89 Action Plan

ECONOMIC
ACTION PLAN
The Liberal-National Parties'
Economic and Tax Policy
October 1989
J
R/PS
324.29405H
LIB
LIBERAL
NATIONALS
ECONOMIC
ACTION PLAN
The Liberal-National Parties'
October 1989
LIBERAL
NATIONALS
TABLE OF CONTENTS
Page
OVERVIEW
EXECUTIVE SUMMARY
ECONOMIC POLICY
COALITION ECONOMIC POLICIES
THE LOOMING CRISIS
THE RESPONSE REQUIRED
THE ECONOMIC LIBERALISATION PROCESS

LABOUR MARKET REFORMS AND WAGES POLICY
4
4
4
5
FAMILY TAX PACKAGE

OTHER TAX CHANGES
EXPENDITURE DECISIONS
THE COALITION'S APPROACH TO WAGES

INDUSTRY REFORM
(i) PRIVATISATION
(ii) BUSINESS REGULATIONS
(iii) REDUCTIONS IN PROTECTION
(iv) COASTAL SHIPPING
(v) THE WATERFRONT
(vi) TELECOMMUNICATIONS
(vii) EDUCATION AND TRAINING
FOREIGN INVESTMENT
MONETARY POLICY
FISCAL POLICY
TRANSITION TO GOVERNMENT
7
S
7
9
13
13
13
14
15
16
17
17
18
20
21
21
22
23
24
CONCLUSION
25
SUMMARY OF POLICY DECISIONS

SUMMARY OF TAXATION MEASURES
SUMMARY OF EXPENDITURE DECISIONS
27
28
29
TAXATION MEASURES
FAMILY TAX PACKAGE

CHILD TAX REBATES
DEPENDANT SPOUSE REBATE
CHILD CARE TAX REBATE
OTHER TAXATION MEASURES
CAPITAL GAINS TAX ABOLISHED

COAL EXPORT LEVY
GOLD TAX
FRINGE BENEFITS TAX
INCREASE IN TAX-FREE THRESHOLD FOR
SUPERANNUATION
TAX DEDUCTION FOR RETIREMENT SAVINGS ACCOUNTS
TAX DEDUCTION FOR FARM BUSINESS ELECTRICITY
-
31
31
31
31
32
32
32
33
33
33
NOTES ON EXPENDITURE DECISIONS
34
1.
SOCIAL SECURITY AND WELFARE
34
AGED PENSION IMPROVEMENTS

LIBERALISATION OF ASSETS TEST FOR AGED
PENSIONERS
DEFERRED PENSION PLAN
UNEMPLOYMENT RELIEF PLAN
34
34
33
33
34
34
35
(i)
2.
EDUCATION
TERTIARY FEES
3.
RESTRICTION OF UNEMPLOYMENT BENEFITS

TO 9 MONTHS
(ii)
INCREASE WAITING PERIOD
(iii)
DEFER PAYMENTS UNTIL LEAVE EXHAUSTED
(iv)
JOB SEARCH ALLOWANCE
(v)
SPECIAL BENEFITS
REHABILITATION OF INVALID PENSIONERS
(i)
INCREASED FUNDING FOR REHABILITATION
(ii)
ANNUAL REVIEW
REDUCING FRAUD AND ABUSE
(i)
SICKNESS BENEFITS - MONTHLY CMO REVIEW
(ii)
UNEMPLOYMENT BENEFITS
ASSETS TEST FOR BENEFICIARIES UNDER 25
TIGHTENING OF PENSIONS PAYABLE OVERSEAS
RESIDENCY REQUIREMENT OF 12 MONTHS
AUSTUDY
CULTURE AND RECREATION
ARTS
HERITAGE AND ENVIRONMENT
35
35
35
35
36
36
36
36
36
36
37
37
37
37
38
38
38
38
38
39
4.
ABORIGINAL AFFAIRS
39
5.
IMMIGRATION
39
6.
TRANSPORT AND COMMUNICATIONS
AUSTRALIAN NATIONAL RAILWAYS COMMISSION
40
INDUSTRY ASSISTANCE AND DEVELOPMENT
AUSTRADE
40
7.
8.
PRIMARY INDUSTRY AND ENERGY
PRIMARY INDUSTRY
9.
SCIENCE AND ENERGY
LABOUR AND EMPLOYMENT
INDUSTRIAL RELATIONS
10.
11.
12.
13.
14.
15.
16.
17.
18.
INDUSTRY ASSISTANCE
EMPLOYMENT CREATION AND, SPECIAL TRAINING PROGRAMS
CONTRACTING OUT
PUBLIC ADMINISTRATION
ATTORNEY-GENERAL
GOVERNMENT SERVICES
OVERSEAS AID
TREASURY
PUBLIC DEBT INTEREST
PAYMENTS TO STATES
PROCEEDS FROM THE SALE OF GOVERNMENT
BUSINESS ENTERPRISES
ATTACHMENT
THE MYTHS OF THE HAWKE GOVERNMENT
40
40
40
41
41
42
42
42
42
44
44
44
45
45
46
46
46
47
48
OVERVIEW
This document provides the most detailed and comprehensive tax and
expenditure program ever presented by an Opposition Party.
It is an action plan for a more productive and fairer Australia.
Australia is facing a growing economic crisis which threatens the future living
standards of all Australians.
The Coalition's Economic Action Plan represents an integrated attack on
Australia's problems.
By the end of the first term of a Peacock Government:
tax rates will be cut
interest rates will be lower
Government will be smaller
inflation will be reduced
productivity and real wages will be higher
growth in foreign debt will be brought under control
Tough decisions have not been shirked.
The Plan calls for:
cuts in Commonwealth Government spending and other savings of over
$2.7 billion;
an end to the present openended unemployment benefits system;
a far reaching program of reform to transport, communications and other
key areas of the economy;

a credible, medium-term monetary policy directed at reducing inflation;
a major program of privatisation to transfer to private enterprise what it
can do more efficiently and at lower cost;

reform of the labour market to boost productivity by encouraging closer
and more rewarding working relationships between management and
employees;
an end to compulsory age retirement.
Economic and Tax Policy - 1
A major commitment is given to hand back the increase in tax caused by

inflation pushing taxpayers up the tax scale. Never again will inflation be
permitted to swell government coffers and rip off taxpayers through "bracket
creep". This decision represents a most significant discipline on any government
and is a major initiative in this Action Plan. Indeed it is estimated that bracket
creep, under the Hawke/Keating Government's high inflation, could be
between $2 to $2.5 billion this year.
A goal is set to achieve a flatter twotier tax rate system, with the top marginal
rate equal to the corporate rate, by the end of the Coalition's first term.
The tax reforms give priority to providing incentives and assisting families particularly those with children who have suffered most under the Hawke
Government.
These reforms include:
the provision of substantial child tax rebates estimated to cost $1000

million
an easing of the income test for the dependant spouse rebate at a cost of
$200 million.
assistance to working mothers with tax rebates for child care, at a cost of
$820 million.
As an incentive to save and invest we will replace Labor's capital gains tax with
a tax on short-term speculative gains.
A key policy goal is set for the next Coalition government to bring our inflation
rate and labour cost growth at least into line with those of our trading partners.
To achieve this goal we reject the Government's policy of sole reliance on high
interest rates to try to cope with Australia's economic problems.
Rather, the Coalition aims to reduce inflation and interest rates, and to achieve
a major shift of resources into the production of exports and of goods to replace
i mports, by a process of liberalisation encompassing all aspects of Australian
economic life: market structures, management, work practices, public sector,
and other infrastructure, including the waterfront, transportation and
communications.
Economic and Tax Policy -2
EXECUTIVE SUMMARY
ECONOMIC POLICY
The Coalition's Tax and Expenditure Policy has been developed within the framework of our overall
Economic policy which is designed to tackle Australia's growing economic crisis.
Our policy is an integrated package designed to :
raise productivity;
reduce inflation;
increase competition in the economy;
increase exports and tackle foreign debt;
raise incentives to work and invest;
reduce the size of government;
reduce the burden of business regulation;
increase flexibility in the labour market; and
lift the efficiency of our infrastructure.
Our Industrial Relations policy sets down a detailed blueprint for a more flexible market oriented
approach to wage determination with the aim of ensuring a clear link between wages and productivity
and moving our labour cost growth to a level at least in line with that of our trading partners. We will
achieve this by shifting the focus of industrial relations and wage determination to the workplace
through voluntary agreements between employers and employees at the enterprise level, and within the
centralised system itself. Complementary to this will be the reinstatement of the rule of law,
introduction of genuinely voluntary unionism and secret ballots and encouragement of employee
participation and incentive schemes. For those remaining under the Industrial Relations Commission
we will ensure the Commission takes into account productivity, inflation and international
competitiveness.
We will liberate industry from excessive government interference which often puts off the day when
it faces up to changing economic conditions.
Under our program of privatisation twelve Commonwealth enterprises have already been identified for
sale including Australian Airlines, QANTAS, airport terminals, AIDC, OTC, AUSSAT, Medibank
Private, Commonwealth Bank and Australian National Line. Proceeds from the sales will be used to
pay off public sector debt.
We will reduce the burden of regulation with responsibility at a senior ministerial level for a
comprehensive deregulation program.
Protection will be reduced further to accelerate the pace of adjustment. A more competitive transport
sector will raise productivity and encourage exports. We will progressively expose our coastal
shipping to foreign competition and clean up Australia's waterfront.
Finally we will conduct monetary policy with the aim of reducing inflation. Lower inflation is the only
way to bring about a sustainable reduction in interest rates, including home mortgage rates. We shall
pursue a more co-ordinated approach including micro-economic reform and fiscal policy, which places
less emphasis on monetary policy in the short term macroeconomic management of the economy.
With wages and fiscal policy playing an appropriate and effective role in restraining demand, interest
rates will no longer have to be kept at record and punitive levels to cover up for a lack of action in other
areas of policy. Home buyers and small business operators will no longer have to pay a heavy price
for the policy failures of a government unable to deliver the right economic strategy.
FAMILY TAX PACKAGE

We have decided that the main focus of our tax package will be to provide relief to families who have
been hardest hit by Labor. Over $2000 million will be returned to families through our tax package
which comprises :
a new program of child tax rebates;
a new program of child care tax rebates; and
an increase in the eligibility threshold for the dependant spouse rebate and a reduction in the rate
at which it is withdrawn.
Child tax rebates recognise the increased cost to families of bringing up children and will be paid at
varying rates for the first and subsequent children at a total cost of $1000 million. For the first child
under 13 years the rebate will be $250; for the second and subsequent child under 13, $200; for the first
child between 13 and 15 the rebate will be $350; and for the second and subsequent children from 13
to 15, $300.
We will introduce a child care tax rebate to help those families where both parents are at work and to
help sole parent families. This will be at the rate of $20 a week for the first child under five and $10
a week for other children under five and children between five and twelve.
Finally the dependant spouse rebate will be improved by increasing the income which a dependant
spouse may earn while still being eligible for the full rebate to $1000 and easing the rate at which it is
withdrawn.
OTHER TAX CHANGES

Apart from our family tax package we will:
replace Labor's Capital Gains Tax with a Speculative Gains Tax on short term gains at a cost of
$450 million. This should particularly help smaller business and encourage longer term
investment and savings.
Abolish the coal export duty.
Increase the tax free threshold for superannuants from $60,000 to $125,000.
Give tax deductions to those who take out Retirement Savings Accounts.
Taxpayers will also benefit from the Coalition commitment to forego the proceeds of "bracket creep".
Our goal is to achieve a flatter two tier tax system with the top rate equal to the corporate rate by the
end of our first term.
EXPENDITURE DECISIONS
The family tax package will be paid for totally by reductions in expenditure of over $2700 million.
The reductions will implement our commitment to:
a redirection of the welfare system so that it is targetted on areas of real need, including major
changes to unemployment relief;
an attack on fraud and abuse in the welfare system;
smaller, more efficient government; and
more relevant employment programs.
In addition, a $1600 million sale of assets in our first year under our privatisation program will be used
to retire government debt and thereby permanently and substantially reduce public debt interest.
The main areas of savings are:
Social Security and Welfare
Education
Aboriginal Affairs
Industry Assistance
Primary Industry and Energy
Labour and Employment
Contracting out
Overseas Aid
Public Debt interest
Payments to States
$m
1145
235
100
70
40
289
160
100
105.
300
The welfare system eats up many billions of taxpayers' dollars each year. Too often these scarce
resources are used by those who are not really in need. It is time to stamp out fraud and abuse and ensure
programs are designed to focus on those in genuine need.
Unemployment benefits should not be seen as a disincentive to seek employment.
Unemployment benefits will be terminated after nine months with the onus of proof of entitlement on
the beneficiary during those nine months. Those who remain unemployed after this time will be
eligible to apply for Special Benefits subject to strict criteria. Waiting periods for unemployment
benefits will be extended to two weeks and school and tertiary leavers will be eligible only for Job
Search Allowance not unemployment benefits. Payment of benefits will be deferred until all annual
leave and long service leave is exhausted. The overall savings will be $815 million in a full year.
Receipt of sickness benefits and unemployment benefits will be subject to much stricter control and
review to reduce fraud and abuse. Sickness beneficiaries will be subject to a monthly check by
Commonwealth Medical Officers and some invalid pensioners will be subject to an annual check. In
addition eligibility for benefits will be tightened with the assets test applied to beneficiaries under 25;
checks on pensions paid overseas extended; and migrants not able to claim certain benefits in their first
year in Australia. In all, savings of $300 million have been identified.
Pensioners will benefit from the deferred pension plan under which increased pensions will be
available for those who work beyond the retirement age. Taxpayers too will benefit from savings of
$100 million in pension payments through this scheme. $40 million of this will be used to reduce
inequities in the assets test. An additional $30 million will be directed to the rehabilitation of invalid
pensioners to assist them back into the workforce.
Savings of $100 million will be made in programs in the Department of Aboriginal Affairs.
Many so called employment and training programs are merely subsidies to employers. Our wages
policy provides for payment of junior wages, reducing the need for such subsidies. We will therefore
save over $200 million by rationalising Employment and Training programs and by placing greater
emphasis on improving genuine training of individuals. We will also ask tertiary students to pay a
$1200 annual tuition charge (with 25 per cent exempted because they have been awarded scholarships).
This will save $205 million.
Those in primary and manufacturing industry have called for smaller government and cuts in public
expenditure. They too will be asked to bear some of the burden of getting Australia back on the path
to prosperity through reduced industry assistance, which will be mirrored by reduced costs to industry
resulting from our overall economic program. Overall savings will be $90 million.
Overseas aid will be better focussed on those areas of greatest need at a saving of $100 million.
Government itself must become more efficient at both the Commonwealth and State level. Savings of
the order of $650 million should be able to be made by the State and Commonwealth Governments
through contracting out; increased efficiency in departments; abolition of unnecessary Government
extravagance; improved cost recovery; and reduction in public debt interest following the first year sale
of QANTAS, the Pipeline Authority, AIDC and Medibank Private.
COALITION ECONOMIC POLICIES

Our economic policies provide a framework for tackling Australia's emerging economic crisis.
The voters of Australia have a clear choice when they next go to the polls the continuation of the
current malaise under Labor or a credible plan for the future under the Coalition.
THE LOOMING CRISIS

The principal economic challenge of the 1990s is to restructure our economy to deal with the excessive
external debt levels which have accumulated under the Hawke/Keating Government.
Only twice in Australia's history has the external debt servicing burden accelerated as rapidly as we
are now seeing.
In the 1880s and 1920s, the service ratio of gross property income climbed rapidly, topping out above
40 per cent in 1890 and 1931 respectively (see Chart 1). Recent data indicate that we will be well on
the way towards that level in the 1990s.
Chart One
PROPERTY INCOME PAYABLE OVERSEAS

