|Issue No 63||21 July 2000|
Paul Keating's Big Picture
Interview with Peter Lewis
The former Prime Minister is still painting on a broad canvass. He talks to Workers Online about the new economy, fair trade and political chi.
I'll start off with a general question. Are you optimistic about the potential of the new economy and globalisation?
I'll start with the new economy. Let's deal with globalisation separately.
What the new economy is about is a reach of information - the cheapness of computing power and the connection at the edges which the Web provides.
The Web once worked through Kray computers in the universities and defence establishments and people hooked on their communications software to talk to one another. Now nobody cares how the messages are delivered - just that they get delivered. And everyone can be connected, if they wish, at the edges and not the centre, and this represents a revolution in information. It is that focus of information that I think is most important to us.
Globalisation was well on the way by the early 1980s. In the 15 years to 1995 world trade grew at twice the rate of world output, and that has been assisted by more open markets and greater fungability of funds coming through more intelligent operating systems. And of course, this internet moving the way it's moved, and secure networks being more secure and faster, just means that the whole process of globalisation has in a sense been reinforced and if anything, speeded up.
But what has been the benefit in all this for the average working person who is basically seeing their job and their certainty in life disappearing?
Well, they are not seeing their jobs disappear. They are seeing a new job appear not dis-appear, a-ppear. If you look at the structure of employment in Australia now, compared with the early 1980s, before tariff reform, people's jobs in the main are much more secure than they ever were with the haunting spectre of growing unemployment. That is not there any more. Unemployment is there but not growing. It's declining.
And things like education which Labor invested heavily in, will pay handsome rewards for Australia, as has to date, research and development in particular fields. We are producing technology now which is world class and we are getting to market it better. But at any rate we are living now from the explosion in financial services, in all categories of services including of course things like tourism. All of which didn't exist before 1983. So people who think that without protection their jobs are going to go are, as the record goes, wrong.
These changes you are talking about, do you think our politicians get it?
Some do. But politics is always divided between the clever ones and the not so clever ones. That was the ideological divide that wasn't really left and right.
Who are the clever ones at the moment? Who are the ones that are leading us in the right direction?
I'm not going to go into any names. I have got no intention of doing that, but it is about those who perceive where the future is and do things to maximise Australia's potential - and those who don't.
What is your take on the data casting debate and the decision down in Canberra the other week? It seems that the Packers were the big win with that one ...
Data casting is a trick the Government dreamed up to describe something people may do which doesn't go to entertainment. In other words, the opportunities which the Web and which both wireless and terrestrial transmission provide now with digital technology, can provide all sorts of things to people. What the Government is trying to do is to wholesale it. They are still in the wholesaling business. They are trying to round it up. I think it is futile, frankly, but they are doing it and the winner so far of course is the free to air networks.
What is your take on the impact of that decision over the long term?
Well in terms of jobs for Australia it will be a very big negative about the enablement which these technologies bring, but if Australia doesn't even maximise the opportunities from the enablers, let alone entrepreneurship - the enabling quality of the technology - if we don't even let that happen, what chance do we have? What the current Government is doing is actually not permitting the enabling technologies to deliver things to people which other people in the world will have.
News Limited seems to be the loser in the short term play. Do you see them as a company with a lot to offer in this area?
News Limited is a world company and if ever the phrase "thrives on competition" means anything, it does mean something to the News Corporation. Murdoch took on Fleet Street. He build a pan-European satellite entertainment network. He didn't wait for some government to do him a favour. Now, that is not to say that News Corporation won't be in the favours business - like the bunch at Channel 9. But they are decent enough to put it within a competitive framework. Nobody at Channel 9 or PBL believes in competition. They regard that as ultra vires of their interests. They want monopolies at best, or duopolies or oligopolies - but nothing less than that.
On trade unions, when you addressed the ACTU Executive, your message was basically that unions should be embracing the new economy in the interests of their members. I think you also said something along the lines that 'the union movement may have fulfilled its historical destiny'. What do you mean by that?
