dare Not Speak Its Name. Nowadays he only uses the term reluctantly, and when pressed.

Beazley was asked two years ago what Rollback meant. He said “Anything that you can conceivably think of is implicated in the term Rollback.”

That was two years ago. In Cairns four months ago Kim showed that he still has no idea.

Beazley was asked on talk-back radio about rollback. Heres what he said:-

CALLER: Gday, Kim. How are you going?

BEAZLEY: Good mate, good.

CALLER: Thats the idea. Kim could you tell us how you are going to roll back this GST and help primary producers?

Now this should be a gift of a question. In fact I would be surprised if the question wasnt asked by a Labor member or staffer as a Dorothy Dixer. If you were Labor Leader this is the question you would want every day.

What was Kim Beazleys answer to this gift question on Rollback?

BEAZLEY: What would be a very good idea is, if you think there is some way that we can assist you, would be for you to send in some suggestions to us.”

That was it. This is his response on an area of policy that Labor have as the centrepiece of their economic platform. This is a leader who when asked about his policy says, “you tell me.

People shouldnt be surprised at this display of incompetence. Beazley has a Ministerial record.

• Minister for Defence, what was his biggest achievement? The Collins Class submarines. Enormous budget blowout of $1.5 billion (so far) which this Government is still paying for.
• Minister for Education, what was his big achievement? In his biography he says “I had sort of finally got to accept that I would never be Defence Minister again, so I lost a lot of ambition and I stopped straining. I thought that there was less capacity to achieve in that (education) portfolio than just about any I have had.”
• Minister for Employment, what was his big achievement? Record unemployment at 11.3% – over one million Australians out of work.
• Minister for Finance, what was his big achievement? Budget deficits every single year, including a $10 billion deficit outcome after predicting a Budget surplus. Oh well, only $10,000 million out.

Four portfolios – four failures. Hes the Master of Disaster. Hes the Kim of the Bungle. Heaven help us if he ever got his hands on the big steering wheel

Now, you would think that after being responsible for the financial mismanagement last time that the Labor Party might be trying to be financially responsible this time around. But incredibly, no.

Their two pillars of Rollbackwards and Noodle Nation are mutually incompatible. You cant reduce revenue and spend more at the same time.

This is such a simple proposition that a fourteen year old schoolboy from Canberra understood it. Remember after the Budget the question asked by Carl Zimmerman of Kambah High School to Labors Shadow Minister for Financial Services, Stephen Conroy:-

QUESTION: In order to fund this Knowledge Nation that Labor keeps talking about, would you be willing to increase revenues in some way?

CONROY: Weve got some hard decisions to make over the next couple of months. I mean I dont think we can run away from the fact that there will be hard decisions and we have to prioritise how were going to fund our spending initiatives and were going to have to make choices between are we going to cut programs, are we going to increase some taxes.

Increase some taxes. Stephen Conroy was also pilloried for telling the truth.

Labor doesnt have a clue how theyre going to pay for Rollback and Noodle Nation. They are getting increasingly desperate for money to pay for their spending plans, which explains some of their recent “funny money” proposals for raising revenue.

Carmen Lawrence has publicly advocated Education Bonds to pay for Noodle Nation. Kim Beazley told the Financial Review he is looking at “mezzanine finance”. Theyre all just fancy words for going into debt

Which brings us to Kim Beazleys thoughts on income tax. Last week on Melbourne radio he was asked whether Australians pay too much income tax. He said:-

“No, I dont believe so, and I will say that with some vigour.”

Kim Beazley is vigorous about one thing – that Australians dont pay too much income tax. In fact he thinks theres too much weight on indirect tax which means he wants more weight on direct income tax.

The Coalition believes that if there is money available after paying for essential Government services, that money should go back to the Australian people. Whose money is it anyway? It shouldnt be taken from people to pay for big Beazley bureaucracies

Of course if you listen to Kim Beazley and Simon Crean they say dont worry about taxes, trust us. But the best indicator of future behaviour is past behaviour.

We all remember Labors record on income taxes.

We remember as though it were yesterday the Labor Party with its L-A-W tax cuts before the 1993 election. What happened after the election? The L-A-W tax cuts were abandoned, wholesales sales taxes were all increased, fuel excise was increased by 5c/litre, and company tax was increased to 36%.

There is a fascinating record of Kim Beazleys attitude to this shameful episode. In Parliament on 28 September 1993, only 6 months after the election Kim Beazley was the Finance Minister who chose to defend these tax rises as follows:-

“There are one or two points that the Coalition put forward that require an answer. Firstly, Mr Howard repeated this furphy that the Liberals go on with that the Australian public was lied to during the election campaign by virtue of the fact that small adjustments have been made to petrol taxes and sales taxes.