(% Current A/C Credits)
50
45
P 40
e 35
r 30
c 25
e 20
n 15
t 10
5
0
1861
1869
1877
1885
1893
1901
1909
1917
Calendar Years
1925
1933
1941
1949
1957
1965
1973
1981
1989
Fiscal Years
Source: Butlin (1962), McLean (1968) & ABS 5301.0.5302.0 & 5303.0 (various), Calendar years until 1913, then fiscal.
History reveals that both earlier episodes were only finally arrested by harsh economic conditions
imposed on Australia from outside. In both cases,- the unwinding of debt levels, and associated
property income service burdens, took a decade of grinding painful adjustment.
Australia now faces the same dismal prospect if we fail to quickly recognise the magnitude of our
problems and to respond to them.
The extent of the problem we face must not be underestimated.
Australia is now third in a list of countries ranked according to the level of external debt they owe to
commercial banks. (see below)
External debt
0 10 20 30 40 50 60 70 80 90 100
Brazil
Mexico
Australia
Soviet Union
Argentina
South Korea
China
Bank
Venezuela
Non-bank
trade related
1 I
1987
1988
End Year
Indonesia
Finland
Sources: BIS, OECD
More than $1 billion per month in foreign exchange earnings is needed to service our external liabilities
annually.
It now takes about 20 per cent of our exports to service our gross foreign debt compared with 5 per cent
in 1980-81; it takes over 30 per cent of our exports, more than double what it was in 1980-81 to service
our total foreign liabilities (debt and equity).
And the situation shows no sign of stabilising.
Indeed, even on optimistic assumptions, work undertaken for EPAC suggests that our international
debt burden will not stabilise (relative to GDP) until the mid to late 1990s at the earliest.
About onethird of our foreign borrowings are now supplied by short term lenders attracted to Australia
solely by our excessively high interest rates.
However, rather than acknowledge, the magnitude and severity of our debt problem and quickly adopt
policies to deal with it, the Hawke/Keating Government has attempted to perpetrate the myth that the
rapid deterioration in our external accounts, and the climb in our debt, are due to an "investment boom".
That is wrong. We do not have excessive investment. And much of the investment we have seen has
been in areas with little prospect of producing significantly higher export incomes.
Capital goods imports rose by $2 billion in 1988-89 while the current account deficit deteriorated by
$5.5 billion. Thus even if capital goods imports had remained unchanged, the current account deficit
would have deteriorated substantially.
The deterioration in our current account deficit from 1987-88 to 1988-89 occurred despite a strong
improvement in the terms of trade and favourable world growth.
We are entering a self perpetuating "debt trap". Interest payments due overseas are increasing at over
$1 billion each year and accelerating. This, combined with the fact that about threequarters of the $5.5
billion deterioration in the current account deficit last year was due to a decline in net exports,
dramatically emphasises the urgency of making the necessary policy adjustments.
The real culprit is an excessive level of consumption and intermediate imports related directly to
inappropriate demand management policies, our abysmal domestic productivity and, poor levels of
production in Australia.
We are now dangerously exposed to even a small slowdown in world activity and commodity prices.
A 10 per cent deterioration in our terms of trade, which is well within recent experience, would add
around $6 billion to the current account deficit.
The policies of the present Government have placed the nation in the hands of international creditors
and at the mercy of foreign investors.
The recent further downgrading by the international rating agency, Moody's, demonstrates an
increasing concern among foreign creditors about the inadequacy of the current policy stance of this
Government.
Continued failure to address our problems could see our credit rating downgraded yet again, the $A
under downward pressure and a further rise in interest rates, followed by a prolonged recession.
THE RESPONSE REQUIRED

Australia is first and foremost a trading nation. The living standards of all Australians depend on our
success in world markets across the board - agricultural and mineral products, manufactures and
services.
To develop new products and diversify markets, we must ensure that our major export industries are
as competitive as possible in world terms.
Even though we rank amongst the most competitive producers in the world on the farm or in the mine,
we often pay away much of that competitive advantage as we move products via domestic transportation
(especially road and rail), or clear those products across the waterfront, or put them on a coastal ship,
due to the significant cost inefficiencies in those infrastructure industries.
Moreover, our producers have found themselves having to operate with excessively high interest rates
and volatile exchange rates and other disadvantages due to labour market costs and practices.
The Hawke/Keating Government has actively stifled development and progress in Australia as
evidenced by its discriminatory three mines uranium policy, its politically motivated decisions like
those related to Wesley Vale and Coronation Hill and its increasing taxes, charges and high interest
rates.
The central thrust of the Coalition's policy approach is to boost the competitive ability of our exports
and our import replacement industries.
Australia urgently requires a major shift of resources into the traded goods sector to stimulate exports
and replace imports.
To achieve this task we need to contain our consumption levels; to boost savings; and to boost our
productivity and production by engendering a period of sustained investment principally in the traded
goods sector.
This requires a process of economic liberalisation to reduce or remove the impediments and cost
inefficiencies which limit our ability to compete in global markets.
That liberalisation process must encompass almost all facets of our economic life: our market
structures; our management; our work practices; our public sector enterprises; and our waterfront,
transportation and other infrastructure.
The task of Government in this process of change is twofold:
to establish the broad economic conditions in which reform can proceed; and
to provide the basis for a stable society founded on the family unit; which is essential to generate
the energy and productiveness necessary to implement and facilitate change.
Central to the first of these tasks is an acceptance of the need to control inflation, so as to bring cost
levels in Australia at least into line with those of our trading partners .
A whole generation of Australians has begun to accept, and to learn to live with inflation; many of our
activities unfortunately reveal almost a vested interest in inflation.
Year after year our price and wages growth has significantly exceeded countries with which we
compete in world trade.
Combined with our poor productivity and outdated work practices, there has been a steady erosion of
our competitiveness. Import penetration picks up and progress in export markets falls away.
This builds up pressures which, in the absence of unacceptably high interest rates, would precipitate
a major devaluation of the currency, raising our debt burden and guaranteeing renewed inflationary
pressures. With a centralised wage fixation system we now run the risk of a wage/price/devaluation
spiral.
The next Coalition Government will therefore adopt as its overriding policy goal a commitment to
bring movements in our wage and other costs at least into line with those of our trading partners.
This is a firm commitment for our first term of office.

We recognise the magnitude of the task.
We are particularly aware of the fact that under Labor we have never achieved this goal.
Table 1.
Unit Labour Costs in the Business Sector

Percentage changes from previous period
Average Annual Rate
1979-86
1987
1988
1989 1990
Australia
8.3
4.7
7.3
7.25
6.0
Total OECD
5.3
2.8
3.2
3.75
4.5
Source: OECD Economic Outlook, June 1989
Under Labor inflation is endemic in our society.

Macro policy adjustment alone is not the answer, although it sets the framework within which the
essential structural reform and attitudinal shift can take place.
The Hawke/Keating Government has had no answer to inflation; it has been complacent about it for
too long.
The Government has met its inflation forecast in only one year of its seven-year term.
The tradeoffs implicit in the Accord have generally imparted an inflationary bias to the overall stance
of macro policy, resulting in growth rates that are unsustainable in the context of structural rigidities.
Labor's response has been dominated by blind faith in the Accord and the centralised wage fixation
system.
Initially, the Accord was heralded as a complete substitute for disciplined monetary and fiscal policies
and structural reform.
The exchange rate crises of 1985 and 1986 proved that strategy wrong.
But the Accord has failed to work even with a Budget surplus and near record interest rates.
It is the Accord and its support for the centralised wage system, giving trade union leaders excessive
power in Australia, which is the fundamental stumbling block to getting inflation under control.
The very practice of fixing wages across the board unrelated to productivity and the circumstances of
individual firms and industries, has placed a floor of about 6 to 7 percent under Australia's inflation rate.
Moreover, it is the Accord which has prevented all the other key structural reforms from taking place
essential reforms in relation to the size of government, taxation, privatisation, the waterfront and in
a host of other areas.
The Accord has represented the surrender terms of economic management in this country.
By contrast the linchpin of the Coalition's economic strategy is raising productivity in all avenues of
economic activity to restore our standard of living.
Australia desperately needs a productivity breakout.
We have an integrated package of policies to:
reduce our inflation rate;
increase competition in the economy;
raise incentives to work and invest;
reduce the size of government and the burden of business regulation;
increase flexibility in labour markets; and
lift the efficiency of our infrastructure.
The benefits of our approach will be maximised if these policies are implemented as a package.
Australians will accept a faster pace of adjustment if they understand that the end result will be a more
competitive, resilient, dynamic and productive economy which rewards effort and thrift while at the
same time providing the resources to meet legitimate social priorities and the needs of the genuinely
disadvantaged.
THE ECONOMIC LIBERALISATION PROCESS

LABOUR MARKET REFORMS AND WAGES POLICY
If we are to run an efficient internationally competitive economy, we must seek increased decentralisation of decision-making so that price and wage outcomes are consistent with the circumstances of
our individual enterprises competing in a global trading environment.
The process of liberalisation of product and labour markets must proceed hand-in-hand. Sensible
wage outcomes will be harder to achieve where regulation or protection policies have allowed
managements and unions to avoid the cold wind of competition. Similarly, it is harder for those who
face such competition to be confronted with centralised wage decisions which do not pay regard to their
special circumstances.
THE COALITION'S APPROACH TO WAGES

Our Industrial Relations policy sets down a detailed blueprint for a more flexible, market oriented
approach to wage determination.
It is a blueprint for higher real wages growth underpinned by productivity growth.
Our aims are:
to ensure a much closer link between wages and productivity;
to introduce incentive and reward for effort, thus encouraging higher productivity; and
to achieve labour cost growth at least in line with that of our trading partners.
We believe that the most efficient, positive way to achieve these aims is to shift the focus of industrial
relations and wage determination to the workplace. Research by the Business Council of Australia
suggests that an enterprise-based system could increase enterprise productivity by an average 25 per
cent.
A complementary requirement will be to re-establish and uphold the rule of law in industrial relations.
The disturbing imbalance of power within the conciliation and arbitration system where unions
frequently defy Commission orders with impunity will be redressed. Voluntary agreements will be
legally enforceable.
The legal and economic framework is explained in detail in the Liberal and National Parties' Industrial
Relations Policy.
A major ingredient of our approach is that employers and employees who choose to do so can negotiate
voluntary agreements on wages and conditions of employment at the enterprise level.
Employees may negotiate individually or through a union (or unions) of their choice.
Agreements may take account of the specific characteristics of enterprises such as regional economic
conditions and the availability of different types of labour.
These agreements would offer the incentive to remove archaic work practices, introduce new
technology and management methods, and improve employeremployee relations.
In particular, they provide the scope for introducing more flexible hours of work, permanent parttime
work and specific rewards for skill, effort and ability.
Our policy details the safeguards which will be available to protect the interests of employers and
employees alike.
Complementary to voluntary agreements will be the encouragement of employee participation and
incentive schemes.
Enterprises which foster good relations with their employees consistently out-perform other enterprises.
In a more decentralised labour market, as increased competition compels employers to look for new
ways to increase productivity, employee participation and incentive schemes will flourish.
The task of the next Coalition Government will be to facilitate the introduction of such schemes.
Both the abolition of Labor's capital gains tax and our decision to privatise several major government
businesses will also encourage the spread of employee share ownership schemes.
We recognise, however, that the Industrial Relations Commission will, for the foreseeable future,
continue to settle disputes and determine the wages and conditions of employment for a significant
proportion of the workforce. It is essential that the centralised system itself develops a more flexible
approach, one that encourages enterprise negotiations and is responsive to the needs of individual
enterprises and industries while at the same time taking into account the impact of its decisions on the
national economy.
We will legislate to require the Commission to have greater regard for economic factors, especially
international competitiveness, productivity and inflation.
We will submit to the Commission that it put in place wage principles based on the concepts of
flexibility and competitiveness and which allow for differential wage increases between industries and
enterprises.
At the same time, the Commission will be given enhanced powers to ensure compliance with its
decisions by employers and employees.
The introduction of genuine voluntary unionism and provision of greater scope for workers to choose
their union will help bring about a union structure which is more accountable and enterprisefocussed.
In particular, we will facilitate the creation of singleenterprise bargaining units.
INDUSTRY REFORM
The Coalition believes that, in general, government assistance and involvement, in industry is
counterproductive.
Economic and Tax Policy - 1 4
It is vital that industries are exposed to, not protected from, changing economic conditions.
Our program includes privatisation of public enterprises, reductions in protection, the reduction of
imposts on business and the rationalisation and reduction of business regulations, an open (but
monitored) foreign investment policy and the revamping of education and training.
(i) Privatisation
The Coalition Parties believe that the privatisation and deregulation of public enterprises are long
overdue.
The rates of return on capital invested in public trading enterprises are significantly lower than those
in the private corporate trading sector. Resources are thus tied up inefficiently in public enterprises
predominantly in the important areas of transport and communications. When such essential services
are not provided in the most efficient manner, Australian businesses and households suffer through
higher prices, inadequate standards of service and lower real incomes.
Our privatisation program will be governed by the following principles:
There should be a clear consumer and/or taxpayer benefit.
Employees of privatised enterprises will be offered the opportunity to buy shares in that
enterprise on a preferential basis, thus promoting employee participation and providing the
incentive for increased productivity and strengthened industrial harmony.
The quality and availability of services to remote areas will be maintained.
Implementation of the privatisation program will be gradual and preceded by a thorough

investigation of available options.
Sale price will not be the key consideration in the transfer of public enterprises to the private
sector. In particular, we will not maintain intact the monopoly rights of an enterprise in order
to enhance the sale price.
The Coalition has already decided on a number of bodies to be privatised when we are elected:
Australian Airlines
QANTAS
Domestic and international airport terminals
Australian Industry Development Corporation
OTC (49 per cent)
AUSSAT
Housing Loans Insurance Commission
Medibank Private
Pipeline Authority
Commonwealth Bank
Australian National Line
Snowy Mountains Engineering Corporation
The Coalition will reserve the right to use special or `golden' share arrangements which allow the
Government to sell its financial interest in an enterprise, but provide a means to control the level of
foreign ownership or dominance of a single shareholder in enterprises considered strategically

important. It must be emphasised, however, that any special share arrangements are not mechanisms
by which the Government is permitted to involve itself in the ongoing and daytoday commercial
decisions of the company.
(ii) Business Regulations
The Coalition Government will reduce the burden of business regulations.

