Published in The Age, 17 August 1993, p. 4.
The Treasurer knew that last night’s Budget would be judged against three criteria: jobs, jobs, jobs. So what’s the scorecard? Clearly the economic and employment optimism that colored One Nation is now replaced by a more subdued outlook.
At the end of June 1994, unemployment is likely to remain high – 10.75 per cent; employment growth is estimated to grow weakly by 100,000.
More will be done in targeting assistance to the unemployed. An extra $100 million is allocated to labor market programs. An estimated 500,000 unemployed workers are scheduled to receive assistance in the form of labor market programs. Two-thirds of those have been unemployed for more than 12 months.
With GDP growth of 2.5 per cent in 1993-94 it is clear that this is not enough to cut unemployment significantly. Private sector investment forecasts are also not as robust as might be expected in a period of economic recovery.
On the bright side is the recent increase of exports, especially elaborately transformed manufactures. Even so, employment growth in this important sector is not as impressive as the rhetoric may suggest.
Also worth noting are the increased outlays to exporters, in line with the McKinsey Review, and an $80 million increase to the tourism budget over the next six years is significant and well targeted for both employment and export earnings.
The government’s ideas about a lower deficit, expansion of savings and increased economic activity in the medium term, is impressively illustrated including the detailed projection of tax revenue increases and program outlays in the next few years. The 1996-97 Budget deficit is aimed at one per cent of GDP compared to the 3.8 per cent in this year’s Budget. But, as we all know, any forward estimates are conditional on a host of other factors.
The Budget implies some difficulties for the union movement – not to say, more generally, the public. For example, Accord Mark VII and the employment growth predicated in the $8 safety net adjustment is relevant. The full implications of the indirect tax rises will have to be closely reviewed by the ACTU.
The government’s Employment Opportunities Committee, due to report early next year, will need to focus long and hard on the employment issues. That’s stating the obvious. Even so, the obvious is something that has not often been in view in the last 12 months.
The words I used, “The full implications of the indirect tax rises will have to be closely reviewed by the ACTU” in this article, was a hint of things to come.
The government in the Budget proposed revenue measures of penalty taxes on untaken sick leave, long service leave, and, redundancy.
I wrote several times to the Prime Minister and, as well, the ACTU Secretary seeking an urgent meeting to discuss.
I called his office and left a message for the PM.
The Labor Council met weekly. In those days, every Thursday night, hundreds of delegates packed into the auditorium at the Teachers’ Federation headquarters at the corner of Sussex and Bathurst streets. Usually the Australian Broadcasting Commission (ABC), Australian Associated Press (AAP), the Sydney Morning Herald, The Daily Telegraph, and other media outlets were represented. The “parliament of the union movement”, as we called those meetings, could be lively affairs.
On a contentious or significant issue, concerning the government, you might one week seek further information and say “representations will be made”, but it was hard to hold back the tide. Not that I wanted to.
Two weeks after the Budget was delivered, with no response from PM, Treasurer or the ACTU, I said those specific actions were an “act of bastardry.” Not that the whole Budget was, but just those aspects.
Ginny Stein from ABC radio reported that I said the whole Budget was bad. An AAP’s reporter, on the contrary in their coverage wired to media across the country, quoted me referring to the specific taxes only. Both were at the same Labor Council Thursday night meeting, and both reporters reported different things. (The AAP reporter, the next week, showed me the shorthand taken on the night, saying they got it right.) Not that this mattered much any longer.
Regardless, the story was that I was critical of the Budget measures. This led to ALP backbenchers nationally saying the same thing as I. It was as if the levee had broken. Mary, the Federal MP for Lowe, was in Canberra that Thursday night, as the House of Representatives was sitting. Michelle Grattan, from The Age, called us both that night to ask if we were in agreement.
Keating rang me on the Friday morning to ask: “What’s going on?!” I said that Paul, the Labor Council had written to him several times and I had left a telephone message with his office. No reply. The day before Labor Council had received several cranky letters from the NSW Secretaries of the Municipal Employees Union (the MEU), Keating’s old union (that he had been a member of) and the Health and Research Employees Association (HREA) demanding the Labor Council condemn the Budget measures. We could not beat back the tide. Those unions (traditional bastions of the Right of the NSW ALP) were threatening disaffiliation from the ALP — so strong was their resentment. Both union leaders told me they had also been in contact with his office. No response. The Transport Workers Union (TWU) was also angry. From the discussion last night, I said, there were no unions that were not.
Paul, I explained, you know we meet every Thursday. It’s why I earlier and Peter Sams also contacted his office and why we faxed his office Thursday morning, as the rumblings were getting louder and we started getting even more agitated calls from union leaders and letters from major affiliates. The dam had broken.