I did not say that. But I did say that we are going to reach a point where individuals will be able to command a premium on their own abilities. In the days that I grew up, capital was king. In future, capital is going to be in reasonably plentiful supply and the prizes are going to go to intellectual product - to the knowledge workers, and what this is going to mean is that people with abilities are going to be able to eke out a place for themselves in the economy. And if you have got skills you will be paid more. And if you don't like where you are currently employed you will be able to move on. And the likelihood is we are going to find skill shortages of this kind. Which is going to mean that a lot of people who formerly were simply employed are going to find themselves, certainly in a world without the old certainties, but also in a world where they actually earn more and have more freedom for themselves. And this has come by way of developed education. But again who worries and contributes to these things?- the Labor Party. When we began in 1983, three kids in 10 completed Year 12. When I finished in 1996 that was nine kids in 10, and we trebled university places. That output is now creating a much more clever country.
That is not to say that there won't be a place for trade unions, of course there will because not everyone, say women working in retail and those sorts of things will be able to cart themselves around and offer their wares and services elsewhere at a premium. Nobody I think believes that. But there is going to be a much more fluid and much more mobile workforce and it is going to be more highly paid. And there is some triumph of labour (l-a-b-o-u-r) in all that.
If you were Secretary of the ACTU in the early 21st Century, what settings would you be putting it on at the moment?
In the international division of production we have to be at the front of the wave. We have to be on the board with our toes hanging over the front! If we are up the back just sloshing about waiting for the next wave to come - which is where Doug Cameron and co are - the likelihood is it will go across the top of us. And it is only at the front of the wave where the new wealth will be created. In the current international division of production, Australia can't be left doing the old things. We can do some of that, where we think we need to - I still believe we should build motorcars for instance. But they should be cheap, and they should be of good quality. But I don't believe we can make shoes, shirts for ourselves - although we may make some. Those that have some fashion premium to them - and we will get a premium for that. But not cheap mass production; we cannot compete at that. That is old think.
In the end it is actually better for Australians to have higher disposable incomes by having someone else make their shoes, and someone else make their shirts and their underwear, etc., while they do things which are more valuable. That is the way. With that in mind - the ACTU leadership ought to be focussing on information, because more and more its constituency is in the public sector and in strategic parts of the private sector - and that will probably intensify. So there is need for focus, a focus on information that will take the ACTU and the union movement generally, down pathways that the old dogma didn't and won't.
What sort of information are you talking about there?
The new pathways of information are going to change the way everyone lives. That is not to say that we are not going to go home at night at the usual time; get up in the morning at the usual time, or kick our shoes off and watch the evening news at the usual time, but outside of that - because people are going to be educated in different ways - they are going to find economic opportunities in different ways - they will exploit those opportunities in different ways.
There will be a lot more people working from home, and the revolution in the internet is yet to come. The internet is going to change in a very big way and a lot of complex things that now can't be done on a personal computer are going to be able to be done on huge, centralised mainframe computers with complex enabling software, which will then be able to deliver to you. Which means that the power of the thing is going to manifestly change. If we don't understand that and we are not there we are going to miss out; badly. And we need no false prophets here, or Pied Pipers with the wrong tunes; taking us to the wrong places.
Let's just stay with that idea of fair trade - Doug Cameron's call - for a moment. Can you understand why his membership of traditional blue collar manufacturing workers are feeling locked out of all the gains of the changes going on?
There is a great moral dilemma here for people of Labor persuasion, and that is that they don't want their jobs taken by the workers of developing countries. The case is dressed up as a real concern, with concern for the welfare of the workers in developing countries. The genesis of the concern is however, the welfare of workers here, and the workers in the United States.
As President Portillo of Mexico said at the time of Seattle - that protest movement was a movement preventing developing countries from developing themselves - and I agree with that. It is pretty savage to say we will be in the developed world, we'll exploit its market but you can't. And they enquire: But why can't we? Well, because you are exploited, you are not paid enough.
What would you say to the blue collar workers who have seen their jobs lost in Australia? What do you say to them?
What do I say: What is your new job like? One of the 2.5 million created since the early 1980s. People have found better jobs. I mean, did we ever hurt anybody liberating them from the car assembly line? When they left the car assembly line and got a more interesting job in the economy, did we do them a disservice? Of course we didn't. And the way people talk about this free and fair trade as if the economy is static and not dynamic and a job lost is not a job replaced, is just bunkum.
We are going to have commerce run every minute of every hour of every day, right before your very eyes, at home if you want it, and some of these people like Cameron et al, think we can isolate ourselves from that. That in some way we can insulate ourselves, while at the same time having a growing standard of living - it's tripe - it is such horrible tripe - that it shouldn't run for five seconds.
