Australia from 1949 and into the future

Today, in this the inaugural Dame Pattie Menzies oration, we seek in our own inadequate way to honour a remarkable Australian, woman, mother and wife.

A political movement reveals itself - its values and beliefs, not only by those it elevates to lead in its highest offices, but by those whom it honours. Some people lead from position, others by principle. Pattie Menzies did both. The debt owed to her legacy by the Liberal Party of Australia and the country we serve, is one we can barely understand, let alone repay.

Where then should the Liberal Party head in the 21st century? Australia faces different horizons and different challenges from those of Dame Pattie’s era. The one hundred segmented markets that characterised the world when Sir Robert and Dame Pattie moved into the Lodge in 1949 have coalesced into three principal trading blocs. So too the agrarian, land and labour intensive industries of our past - agriculture, fishing, forestry, mining and manufacturing have undergone enormous transformation. Some are dying.

Whereas in 1949 agriculture was 21.3 per cent of the nation’s GDP, it is now 3.4 per cent. When I finished school in 1975, manufacturing represented 21.4 per cent of our economic activity, it is now 11.9 per cent.

In contrast Australia last year earned more from exporting education than wheat and wool. At 4.2 per cent of GDP and employing 241,000 Australians in 22,000 businesses, information communication technology surpasses many traditional industries in value. So too tourism ranks alongside mining in economic value to our nation, representing 4.2 and 4.4 per cent respectively of GDP.

From the early 70s however, we saw churches and ethics based organisations progressively marginalised from public debate. The value of parenting as a fulltime occupation was diminished, volunteering was considered the domain of the “do gooder” and young people felt they were being pushed to the zeniths of educational achievement - frequently beyond their natural abilities and heartfelt preferences.

In elevating gambling to the status of a religion and having some arguing euthanasia on the basis that death is an acceptable escape from insufferable physical and emotional pain, we saw by the mid 90s the price paid by young Australians.

It wasn’t so much the peak in young male suicide at 27 per 100,000, nor illicit drug use by teenagers approaching a majority experience. We had reduced the toll taken by disease and car accident, but failed to have any impact on that exacted by despair.

When John Howard came to government a culture had emerged in which many young people felt that they had little to believe in other than themselves. When 2,600 year eight students were surveyed for the Victorian Centre for Adolescent Health’s “Gatehouse” longitudinal study in 1999, the results were disturbing.

40 per cent could identify a person whom they felt knew them well - favourite music, best friend, dreams and deepest fears. However, only a quarter could name a single adult whom they felt they could trust. Not a parent, teacher, neighbour, doctor. No one.

The problem perhaps is not that many young Australians have not learned our values: it is that they have. So what does all this have to do with articulated national vision? Everything.

Young people must have a stable and loving relationship with at least one adult, preferably a parent. They must secondly be a part of a school community in which identity is built. It is important they are known and understood as individuals. But thirdly, young people must grow in a community and nation that gives meaning and purpose to their lives. The growing pilgrimage by young Australians to Gallipoli is but one manifestation of their search for meaning.

Young Australians understand the central importance of progress and economic growth, but to what end? Towards what are we striving to grow?

Fiscal consolidation and sound economic management over the past nine years has allowed a generation to escape the single biggest lifelong cause of poverty - unemployment. Gun control, the emancipation of East Timor, taking up arms against terrorist fundamentalism, defining clearly which side we’re on in the war on drugs, determined efforts to practically address the existential despair that is much of Aboriginal Australia, tsunami relief - these things send powerful subliminal messages to young people about the future we want.

We should in all we do, show that we value the health and integrity of human life as much as achieving our economic objectives, strive to be an outward looking, competitive yet compassionate country reconciled with its indigenous history, imbued with the values of hard work, self sacrifice, tolerance and courage.

The context for the future has been laid recently by the Productivity Commission. The fiscal gap (revenue minus expenditure) will grow over 40 years by 7 per cent of GDP to cover the health and welfare impact of aging. Alternatively taxation will need to increase 23 per cent. Although incomes will be 90 per cent higher, we face a 10 per cent contraction in labour market participation.

One proposal is that marginal tax rates be indexed to inflation as a means of boosting productivity. Consistent with Liberal principles, the Commission puts the case for incentives for working Australians to work harder by not penalising them with static marginal tax thresholds in an environment of real wages growth.

In 1954, an Australian had to be earning 19 times the average wage to hit the top marginal rate. That’s about $800,000. Today it is approaching 1.2 times the average wage.

The Business Council of Australia recently proposed a cut to the top marginal rate to 40 per cent by 2007-08 at its estimated cost to the budget of $5.2 billion. It further argues that it should in the longer term align with a corporate tax rate which itself should decline from 30 per cent.

The Howard government has already had a near death political experience in delivering lower marginal tax rates - $12 billion annually in personal income tax cuts, abolishing a raft of indirect taxes including wholesale sales tax and introducing a broad based consumption growth tax for the states to put a foundation under federation. A further $25 billion was returned to taxpayers over the forward estimates in the previous two budgets.

No Liberal Member of Parliament wants anything other than lower levels of taxation. Our medium to long term objective should be a lowering of the top marginal rate and closer alignment with the corporate tax rate.

However, the Commonwealth is currently the nation’s only significant net saver. With the current account deficit running at 6.75 per cent of GDP in a climate where we have a strong rise in the terms of trade and a reasonably buoyant global economy, the imperative is to continue to run strong fiscal policy.

Reducing personal and corporate taxation rates in this climate which includes strong domestic demand could threaten what has been 14 years of economic expansion.