Keating said that he was working out something with Kelty (and had met with him the day of my “attack”) and had planned to make an announcement the next week. I asked if that meant he was going to repudiate the proposed measures. He said it was part of a package. He said his office told me that in my Canberra Times article on the Budget I had given the Budget a tick. Why the change? I said we saw that in some of the fine print measures that let down our people. It is not just me. It is our base that is talking.
I said no one in the ACTU had been communicating anything about a grand deal or new budget compact of any sort. But that this had dragged on too long, was a running sore, and needed to be staunched quickly. He said, exasperated, “that’s why we deal with Bill.”
I do not think even then that Keating realised the ramifications.
The next week, Keating held a meeting with backbenchers and wave after wave of them told him of their misgivings on the Budget, about the performance of the Treasurer John Dawkins, and about other aspects of how the government was governing. Keating felt humiliated.
But he needed to hear this feedback.
Tom Burton, writing about the aftermath said:
By Thursday, Keating knew he had a problem and that day met in secret with ACTU chiefs Martin Ferguson and Bill Kelty. It was too late for NSW Labor Council boss, Michael Easson who, under pressure on his own job, made a highly public, bruising attack, describing the long-service leave changes as “an act of bastardry”. Tom Burton, How Backbench Protests Turned to Revolt Over Keating’s Budget, Australian Financial Review, 1 September 1993.
I felt that Keating had grown isolated.
Yet he was one of the most exciting, creative, devil-may-care reformers in the ALP’s history. Like most in the movement at that time, it seems, we loved his turns of phrase, eviscerating rhetoric, and instinct for big reforms.
But I wondered if he was too tired and needed a break.
I hated the idea that with this Budget there was such a huge breach between us.
In my Annual Report 1993 to Labor Council, I wrote:
This year’s Federal budget provoked outcries from amongst traditional ALP supporters. There were three major areas of concern: the introduction of prescription fees for certain optometry services (non-rebatable through Medicare); taxation at higher rate of untaken long service leave and annual leave at time of voluntary termination by workers under 55 years of age; and, finally, the introduction of a range of sales taxes that would have effected the CPI and the cost of essential items. Those measures were in a Budget that provided tax relief skewed to higher income earners.
Reacting to complaints received at my office, and research commissioned by Labor Council Industrial Officer Gail Gregory which showed that low wage earners would be worse off as a result of those measures, I described the three principal actions by the government as “an act of bastardry” — a phrase which became widely bandied about in the media. The reaction was fast and influential. A number of other critics within the government became emboldened to criticise the Budget. The Prime Minister rang me to ask what I was doing. He queried whether I was acting in the best interests of the labour movement. “Give us a call before you act like this” was his plea. Although I have no regrets about my actions — which contributed to a backdown by the government on all three measures — I understand the prime minister’s point. There are lessons for us all from that unfortunate mess.
In describing the story this way, I wanted to be conciliatory, putting matters in more favourable terms (from the PM’s perspective) than was warranted. Getting the right result was what I had set out to do.
When I became Secretary of the Labor Council, and held with my Labor Council colleagues the first in-house strategy weekend, we went to a motel in Canberra so as to ensure we could get Keating to come along and speak to us, in closed session. That was in 1989.
I felt that in any choice between what was right for the union movement and what was best for the ALP government there was no contest. The union movement, specifically, the people we represented, came first every time.
In our “discussion” I sensed that Keating had lost touch with and kicked away from his base in NSW. Although he was conceding nothing immediately, I knew that changes were going to be made.
Kelty told me that he had also been working on Keating on getting a reversal of policy. The problem was Keating hating to backdown, torn between loyalty to his Treasurer and regard for the feedback and representations from the ACTU. Dawkins, we all thought, was not up to the job. (He resigned as Treasurer in December 1993.)
There was one other interesting sidelight to all of this.
The Budget imbroglio was good for Opposition Leader John Hewson who, on the issues in contention, would have done far worse things than Keating.
But by early 1994, Keating looked damaged and Hewson looked tired and sounded strident. Moves were in the air.
Alexander Downer replaced Hewson as Opposition Leader in May 1994.
Beforehand, Peter Barron, the former Wran, Hawke and briefly, Keating adviser, told Keating he should retire. No one would expect it, he had won the impossible victory the year before, he had come to the job exhausted, he could leave in glory. The idea appealed. Beazley was the obvious successor. Like it or not, Dawkins’s 1993 Budget had damaged the Prime Minister. Barron predicted Howard would again become Liberal Leader, that the mob respected him, probably next time would think it is his turn. Keating had been given the benefit of the doubt in the last election. All reformers accumulate baggage. In changing the country, you pick up enemies, get nicked and bruised by the political contests. You eventually run low on your goodwill capital. The daring and unexpected about the suggestion really did attract him. Keating said he would chat with Anita.
The next time they spoke, Barron asking if he had thought some more about the idea. By now Downer was Liberal Leader. Keating was invigorated by the contest. “I am not resigning for that sook”, he said.