I just want to ask you a couple of questions about the IR system. You introduced the enterprise bargaining system which is now seen by some in the Labor movement as part of the problem in terms of their decline.
Well, it saved the Labor movement. If we had had a centralised wage fixing under this vicious government, they would have chopped the head off any person who was still in there. It would have been like a chaff cutter going through a wheat field. But by learning to enterprise bargain we diminished their capacity to hurt us. I made this point clear to the ACTU in 1993. What the 1993 election did was give the labour movement at least three more years, given that Bill Kelty and I had started this earlier - at lease three more years to get itself - to get the unions positioned to be useful in the real economy at bargaining at enterprise level.
If workers had been subject to and dependent upon the centralised wage fixing system - I don't mean other that from the safety net - but I mean as a primary method of wage adjustment - the Labor movement would now be in deep trouble. Howard is a reactionary - an ideologue and a reactionary, and an inveterate enemy of the working people of this country. To have left our battalions at his mercy and the likes of Reith would have been something I would not have wanted to be responsible for.
Now those who think we should roll back - and God knows who they are - is there anyone in the Labor movement silly enough to think we could roll back to centralised wage fixing?
Oh, there is still a strong push.
Yes, well they need their heads tested.
Of course the other line coming out of that 80s to 90s period is the idea that the union movement got too close to Labor. Do you think for instance Bill Kelty got too close to you during that period?
See how close they are to this Government? Does it feel good to be frozen right out? To have no influence in social policy. No influence on economic policy. No influence on tax policy. These people enjoy the worst place on the field; left right out.
The numbers went down a long way during the Labor years though didn't they? Almost halved union membership.
That was because of the inevitable decline of the old structure to which Australia was completely vulnerable. Australia was very lucky in the 1980s that it didn't go the Argentinean road. The Accord with the trade unions and the sensible operation of economic policy saved Australia. It wasn't just a matter of the numbers declining, they would have just been decimated. I mean, Bill Kelty I believe, and his executive, led the unions through the valley of industrial death in the 1980s and they came out the other side. Richer. With higher incomes and more people in work.
So the trade off was less members?
That was the creaking industrial structure - the structure doing that, not disaffection with unions per se. As everyone in the business knows.
How do you feel at seeing the GST finally coming in?
The GST is the tax that Australia did not have to have If you are a low or middle income earner and you spend all you earn you will be taxed more heavily and more discriminately under the GST than you are under the income tax system.
And what is this national horror story for? To give the States a growth tax. So the State Governments can grow their services as their Cabinet rooms please. But ordinary wage and salary earners will be paying for it.
How different is this model to the one that you pushed in the 80s - the consumption tax idea?
We were pushing a retail level tax that had one purpose. And that was to pay for the enormous growth in outlays to GDP which dangerously and irresponsibly was left to us by John Howard. When I became Treasurer outlays were at 30% of gross domestic product and I got them down to as low as 24%.
When it seemed as though saving ourselves in the balance of payments crisis of the middle 1980s, meant rapidly pulling the public sector call on savings back, we believed the quickest and only route was to go down the road of another base in the tax system. A consumption tax. But as that didn't happen, we then went the longhand route. Having been denied the shorthand route, we went the longhand route and spent seven years cutting back outlays in two budgets a year. A May statement and a budget every year for years.
And in the end, because we had cut outlays to GDP by 5 to 6 percentage points - and that is worth today savings of $30 to $36 billion a year, every year - we didn't need a GST or the consumption tax. So where the primary urgency in the middle 80s was to deal with the current account imbalance and our savings paucity, to cut back the public sector call on savings quickly - when that was denied to us we went the longhand, quality route, by cutting recurrent outlays and not resorting to a new tax.
If revenue to GDP is higher than outlays to GDP, as it is, - in other words if the budget is in surplus - why did we need a second tax base? And the answer is - we didn't. With the budget in surplus, why did we ever need to put such a burden on ordinary people. Because Labor structurally changed the nature of the budget - structurally changed the level of outlays to something that existed before the Whitlam Government came to office, we never needed a second tax base in expenditure. We lept over the issue of ever needing a GST.
The GST is a 70s issue. It is a hangover from the 70s, and everything about Howard in the last three years has essentially been to retard the country's opportunity. With the Republic; with Reconciliation; with Asia; with the GST. They are all look-behind-you issues. They should have been decided in the 80s and 90s. The Liberals are driving through the rear view mirror, instead of getting on with the real challenge, which is the new economy; information; Asia; its problems; the place where we live. Instead of doing those things, he is wading around in the old issues, fighting for his obscurantist view till the end. A sunken version of the Cinque Ports.