[Small adjustments were a 5 cent rise in petrol excise and 2 per cent rise in WST]

“They were not conned. When the government of the day gets up and says that it will sustain the current level of taxation, and the taxation that is predicted in the out years is actually falling, the public clearly knows that at any point of time a government is going to adjust taxation levels irrespective of anything that is said during election campaigns.

The fact that the Coalition was never able to exploit that politically is not the fault of this government. Nor is it the fault of this government that that statement was made and that Dr Hewson did not then go out and thump the table and demand to know how the government of the day was going to keep to that particular mark. He did not ask what taxes the government was going to raise or what tax cuts it was not going to put through. The fact that those opposite did not, day in, day out like any halfway decent opposition go through those propositions with us is not our fault.”

Two points. Firstly, Beazley thinks Labor is entitled to hide its tax plans and if it is not caught out that is bad luck to the public. He was even trying the same tactic after this years Budget:-

BEAZLEY: Laurie, Laurie, the point I’m making here is that it’s silly for an Opposition leader, or anyone else, to sit down in front of somebody like yourself, and it’s also undignified, and I won’t be involved in that. Undignified for an alternative Prime Minister to go through tax by tax under scrutiny like that.

Secondly, Kim Beazley said that irrespective of what is said in election campaigns, if revenues in the out years are falling then a government is entitled to increase taxes. THAT IS EXACTLY THE SITUATION WE HAVE AT PRESENT.

As the Budget papers show, tax revenues are expected to fall over the next few years. Kim Beazley thinks this means that irrespective of anything said during the election campaign this means he can raise taxes.

Make no mistake, I will pursue him day in, day out, to expose the taxes he intends to increase. I ask that each of you, too, do so

Ours is the Party that had the political courage to reform the tax system. We knew that it would be politically dangerous. But we knew that it was in the best interests of the nation. We did the heavy lifting.

• Ours is the Party that has cut income tax by $12 billion every year.
• Ours is the Party that has cut company tax from 36% to 30%.
• Ours is the Party that replaced wholesale sales tax with rates of zero, 12, 22, 32, 37, 41% with a single rate GST of 10%.
• Ours is the Party that took taxes off exports.
• Ours is the Party that is refunding excess imputation credits.
• Ours is the Party that has delivered tax cuts for older Australians.
• Ours is the Party that has funded the abolition of Financial Institutions Duty.
• Ours is the Party that funded the abolition of stamp duty on share transactions.
• Ours is the Party that has cut capital gains tax for individuals in half.
• Ours is the Party that has given capital gains tax rollover relief.
• Ours is the Party of tax cuts. The net effect of the tax package introduced last year was to cut taxes by around $5-6 billion.

In fact, one of the reasons that the Australian economy is healthy now when the rest of the world is going through a downturn is because the tax cuts in our package have supported consumer spending, and the abolition of $3.5 billion taxes on exports has given Australia a competitive boost against other countries. These have contributed to Australia now growing faster than the rest of the developed world

Over five years, our hard work has also seen:-

• Unemployment falling to 6.9%, around the lowest in a decade, and almost 800,000 jobs have been created.
• Inflation which has averaged 2.1% under the Coalition, compared to 5.2 % under Labor.
• The fifth consecutive budget surplus this financial year.
• $60 billion of Labors legacy of debt repaid and the governments annual interest bill reduced by $4 billion.
• Pressure off interest rates. The last rate cut takes mortgage interest rates down to 6.8%. This represents an annual interest cost saving on an average mortgage of $3,700 since 1996. It represents an annual saving of $10,200 when compared to the interest rates reached their peak of 17%!

Its five years since the Coalition came to office. Five years of achievement. Five years of progress. Five years of governing for all Australians.

The alternative is a lazy and incompetent Labor Party who have learnt nothing from the economic damage that they wrought when they were in office

We should never be complacent about the Australian economy. While our economy is healthy, economies in our region are undergoing difficulties and the US economy has been going through a downturn.

We have faced a similar situation before during the Asian financial crisis and we managed to get Australia through in very good shape. With some stormclouds on the horizon again, it is only through sound economic policies that we will guard against those negative effects.

The Coalition Government protected Australia successfully against the Asia crisis. We have the track record.

The last thing that you would do with the current international situation is risk our economy with Labors high spend, high tax agenda.

• The last thing you would want is wall-to-wall Labor Governments rewarding special interest groups.
• The last thing you want is three former ACTU presidents in the Labor Cabinet dictating industrial relations policy.
• The last thing you want is Rollbackwards complicating the tax system, and Noodle Nation wasting taxpayers dollars.

To keep the Labor Party in Opposition requires an enormous effort, and we must co-operate at state and federal level. I want to pay tribute to the work Chris McDiven and the team are doing here in NSW. I applaud the work Kerry Chikarovski and the Parliamentary Liberal Party have been doing against Bob Carr and NSW Labor. And I want to thank the efforts of all of the branch members of the Liberal Party in fighting for the good guys. Thank you.