ADDRESS AT THE 2017 UNIVERSITY OF QUEENSLAND FORGAN SMITH LECTURE

I acknowledge the traditional owners of the land on which we meet, Turrbal Nation, and extend my respects to elders past, present and emerging.

I’m delighted to have been asked to deliver the Forgan Smith lecture for the University of Queensland Labor Club.

I acknowledge the presence here tonight of my friend Milton Dick, Member for Oxley. He is an alumnus of the University and Club, as is of course Premier Palaszczuk, and Peter Beattie, Wayne Goss, Wayne Swan, Stirling Hinchliffe and Cameron Dick.

Each of these a trailblazer who once sat where you sit and each of them an inspiration to the generations who have come after them.

It’s right and proper that the UQ Labor Club honour William Forgan Smith, and congratulations for doing so.

He was Premier for ten years and the later Chancellor of this University. As Premier he was a big supporter of the University, adding the veterinarian, dentistry and medicine faculties to the university’s offerings, and seeing it as a key institution for the economic and social betterment of the state. 

At the opening of the Medical School in 1939 he said: “university is not established for the purpose of creating a privileged class in the community … a university can only play its part properly in the life of a nation if the period spent there is regarded as a period of training for greater and specialized service'.

But his legacy is broader and even more important and should be celebrated.

I come from New South Wales where a near contemporary of Forgan Smith, William McKell, is to this day honoured as the architect of modern Labor’s governing style. Forgan Smith deserves the same honour in Queensland. Indeed his legacy is important beyond the borders of his state.

He was of course a good, competent and effective Premier who won convincing victories and commanding majorities.

He was Member for Mackay.  The first Labor Member for Mackay.  He understood the vital importance of Queensland’s regions: a subject I will return to later in this speech.

He was an effective communicator who didn’t shy away from controversy and doing big and difficult things.

His tenure spanned two existential crises, the Great Depression and World War II, so Queenslanders looked to him and trusted him in difficult times.

He was happy to buck the orthodoxy and lead the economic debate using his considerable communication skills to argue for important and controversial reforms.

Defeating Premier Arthur Moore in 1932, a conservative Premier who was fully signed-up to the Premiers Plan, a disastrous conservative doctrine which prescribed austerity and cuts as a remedy of the Depression. Of course those cuts were to be unfairly implemented, removing support from those who needed it most when they needed it most.

Forgan Smith knew they were the wrong prescription, ripping support from the economy when it needed it the most.

Forgan Smith knew there as a better way.  He increased not decreased, the state based support for the unemployed, increasing social support and buttressing the economy. He built fairness and stimulated the economy of the state.

He paid for it by a more progressive state income tax, which was not popular with those who had to pay it.

But he rejected the populist and the counterproductive.  When Lang promoted repudiation of our debts to Britain, Forgan Smith knew that while that might be popular, it was wrong and counterproductive.

All this looks like an obvious course of action to us in hindsight. But of course it took Labor ingenuity and courage, against the orthodox and vested interests.

Forgan Smith became Premier nine months before Franklin D Roosevelt became President of the United States and before Keynesianism had really been invented, let alone adopted as orthodoxy so he had little to call upon in the way of international precedent and support.

But Labor in Queensland was leading, and Queensland Labor was leading federally.

Federal Treasurer Theodore, a former Queensland Premier was also arguing the folly at the conservative approach.

He argued for stimulus, he fought for the creation of a Reserve Bank, which was blocked by the conservative majority in the Senate. He argued for what we would now call Quantitative Easing – which so outraged conservative protestors that they threw money down from the gallery of the floor at Representatives, in protest at what they saw as the socialist inflationary printing of money.

But Theodore was right. Forgan Smith was right. Labor was right.

That legacy is an important one for us to draw on today, as we contemplate and prepare the agenda of the next Labor Government.

Of course, the challenges and opportunities we face are different to those faced by Forgan Smith, Theodore and those of the 30’s.

But our mission of ensuring economic growth that benefits many and not a few is unchanged. And in other important senses, the more things change the more they stay the same.