In recent years there has been a growing recognition that, as regulations have accumulated, their effect
on enterprise has become oppressive. They have become a massive obstacle to new investment and
the improved productivity and competitiveness of Australian industry.
It has been estimated that the costs in terms of the administration of business regulations alone are at
least $1.8 billion a year. When account is taken of the paper burden cost on private business and the
distortions to resource allocation, the aggregate costs of business regulation are estimated by the
Business Regulation Review Unit to be up to $47 billion or 19 per cent of GDP. Some 17,000
Commonwealth employees are estimated to be involved in business regulation. There are, of course,
many more than this at the state and local government levels.
Our aim is to stem the flood of regulations and remove the bureaucratic roadblocks that undermine
efficiency, and impede competition, flexibility, experiment and creativity; and curb the appetite of the
public sector.
The Coalition acknowledges the important function of the Trade Practices Act in promoting competition in product markets. We will ensure that the Trade Practices Commission is able to operate
effectively to discharge its responsibilities under the Act. Where practicable we will promote market
based solutions to problems of competition rather than stipulate legislative requirements. We will
promote the concept of industry self regulation where appropriate.
Responsibility for the next Coalition Government's comprehensive deregulation program will be
placed at senior ministerial level. The Minister will be assisted by an upgraded Business Regulation
Review Unit. One of the first tasks will be to identify priority areas for regulatory impact statements
to be provided by Ministers.
The cooperation and active involvement of State Governments and the business community in the
deregulation process will be sought.
The costs of business regulation will be highlighted and, where appropriate, opportunities will be
provided for self regulation.
Existing regulations will be systematically reviewed and any regulation that cannot be justified will be
repealed.
In addition each department will be required to set a deregulation agenda and report annually on
progress.
New regulations will be subject to a more effective and rigorous test of public benefit including a clear
statement of regulatory objective and, where appropriate, an assessment of financial impact.
Except in cases of emergency, a public exposure and consultation process will be implemented.
As a general principle, sunset clauses will be included in new regulations.
At the Parliamentary level, the next Coalition Government will set up a Parliamentary Regulatory
Review Committee to review existing and proposed regulations in consultation with interest groups
affected by them and also to oversee the deregulatory policy of the Government.
(iii) Reductions in Protection
The Coalition will reduce protection further as part of our overall agenda.
The Coalition recognises the importance of predictability in reducing protection to provide a more
certain environment for industries to undertake restructuring, and for this reason, will announce a
comprehensive timetable of reduction in our first term of Government.
Prior to the expiry of the sectoral plans for certain industries, the Coalition will develop programs for
further reductions in assistance to those industries with the aim of speeding the pace of adjustment.
The emergence over the last several years of policies designed to `pick winners' is of great concern to
the Coalition. So too is the Hawke/Keating Government's recent practice of selective compensation
for obvious political ends.
Our fundamental view is that governments are in no position to judge the likely success or otherwise
of industries or to squander taxpayers' money on vote buying exercises. Rather, the Coalition believes
that the appropriate role of government in industry policy is to encourage an environment in which
winners can select themselves.
Decades of protection have discouraged many firms from investing in new technologies, and fostered
nonmarket competition, leaving Australia lagging behind comparable overseas countries in terms of
technology use and research and development.
The Coalition reiterates, however, its view that direct support from government should be the exception
rather than the rule.
The Coalition's Industry Policy details our policies in relation to direct assistance, government
purchasing offsets, dumping and other specific industry measures.
(iv)
Coastal Shipping
A more competitive transport sector will raise national productivity, encourage exports and thus force
the pace of reduction of our current account deficit.
The tragedy of coastal shipping policy is that the Government has funded expensive tax concessions
and other measures over a period to reduce manning to levels comparable with overseas but these
measures have had only limited success.
According to a recent IAC report, Australian ships are heavily overmanned by international standards.
Not only are manning levels too high, but conditions of employment are out of line with our trading
partners. For example, the IAC states that "in Australia the net effect of [leave arrangements] is that
for every berth on a ship, an Australian ship operator needs to employ approximately 2.2 men to
maintain yearround ship operations.... According to participants, comparable developed countries

such as the US, Canada, Norway and the UK operate on a crew to manning ratio approaching 1.5 on
average."
The reduction of manning levels remains stalled, Australian ship operators cannot take full advantage
of continuing improvements in vessel technology and, relative to other countries, our shipping costs
will increase.
That will be fatal to our prospects for restructuring our economy and encouraging exports.
At present, seaman are assigned to vessels according to a roster operated by the Seamen's Union and
the Stewards' Union.
A seaman is unlikely to feel any loyalty to his employer of the moment, safe in the knowledge that if
the company concerned goes out of business he will simply return to the pool to await reallocation.
On the shipowner 's part, there is little incentive to provide training to seamen, when the benefit of such
training is lost if and when they are assigned to another ship.
For too long, there has been an effective prohibition of foreign competition (cabotage) on our coast.
Greater competition and companybased industrial practices are the only sure way to reduce shipping
costs and make the industry more responsive to customer needs.
Employment should be determined on a ship or firm basis between employers and employees directly.
Our strategy is to expose coastal shipping progressively to foreign competition.
Our strategy has several elements:
negotiate with New Zealand to open transTasman shipping to foreign vessels plying the route
on longer journeys;
phase out cabotage over five years, initially through more lenient granting of single voyage
permits;
interim tariff protection of 10% to 15% would be provided to help shipping companies to adjust
to the abolition of cabotage; and
repeal of all economic sections of the Navigation Act, including regulation of minimum manning
levels.
(v) The Waterfront

The Australian waterfront is grossly inefficient.
The IAC estimates that a 20 percent improvement in labour productivity in the water transport industry
as a whole, combined with a faster turn around time of ships in port, would produce an initial cost saving
of $860 million in 1986-87 dollars. This would lead to an increase of over $1 billion in GDP in the long
run.
Containers lifted per gross working hour in Melbourne are less than half the figure for Rotterdam, with
Sydney even further behind.
Other gross inefficiencies on the waterfront are well documented. Under the next Liberal/National
Government, those who engage in cosy arrangements through inefficient and costly work practices
will no longer be able to hold the rest of Australia, particularly our export industries, to ransom.
There is a desperate need to encourage competition among port authorities and stevedoring companies
and to firmly establish a company-based employment system for waterside workers.
The requirement now is not for more compromises which are aimed at covering up the mess but which,
in the past, have had only a limited and temporary effect on industry costs.
The government can force the pace of change on the waterfront. The Coalition will not hand over
taxpayers' money without ensuring that there will be genuine and permanent change.
The fundamental problems have not been addressed.
A more competitive approach must be taken to stevedoring operations. At present, stevedoring firms
operate under national awards which provide identical terms and conditions. Firms cannot use
industrial relations practices as a way of gaining a competitive advantage over other firms in the
industry.
Employers and their employees should be free to negotiate their own pay and conditions. This will be
facilitated by the Coalition's encouragement of voluntary agreements and changes to union coverage
arrangements, including voluntary unionism.
Shippers and others should be given the opportunity to offer stevedoring services in competition with
established firms.
This approach will spur unions and stevedoring companies to lift their game or to risk becoming
irrelevant.
It is important to abolish the industrybased employment system of waterfront labour to encourage a
greater identification of employees and enterprise management.
Employers must be given the normal freedom to hire and fire employees at present it is almost
impossible to be sacked as a waterside worker.
The maze of Government and other regulations regarding recruitment must also be swept away.
Individual employers should be free to determine how many employees, including casuals, they
require. Employers should not be required to recruit labour from the Waterside Workers' Federation
register.
These changes will achieve radical improvements on the waterfront which will boost exports and
signficantly improve our competitiveness and current account deficit.
(vi) Telecommunications
Telecommunications is a $10 billion a year industry in Australia costing the average business more
than $30 per week per employee. Worldwide it is currently estimated to be worth more that $500 billion
a year more than is spent on computing, pharmaceuticals or air travel.
It is the fastest growing sunrise industry which presents Australia with vast opportunities not only
to significantly reduce charges for both business and residential consumers but to become a telecommunications shopping centre for the South East Asian region.
The featherbedding in Telecom is legendary. In 1985 Telecom had 65 main lines per employee
compared with an OECD average of 135. In May 1988 the Government admitted that in comparison
with 12 other major telephone enterprises around the world Telecom had 60 per cent more employees
per unit of services. The IAC has measured Telecom as 20 per cent less efficient than its Canadian
counterpart with a similar sparse population distribution. Australia currently has the highest local call
charges in the world. The potential exists for a substantial drop in STD rates, to the benefit not only
of business, but also to many rural subscribers for whom a reduction in phone charges and improved
quality of service could be guaranteed.
Whilst the rest of the world is rapidly opening up telecommunication industries to competition,
Australia remains locked firmly within the monopoly mould covering:
the first phone monopoly which is presently costing consumers at least $250 million a year;
cellular mobile telephones where the introduction of air time reselling would dramatically reduce
equipment costs;
Integrated Services Digital Network (ISDN) where competition for central business district
installation of fibre optic networks would speed up fast fax and other business services;
public switched data text and video services where competition would quickly force prices down
and services up;
public telephones where new services such as cordless telephones and personal communications
networks would dramatically improve the present range and quality of service.
Under the Coalition Government, Telecom will be required to compete on normal commercial terms
in the provision of the first phone, small business systems, data text and video transmissions and
cabling and maintenance functions.
Deregulation of these services will open up exciting possibilities for new and existing small businesses
and independent contractors. The expansion of private networks unconstrained by artificial "common
interest group" requirements will allow substantial reduction in business costs as well as reducing the
amount of new capital investment required by Telecom to meet peak load requirements.
As well, we are exploring the possibility of a second cellular mobile telephone network operator, which
could revolutionise the efficient use of telephone services.
(vii) Education and Training

Under Labor's centralised and corporatist approach, our education and training systems have become
inadequate to meet the changing skill demands of our economy in the future.
Inappropriate curricula and outdated training and apprentice systems have acted to reduce the quality
of our skills base and have thus disadvantaged our workforce.
Our Schools, TAFE, Higher Education and Employment and Training Policies are aimed at
addressing these problems and enhancing the opportunities facing young Australians.
The next Coalition Government will provide greater autonomy to higher education institutions, reduce
Government regulation and encourage universities and colleges of advanced education to develop new
sources of revenue to supplement Government funds.
Because institutions will be permitted to retain this revenue, they will have the maximum incentive to
provide courses tailored to the specific needs of students. Courses will not be based on secondguessing
by bureaucrats.
FOREIGN INVESTMENT
Historically, Australia has relied on foreign capital to supplement domestic savings. This has allowed
us to undertake a higher level of investment than otherwise, thereby enhancing our national economic
performance and raising our living standards.
We have also benefited from the transfer of stateoftheart technology and advanced managerial
techniques. We should count ourselves fortunate that our political stability makes Australia an
attractive place in which to invest when our economic circumstances are right.
Too often Labor Governments have tried to discourage foreign investors from even considering, far
less undertaking, projects in Australia. They have a distrust of anyone they cannot completely control.
They fail to realise that foreign investment restrictions carry with them substantial economic costs.
In recent years these restrictions on foreign investment have encouraged a dramatic increase in the
proportion of debt in total capital inflows and in turn this has an adverse impact on our balance of
payments.
These controls should be abolished, except for certain strategic areas such as the media, and with them
the Foreign Investment Review Board. They are out of step with the outward looking, entrepreneurial
spirit we wish to see in Australia.
Resources will be made available, however, to enable the Federal Treasury to upgrade its monitoring
of the extent of foreign ownership and control in the Australian economy.
Generally, there are adequate existing mechanisms, such as the Trade Practices Commission, to
supervise, where necessary, the behaviour of foreign companies in Australia, and to deal with issues
such as vertical integration.
Finally, in an effort to win reciprocal rights of access from our trading partners the next Coalition
Government will use the fora of trade negotiations to gain a relaxation of restrictions on investmen
undertaken by Australians in various foreign countries.
MONETARY POLICY
The Hawke/Keating Government has not provided a medium term statement of its objectives and the
stance of monetary policy required.
In particular, there has been no emphasis on the need to get inflation down.
The Government has simply sought to string together a series of wage/tax deals with the union
movement and asked the Reserve Bank to use monetary policy as a "balancing weapon" to make up
for the deficiencies of its wage and fiscal policies.
A number of other operational weaknesses have followed from this basic failure to establish medium
term goals and to pursue them through an effectively independent Reserve Bank.
First, we have seen enormous volatility in interest rates as the Reserve Bank has attempted to perform
its "balancing act".
Second, we have seen uncertainty on the part of officials, particularly in the disastrous 1987 period, as
to whether they should be targetting interest rates or the exchange rate.
Third, we have seen the Government obfuscate the stance of monetary policy. Business and individuals
have therefore been left uncertain as to what the Government is trying to achieve. This may be one
reason why record high interest rates are currently having so little impact on demand. This is
particularly so when the Government continually holds out the hope of an early easing in monetary
policy.
Finally, and most seriously, there is a widespread belief amongst the community that monetary policy
can and will be manipulated for electoral reasons. Again this blunts the effectiveness of monetary
policy and indeed leads to perverse actions by the market.
As the Reserve Bank of Australia has stated in its Annual Report, inflation is the vital key in
restructuring the economy. Restructuring is much more difficult, even impossible, in a high inflation
environment which destroys competitiveness and discourages saving. Altering this situation must
have top priority.
The next Coalition Government will conduct monetary policy with the mediumterm objective of
reducing and eventually eliminating inflation.
By reducing inflation and shifting the weight off monetary policy, we will be able to bring about a
sustainable reduction in interest rates, including home mortgage rates.
A monetary policy pursued steadily over the medium term, in conjunction with our industrial relations,
fiscal and structural policies, provides the only means of reducing inflation and hence interest rates.
We will bolster the independence of the Reserve Bank including if necessary by way of amendment
to the Reserve Bank Act. Less emphasis will be placed on monetary policy in the shortterm
macroeconomic management of the economy. We will not rely on monetary policy as a backup for
the failure of other policies.
FISCAL POLICY
The detailed expenditure and tax measures which the Coalition will introduce upon attaining
Government are set out later in this document.
These measures complement our overall strategy for making Australia a more competitive and stable
family oriented society.
Our fiscal policy offers smaller government, privatisation of several major government business
enterprises and a larger Budget surplus.
The essential features of our approach to fiscal policy are:
the largest Budget surplus since comparable records have been kept $10.9 billion including the
proceeds of privatisation (about 3 per cent of GDP);
tax relief fully funded by expenditure restraint (excluding the proceeds of privatisation);
in these difficult economic times, tax relief has been limited to assisting those most disadvantaged by the Hawke/Keating Government namely Australian families with children;
expenditure (including the proceeds of privatisation) is reduced to 22.5 per cent of GDP the
lowest since 1964-65, that is, the lowest for 25 years;
tax revenue is reduced to 24.3 per cent of GDP the lowest for six years;
the proceeds of privatisation (some, $1600 million) are fully committed to debt retirement;
a commitment to forego the increase in revenue because of "bracket creep".
These tax and expenditure measures are the first instalment of our mediumterm strategy to wind back
the role of the government in the economy by:
eliminating wasteful and inefficient spending;
removing duplication in the provision of services;
reducing government interference; and
privatising a range of public enterprises.
Our welfare policies and our attitude to welfare spending are based on compassion and realism.
We are committed to providing a basic level of security, a safety net, the purpose of which is to offer
support, not trap those it is designed to help so they become its victims.
We want to improve our welfare system so that individuals and families in need are properly supported
while also being encouraged to assume more personal responsibility for improving their circumstances.
Our objective is to encourage a more caring community in which the family and other groups accept
greater responsibility for support. It is within this framework that government assistance can be most
effective.
We believe it is important to encourage the family unit and encourage support of its members. The tax
measures announced today are directed to that end.
The Coalition's commitment to restraint goes beyond the measures outlined below.
One of the greatest disincentives arising from the present income tax system has been the Hawke /
Keating Government's willingness to bolster its revenues with the proceeds of "bracket creep".
Indeed, it has been estimated that "bracket creep" has contributed some $13.5 billion in additional
(cumulative) revenue over and above all tax cuts during the life of the Hawke-Keating Government
(using November 1982 tax scales as a base).
A major commitment is given to hand back the increase in tax caused by inflation pushing taxpayers
up the tax scale. Never again will inflation be permitted to swell government coffers and rip off
taxpayers through "bracket creep".
The Coalition makes a commitment to forego the increase in revenue because of "bracket creep".
While our immediate fiscal achievements must be tailored to the economic mess we will inherit, the
Coalition remains committed to delivering a flatter and significantly lower tax scale. We will aim to
move towards a twotiered personal income tax schedule where the top marginal rate is equal to the
corporate tax rate.
We will also reform the existing ramshackle indirect tax system to remove the inequities and anomalies
that have arisen over the years.
TRANSITION TO GOVERNMENT
The extent of mismanagement of the economy has been such that there will be a need for quick and
decisive action once the Coalition attains power.
A considerable amount of work has already been done on the legislative and administrative changes
necessary to implement our policies and further work will be done between now and the election.
As a matter of immediate priority on gaining government, we will conduct a thorough audit to assess
the true state of Commonwealth finances, the extent of unfunded or contingent liabilities, the full
potential for contracting out of government services, the extent of foreign exchange exposure and the
extent of duplication of Commonwealth and State and local government expenditure.
This audit of the government's finances will form the basis of our first Budget.
The Industry Commission will also be asked to prepare and publish as a matter of urgency a
comprehensive list of structural reforms necessary to make Australia internationally competitive. The
IC will play a coordinating role in the implementation of our liberalisation policies.
Within months of the election, the Treasurer will bring down a comprehensive Economic Statement
detailing a mediumterm fiscal and monetary policy and economic reform strategy for our first term.
Immediate action will also be taken to introduce enabling legislation for reforms such as industrial
relations, coastal shipping and waterfront reform, much of which is already available in draft form.
For example, the following legislation will be introduced as quickly as possible in our first Parliamentary
term.
Industrial Relations legislation to :
provide for voluntary agreements at the enterprise level
guarantee genuine voluntary unionism
give the Industrial Relations Commission effective powers to enforce its decisions
reform union structure

provide for secret ballots before any industrial action
Coastal Shipping legislation to :

introduce foreign vessels into the coastal shipping service to inject competition and
dramatically reduce costs

