A Matter of Choice
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
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
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
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
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
- 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
- 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
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
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