The political descendants of the people who thought the answer to mass unemployment was cuts to unemployment benefits and pensions now believe the answer to record low wages growth is to cut wages through penalty rates.

And again it falls to Labor to provide an alternative vision and lead the debate with ingenuity and courage. It is that alternative vision we’ve been laying out and will continue to do so.

Tonight I want to briefly address three of the economic challenges and opportunities that a Shorten Labor Government will need to deal with.

These are:

Ensuring our economic growth continues

Deal with income inequality and ensuring growth is fairly shared

Deal with geographic disparity and the need for all Australians regardless of where they live to contribute to and benefit from our economic growth.

 

One of the key areas of contest in this election is economic growth.  That is a good thing; economic growth should be a key issue in any election. This is an argument I relish.  We’ll take no lectures from Malcolm Turnbull or any Liberal about economic growth. 

With our twenty-six years of uninterrupted economic growth almost under our belt, we need a plan to ensure it continues.

For Labor, economic growth is at the core of our political mission.

Unlike the Greens, we believe in economic growth. It’s the best poverty alleviation program that has so far been invented.

Our twenty six years of uninterrupted economic growth are in no small measure due to big decisions made in the Hawke and Keating governments.

As Paul Keating has described the economic model that they engineered:

And of course the greatest achievement of Kevin Rudd and Wayne Swan was to protect Australia’s economic growth in the face of the most ferocious international circumstances possible, putting a premium on growth and jobs despite the strong opposition of Malcolm Turnbull and the Liberal Party.

Australia was spared a recession in the face of the worst global financial crisis in 70 years and the debilitating effects of mass unemployment that other developed countries are still recovering from almost a decade on.

The June quarter National Accounts showed that the Australia economy is growing at an annual rate of 1.8 per cent, a long way short of the growth potential of the Australian economy.

With annual economic growth below 2 per cent, and with it being below 2 per cent for three of the last four quarters, this is now the worst run economic growth performance since the GFC.

And to give this growth percentage some context, it puts Australia’s growth performance below that of Canada, USA, New Zealand and the OECD.

You will recall that Malcolm Turnbull and Scott Morrison’s ‘jobs and growth’ slogan came with a one point plan – a plan they want every other Australian tax payer to pay for: a $65 billion company tax cut.

That’s it – a one point plan paid for by higher income taxes – on the hope of higher growth over the next decade.  The government’s own figures and modelling indicate that the economic growth dividend will be small and many years off.

That’s all the Government has. a one point plan.  They are a one-trick pony.

They used to pretend that they had more.

The Government used to tell us how important innovation is, for example. Remember not so long ago when we were told that “it’s never been a better time to be alive” and that we need to be “agile”? 

It was the flavour of the fortnight. Now it’s not.

The relevant Minister, Arthur Sinodinos, admitted this morning that the Government had dropped the ball on innovation because it has other priorities.  Your guess is as good as mine as to what those priorities actually are. Tearing themselves apart over marriage equality and energy policy maybe.

The fact of the matter is that we believe entrepreneurship and innovation are not add-ons, optional extras or an economic fly-by-night scheme as Malcolm Turnbull appears to treat them.  I would recommend to you an excellent speech delivered to the Australian Financial Review Innovation Summit yesterday by colleague Ed Husic, the Shadow Minister for the Digital Economy and the Future of Work which underlines the consistency of Labor’s approach and the importance we place on innovation as part of our economic agenda.

Innovation is part of a broader holistic agenda for promoting economic growth.

A one size fits all policy like an expensive corporate tax cut won’t cut the mustard.

We will go to the people with a comprehensive economic growth plan which encapsulates investment in infrastructure, in the NBN.

We’ve already outlined what we see as the importance of investing $17 billion more in schools over the next decade. That’s part of holistic approach to economic growth.

We believe in a consistent, coherent energy policy, enabling and facilitating investment in clean energy which important for ensuring efficient supply of energy to manufacturers and other major employers and recognising the very significant job creation of potential of investment in clean energy in and of itself.

