A Matter of Choice

Dinner Address

Hal Clough

I feel very honoured but somewhat humble in addressing you this evening.

When John Hyde telephoned to suggest that I do so some months ago I had doubts. H. R. Nicholls conferences are addressed by the articulate members of the community, the lawyers, the economists, the politicians. I am a simple engineer.

But I am honoured and I expect all of us appreciate the opportunity of expressing our views.

I am a great admirer of John Hyde and the work he does at the Institute of Public Affairs. John Hyde and also Lyndon Rowe are two people, whom I know, when I ask for an opinion, will give it to me straight between the eyes. Most people tend to tell you what you want to hear, I find I do so myself, but John Hyde has his principles very clearly established and you get an opinion clearly as he sees it. I believe this is a great strength.

The tragedy of the last election was not that the Labor Party won and the Liberal Party lost. The tragedy was that for probably the first time ever in this country a political party went into an election with a comprehensive detailed policy. It lost, for whatever reason. What this means is that there is no way for at least a decade or two that a political party will promote a detailed policy. The winners, the Labor Party, promoted little or no policy initiatives and those they did propose they abandoned.

The election results have been interpreted as favouring the party that promises whatever the latest opinion poll indicates is popular, has little or no policy positions, and has no intention of honouring any promises it makes. Australia will pay a high price for this result.

One result of this situation is that political parties will no longer develop and promote comprehensive policy positions. Our country desperately needs comprehensive, clear-cut policy direction. Where is it to come from? Organisations like The H. R. Nicholls Society have an important function to raise the level of debate on a wide range of issues.

The development of policy issues will fall more heavily on a wide range of organisations: think tanks like the Institute of Public Affairs and the Centre for Independent Studies, business bodies like the Business Council of Australia and the Australian Chamber of Commerce and Industry. perhaps we can even get our universities to start contributing to the real world.

I have recently been elected as President of Australian Chamber of Commerce and Industry (ACCI) and we have been debating in what areas we can develop responsible research in important policy issues. What are the most pressing problems facing Australia today? Everyone would have their own list and their own priorities but two items would probably be on most:

1. Unemployment;

2. Balance of payments deficit; and my pet hobby horse

3. Federalism or, rather, the loss of federalism.

The Confederation of Australian Industry, which merged with the Australian Chamber of Commerce and Industry a year or so ago, was primarily an industrial relations organisation, a staunch member of the Melbourne Industrial Relations Club. Two or three years ago it revolutionised its Industrial Relations policy. It recommended the demise of the Industrial Relations Commission and the Industrial Relations Club and promoted true workplace enterprise bargaining. It is totally opposed to the latest Industrial Relations legislation, which entrenches the Industrial Relations Commission and awards into the system and makes a mockery of enterprise bargaining principles.

On 16 February 1994 1 attended the Small Business Forum in Canberra chaired by the Minister Chris Schacht. There was a presentation on the Committee on Employment Opportunities' Discussion Paper "Restoring Full Employment". The Government wanted to be seen to be doing something. There was talk of a jobs levy and regional development. Tax the workers so we can send the unemployed into the country to paint rocks.

I made myself unpopular by suggesting to the Minister that we were approaching the problem from completely the wrong direction. The Government should not be looking at new initiatives, new legislation. It should look at all the things it was currently doing wrong.

How do you identify the things we are currently doing wrong which cause high unemployment? I suggested one way was not to have a committee on Employment Opportunities but a committee on how to increase unemployment. If we could identify all those policies that cause high unemployment, we could then get rid of them.

I then suggested that he did not really need a committee. I could probably list them from my head. For example, how to increase unemployment?

Looking firstly at the potential employee:

1. Pay people not to work;

2. Tax people if they started to work.

Looking then at the employer:

3. Tax the employer on any payroll.

4. Make the employer responsible for collecting the employees' tax;

5. Add superannuation levies, training levies, fringe benefit taxes, etc.

Looking next at the unskilled, the young, the disadvantaged:

6. Put the minimum wage at a level well above their worth so that they can never get a start, never get trained, never get on a career path.