reduce crewing levels on Australian Flag vessels
Waterfront legislation to :
introduce enterprise employment (the right of employers to employ whom they choose)
introduce compulsory stand down provisions
introduce compulsory redundancy provisions
remove
the Waterside Workers Federation's coverage of small ports
Unlike the Hawke / Keating Government which has no answers and is locked into the one-dimensional
policy of high interest rates, the Coalition has a well developed integrated economic strategy to deal
with our emerging economic crisis and is ready to go from Day One of government.
CONCLUSION
The Australian economy is about to enter its most difficult period since the Second World War.
The economic mismanagement of the Hawke / Keating Government has left Australia with a legacy
of debt, the servicing of which has already mortgaged the future of the next generation of Australians.
Much of the money has not gone into productive investment and exports which would service that debt;
it has been frittered away to try to artificially prop up living standards.
The hard decisions to boost our productivity and competitiveness have been avoided to placate some
narrow vested interest groups and to buy "industrial peace" under the Accord.
The moment of truth has now arrived.
Urgent action is required if the debt mountain accumulated under Labor is not to bury us.
There are no easy quick fix options.
We will have to work harder; we will have to work smarter. We will have to save more and restrain
our consumption levels for a time.
We must approach our task with compassion and realism.
Those in genuine need must be helped, but there is no place for those who will not help themselves or
who have become excessively or unjustifiably reliant on others.
In particular millions of average Australian families who are struggling to make ends meet, to raise,
and educate their children, are becoming very impatient as they see their hard earned tax dollars going
to others who they believe are not pulling their weight.
The principal task of a Coalition Government will be to tackle the issues which the Accord has swept
under the carpet:
to bring employer and employees closer together so they can reach sensible wage bargains and
boost productivity and competitiveness;
to eliminate waste and inefficiency in Government spending programs and in public

administration;
to revamp our health and welfare systems to encourage greater personal and family financial
responsibility except in cases of genuine need;
to work towards a simpler, flatter tax system that will restore incentive;
to enhance the independence of the Reserve Bank to ensure that it can pursue a truly independent
monetary policy framed against our medium term objectives of reducing inflation and placing
Australian industry on a competitive basis;
to eliminate inefficient work and management practices on the waterfront and throughout the
transport system generally;
to free up restrictions flowing from excessive regulation, protection and public sector control of
enterprises which would be better run in the private sector;
These basic changes of policy must be designed to engender a new attitude towards work and selfreliance.
Incentives to work, save and invest must be coupled with some strong medicine for those who will not
pull their weight in society.
A fair go for all Australians requires us to recognise that the efforts of each individual affect others.
The Coalition is committed to liberating our economy so all Australians can be free to play their role.
SUMMARY OF POLICY DECISIONS

COALITION ESTIMATES (a)
GOVERNMENT BUDGET ESTIMATES
1989-90
$M
CHANGE 1989/90 (b)
%GDP
$M
$M
95875
(26.2)
-2568
93307
(25.5)
(91325)
. (4550)
(24.9)
(88777)
(4530)
(24.2)
Outlays
87953
(excluding asset sales)
(24.0)
-2708
85245
(23.3)
Revenue
Tax
Non-Tax
(-2548)
(-20) (c)
Surplus
(excluding asset sales)
7922
140
8062
Asset Sales
1200
1600
2800
Outlays
86753
(including asset sales)
Surplus
9122
(23.7)
(2.5)
1740
%GDP
82445
(22.5)
10862
(3.0)
NOTES:
(a)
This Table provides the order of magnitude of our proposals for tax and expenditure.
Since the Government introduced the Budget, there may have been some revisions to the
estimates. No attempt has been made to estimate any such revisions. The actual timing of
expenditure and taxation decisions will be announced in our first Budget.
(b)
Full year output at 1989/90 prices and parameters assumed in Budget Documents. As per
government forecasts, GDP in 1989/90 is assumed to be $366,376 million.
(c)
Change in nontax revenue assumes some loss of dividend income following privatisation
of Qantas and the AIDC.
Economic . and Tax Policy - 27
'r
SUMMARY OF TAXATION MEASURES
ESTIMATED FULL
YEAR EFFECT (a)
$M
Family Tax Package:
Child Tax Rebates
Dependant Spouse Rebate
200
Tax Rebates for Child Care
820
1000
Abolish Capital Gains Tax and replace with Speculative Gains Tax
450
Abolish Coal Export Levy
52
Increase in Super Lump Sum TaxFree Threshold
15
Retirement Savings Accounts
Reinstate tax deductibility of farm business electricity connection/upgrading
-5
Loss of Dividend Income from Privatisation of Enterprises
TOTAL
2568
NOTES:
(a)
20
1989/90 Prices and Parameters used in Budget Speech.
SUMMARY OF EXPENDITURE DECISIONS

Estimated Full
Year Effect on
Outlays(a)
$M
Aged Pension Improvements
- Liberalisation of Assets Test for Aged Pensioners
- Deferred Pension Plan
Unemployment Relief Plan
- Restriction to 9 months
- Increase waiting period
- Defer payments until leave exhausted
- Job Search Allowance (School and Tertiary Leavers)
- Special Benefits
Rehabilitation of Invalid Pensioners
- Increased Funding for Rehabilitation
- Annual Review
Reducing Fraud and Abuse
- Sickness Benefits - Monthly Review by CMO
- Unemployment Benefits
Tightening of Eligibility
- Assets Test for Beneficiaries Under 25 years
- Tightening of Pensions payable overseas
- Residency Requirement of 12 months for Benefits
2. EDUCATION
Tertiary Fees
Austudy reduce fraud and abuse
3.
Arts
Heritage and Environment
-1500
-90
-20
-40
+835
+30
-150
-60
-30
-5
-10
-45
205
30
33
+8
100
4.
ABORIGINAL AFFAIRS
5.
I MMIGRATION
6.
7.
+40
-100
20
Reduce Subsidy to ANRC
20

Austrade
Industry Assistance
20
50
8.
9.
10.

Primary Industry
Energy
-20
-20

Industrial Relations Department
Savings after sale of TUTA
Transfer OH&SC to States
Targetting of Employment Programs
Abolish NEIS
CES
-9
-9
-17
-197
-7
-50
CONTRACTING OUT N.E.C.

General Contracting Out
Australian Broadcasting Corporation
-130
-30
PUBLIC ADMINISTRATION N.E.C.

Increase efficiency dividend
-70
12.
ATTORNEY-GENERAL
-10
13.
GOVERNMENT SERVICES
Reverse Postage Entitlements for MPs
Abolish NMLS
Eliminate Government Advertising
Abolish unlimited stationery to MPs
-4.2
-1.5
-3.3
-0.5
14.
OVERSEAS AID
usII:
15.
TREASURY
ABS Cost Recovery
mat]
11.
16.
17.
PUBLIC DEBT INTEREST

Savings after Assets Sales
-105
PAYMENTS TO STATES N.E.C.
-300
-2708.5
18.
ASSET SALES
Qantas
AIDC
Pipeline Authority (b)
Medibank Private
-1600
-4308.5
------------------------------------------------------------------------------------------------------------------------
NOTES:
(a)
Full Year Effect. Estimated in 1989/90 prices and assuming parameters used in
Budget documents.
(b)
To avoid the potential for double counting $100 million in proceeds from the sale of the
Pipeline Authority has been excluded because this may be included in the Government's
1989/90 costings.
TAXATION MEASURES
FAMILY TAX PACKAGE
The Coalition Parties' Family Tax Package comprises:
a new program of child tax rebates;
an increase in the eligibility threshold and a reduction in the withdrawal rate for the dependant
spouse rebate; and
a new program of child care tax rebates.
CHILD TAX REBATES

Tax rebates for children will be available for deduction against the tax liability of a sole parent or against
the combined tax liability of both parents for two parent families.
The amount of the child tax rebate that can be claimed varies according to the number of children in
each family and the age of children, as follows:
AGE OF CHILD
NO. OF CHILDREN
Under 13 Years
13-15 Years
First Child
$250 p.a.
$350 p.a.
Second and Each

Subsequent Child
$200 p.a.
$300 p.a.
The cost of the child tax rebate is $1000 million.
DEPENDANT SPOUSE REBATE

The dependant spouse rebate is to be changed in two ways. Currently, where the dependant spouse
derives "separate net income" the maximum rebate is reduced by $1 for every complete $4 by which
the separate net income exceeds $282. The eligibility threshold will be raised from its current level of
$282 to $1000 and the withdrawal rate will be eased.
That is, for a spouse's net income up to $1000 the dependant spouse rebate is $1000 per year (no
children) and $1200 per year (with children).
Eligibility for the dependant spouse rebate will fall by $1 for every $6 by which the dependant spouse's
separate net income exceeds $1000.
The cost of these changes to the dependant spouse rebate is $200 million.
CHILD CARE TAX REBATE

Tax rebates for child care will be available for deduction against the tax liability of a sole parent or
against tax calculated on a secondary earner's income for two parent families.
A rebate of $20 per week will be paid for the first child under five years of age. For each other child
under five years, and for each child aged between five and twelve years a rebate of $10 per week will
be paid.
For couples rebates will be paid only where the second earner's income is derived from wage, salary
or selfemployment income and where that income exceeds the relevant taxfree threshold.
For example, a parent with one child under five who earns more than the taxfree threshold (assuming
four weeks annual leave) would receive $960 a year.
To receive the full rebate entitlement, child care expenditure will have to be fully substantiated.
However, payment of the rebate will not be restricted to formal child care. As far as possible, a range
of child care facilities will be eligible.
The estimated cost of the child care tax rebate is $820 million.
OTHER TAXATION MEASURES
Replace Labor's Capital Gains Tax with Speculative Gains Tax

The Liberal and National Parties will abolish Labor's capital gains tax.
The Coalition Parties will, however, introduce a speculative gains tax which will apply to shorter term
gains. Such gains will be taxable on a sliding scale over five years. After five years there will be no
tax on capital gains.
Assets held for up to one year will continue to be taxed at 100% of the real capital gain. For assets held
for more than one year and up to two years, 80 percent of real capital gains will be treated as income
and, therefore, subject to the appropriate marginal tax rate for individual taxpayers. That is, 20 percent
of real capital gains would be taxfree.
For assets held for more than two years and up to three years, 60 percent of all real capital gains will
be treated as income and taxed accordingly. For assets held for more than three years and up to four
years, 40 percent of real capital gains would be treated as income, and for assets held for more than four
years and up to five years, 20 percent of real capital gains would be treated as income.
The asset cost base would be indexed as at present and the current exemptions would apply, including
the exclusion of a taxpayer's principal place of residence.
These provisions will apply to assets acquired after 19 September 1985 and disposed of after the date
of election of the Liberal/National Government.
The abolition of the capital gains tax and the introduction of a speculative gains tax is estimated to cost
$450 million in terms of tax revenue foregone.
The Abolition of the Coal Export Levy

The Liberal and National Parties will abolish the coal export levy.
The cost of the abolition of the coal export levy is $52 million.
Gold Tax
The Coalition will not repeal the legislation which removes the exemption from taxation of income
from gold mining from 1 January 1991.
Fringe Benefits Tax

The Coalition will retain the current system of fringe benefits taxation and we will review anomalies
especially in the mining, pastoral and tourist industries.
The Increase in the TaxFree Threshold for Superannuation

The Coalition Parties will raise the lump sum taxfree threshold from $60,000 to $125,000.
Only those who retire at the normal age or later will be eligible for the increase in the threshold.
The cost of increasing the taxfree threshold is $15 million in terms of revenue foregone.
Tax Deductions for People with Retirement Savings Accounts

The Coalition Parties will introduce tax deductions for those who take out Retirement Savings
Accounts.
Initially this facility will be available to itinerant, casual, and part-time employees and those entering
the workforce for the first time.
The cost of the tax deduction will be $6 million in terms of revenue foregone.
Reinstate tax deductability of farm business electricity connection/upgrading

Labor's replacement of the immediate tax deductability of farm business electricity connection or
upgrading, with a ten year write-off has unfairly affected remote area farms. The Liberal/National
Government will reinstate the previous arrangement. Estimated cost will be $5 million.
NOTES ON EXPENDITURE DECISIONS
1. SOCIAL SECURITY AND WELFARE
Aged Pension Improvements
(i)
Liberalisation of Assets Test for Aged Pensioners
A modified assets test will be administered to ensure that people in genuine need are not precluded from
the age pension. In particular, the assets test will not apply to retirees who:
wish to retire on or from the family farm when they intend passing it on to their close relations
who are already working on the farm and drawing their primary income from it;
are unable to sell their property due to market conditions;
remain or settle on relatively small or nonviable land holdings on which they cannot generate
income beyond the age pension limits; or
are unable to subdivide and sell their land due to government restrictions.
We will ensure that all reasonable cases of hardship are fully considered in determining eligibility for
the age pension.
Estimated cost: $40 million
(ii)
Deferred Pension Plan
There are many Australians who wish to remain in employment beyond the current retirement age.
Age alone should not be a bar to employment and we will legislate to remove this artificial barrier to
enable people to continue to work if they so desire. Under this plan, those who wish to remain in the
workforce and who qualify for the age pension at the time and agree to defer it, will ultimately receive
an increased pension payment for each additional year of deferment.
Estimated savings: $100 million.
Unemployment Relief Plan

(i)
Restriction of unemployment benefits to 9 months
Under a Liberal/National Government:

resources will be directed toward ensuring that the unemployed are given adequate and timely
counselling on a regular basis;
the unemployed will be provided with access to reskilling and training programmes; and
unemployment benefits will be efficiently administered.
We do not, however, consider the receipt of unemployment benefits should be seen as an adequate
alternative to employment.
Unemployment benefits will only be available for a maximum nine months. Within this nine month
period, the onus of proof as to why benefits should be continued will rest with the beneficiary.
Estimated savings: $1500 million
(ii)
Increase waiting period
Currently the general waiting period for those who apply for unemployment benefits is 1 week. This
will be extended to 2 weeks for all those who apply for unemployment benefits.
(iii) Defer payments until leave exhausted

Unemployment and sickness benefits will not to be paid until all annual leave and long service leave
is exhausted.
(iv) Job Search Allowance

Unemployed people under the age of 18 do not receive full unemployment benefits, but a lesser benefit,
namely the Job Search Allowance.
School and tertiary leavers who are over the age of 18, with no dependants, will only qualify for Job
Search Allowance and not unemployment benefits.
(v)
Special Benefits
People who remain unemployed beyond the nine month period in which they have received
unemployment benefits and who are not capable of providing for themselves and/or their family will
be eligible to apply for Special Benefits subject to the more rigorous testing which applies to the
provision of these benefits.
Estimated cost $835 million
Rehabilitation of Invalid Pensioners

(i)
Increased Funding for Rehabilitation
Once people are on the invalid pension, few beneficiaries are ever encouraged to seek rehabilitation
for reentry into the workforce.
Greater access to rehabilitation and labour market programs tailored to suit the special needs of
disabled people will be provided.
(ii)
Annual Review
As a first step towards ensuring a greater degree of accountability for recipients of the invalid pension,
we will require all invalid pensioners, except those who are totally and permanently incapacitated, to
undergo a thorough annual health check conducted by a Commonwealth Medical Officer.
Reducing Fraud and Abuse

The Liberal and National Parties are committed to eliminating fraud and abuse of the welfare system
wherever possible.
(i)
Sickness Benefits Monthly Review by Commonwealth Medical Officers
Sickness benefit is a payment for temporary periods of total incapacity for work usually up to 6 months.
It is generally not payable to people who are fit for light or other types of work.
The present three-monthly assessment will be replaced by monthly assessments to be performed by
Commonwealth Medical Officers. Failure to attend without justifiable reason may result in termination
of benefits.
(ii)
Unemployment Benefits
To make further inroads into unemployment benefits fraud, including overpayment, we will initiate
administrative procedures over and above the Hawke Government's use of review teams.
Assets Test for Beneficiaries under 25

When the assets test on unemployment, sickness and special benefits was introduced in December
1987, it applied only to those recipients aged 25 years and over. People under 25 should not be immune
to the assets test simply because of their age.
Tightening of Pensions Payable Overseas