Bill Shorten has already begun to outline our plans when it comes to investing in TAFE.  We believe our vocational education and training system is fundamentally broken. 

I can think of few more important things we need to get right for economic growth than getting VET right, with a well-funded TAFE system at its core.

And importantly, we need a step change in our thinking about economic engagement with Asia. 

We live at the edge of the fastest growing economic region in the world.  And yet the blue print laid out in the Australia in the Asian Century White Paper for closer economic engagement with our region lays gathering dust.  

As a nation, we pay economic engagement with our region lip-service.  We need to much more and we’ll be saying more about this.

Importantly, Labor does not believe we face a choice between growth and equality.  Properly designed policies which promote fairness also can engender growth. 

This is the difference between Labor and the Liberal Party.   They claim to care about growth, but fundamentally under-estimate the importance of fairness. While the Greens at the other extreme are only interested in questions of equality without considering how we grow the pie.  Labor’s the only party which understands the importance of both.

Labor’s mission is critically important to success of the Australian growth story.

And so as a member of the Australian Labor Party of nearly thirty years, I believe passionately in equality of opportunity as a matter of social justice, of fairness. 

But even if I didn’t, I’d believe in it as sensible economic policy, as being vital to our future to ensure that all our talents as a nation are being harnessed. 

Inclusive growth is not just about ensuring that all Australians are included in receiving the dividends of economic growth.

It’s also about ensuring that all Australians can participate and contribute to our economic growth.

It’s simply good economics, ensuring that our growth potential is maximised by, in turn, maximising the capacity for each individual to contribute.  

As the IMF has said:

It is now more important than ever to ensure that whoever can participate in the economy does participate.

I argued a few months ago in a speech on the Case for Action on Inequality, that there are four principles to deal with policy action to tackle inequality.

I’m sure I don’t need to bore anyone hear about the need for more education!

But if I can briefly outline why Labor’s progressive tax reform agenda is so critical to supporting growth and addressing inequality.

Australia’s current tax settings see:

[if !supportLists]·         [endif]50% of the benefit of negative gearing goes to the top 10% of income earners.

[if !supportLists]·         [endif]70% of the benefit of the capital gains tax concession goes to the top 10% of income earners.

[if !supportLists]·         [endif]30% of the benefit of the superannuation concession goes to the top 10% of income earners.

All have been regressive elements of Australia’s tax system for some time, in some circumstances allowing people on higher incomes to reduce their taxable incomes to zero.

While Australia has a progressive taxation system based largely on a progressive income tax system, in the face of the increasing inequality of incomes, making the tax system less progressive would be a backwards step. And that is what the government is proposing as they take the deficit levy off, reducing the top marginal tax rate at the same time as increasing the Medicare levy, which applies to every Australian earning more than $21,000 a year.

Therefore improving the fairness of the tax system should be a key priority.

One of the most important things we can do is carefully and systematically reduce tax concessions in the system which are no longer fit for purpose and are regressive.

That’s exactly what Labor’s agenda does, and I am proud of it.

In July, Bill Shorten and I announced, for example, Labor’s plan to make the family trusts system fairer. 

A reform which has been in the too hard basket for too long.  It’s now in the “To Do” list.

Out of the four last Liberal treasurers, three have thought that family trusts should be reformed. 

John Howard, Peter Costello and Joe Hockey all understood that the tax breaks which are provided through family trusts are available only to some, are a big drain on the budget and are highly regressive.  Costello and Hockey both stuck their toe in the reform water but both were crushed by their party.

Only the current treasurer seems to think the current arrangements are okay.

Well, we don’t think they are okay and unlike Costello and Hockey, we will see the reforms through and deliver real improvements to the fairness of the system.

I now want to turn to the matter of geographical or regional inequality.

Any discussion about inequality in Australia which doesn’t deal with geographic inequality is missing a key part of the issue.

Where you live has a big impact on your quality of life.

And just as income inequality is at very elevated levels, there is no evidence that geographic inequality is reducing, quite the contrary.