Compounding this is the brake on expanding resource exports from inadequate antiquated rail and port infrastructure. Our forebears living in considerably more difficult times were occupied with building bridge, rail, port, road, power and telecommunications infrastructure. Perhaps it is time for our generation to make similar sacrifices and to do so through leveraging the private sector.

Our government inherited from the Keating Government a legacy of debt and asset sales being used to fund recurrent expenditure and essential social infrastructure. But equally crippling was the culture of unsustainable expectation that emerged in terms of what governments could and would provide.

There is evidence that the world’s environment is warming and that human activity is a key contributor. Most of us appreciate that no longer can human existence be sustained on environmental capital. Australia has rightly refused to sign the Kyoto protocol. Exporting thousands of mining and manufacturing jobs alone to less developed countries with less stringent environmental controls serves the interests neither of our nation nor those whose jobs are at risk.

Yet we are one of only a handful of countries on track to meet our Kyoto deadline. We have grown our economy by 47 per cent since 1990 but increased greenhouse gas emissions by only 1.3 per cent.

The Howard Government has invested $1.8 billion in its climate change strategy. At least a further billion dollars is leveraged from the private sector in low emission technologies, photovoltaics and renewable energies. But in addition to this, is it not time to consider in the longer term the most obvious power source, nuclear power?

For a million years CO2 levels were between 200 and 300 parts per million. They have risen to 380 ppm in 150 years. Although much hysteria surrounds global warming, it pales into insignificance compared to that surrounding nuclear power.

We are a part of the nuclear cycle. About a third of the world’s uranium is at Olympic Dam in South Australia. As Australia’s science minister I have had to deal with parochialism of the South Australian government refusing to allow the safe storage of low level waste at Woomera. Now it is making arrangements to store its own low and medium level waste in South Australia.

Simultaneously the same government enthusiastically eyes the economic potential of its massive uranium deposits. Australia already accounts for 19 per cent of global uranium production earning us $427 million in 2002-03.

Nuclear power generates 16 per cent of the world’s electricity from 440 stations in 31 countries. In doing so the complete nuclear process emits 2-6 grams of carbon equivalent per kilowatt-hour. Coal, oil and natural gas emit 100-360 grams of Carbon per kilowatt. The nuclear power that today generates 16 per cent of the world’s electricity avoids 600 million tonnes of carbon emissions annually. In plain language that’s 8 per cent of current global greenhouse gas emissions.

My Canberra office has its walls adorned by numerous photos. Every one tells a story. The largest hangs  there to remind me that I am privileged to be a member of parliament. Almost twice the size of a door, it is a black and white photograph of the late Neville Bonner. Neville was, of course, the first Aboriginal Australian elected to the federal parliament in 1971 as a Queensland Liberal senator.

Born into a life of poverty unknown to all but a few of us here, he endured a life of adversity, prejudice, hurtful stereotyping and an education in the university of life. When asked to nominate his greatest achievement, he replied, “It is that I was there. They no longer spoke of Boongs or blacks. They spoke instead of Aboriginal people.”

Life expectancy for Indigenous Australians remains 15 to 20 years below that of non Indigenous Australians. Only 1 in 3 will see age 65 when the rest of the country is concerned about collapsing age dependency rates. Aboriginal infant mortality, despite dramatic improvements, is 3 times higher, unemployment 4 times higher and incarceration rates 16 times higher than non Indigenous Australians.

In remote areas only 1 in 10 Indigenous students remains to year 12, frequently achieving barely a year 10 standard. Achievement in these areas against national literacy and numeracy benchmarks is barely 13 per cent. On a range of health and educational benchmarks however, there has been improvement over the past five years.

The COAG trials driven by the Prime Minister offer great promise. Pooling state and federal money, cutting through red tape and requiring mutual obligation on the part of Aboriginal communities is starting to pay off already.

The much maligned deal to install a petrol bowser in the remote community of Mulan in return for parents washing kids’ faces has seen the prevalence of trachoma plummet from 70 per cent to zero. Well may we argue that every parent should do it anyway.

I am responsible for nine Shared Responsibility Agreements (SRAs) signed in western NSW. Homes will be air conditioned but in return people must be formally trained in their maintenance and kids must be at school. At Burke we fund a bus and administrative support in return for which the community runs a night patrol to return kids on the night streets to their homes. Crime has dropped to 40 per cent.

It is hard, however, not to conclude that our first world welfare system is a big part of the problem.

Too much money goes too quickly on alcohol, gambling, fast food and tobacco. The diseases and events killing Aboriginal people are consequences of obesity, diabetes, tobacco, alcohol and I would add - illiteracy. We should respond with enthusiasm to proposals which come from Aboriginal people themselves for different models of welfare delivery.

Pooling some or all individual payments in some communities to ensure food, clothing and shelter is provided, is an initiative worthy of expansion. Further incentives could be built into such initiatives to encourage their uptake where Aboriginal people themselves have decided to take control of monies in their own communities.

Although symbolism is important, an Australian Republic is not our most urgent need. In the past three years the only people I’ve heard raise it have been in federal parliament. Australia will inevitably return to the issue at some point.

The most pressing constitutional issue is how we can best govern ourselves as a federation in a world vastly different from that of Henry Parkes. Increasingly, international pressures demand a nationalist approach in everything from diplomacy, border protection and counter terrorism to education and industrial relations. For Liberals there is a tension not only in adjusting to a different role for the States and the Commonwealth, but also in the fundamentals of a market economy.

On the one hand we support competition, but on the other we recognise the critically important role of newsagents and pharmacists as community anchors. Given that Coles and Woolworths have between them now almost 50 per cent of the grocery sector and tentacles into almost every aspect of Australian life, where is the place of the corner store in any emerging national identity?

Dame Pattie Menzies, her life and that of her husband, have given us a legacy upon which we must build the foundation for our future.