Any person residing overseas and in receipt of an overseas pension, with a pre-departure certificate,
will be required to return a review form within a specified period in order to continue to receive a
pension.
After 6 months, failure to provide a review form within 4 weeks will result in an immediate cancellation
of pension entitlements.
Return to Australia will then be required to regain eligibility for the pension.
o Benefits
Residency Requirement of 12 months jr
Migrants coming to work in Australia (excluding refugees) should be expected to support themselves
for at least 12 months. Illegal migrants should not be entitled to any benefits including legal aid.
Except where reciprocal bilateral treaties otherwise provide (ie New Zealanders), new
migrants (excluding refugees), will not have access to unemployment, sickness benefits or invalid
pensions for 12 months after arrival in Australia.
2. EDUCATION
Tertiary Fees
An Annual Tuition Charge of $1200 will be payable by tertiary students.
These payments will be made direct to the institutions. However, 25% of students will receive national
education scholarships on the basis of merit and/or need and will accordingly be exempt from the
charge. Provision will also be made for Commonwealth guaranteed commercial loan arrangements
if necessary.
The current Higher Education Contribution Scheme levies a charge of $1800 for those students who
elect to "pay later" through the tax system and reducing to $1530 (a 15% discount) for those who pay
upfront.
The tuition charges would raise $313.2 million in 1989/90, some $205 million more than the
Government's scheme as forecast in the August 1989 Budget.
The Commonwealth can reduce its funding to institutions by $205 million.
AUSTUDY
Reduce Fraud and Abuse
Controls on the administration of the AUSTUDY student assistance scheme will be tightened to
achieve a reduction in the amounts of money widely acknowledged to be defrauded from the scheme.
We will tighten administrative controls on applications; adopt a system to check all recipients on a
regular basis; accord high priority to fraud investigation, prosecution and recovery action; and request
the AuditorGeneral to undertake a thorough audit of the scheme.
3. CULTURE AND RECREATION
Arts
Cost recovery from National Collections will be increased, the Film and Television program will be
rationalised, and the Australia Council will be abolished.
Heritage and Environment

Initiatives within these programs, such as the establishment of an Endangered Species Unit and
increased funding for the National Tree Program will lead to additional expenditure in the order of $15
million. This amount will be partially offset by increased cost recovery from National Parks and
improved administrative efficiency.
Estimated cost: $8 million.
4. ABORIGINAL AFFAIRS
Total expenditure savings of $100 million will be made from current total assistance to Aboriginals of
close to $1,000 million.
The following savings will be made:
Estimated savings
The Aboriginal and Torres Strait

Islander Commission will not proceed.
$10.0 million
The Royal Commission into Aboriginal

Deaths in Custody will be wound up.
$10.0 million
Savings in the Department of Aboriginal

Affairs.
$46.0 million
Savings in Department of Employment,

Education & Training
$23.0 million
Savings in Department of Community

Services & Health
$11.0 million
Estimated savings:
$100 million
5. IMMIGRATION
Expenditure savings of $20 million will be achieved in this portfolio through improved administrative
efficiencies and increasing cost recovery for migrant entry.
6. TRANSPORT AND COMMUNICATIONS
Australian National Railways Commission

The Coalition is committed to a program of widereaching microeconomic reform to make our
transport and handling more efficient. Accordingly, to accelerate the pace of reform on the railways,
a cut in the subsidy to ANRC of $20 million will be made.
7. INDUSTRY ASSISTANCE AND DEVELOPMENT
Austrade
At present Austrade recovers only a small proportion of costs by user charges. We believe that a higher
level of cost recovery would encourage a better quality service.
Industry Assistance
Industry strongly supports fiscal restraint, and must share some of the burden of expenditure savings.
Our economic policies will assist industry to adjust to reductions in assistance. Accordingly, bounties
such as the textile bounty, the book bounty and the computer bounty will be reduced. The TCF
Development Authority will be abolished. An overall budget ceiling will be imposed on the Grants for
Industrial Research and Development (GIRD) scheme. Remaining National Industry Extension
Service (NIBS) functions will be transferred to the States.
8. PRIMARY INDUSTRY AND ENERGY
Primary Industry
We will make total net expenditure reductions of $20 million, which is made up of gross savings of $24
million and additional expenditure commitments of $4 million.
Most of the cuts will be made in the General Assistance NonSpecific area of the budget. Programs
to be abolished include:
Countrylink
Rural Education Access Program

Marketing Skills Program
Innovative Rural Education and Training Program
Rural Women's Access Grants Program
Rural Communitybased Education Program

Estimated savings: $4.6 million.
Funding for the following programs will be reduced:
Rural Counselling Program

Estimated savings: $0.4 million
Quarantine and Inspection Service

We will reduce duplication with the States.

A cost shared Forestry Industry Research Fund will be established for the forestry industry similar to
those operating for nineteen other primary industries.
Payments will be made for the National Residue Survey and for the Market Basket Survey to assist the
sheep, cattle and pig industries.
Science and Energy

There is scope for efficiency gains in various programs which will not affect the Government's research
effort.
The Australian Government Analytical Laboratories will promote feeforservice, saving $3 million.
The Coal Marketing Council and Joint Coal Board will be dismantled. Industry will be encouraged to
contribute to joint energy research ventures. The Australian Nuclear Science and Technology
Organisation will be encouraged to accelerate commercial applications of its research such as in radio
isotopes.
9. LABOUR AND EMPLOYMENT
Industrial Relations
We believe that occupational health and safety is primarily the responsibility of the States, although
the Commonwealth may have a role in promoting uniform standards where appropriate. This
coordinating role will be managed by the Department and the National Occupational Health and Safety
Commission will be abolished.
The Trade Union Training Authority provides industrial relations training for trade unionists at
taxpayers' expense. The Authority will be offered for sale to the trade union movement, and/or any
other interested buyer. If the authority is not sold, it will be disbanded.
(exclusive of any sale proceeds)
The Workplace Reform Program which effectively helps implement the ACTU's award restructuring
blueprint will be reviewed and rationalised. Assistance for union amalgamations will be abolished.
Employment Creation and Special Training Programs

A more flexible, dynamic and efficient economy is the only way to ensure creation of real job
opportunities. Piecemeal programs designed to overcome deficiencies in the existing industrial
relations system will not, and indeed, do not work.
The Liberal and National Parties therefore propose to rationalise job creation and special training
programs. Details of these proposals are outlined by the Shadow Minister for Employment, Training
and Youth Affairs in the Supplementary Notes accompanying this document.
Jobstart, a wage subsidy scheme which succeeded the Community Employment Program, will be
abolished. The Coalition is committed to the introduction of youth and trainee rates in industrial
awards as well as a more flexible approach to wages generally, thus removing the need for Jobstart.
Skillshare is a communitybased program which combines elements of three earlier schemes: the
Community Youth Support Scheme, (CYSS), the Community Training Program (CTP) and the
Community Volunteer Program (CVP). Skillshare will be phased out as soon as practicable, and
emphasis on finding employment for the longtern unemployed and the disadvantaged will be
concentrated through the JOBTRAIN program. The Formal Training Allowance component of
Skillshare will be retained and allocated to JOBTRAIN.
Estimated savings: $61, million.
The Industry Training Support scheme supports various industry training projects and committees in
several industries. While the Coalition strongly supports industry efforts to upgrade workers' skills,
it does not consider this should be done at taxpayers' expense. The program will be abolished.
The Australian Traineeship System pays an employer subsidy for one year to cover the cost of
offthejob training for trainees. The concept of the program is supported by the Coalition because
it provides an avenue for formal training for jobseekers, especially the young. We will gradually
refocus the scheme to ensure that the original objectives of the Kirby Committee are met and training
places are provided for many more trainees. These changes will be introduced in conjunction with
industrial relations reform.
The amount of subsidy provided will be reduced by approximately 25 per cent to achieve savings of
$15 million.
The New Enterprise Incentive Scheme (NEIS) is aimed at helping the unemployed become
selfemployed. The scheme has had many teething problems and last year only a fraction of
appropriated funds were actually spent. The scheme will be abolished.
Commonwealth Employment Service

The Commonwealth Employment Service . (CES) involves net expenditure of $210 million. Its
operations will be rationalised and streamlined. Some services will be contracted out and others will
be rationalised where the private sector offers similar services. Feesforservice will be introduced
where appropriate.
10. CONTRACTING OUT
Competitive Tendering
Competitive tendering on certain publicly provided services will be extended into areas hitherto
reserved for the public sector.
Australian research, backed by local and overseas experience, indicates productivity and cost savings
of over 20%.
Services which provide a ready scope for an expansion of competitive tendering include office
cleaning, maintenance, security, computer services and transport.
Savings which can be achieved in government departments as a result of an expansion in the
competitive tendering process are estimated to total $130 million.
The ABC could save at least $30 million through greater use of competitive tendering in program
production and equipment maintenance.
t
11. PUBLIC ADMINISTRATION N.E.C.
The efficiency dividend required from all Commonwealth departments will be raised from 1.25% to
2.00%. Overall, this is expected to save $70 million in portfolios where such savings have not already
been specifically detailed.
12. ATTORNEY-GENERAL
Administrative efficiencies will be achieved within theAttorneyGeneral's portfolio. The War Crimes
Special Investigation Unit and the Human Rights and Equal Opportunities Commission will be
abolished.
The functions of the Privacy Commission within the HREOC will be retained.
13. GOVERNMENT SERVICES
A Liberal/National Government will:
Reverse the recently announced decision of the Hawke Government to provide additional
postage entitlements to Members of the House of Representatives ($4.2 million).
Reverse the Hawke Government's recent decision to provide Senators and Members with
unlimited stationery entitlements ($0.5 million)
Abolish the National Media Liaison Service ($1.5 million)
Abolish the Office of Government Information and Advertising ($3.3 million).

14. OVERSEAS AID
The major criteria for identifying savings in country-specific aid programs are as follows: aid
programs to upper middle income countries; aid programs to countries that spend more on defence as
a proportion of GDP than Australia; and aid programs to countries outside our region or area of
expertise. Employing these criteria leads to savings from:
South East Asia Programs
Cross Regional Programs
Other Regions Programs
$10.1 million
$10.0 million
$33.7 million
$53.8 million
The main criteria in identifying savings on global aid programs are that: bilateral aid can be more
efficient, effective and may better advance Australia's foreign policy interests; and spending under the
Development Import Finance Facility (DIFF) has become unbalanced. Employing these criteria leads
to savings from:
International Organisations
DIFF
$10.5 million
$33.3 million
$43.8 million
AIDAB Corporate Services savings of $2.4 million have been identified. These will be achieved as
the result of staff reductions following on from the improved focus of the aid program.
15. TREASURY
The Australian Bureau of Statistics will be required to extend the use of costrecovery on the
publication of statistical bulletins.
16. PUBLIC DEBT INTEREST
Costings have been estimated based on the assumption that proceeds from asset sales are received
throughout the first year. In a full year, savings on PDI from proceeds of asset sales in the first year
of our privatisation program could be well over $210 million, based on today's interest rates.
17. PAYMENTS TO STATES N.E.C.
General Purpose Payments

State Governments will be expected to adopt tighter expenditure policies. General purpose payments
will be reduced by $300 million representing some 2.3% of these payments.
Some States could do more to take advantage of the large savings which can be expected from
competitive tendering for many services. The Business Council of Australia has indicated that, using
conservative assumptions, contracting out of a variety of functions at the State Government level could
save State Governments up to $600 million Australiawide. Recent contracting out exercises by the
New South Wales Government confirm that this is probably an underestimate.
This reduction in payments to the States could be absorbed without reductions in services if States
adopt a more commercial approach, including contracting out.
18. PROCEEDS FROM THE SALE OF GOVERNMENT

BUSINESS ENTERPRISES
The Liberal and National Parties' privatisation program will include the sale of the AIDC (the
remaining 70%), the Pipeline Authority, Qantas and Medibank Private in the first year. Total proceeds
of this program are conservatively estimated to be in the vicinity of $1600 million, which will be
assigned to retiring Commonwealth Government debt.
Policy issued October 1989
ATTACHMENT
THE MYTHS OF THE HAWKE GOVERNMENT
The Myth of the Hawke Government's Overall Economic Management

The Hawke Government has assiduously cultivated the myth that it is one of responsible and successful economic management.
a result of the Government's economic policies Australia will emerge from the recent high level
of spending without a recession and with its economic and social structure improving. This will occur
because the Government has kept sight of its objectives and has not been diverted by superficial
solutions to fundamental problems. It has never sought to minimise its responsibilities or shy away
from the issues of substance". [The Hon Paul Keating, Budget Speech, 1989-901.
An examination of the economic record reveals the acute difference between the myth and reality.
The Hawke Government's policy perspective is short term.
The Government has tended to respond to economic developments as they occur rather than set policies
with a view to achieving longer term objectives. Indeed, more often than not, the Hawke Government
has been forced into each of its major economic decisions by circumstances, particularly financial
market developments.
For example, the ground work for foreign bank entry had already been laid by the Fraser Government
before March 1983; indeed, applications had already been called in the face of resistance from the then
Labor Opposition. The floating of the dollar in December 1983 was forced on the Hawke Government
by a foreign exchange crisis. The worsening current account deficit and large currency depreciations
in 1985 and 1986 forced a marked tightening of monetary policy. The subsequent tightening of fiscal
and wages policies was necessary to take the burden of adjustment off monetary policy, in what had
become an inflationary environment. The Budget surplus of 1987-88 was essentially a `surprise' to the
Government; it was mainly achieved by increasing tax revenue through `bracket creep' rather than any
significant reduction in outlays.
The Hawke Government has always been ready to offer elaborate expost rationalisations for each of
these decisions.
In its first two years in office, the Government's fiscal policy irresponsibly ignored external
constraints. It ignored both the significantly beneficial effects of the Fraser Government's wages pause
which broke inflationary expectations, and the cessation of the drought. The Hawke Government's
first two Budgets increased Government spending in real terms by 6 and 9 percent, respectively. Not
surprisingly, since then, the Government has been forced by the money markets to gradually eliminate
the Budget deficit.
Similarly, the Hawke Government's wages policy has evolved in response to the worsening economic
performance. Having promised real wage maintenance, the selfinflicted economic circumstances of
1985 forced the Government to seek to impose real wage cuts and to begin to acknowledge the need
for more flexible labour market arrangements.
The failure to consistently pursue an economically rational fiscal and wages policies has meant that
monetary policy has had to bear the brunt of economic adjustment.
Overall, the Hawke Government's policy response has been a classic case of `too little, too late'.
The other great failing of the Government's economic management is its failure to go beyond its
rhetoric to pursue a genuine, broadbased program of microeconomic reform. Microeconomic reform
was supposedly the hallmark of the third term of the Hawke Government and it has failed to deliver
any reform of substance. Most noticeably, the Government will not even tackle the problems on the
waterfront and in coastal shipping.
The Hawke Government's `corporatist' approach to economic management, whereby decisions are
made in `consultation' with big unions and big business, has clearly failed to deliver sustainable
improvements in the economy. Moreover, we have seen some of the worst manifestations of
`corporatism' as the approach adopted in some States has degenerated into financial mismanagement
(for example, Western Australia Incorporated and the VEDC).
Recent decisions to prolong the pilots' dispute by paying airline compensation; to buy off stevedoring
companies; to buy off Kodak; to make a deal with the four major banks on home loan interest rates;
and to defer a decision on Coronation Hill, make it abundantly clear that the Hawke Government is
putting short term political considerations ahead of the task of addressing Australia's fundamental
economic problems.
The decision to peg the home loan interest rates charged by the four major banks smacks of political
opportunism and economic irresponsibility. It guarantees that all interest rates will stay higher for
longer and that some mortgage rates and all other business and personal rates will rise more than would
otherwise be the case. The erosion of the independence of the Reserve Bank is evident once again and
it is possible that the Trade Practices Act has been breached.
The interest rate deal is a disturbing sign of the Government's willingness to "reregulate" in an attempt
to deliver politically acceptable results.
This is in stark contrast to the selfcongratulation which the Hawke Government indulged in when it
was forced to deregulate the financial sector and float the Australian dollar.
The Myth of the Accord

Labor's Prices and Incomes Accord has been credited with achieving massive employment growth,
significant reductions in industrial disputation, increased productivity and significant real wage
restraint.
The Labor Government constantly engages in rhetoric on these themes but the facts tell a somewhat
different story.
(i)
Employment Growth
The Government claims that:

`There was no possible chance without the Accord that we could have had ... three years of unparalleled employment growth ...' [The Hon Ralph Willis, House of Representatives, 20 May 19861.
Australian employment growth has generally been higher than the average for the seven major OECD
countries in the last thirty years.
Clearly, Australia has experienced a particularly strong rate of growth in employment throughout its
post war history reflecting, in part, a relatively youthful demographic structure and a high rate of
immigration.
That strength has certainly not been isolated to the years of the Accord.
The important issue over the medium term is whether the recent employment growth will prove to be
sustainable. Employment growth remains highly vulnerable in the event of any downturn in economic
activity which is, of course, the aim of the Government's high interest rate policy.
Under the Accord, structural rigidities have been cemented in the labour market. The average duration
of unemployment has increased from 8 to 13 months. The percentage of the unemployed who are "long
term" unemployed has increased from about 20 to 27 percent. The interaction between the Government's wages policy and social security policies has served to exacerbate the problem of unemployment in Australia.
Indeed, with the very real prospect of a recession in the second half of this financial year, it is possible
that unemployment will rise over the course of 1989-90.
The current round of award restructuring is the latest stage of the Accord. While the reduction in the
number of awards is to be welcomed, the linkages which are explicit between different awards
represent a return to "comparative wage justice".
In short, the award restructuring process could well be a recipe for a wages breakout.
The pilots dispute could prove to be the death knell of the Accord.
(ii)
Industrial Disputation
The Government claims that:

'The Accord has produced enormous benefits for the economy, reduced the overall level of industrial
disputation and changed the way employees and employers operate in the workplace' [The Hon Peter
Morris, Media Release, 8 December 19881.
It is a myth that there has been a significant fall in the level of industrial disputation under the Labor
Government.
While there has been a decline in the level of disputes in recent years, most of this occurred in 1982
i.e. before the election of the Labor Government.
Indeed, the release of the July 1989 industrial disputes statistics is likely to confirm that the level of
working days lost is running at around the same level as when Labor took office.
The Government subsidy to the airlines to avert standdowns during the pilots' dispute will probably
artificially reduce the number of working days lost figure for 1989 by over half a million working days
lost.
The Australian Bureau of Statistics working days lost figures do not take account of the increase in the
number of disputes involving bans and limitations.
Data prepared by the Department of Industrial Relations show that the number of disputes involving
bans and limitations last year was 26 percent higher than in the year before the Government took office.
Under the Accord, Australia has had a far higher level of industrial disputation than all our major
trading partners. The latest available annual data on industrial disputes statistics in OECD countries
relate to 1987 the year Australia recorded its lowest level of disputes under the Accord. Those data
show that Australia lost around 40 percent more working days lost per thousand employees than the
United Kingdom, over three times as many as the United States, and over twenty times as many than
both Japan and West Germany.
To the extent that there has been a fall in the level of disputes in recent years, this owes a great deal to
the willingness of employers to use legal remedies to stand up to unlawful industrial action. This has
undoubtedly brought about a change in union attitudes including a reduced propensity to take strike
action.
(iii) Productivity
The Accord is invariably given credit for improving productivity. For example, the Government
claims that:
'This Accord has provided the foundation for adapting our wages system to deliver wage restraint and
foster improvements in productivity' IThe Hon Paul Keating, address to Nomura Seminar, Tokyo,
7 July 19881.
While the second tier arrangements were at least a belated recognition of the need for greater labour
market flexibility and of the importance of productivity growth, they achieved little in terms of genuine
improvement. Award restructuring is unlikely to do much better given that working time arrangements
have been omitted from the negotiations.
Indeed, according to the Budget figures, labour productivity is expected to show negligible growth in
1989-90, on top of very weak growth over the last three financial years as well.
According to the latest OECD forecasts, Australia's labour productivity is estimated to increase by
0.3 percent per annum over the period 1987 to 1990, compared with the OECD average increase of
1.9 percent per annum for the same period. Australia's productivity performance is one of the worst
in the OECD.
(iv)
Significant Real Wage Restraint
At the time of its election, the Hawke Government claimed that the Accord would deliver real wage
maintenance:
'The maintenance of real wages is agreed to be a key objective' [Statement of Accord by the ALP
and the ACTU, 19831.

Real wage restraint has come about largely through delays in the implementation of wage increases (for
example, superannuation offsets and tax cuts). But real wage restraint through the backdoor is not
sustainable over the long term.
In any case, recent research undertaken in the Treasury casts considerable doubt on the Government's
claim that wages outcomes under the Accord were significantly different from those that would have
emerged without the Accord.
In short, it is not clear that the Accord, in itself, has been responsible for real wage restraint. But, it is
clear that falls in real wages are largely consistent with Australia's poor productivity performance
under the Accord.
This real wage restraint would not have been necessary had Australia been able to achieve higher
productivity growth over the last few years.
The Myth of Labor's Spending Record

The Hawke Government has repeatedly claimed that it has made significant cuts in Government
spending and that these cuts have paved the way for the eliminaton of the Budget deficit:
'This move into surplus was not achieved as a result of revenue increases. It has come entirely from
outlays reductions' [The Hon Paul Keating, to the British Australian Chamber of Commerce,
London, 11 October 19881.

In its first two years the Hawke Government increased Commonwealth Budget spending by over
15 percent in real terms.
Expenditure restraint has been largely illusory and directed to reining in Labor's earlier extravagance.
Much of the apparent restraint has also been due to the movement offBudget of some major items (for
example, the Civil Aviation Authority) and classification changes which have raised the base year for
spending comparisons.
Under the Hawke Government, the composition of Government outlays has changed dramatically as
capital items and payments to the States have borne the brunt of any reductions in expenditure, while
personal benefit payments have increased as a share of total spending:
capital spending has fallen from 9.1 percent of total outlays in 1982-83 to 5.0 percent in
1989-90;
grants to other Governments have fallen from 31.3 percent in 1982-83 to 30.2 percent in
1989-90;
personal benefit payments have increased from 31.8 percent in 1982-83 to 36.4 percent in
1989-90.
The Restructuring Myth

According to the Hawke Government, the economy has been undergoing an enormous structural
transformation in the last few years.
Specifically, the Government claims that
"(last year) I said that Australia was on the way to a systematic restructuring of its
economy, making it more dynamic and more able to compete in the world.
Tonight, I can report that we are much further down the road of that fundamental
restructuring than we were a year ago.
That is because the past year has seen the consolidation of the most significant
investment phase since Federation.
And it is investment which is the key to a successful fight back on the trade front.
As a result of the Government's economic policies Australia will emerge from the
recent high level of spending without a recession and with its economic and social
structure improving.
This will occur because the Government has kept sight of its objectives and has not
been diverted by superficial solutions to fundamental problems.
It has never sought to minimise its responsibilities or shy away from the issues of
substance" (The Hon Paul Keating, Budget Speech 1989-90).
Net exports are forecast to make a small contribution to GDP growth in 1989-90, following years of
negative contributions.
The Government constantly claims that capital goods imports are fuelling a massive investment drive.
In fact, imports of consumption and other goods have been very strong and many of the imports of
socalled capital goods are in fact radios, TVs, VCRs, office equipment and data processing
equipment.
While net exports are likely to make little, if any, contribution to economic growth, we are clearly
making little progress on restructuring.
Economic and Tax Policy -.53
As the Reserve Bank stated in its most recent Annual Report:

"the setting of incentives and disincentives at the microeconomic level has played a role in
creating some of our present economic imbalances. Changes there are essential if we are to
avoid a reemergence in the next upswing of the problems of the past year, but the vital key is
inflation. Restructuring is much more difficult, even impossible in a high inflation environment
which destroys competitivenss and discourages saving. Altering this situation must have top
priority".
On export diversification, it is not clear that there has been a significant swing towards noncommodity
exports. The much vaunted expansion of manufactured exports has been mainly concentrated in
aluminium, gold production and sales of secondhand aircraft.
Other evidence points to the fact that investment in plant and equipment in the manufacturing sector,
which is crucial to any expansion of nontraditional exports, has not been strong in recent years.
Overall, there has not been a significant transformation in the structure of our export and
import-competing industries.
The Myth of Labor's Tax Reform

The Hawke Government claims to have reformed the personal income tax system.
"Our first taxation package in 1985 comprehensively reformed our personal income tax system"
[ Keating to British-Aust r alian Chamber of Commerce, London, 11 October 19881
Since then the tax burden has jumped to record levels in terms of total tax revenue as a proportion of
GDP.
In 1989-90 the tax/GDP ratio is forecast to be 25 per cent which is just below the peace-time records
set in 1986-87 and 1987-88. This compares with average ratios of 19.9 per cent in the 1950's, 18.6 per
cent in the 1960s and 20.8 per cent in the 1970s.
The massive growth in personal tax revenue under Labor has been brought about largely through
inflation.
The Hawke-Keating Government clearly has a vested interest in inflation.
When it has given tax relief, any benefit has been temporary - it has soon been clawed back by further
"bracket creep".
The Treasurer claimed that the most recent tax cuts, effective from July 1989, were to provide
"substantial tax relief" in 1989.
The truth of the matter is, however, that "bracket creep" will claw back the benefits of those tax cuts
in the next two years.
According to Access Economics, in the June quarter 1990 the annual rate of bracket creep will be in
the range of $2 to $2.5 billion. And 12 months later, the annual rate of bracket creep will have increased
to double that rate.
And this is not to mention, of course, the additional claw back through further inflation and the
Government's high interet rates.
Reliance on "bracket creep" is obviously a conscious Hawke Government policy. It has made no
commitment to hold the tax/GDP ratio at the current level, let alone to reduce it.
Apart from the burden of "bracket creep", the Hawke-Keating Government has dramatically increased
the indirect tax burden. For example, wholesale sales tax revenue has increased by 200 per cent since
1982-83.
As most of these changes haven't been announced in annual budgets, this is another dimension of
taxation by stealth under the Hawke-Keating Government.
Authorised by Tony Eggleton, Federal Director, Liberal Party of Australia, Cnr Blackall and Macquarie Streets, Barton ACT 2600
and Paul Davey, National Party of Australia, National Circuit, Barton ACT 2600
Printed by Online Offset, 5179 Gladstone St, Fyshwick, ACT 2609
EcON
-- OMIC,
AC_,TI0N PLAN
The Liberal-National Parties '
October 1989
Supplementary Notes
on Expenditure Decisions
J
R/PS
324.29405H^
LIBERAL
NATIONALS
Supplementary Notes
on Expenditure Decisions
CONTENTS
Social Security and Welfare
Page 1
Education
Page 4
Culture and Recreation
Page 6
Aboriginal Affairs
Page 7
Immigration
Page 10
Transport and Communications
Page 11
Industry Assistance and Development
Page 12
Primary Industry and Energy
Page 13
Science and Energy
Labour and Employment
Page 15
Page 16
Employment and Training
Page 17
Contracting Out
Page 19
Government Services
Page 21
Overseas Aid
Page 22
Asset Sales
Page 25

Statement by David Connolly, MP
Shadow Minister for Social Securit y and Retirement Income
UNEMPLOYMENT RELIEF PLAN
Duration of Benefit
The indefinite receipt of unemployment benefits should never be an adequate alternative to employment.
Our policy will provide unemployment benefits for a maximum of nine months.
Unemployment benefits were introduced as a temporary income support measure between jobs. Today
this intention has been distorted.
The present system enables people to remain on unemployment benefits indefinitely thus raising the
likelihood of such benefits being regarded as an alternative to employment.
The provision of unemployment benefits for an indefinite period reduces the urgency of the job search
task.
This is compounded by the fact that the worktest arrangements are often difficult to administer enabling
the indefinite receipt of benefits by individuals.
The next Liberal/National Government will provide intensive joint interviews and assessments of the
unemployed by the Departments of Social Security (DSS) and Employment, Education and Training
(DEFT) and a range of job training programs will be available for the unemployed and disadvantaged.
Waiting Period for Unemployment Benefits
The general waiting period for unemployment benefits will be extended from 1 week to 2 weeks for
those who are involuntarily unemployed. For those leaving employment voluntarily the waiting period
will be extended to up to sixteen weeks depending on the number of occasions a person has previously
voluntarily left employment and received unemployment benefits.
Administrative Procedure
Upon application for unemployment benefit, the client will be interviewed by the Commonwealth
Employment Service (CES) and his/her labour market potential will be established. This will be based
on a detailed analysis of the client's qualifications, their employment history and the needs of
employers.
More efficient placement of clients on more appropriate benefits such as invalid pension or special
benefit will ensure greater effectiveness in administration. Currently many clients remain on
unemployment benefits even when they are no longer capable of being members of the workforce and
would be more appropriately placed on other payments.
Within the nine month period there will be additional opportunities for joint DSS/DEET interviews
where further assessment will take place. Failure to attend interviews without justifiable reason will
result in the cancellation of benefit.
At nine months, after having appropriate assistance from DSS, unemployment benefits will no longer
be available. At this stage application for special benefits can be made but they will not be
automatically granted.
Supplementary Notes - I
SPECIAL BENEFITS UNDER THE UNEMPLOYMENT RELIEF PLAN