For example, half of all jobs created in Australia in the last decade have been created within 2 kilometres of either the Sydney or Melbourne GPO. 

In the inner parts of cities, people see low unemployment rates and high levels of job creation.

This is important for Queensland.

The general unemployment rate is currently sitting at 6 per cent with youth unemployment in Brisbane Inner City at 5.9 per cent – the lowest in the state.

While in regional areas like Cairns youth unemployment is running at 15.6 per cent.

It’s not to say that there is no disadvantage in the cities, there is.

But as you move further away from the cities, there’s no denying there are less economic opportunities.

The Government of course, like in many areas, has no answers.

Their regional strategy is to move one agricultural agency from Canberra to Armidale. That’s it.

And at a great cost to tax payers, and efficiency.

While considering locating new organisations or government operations in rural and regional areas can play a modest role in regional development, in the absence of a broader strategy, random decentralisations like this are just a boondoggle.

And a boondoggle for just one town, which happens to be in Barnaby Joyce’s electorate.

Geographic specific policies can and must play a role. Labor created Regional Development Australia, a model which recognises that local communities are well placed to identify the opportunities for growth.

And there is very much a role for the Federal Government in providing strategic investments in skills, education and in infrastructure that meets the needs of the regions.

It has struck me for a long time that we have a problem when areas of high youth unemployment, for example, are areas of good industries with skill shortages.

Cairns has a high youth unemployment rate and yet it has a vibrant tourism sector desperate for well trained workers.

We need to do much better. Bill Shorten announced in May, Labor will create a new $100 million Building TAFE for the Future Fund.

To renovate classrooms, workshops, kitchens and agriculture science centres.

We’ll deliver world-class facilities, for a world-class training system.

And Bill has more recently announced a $1 billion National Tourism Infrastructure Fund – and was announcing some tourism projects in northern Queensland in recent days – exactly to help generate job opportunities that support the industries that do well and that regional Queensland rely on.

I spend a fair bit of time travelling to regional Queensland and other regional economies for this reason.  A Treasurer should not care and think exclusively about what is happening in Sydney and Melbourne.

We are seeing some voters in regional areas find the siren song of short term populism attractive.  And I understand why that is the case. They are hurting and they feel in the Federal Government that too few people are listening.

My family came to regional Queensland from Wales in 1887 as miners, keen to share in the economic bounty that this new country had to offer.

I want future generations of young people to not feel compelled to leave regional centres in search of economic prosperity. 

Unless we care about these issues, we can’t say that economic growth is working for all.

I want to conclude by again thanking you for the opportunity to give this lecture.

And more importantly, to thank you for everything you do in the Labor cause.

There are many calls on a university student’s time, many other temptations on campus.

But you choose devote your time to our cause.

Labor members in Queensland will have plenty to do in the coming months.

The re-election of the Palaszczuk Government is important.  Its election against the odds in 2015 was a boost to Labor across the country.  It’s a good government, and deserves re-election.

Now I can’t tell you when the Federal election will be.  I don’t know.  Maybe Malcolm Turnbull doesn’t know yet either.

But I can tell you a few things about the election.

Firstly, Queensland will be important.  We need more seats in Queensland. It will be a battleground and what you will be important.  So thanks for everything you have done so far and thanks in advance for what you will do in this key battleground state.

But I want to tell you something even more important than that.

That we want to win, not for victory’s sake and not just because the current government is so wretchedly hopeless.

We want to win to big and important things.  To be a bold and reforming Labor Government, in the best traditions of Labor. 

We are not a small target, far from it. We want a mandate to engage in serious reform. 

To engender growth and tackle inequality.

We are setting out an alternative vision: for a modern, sophisticated outward looking Republic.  And one in which every Australian child, regardless of where they live or their parents’ wealth receives the investment that allows them to grow to their full potential.

It’s an agenda different to Forgan Smith’s time, but which draws on the same values he did. He’d be proud of our agenda as he’d be proud of your commitment to our cause.

Thank you for celebrating Forgan Smith tonight, and thank you for inviting me to do so with you