How much of a diversion for the ALP is the current debate about how much of the next campaign should be built around opposing that as opposed to these other themes we have been talking about?
Federal Labor's position is, I believe, a completely correct one. The GST is going to rake in more money that the Treasury has ever estimated. When they first did the estimates on the capital gains tax - the first year estimates from memory was I think $15 or $20 million. And I said "you've got to be joking, I know at least one person who will pay that." The conservative bias in the GST revenue estimates is there again. Howard knows this. This is why he is now trying to pump up and proselytise on Defence spending. He knows that there is going to be a poultice of money, and he thinks it should be spent on Defence - so he's telling us.
What Kim Beazley is saying is that there is going to be a poultice of money, and with that poultice he is going to roll back some of the iniquitous parts of this tax. He cannot change the whole tax base because that egg has been scrambled by this Government. But he is going to deal with the more iniquitous parts of it. A completely respectable position. But he won't know, and can't be expected to know, what the actual revenue collections are going to be. We are going to need at least a couple of full years of collections to see what the level of collection is.
So you think the last week - the misadventures all will end up being light noise down the track?
They don't alter the fundamentals. This thing applies in areas that I think the Labor Party finds socially distasteful. And it can deal with them, but it can only deal with them in office.
My final question is: How you think Australia would be different today, if there was still a Keating Government in power?
First of all I think we would be a Republic. We wouldn't be into pathetic caravans to London. We wouldn't be posing for pictures with the Queen with medals on. We would have a constructive relationship with our largest, nearest neighbour, instead of a poisonous one. That's Indonesia. We would be relevant in Asia as we are now irrelevant. And we wouldn't have things like participation rates in schools declining.
We would be abreast of the New Age in a way this government could never imagine. All these things are themes that I was interested in then, as I remain interested in them now. And which remain relevant now. The Liberals used to say of me that the Republic was a distraction - but it took a couple of years of Howard's last term. That Reconciliation - that Mabo was a day of shame. - That's what John Hewson said, yet I notice him saying in the Financial Review recently that the Government should apologise. Perhaps he ought himself.
Asia: They said I had an Asia-only policy. And they have an Asia first policy. Well, God help us if we had less! We would be nowhere in Asia. I have never known a time when Australia has been more seriously marginalised in Asia than now.
And the other thing I think we would have given the country - continued to give the country - is verve and some political joy. What one may call, if we use Chinese health analogy "chi"; "political chi": the energy that makes the political blood run faster. Gives the country a prouder and more certain sense of itself.
This is the dullest government that I have seen, but unfortunately they come at the wrong time in our history. The only chance of the opportunity being recovered is with a Labor government. - And I think Kim Beazley: all those debates in the 80s; all those Cabinet discussions about the economy; all those structural changes in the economy - all that huge infrastructure of knowledge is in his head. And that is why a government he leads will not only be principled, but it will be one that has Australia's vital interests at heart. And I underline the word vital, as distinct from political interests. It will have Australia's vital interests at centre stage.
Interview: Paul Keating's Big Picture
The former Prime Minister is still painting on a broad canvass. He talks to Workers Online about the new economy, fair trade and political chi.
Unions: War in the West
Only six months after signing individual staff contracts, the gloss has worn off for some of BHP's Pilbara iron ore workers.
Environment: Farmers Fudge DNA Dangers
Farmers have missed the chance to have a meaningful debate into the use of genetically modified crops.
International: 'Dot Union' Proposal on the Table
ICANN, the global governing body of Internet domains, has released the following expression of interest in proposing a top-level domain for trade unions
Economics: Edge of the Abyss
Political economist Frank Stilwell argues that a constellation of events gives good reason to be worried about the Australian economy.
History: Taming the Tigers
Prominent labour historian, Dr Ming Chan, is visiting Australia to report on how workers are faring in the new Hong Kong.
Review: Music is Crap
It's already the second half of the first year in the new millenium. Who would have ever predicted a crisis in the popular music industry when we are at such an advanced stage ?
Satire: Last Kosovars Found Behind Couch
State Emergency Services personnel were called to a house in Brighton this morning, where the last five remaining Kosovar refugees have been found wedged behind a couch.
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