Looking at women and minority groups:

7. Introduce an Equal Opportunities Commission to chase employers with discrimination and harassment claims.

And if all else fails introduce what is potentially the most damaging Industrial Relations initiative ever devised:-

8. The unfair dismissal legislation which will give anyone taken on a job for life.

An employer would have to be stark raving mad to take on anyone under these conditions. I wonder that anyone is still employed. It is certainly despite of, not because of, Government policy.

It is because most sensible people, both employees and employers, ignore the rules and work around them.

The Equal Opportunity Commission, and the various action groups were all established with the best motives but little thought was given to the full ramifications of their actions. In my view, with a few exceptions, they are counter-productive to their aims.

There are lots of examples. I read a month or so ago that BHP had been fined or forced to pay compensation of $19 million to a number of women ex-workers. They had been discriminated against because BHP had a policy that women were not to lift more than nineteen kilograms. It seems to me the poetic irony of this case was if BHP had not had that policy the Occupational Health and Safety people would have blamed them every time one of their women ex-workers had a sore back and that would probably have cost them $38 million. They were damned if they did and damned if they didn't. The point is that the tougher it is to fire somebody or the more onerous their employment conditions, the less likely they are to be hired in the first place.

Business generally does not have a good name in the community. It is looked upon as greedy and uncaring. This is unfortunate and untrue. With a few exceptions, and these usually fail, business leaders I have met are more socially minded and more humble than political leaders, union leaders, academic leaders or government servants. I find them more environmentally conscious than Greenpeace and many other environmental groups.

I tried hard at ACCI to promote a research paper on the dangers of centralising all power in Canberra and the loss of the federal ideals or our Commonwealth. Loss of federal ideals might be a burning policy issue in Western Australia but I learnt it is almost a non-event in New South Wales and Victoria. We are an out-state, they are in-states. We view the problems of Canberra differently.

Against the indifference of my New South Wales and Victorian members I could not make federalism an issue, but it was agreed that a fundamental review of Australia's tax structure was a worthwhile project and this should include a particular emphasis on the proper balance of state and federal taxing powers, so that they might better reflect their spending obligations.

Taxation at all levels in Australia has developed in an ad hoc way, largely driven by taxation bureaucrats with the intention in mind of how most money can be raised most easily. Little thought has been given to the social and economic ramifications of taxes. Our balance of payments problem is largely the result of low saving levels, but if we look at the tax system which taxes savings and gives deductions for borrowings, the result is obvious. The fringe benefit tax was supposed to attack executive lunches and similar perks but the big payers are the resource development companies providing accommodation for employees at remote locations. One result has been the development of fly-in fly-out procedures with families living in capital cities. Is this a social implication we should encourage? I doubt it.

We would like to start with a clean slate. Forget for the time being the constitutional restraints and uncertainties, assume the current levels of taxation are necessary, and ask what is the most efficient way of raising this amount of tax given a set of social and economic objectives?

Probably the next step is a paper on the question: how much of the tax raised is really necessary. The duplication in Canberra is frightening. We can accept the Federal Government controlling defence, foreign affairs, immigration and traditionally social security and communications, but they now have major departments on health, education, employment, environment, sport, housing, local government, industry, technology, regional development and a host of others that are essentially state matters. A combination of surplus taxes from unbalanced taxing powers and the conviction by all politicians that Canberra is the font of all knowledge has been an irresistible force leading to meddling in all manner of areas that for the efficient government of the country are simply no affair of the Federal Government at all. In many cases they are actively encouraged by fringe minority groups who find the Federal Government a soft touch compared to the more pragmatic state governments who are closer to the problem.

What we should probably be doing is seeing how our whole form of Government conforms with world best practice. If we want to be in the top ten of world economies by the year 2010 as promoted by the BCA we certainly should take a comprehensive look at ourselves and how we are governed. Are we over governed? How can we make our federal system work better?

We don't need Governments that want to do something, introduce new initiatives, new legislation, or new regulations. What I would support would be a government dedicated to rescinding legislation and regulation, closing down initiatives and departments. What a great discipline it would be for the tax department if, for every new section they introduced, they had to rescind two. After a decade we might have a tax act someone could understand. I am convinced no one understands it today.

I would like to think that the right policy research raises the level of debate, starts to identify the important issues and allows the politicians to follow. In this role I believe The H.R. Nicholls Society has a role to play that has never been more important. I am sure the Society has a great future and I wish you well.