Eligibility for special benefits will be determined by the DSS based on the existing strict eligibility
criteria:
unable to earn a sufficient livelihood and are in real need of income support;
not receiving a pension, benefit or other Commonwealth income support payment;
all appropriate means of achieving a livelihood are not available or precluded because of personal
circumstances.
If available for employment, clients will remain registered with the CES. Refusal to accept appropriate
employment offered by CES without justifiable reason will result in cancellation of benefit.
Our Unemployment Relief Plan will result in a lowering of overall unemployment, a reduction in
expenditure and a consequent increase in revenue from income tax collection.
DEFERMENT OF UNEMPLOYMENT AND SICKNESS BENEFIT
The 1989 April Statement announced that eligibility for unemployment and sickness benefits will be
deferred for the period covered by payments of annual leave on termination of employment up to a
maximum of four weeks for all persons leaving employment from 1 September 1990. The deferment
period is to be served in addition to the standard waiting period prior to receipt of benefit.
The next Liberal/National Government will require that all annual and long service leave is exhausted
before unemployment or sickness benefit is paid.
ASSETS TEST ON UNEMPLOYMENT, SICKNESS AND SPECIAL BENEFITS FOR
PEOPLE UNDER 25 YEARS
The assets test on unemployment, sickness and special benefits was introduced in December 1987. It
applies only to those recipients aged 25 years and over.
We will extend the current assets test on unemployment, sickness and special benefits to include people
under 25 years of age.
ADMINISTRATION OF THE INVALID PENSION
The Coalition will continue to support disabled people and those community programs which enable
them to live in a suitable environment.
However, with an annual budget in excess of $2 billion, we believe that the administration of the invalid
pension system can be improved.
The Coalition is concerned that the current administrative arrangements for the invalid pension are
fundamentally flawed in that once people are on the invalid pension, few beneficiaries are ever
encouraged to seek rehabilitation for reentry into the workforce.
To remedy this requires a twopronged attack. First, more money should be spent in assisting
rehabilitation. Second, annual medical reviews should be undertaken to ensure a greater degree of
accountability for recipients of the invalid pension.
In 1988/89, the Community Services and Health Department spent approximately $120 million on
rehabilitation and employment programs, directed at assisting disabled people back into the workforce.
Whilst some of these programs have successfully rehabilitated disabled people back into the
workforce, the Coalition believes that greater access to rehabilitation and labour market programs
tailored to suit the special needs of disabled people must be provided.
Accordingly, in our first term of government, an additional $30 million will be allocated for the
Supplementary Notes - 2
establishment of specific rehabilitation programs for the disabled and enhanced Jobtrain schemes to
assist those who are able to return to the permanent or parttime workforce.
We believe that there is a real need to create an income support and rehabilitation system which clearly
recognises the considerable labour market disadvantages imposed by disability but which allows for
part time and other forms of employment.
RESIDENCY REQUIREMENT OF 12 MONTHS FOR BENEFITS
Migrants coming to work in Australia (excluding refugees) should be expected to suport themselves
for at least 12 months. Illegal migrants should not be entitled to any benefits including legal aid.
Except where reciprocal bilateral treaties otherwise provide (ie New Zealanders), new migrants
(excluding refugees), will not have access to unemployment, sickness benefits or invalid pensions for
12 months after arrival in Australia.
Australian residents who wish to sponsor family members or others to reside in Australia under certain
categories of the family reunion schemes are required to lodge an Assurance of Support guarantee on
their behalf. A Liberal/National Government will strictly enforce these guarantees.
The Secretary of the Department of Social Security will have the power to exempt persons in cases of
extreme hardship.
12 October 1989
EDUCATION
Statement by Peter Reith, MP
Shadow Minister for Education
As part of the process of reviewing expenditure programs, the Coalition has given close consideration
to the education portfolio.
The Coalition has a firm commitment to education reform and reiterates its policy statements on
expenditure for schools, TAFE and higher education. It confirms its commitment to increase
expenditure in all sectors of education to match the Government's current and projected funding
allocations.
For example, the recognition of the right of every Australian child to a reasonable measure of
Commonwealth support for their education and the associated commitment to change the funding
scheme for nongovernment schools from twelve to four categories remain fundamental planks of the
schools policy.
In higher education, the Coalition has extended its initial funding commitment to the period 1989-91
to take account of and to match the Government's recently announced projections for increased
expenditure in 1992.
The Coalition reaffirms its commitment to abolish the Higher Education Contribution Scheme
(HECS). Coalition objections to the Scheme include the fact that the funds collected do not go directly
to the institution at which the student is enrolled; there is no comprehensive scholarship scheme to
encourage and reward performance; and potential students from disadvantaged backgrounds may be
discouraged by the prospect of longterm indebtedness.
Nevertheless, the Coalition policy which was announced in February this year recognises the principle
that, as students benefit directly from receiving a higher education, they should contribute to its cost
and, to this end, the policy stipulated a $600 annual tuition charge.
In light of Australia's deteriorating economic circumstances, which demand a tight fiscal policy, the
Coalition has decided to increase the proposed charge to $1200 per annum (pro rata for parttime
students) to ensure that significant amounts of money continue to flow to higher education. The charge
will be fixed at $1200 for the 1989/91 triennium.
For students, $1200 represents a considerable saving against the HECS charge of $1800 deferred or
$1530 upfront (these amounts are indexed and will be $1882 and $1600 respectively in 1990). Over
a standard three to five year course, significant savings would be realised. At the same time, a
significant amount of money will flow directly into higher education and will allow for better facilities
and greater access to be provided.
Since the introduction of the Higher Education Contribution Scheme (HECS) at the beginning of 1989,
the Government's projections for revenue collection have been exceeded. Indications are that as many
as 20% of students are choosing to pay the HECS upfront to take advantage of the 15% reduction on
the $1800 fee. A charge of $1200 should be within the reach of significantly more students.
Moreover, 25% of all students will be eligible for scholarships, to be awarded by institutions on the
basis of merit and/or need, exempting them from the $1200 charge. In addition, the Coalition reiterates
its commitment to facilitating, by Government guarantee or other means, commercial loan arrangements
with generous repayment periods for those students who wish to borrow the $1200. This will ensure
that no student is denied access to a higher education through inability to meet their contribution
towards tuition costs.
For institutions, the annual tuition charge will be beneficial because all the funds which it raises will
flow directly to them thereby substantially enhancing their financial autonomy.
AUSTUDY FRAUD
In the tax policy figures released by the Coalition today, provision is made for saving of $30 million
to be derived from a tightening of controls and a consequent reduction in the level of fraud in student
assistance schemes.
The 1989/90 Budget projects that payments for AUSTUDY will total $823.4 million. This compares
with actual expenditure of $732.8 million in 1988/89. Projected expenditure on the associated student
assistance scheme, ABSTUDY, is $95.8 million for 1989/90.
Abuse of student assistance schemes (notably AUSTUDY) is widely acknowledged. Departmental
officials have admitted that it is endemic and part of the "student culture". There is a wealth of
anecdotal evidence to support this assertion.
In 1987, the Department of Employment, Education and Training, in response to the widely expressed
concern about fraud, commissioned Price Waterhouse to evaluate fraud controls in student assistance
programs. One of the main recommendations in the Price Waterhouse report (obtained by the
Opposition under the Freedom of Information Act) was that the level of fraud should be quantified. To
date, this has not been done.
To the extent that there is no accurate measure of the level of fraud, it is difficult to quantify the savings
which could be derived from tightening up the system. A conservative estimate for target savings is
$30 million out of the total budget of $823.4 million.
The Coalition has a five point plan to achieve at least this level of savings:
1. The adoption of the Price Waterhouse recommendation to quantify the level of fraud. This would
expose the extent of the problem and highlight the benefits to be gained by allocating an appropriate
level of resources to combat the problem. To date, the Government has been reluctant to provide
adequate information to the public so as to avoid the Government's administration being tested.
2.
Administrative arrangements for vetting AUSTUDY applications will be tightened. At present,
there are, for example, difficulties with overpayments as a result of withdrawal from studies.
3.
The adoption of a system to check all AUSTUDY recipients on a regular basis. A 1988 survey
of 6000 students by the Department revealed that more than 1000 students had higher income than they
had estimated. On average their income was $2500 higher than the estimated amount. The
Government has publicly stated that all students could expect their income to be audited at some point
during their studies. However, it is understood that the Government has yet to undertake a universal
checking system.
4.
As a matter of policy, we will give high priority to fraud investigation, prosecution and recovery
action. Only when students realise that prosecution will be the inevitable result of false applications,
will it be possible to stamp out the "culture" that the Government is an easy target to be ripped off.
5.
The AuditorGeneral will be requested to undertake a thorough audit of AUSTUDY. The tabling
of the report will enable public scrutiny and ensure public accountability. Recently tabled reports on
ABSTUDY and the Post Graduate Award Scheme have already identified gaping holes in the
administrative procedures for these schemes.
12 October 1989

Statement by Senator Chris Puplick
Shadow Minister for the Environment and the Arts
The policy to maintain expenditure on grants for art and culture in real terms is reaffirmed.
It is proposed to make some expenditure reductions in the areas covered by Film Australia, the
Australian Film Commission and the Film Finance Corporation to rationalise their activities. It is also
proposed to increase the cost recovery derived from the operations of major national collecting
institutions (specifically the National Gallery, the National Library and the National Science and
Technology Centre) and from the operations of Artbank.
Increased revenue amounting to $10 million ($5million from the collecting institutions and $5million
from Artbank) will be sought.
Subsidies to Film Australia ($5 million) to produce national interest films will be eliminated. There
will be a reduction of $10 million in the sums made available to the Film Finance Corporation and $5
million will be saved in the budget of the Film Commission by the elimination of some minor programs
dealing with production support and film appreciation. Rationalisation of these operations will reduce
expenditure by $20 million.
The abolition of the Australia Council and the transfer of its functions and responsibilities in
accordance with the details given in the Arts Policy will result in expenditure savings of $3 million.
The combination of $23 million in savings and $10 million in increased cost recovery will result in a
favourable outcome of $33 million.
HERITAGE AND THE ENVIRONMENT
Initiatives within these programs, such as the establishment of an Endangered Species Unit and
increased funding for the National Tree Program will lead to additional expenditure in the order of $15
million.
Against this, it is anticipated that significant extra revenue will arise from increased levels of cost
recovery within bodies such as the Australian National Parks and Wildlife Service; the Great Barrier
Reef Marine Park Authority, etc. In addition improved administrative efficiency and elimination of
cost duplication (e.g. in the Northern Territory and in the management of World Heritage matters) will
result in savings.
Proposed Net Expenditure Increase $8 million
12 October 1989
ABORIGINAL AFFAIRS
Statement by Warwick Smith, MP
Shadow Minister for Aboriginal Affairs
The Coalition is committed to the efficient delivery of services which produce better outcomes for the
most disadvantaged group in our community Aboriginal Australians. Reform of the structure and
method of service delivery is a mediumterm goal.
Successive inquiries into the administration of Aboriginal Affairs have confirmed that significant
improvements can be made in this area. There is also a need to coordinate and streamline the many
State and Commonwealth programs. Such reforms would aim to eliminate waste and duplication to
ensure that a much greater proportion of available funds get through to those most in need.
1. GROWTH IN FEDERAL GOVERNMENT EXPENDITURE ON ABORIGINALS
Figure 1 below compares the increase in total Budget Outlays with the increase in outlays on Aboriginal
programs since 1971.
FIG. 1
REAL COMMONWEAL,TII OUTLAYS

Aboriginal Affairs and Total
Deflated by gross non-farm product deflator
700
Aboriginal Affairs
Total
600
500
O
lyl
400
N
rn
300
a
W
'O
200
1 00
1972
1 974
1978
1978
1 980
1982
1984
1 980
1988
1 990
Year ended 30 June
1 989-911 : Budget forecast
Each of the three major expenditure areas Aboriginal Affairs, Employment Education and Training,
and Community Services and Health received a significant real increase over the last financial year
(Fig. 2). Together, they total an increase of $104.2 million.
FIG 2. MAIN ABORIGINAL PORTFOLIOS:

INCREASE IN EXPENDITURE
1988-89
Actual
$m
1989-90
Estimate
$m
Increase
460.60
523.20
62.60
190.95
214.00
23.05
111.73
130.30
18.57
Aboriginal Affairs
Employment, Education &
Training
Community Services &
Health
1.
2.
3.
$m
2. SAVINGS ON OUTLAYS
Total expenditure savings of $100 million will be made from current total assistance to Aboriginals of
close to $1,000 million.
Estimated
savings $m
1. Land & Economic Development
Land Ownership & Administration
CDEP (new programs)
ADC
10.60
Social Advancement
Community Development Support
Community Infrastructure
22.00
Heritage & Culture

Broadcasting/Communication
Program Support
1.20
Corporate Services
Program Support
ATSIC establishment costs savings as
not proceeding
10.00
2.
3.
4.
5. Other
2.00
2.00
1.00
3.00
0.25
3.00
1.00
Special Program Consultants

Administration Running Costs
Property Operating Costs
Aboriginal Hostels P/L
Treaty Consultations
Aboriginal Legal Services
Public Information Program
Administrative Services
Royal Commission into Aboriginal Deaths in Custody.
10.00
Aboriginal Employment, Education & Training

Aboriginal Employment
Aboriginal Education
ABSTUDY
23.00
Community Services & Health:

. Commonwealth State Housing Agreement
12 October 1989
11.00
IMMIGRATION
Statement by Philip Ruddock, MP
Shadow Minister for Immigration and Ethnic Affairs
Savings to be achieved on administrative arrangements.
OUTLAYS
1989-90
ESTIMATE
$(`000)
PROGRAM
CHANGE
$84,264
$57,485
$ 7,998
(1) Migration & Visitor Entry

(2) Corporate Services
(3) Citizenship
$149,747
$5,000
3.3%
1989-90
ESTIMATE
$('000)
CHANGE
Savings
REVENUE
PROGRAM
(1) Migration & Visitor Entry

(2) Corporate Services
(3) Citizenship
$51,179
$ 2,975
$54,154
Increased fees for migration services $15,000
27.6%
Settlement and Ethnic Affairs Services which are principally provided through grants to organisations
and State Government bodies have been exempted from cost recovery arrangements and efficiency
dividend savings.
Cost recovery arrangements are an important component of the Department's Budget. After changes
proposed the percentage cost recovered will still be below 50%. The adjusted outcome is as follows:
OUTLAYS
$144,747,000
REVENUE
$ 69,154,000
COST RECOVERY
47.7%
Under Labor's Budget this year, the percentage increase in fees for Migration and Visitor Entry was
42.8%.
12 October 1989

Statement by John Sharp, MP, Shadow Minister
for Land Transport and Shipping.
Australian National Railwa y s Commission.
The Coalition is committed to a program of widereaching microeconomic reform to make our
transport and handling more efficient.
A reform process of the Australian National Railways was initiated by the last Coalition Government
and is well under way, having been implemented with considerable success by AN's management.
The reform program to date has resulted in huge staff reductions and increased efficiencies, allowing
a substantial reduction in overall subsidy already.
This reform process will be intensified and AN's move into profitability accelerated by enabling it to
operate on an even more commercially oriented basis, particularly with regard to freight services.
12 October 1989

Statement by Senator Austin Lewis
Shadow Minister for Industry, Technology and Commerce and the ACT
Australian industry will be assisted by a coordinated approach across all economic policy areas to
improve the environment in which firms operate. Economic reform on a number of fronts is essential
to promote and encourage productivity growth and provide the basis for a restoration of living
standards.
Although we recognise government's principal role in removing red tape, for our strategy to be
successful we will require, and invite, the close cooperation of industry in a positive role, especially
in order to help identify costly and unnecessary regulatory burdens.
In simple terms our policies are: to address the basic problems of our economy; to introduce flexibility
into the labour market; to reform the waterfront, coastal shipping and transport industries; to bring
about real competition eg., to the communications and airline industries; to privatise government
business enterprises; to reduce business oncosts, including the regulatory burden; and to create
incentives to work, to invest and to save.
In order that these goals are achieved, expenditure savings are vital. Industry strongly supports
restraint and acknowledges that it must share some of the responsibility for expenditure savings to
improve international competitiveness.
To reduce government intervention, the TCF Development Authority will be abolished. In order to
encourage better utilisation of research funds, an overall budget ceiling will be placed on the Grants
for Industrial Research and Development (GIRD) Scheme. The remaining National Industry
Extension Service (NIES) functions will be relinquished to the States. Our economic policies will
assist industry to adjust to reductions in assistance. Accordingly, bounties such as the Textile Bounty,
the Book Bounty, and the Computer Bounty will be revised and reduced.
Estimated savings from these initiatives will be in the order of $50 million.
At present AUSTRADE recovers only a small proportion of costs through user charges. We believe
that a higher level of cost recovery would promote a better quality service. Here we estimate savings
to be $20 million.
A vigorous, competitive and internationally oriented manufacturing sector is absolutely fundamental
to our future prosperity. Only a favourable economic climate will enable industry to flourish
sufficiently to turn around our balance of trade problems.
12 October 1989

Statement by Bruce Lloyd, MP
Shadow Minister for Primary Industry
While the outlay for agriculture, forestry and fishing for the 1989-90 budget is listed as $1300.7
million, industry contributions through levies and charges amount to $882.9 million, leaving the
Commonwealth with a net contribution of $417.8 million.
Under the Hawke-Keating Government the next three-year period would see a 22 percent real decline
in assistance to agriculture, forestry and fishing industries which reflects the expected completion of
some activities such as brucellosis and tuberculosis eradication and other programs.
However, some of the savings will be partly offset by increased finance for the National Soil
Conservation Program.
Most of the cuts will be made in the General Assistance Non-Specific area of the budget.
GENERAL ASSISTANCE NON-SPECIFIC
Programs to be abolished include:
Countrylink
However Federal Department information of importance to country people, eg, Social Security, will
be maintained through the 008 toll free telephone system.
. The Rural Education Access Program
This program gives money to groups to plan, organise and co-ordinate education and training activities
for local communities.
This work can and is already being done by TAFE Colleges, the Council of Adult Education and other
State education bodies, as well as State departments responsible for agriculture, and voluntary bodies.
. The Marketing Skills Program
This program supports marketing skills programs at seven educational institutions.
In a deregulated market each company or organisation must decide what marketing skills are required.
They should also be able to ascertain whether the skills obtained are worth the investment in the course
without Government assistance.
The Innovative Rural Education and Training Program
The Rural Community-based Education Program
Most agricultural colleges throughout Australia have these types of programs and the withdrawal of
Federal Government assistance will not see an end to these programs.
. The Rural Women's Access Grants Program
This program provides financial assistance for small scale projects designed to improve the access of
rural women to education, training, employment and other services.
Women have the same access to these facilities as men as well as assistance from voluntary women's
groups. Last year the program only benefited 35 small projects.
Savings in all these areas will be $4.6 million.
Programs to be kept but with reduced funding include:
Rural Counselling Program

Currently $960,000 with 25 organisations being assisted up to $42,000 each.
This program began during the wheat downturn and continuing droughts in the Eyre Peninsula of South
Australia and the Mallee in Victoria. While the program has been successful there is now room for
some fulltime services to be reduced to part time and others to be amalgamated.
.The Quarantine and Inspection Service

This year the service will cost $168.3 million made up mostly of salaries of $90.6 million and
administrative expenses of $70 million. Sixty percent of this money is recovered from fees.
While the Coalition has promised to recover only 50 percent from fees we will still be able to save at
least $10 million and carry out our promise within our first term. This is because the Coalition intends
to make companies responsible for their own inspection wherever possible and will no longer
undertake inspection for quality as distinct from importing country hygiene or quarantine requirements.
GENERAL ADMINISTRATION
Finance for the general administration of the Department of Primary Industries and Energy has
increased by $10 million this year to $90 million and is predicted to increase to $96.4 million next year.
Much of its work duplicates that of the States. Staff levels will be reduced to stop duplication of work
which the States can and often do carry out and fewer consultants will be used.
This will yield total gross savings of $24 million for Primary Industry.
INCREASED PAYMENTS
Forestry
We will establish a cost shared industry research fund similar to those operating for 19 other primary
industries.
Sheep, cattle and pigs

The Coalition will pay for the National Residue Survey and for the Market Basket survey.
Estimated cost: $3 million.
TOTAL SAVINGS ON PRIMARY INDUSTRY PORTFOLIO

The Coalition will make a net saving of $20 million from the Primary Industry portfolio.
12 October 1989

SCIENCE AND ENERGY
Statement by Peter McGauran, MP,
Shadow Minister for Science and Energy
The Coalition will achieve considerable savings in the Science and Energy portfolios as a result of
efficiency gains and the removal of bureaucratic encumbrances applying to the resources and energy
sector.
Consistent with its Resources and Energy Policy, the Coalition will abolish the Coal Industry Tribunal
and dismantle both the Joint Coal Board and Coal Marketing and Technological Council. These
initiatives will amount to savings of $3 million.
The Coalition also plans to abolish the onerous Coal Levy which currently funds, in part, the activities
of the National Energy Research and Development Council. This initiative, unlike the present
arrangement, will permit the industry to determine its own research needs.
The objective of these policies which will bring about savings of at least $8 million is to allow the
coal industry to operate as do other commercial operations within the resources industry.
The Coalition will also require the streamlining of the operations of Departmental Policy and
Management Services within the Department of Primary Industry and Energy, which currently amount
to $40 million. Savings of at least $1 million are anticipated.
Within the context of our Science Policy, the Coalition intends to restructure and relocate the Office
of the Supervising Scientist (OSS), at a saving of $2.5 million to the Commonwealth.
The Coalition believes the OSS 's responsibilities will be more effectively carried out if integrated with
the Australian Nuclear Science and Technology Organisation (ANSTO) and the Northern Territory's
University College.
The Coalition will also act to abolish the Commission for the Future, at a saving of $1 million. Such
organisations as the Australian Science and Technology Organisation (ANSTO) are in a much better
position to provide studied deliberations on the subject of future national needs.
Further savings in both the Science and Energy portfolios will be achieved by the implementation of
management programs with a commercial orientation and the sale of land and buildings in lieu of lease
back arrangements.
For example, the enhanced research activities of ANSTO will enable that organisation to achieve a
higher degree of commercial interaction with the private sector than at present.
Such a policy will also serve the desired objective of facilitating a greater degree of industry and public
sector research.
Similarly, increased promotional programs highlighting the feeforservices provided by such
eminent organisations as the Australian Government Analytical Laboratories (AGAL) will result in
additional savings to the Commonwealth in excess of $3 million.
The sale of land and buildings in lieu of lease back arrangements will apply in all practical instances
to Commonwealth owned sites, bringing savings in the order of $2.5 million.
Further savings will result from initiatives by the Snowy Mountains HydroElectricity Authority to
accelerate its Tenant Sales Scheme, dispose of surplus land holdings and delegate to local shires
responsibility for the provision of certain community services. These initiatives will bring $2 million
in savings to the Commonwealth.
12 October 1989

Statement by Senator Fred Chaney
Shadow Minister for Industrial Relations
There is a need for fundamental change in the way we organise and conduct industrial relations in
Australia.
Australia needs a less centralised, more flexible system which will provide greater freedom to
employers and employees to choose how they regulate their affairs. The Liberal and National Parties'
Industrial Relations policy provides the framework for positive change. It ensures that the focus of
industrial relations is where it belongs: at the level of the individual enterprise.
We totally reject the bureaucratic approach to industrial relations adopted by the Government through
its Accord with the ACTU. Decisions on matters affecting millions of employees and their employers
are made by a handful of very powerful ACTU members. This arrangement imposes decisions on
enterprises whether they are in their interests or not. It does nothing to encourage a more cooperative
spirit at the workplace or higher productivity. It is making Australia a lowwage, lowproductivity
country and all Australians are the poorer for it.
A significant proportion of the funds appropriated for the Department of. Industrial Relations is directed
at bolstering the Accord. The Workplace Reform Program, for example, is aimed directly at
implementing the ACTU's award restructuring blueprint. While the Liberal and National Parties
consider award restructuring an essential element of industrial relations reform, it is vital that the
process is enterprisedriven and not constrained by the ACTU's narrow selfinterested agenda. This
program will be rationalised, saving around $9 million.
Almost half a million dollars has been allocated this year to support the ACTU's union amalgamation
program. A more efficient, flexible union structure is essential but the ACTU's program will merely
create bigger unions. It will not necessarily create industry unions nor will it reduce demarcation
disputes. It is a last ditch effort to reinforce union power at a time when union popularity is declining.
The taxpayer funds provided are being used essentially to "buy off' disgruntled union officials.
Funding will be abolished.
The Trade Union Training Authority will cost taxpayers almost $9 million this year. There is
absolutely no reason why the Government should provide funds for this purpose.
The Authority will be offered for sale to the trade union movement in the first instance, and then to any
other interested buyer. If the Authority is not sold it will be disbanded. This will save $9 million in
running costs, exclusive of any sale proceeds.
The National Occupational Health and Safety Commission was established in 1985 as an element of
Labor's Accord with the ACTU. The Liberal and National Parties opposed the legislation in 1985 and
we continue to do so.
We acknowledge the need for better occupational health and safety, but this is better addressed by State
Governments in conjunction with industry. The Department of Industrial Relations will take over the
task of coordinating and promoting uniform national standards where appropriate. Abolition of the
Commission and transfer of coordinating functions to the Department will yield net savings of $17
million.
These savings, totalling $35 million, will promote rather than impede improved industrial relations in
Australian enterprises.
12 October 1989

EMPLOYMENT AND TRAINING
Statement by Julian Beale MP

Shadow Minister for Employment, Training and Youth Affairs
One of the main objectives of the Liberal and National Parties' taxation and expenditure policies is to
establish an economic framework that will permit sustained economic growth and so provide the
unemployed with genuine opportunities for employment. Our Industrial Relations Policy will also be
a significant factor in creating a more productive, competitive and vibrant labour market.
The Labor Government has failed to provide appropriate incentives and relevant training in order for
the long term unemployed and the disadvantaged to enter the workforce. Instead, the government has
established a multitude of training schemes, subsidies and grants, many of which simply fail to achieve
the objective of putting Australians to work.
Each government training scheme has its own bureaucracy, its own schedules, its own objectives, its
own set of forms to inflict on employers, employees and unions and its own Budget. Some of these
schemes are so ineffective that State Governments and community groups refuse to participate in them.
The JOBSTART and CRAFT Schemes have recently been criticized strongly by the AuditorGeneral,
while the NEWSTART Scheme has been the subject of condemnation by various industry groups.
Now the Hawke Government proposes to introduce a new Training Guarantee Scheme, which should
be called a Training Tax. This new tax will cost employers an , extra $700 million a year and have the
effect of increasing unemployment, not reducing it.
The next Liberal/National Government will conduct a thorough review of all the Department's training
and employment schemes. Of particular importance in making these schemes more relevant will be
the ability to permit State Governments and community groups to manage them, to allow privatisation
and contracting out, and the implemention of our community service for unemployment benefits
program. Job creation schemes, as distinct from genuine training programs, will be curtailed.
The Liberal and National Parties therefore intend to refocus the national employment and training
effort to make it more coherent and flexible. In the process, several schemes will be eliminated and
others targetted more effectively. Increased emphasis will be placed on skills training strategies and
restructuring and there will be less emphasis on job creation and job subsidy schemes.
Training opportunities for the unemployed will be provided through the JOBTRAIN program to assist
them to return to work. JOBTRAIN will be restructured so that short term training courses provided
are recognised as part of formal training courses, including TAFE courses. Funding of this program
- which this year will exceed $100 million - will be maintained. A further $30 million will be
transferred to JOBTRAIN from the SKILLSHARE program, while a portion of the additional $30
million allocated for rehabilitation of invalid pensioners will also be channelled through this program.
The Literacy, Jobshare, Mobility and Labour adjustment programs which address specific impediments
faced by disadvantaged job-seekers will be maintained. These programs, together with increased
funding and better targetting of JOBTRAIN, will ensure that disadvantaged job-seekers receive
adequate training opportunities. In addition, funding of Technical and Further Education (TAFE) and
apprenticeship training (CRAFT), which this year totals around $500 million will be maintained,
providing further opportunities for the unemployed as well as school leavers.
JOBSTART, a wage subsidy scheme which replaced several other schemes, will be phased out as soon
as practicable. JOBSTART was strongly criticised by the AuditorGeneral because of its failure to
achieve its objectives. The scheme only encourages substitution of subsidised workers for unsubsidised
workers and makes little contribution to medium term training of participants. Implementation of the
Liberal and National Parties' Industrial Relations Policy, which will allow a more flexible approach to
wages, coupled with productivity improvements, will eliminate the need for JOBSTART.
SKILLSHARE, a scheme built on the ruins of the discredited Community Youth Support Scheme
(CYSS), will also be phased out as soon as practicable. Emphasis on finding employment for the long
term unemployed and the disadvantaged will be concentrated through the JOBTRAIN program.
Unemployment benefits under the next Liberal/National Government will be provided for a maximum
period of nine months. The improved and more effectively targetted JOBTRAIN program
(incorporating JET and NEWSTART) will therefore be devoted to fewer unemployed and accordingly
the S KILLSH ARE savings will have no detrimental effect on this important employment effort. State
Governments, community and Church groups will have the opportunity to be involved in JOBTRAIN.
The program will be restructured so that short courses undertaken are officially recognised as part of
longer formal courses, leading to recognised industry or trade qualifications, for example, through
TAFE (Technical and Further Education) or the private sector. This will give participants a real
incentive to continue their training and obtain qualifications.
The Industry Training Support (ITS) Scheme will, in cooperation and consultation with employer
groups, be phased out. The Liberal and National Parties strongly support industry efforts to upgrade
workers skills by providing training and retraining courses, but believe it is more appropriate for
employers to accept the financial responsibility. The New Enterprise Incentive Scheme (NEIS), which
is aimed at helping the unemployed become self employed, is too ambitious in its objective and has had
many teething problems as a result. The recipients of this small pilot scheme should be targetted under
JOBTRAIN.
The Liberal and National Parties support the Australian Traineeship Scheme (ATS), which provides
a one year employer subsidy to contribute to the cost of offthejob training at a TAFE college or other
approved training centre for trainees. However, the Committee of Inquiry into Labour Market
Programmes (the Kirby Committee) recommended against an employer subsidy preferring the
introduction of appropriate trainee wage rates. We will reform the scheme to reflect, to some degree,
the original aims of the Kirby Committee. It is our objective to see that training places are provided
for many more trainees and to share the cost burden with the employer. Savings of about 25% of the
present cost of the scheme are envisaged.
The Commonwealth Employment Service (CES) has a network of offices, branches and agencies
around Australia designed to assist employers in obtaining employees, to place job seekers in
employment and to give general labour market advice. The CES has been the subject of continual
criticism over the years and has undergone ongoing tinkering under this Government. The CES
demonstrably needs a massive overhaul.
The Liberal and National Parties will conduct an early and major review of the CES, making it more
responsive to employer and employee needs. Its operations will be rationalised and some services will
be privatised, for example, professional employment services. Other services will be contracted out
and placed in the hands of State Governments, community and Church groups and the whole
organisation streamlined. Resulting cost savings are estimated to be up to 25% of the total cost of
operations, but additional savings are anticipated in later years.
As a result of ensuring that training programs are made more efficient and are better targetted, the
following annual savings are envisaged:
JOBSTART
SKILLSHARE
ITS
NEIS
ATS
CES
TOTAL
$ 85 million
61 million
36 million
7 million
15 million
50 million
$254 million
*
Net of formal training allowance which would still be applicable to participants in training
programs, e.g. JOBTRAIN.
12 October 1989
CONTRACTING OUT
Statement by John Hewson, MP, Shadow Treasurer
Contracting out can be applied to the provision of a vast range of public sector goods and services, at
all levels of government.
Significant cost savings can be made through contracting out overseas and some domestic estimates
suggest a minimum of 20%.
The cost savings arise for a number of reasons. Government departments or agencies are usually not
subject to competitive market pressures. This lack of competition often encourages work practices that
in turn generate lower productivity, poor service and inefficiencies.
In these terms, contracting out through a competitive tendering process can significantly increase
efficiency, create considerable scope for innovation, increase the quality of the service or good
provided, as well as significantly reduce costs.
Indeed, one of the principal advantages of contracting out of government services is that often, for the
first time, the process forces the government department in question to actually think carefully about
the nature of the service or good they want to provide, and set down specifications to meet their
objectives. So, often there is considerable benefit to be reaped in having to specify the service and
effectively target the service, over and above the direct cost savings.
Other specific benefits of contracting out include:
it c an limit what would otherwise be an openended financial commitment to the provision of

the service "inhouse";
it can introduce a sense of "cost consciousness" and reduce what is often apublic sector tendency
to provide services regardless of cost. Whilst "Think Costs" type programs are commonplace in
the private sector, they are typically not a feature of government departments or agencies;
it c an create an environment that facilitates the generation of new ideas, the adoption of more
modern equipment and technology and which encourages change in traditional methods of
working;
often it can offer improved quality control, not only from the better specification of the service
or good to be provided, but also in the sense that contracts can be renewed, and contractors can
be reviewed and, where necessary, penalised for poor quality, delays and unreliability, etc; and
it c an lead to better and more flexible and more responsive management and organisation.
However, it should be recognised that contracting out does not reduce the Government's commitment
to provide the service or good involved: it merely enables the Government to keep the cost of the
service as low as possible.
There is already clear evidence of the benefits of contracting out at all levels of government in Australia.
A few examples serve to illustrate the point.
At the local government level in Australia the use of contractors is now widespread and
increasing. The Centre for Independent Studies Policy Report (April 1988), draws on a survey
conducted in Melbourne in 1986 which establishes a strong case for contracting out. The survey
found that of the 57% of municipalities that used contractors for cleaning, 54% did so primarily
because the level of service was of a higher quality, more flexible and more reliable. In addition,
the survey found that the cost of collecting refuse per household was on average 17% lower for
municipalities that use contractors.
A survey of 170 South Australian and Tasmanian local governments by the Australian Chamber
of Commerce in 1988 identified cost savings in sanitation of 14%, in roads and bridges
maintenance of 17% and in recreational facilities of 46%.

The Brisbane City Council has produced figures which show savings from contracting out
varying from 5% to 54% across a wide range of functions. These include cost savings of 35%
in maintenance works and 24% in capital works.
Experience under the NSW State Government suggests that simply the threat of contracting out,
has allowed work practices to be improved to the point where savings of $70 million over three
years have been identified in the cleaning of hospitals alone. In addition the NSW Government
has estimated conservatively that $30 million can be saved on hotelstyle services in hospitals
(eg. catering and laundry services).
The decision to contract out the administration of travel in the Australian Public Service followed
a report under the umbrella of the Efficiency Scrutiny Unit, which identified savings of $40
million out of a total expenditure of $270 million. Areas of savings identified were 8% in air
fares, 22% in accommodation and 71% in administration.
Against this background, an essential element of our planned audit of the Commonwealth Government
finances, which will be initiated on our first day in government, will be to identify the scope for
contracting out.
However, a number of candidates for contracting out can be identified for investigation at this stage,
across a broad range of government functions and operations of statutory authorities:
security in departments, government buildings, hospitals, nursing homes, etc
repairs and maintenance in departments, government buildings, hospitals, nursing homes, etc
cleaning in departments, government buildings, hospitals, nursing homes, etc
catering in hospitals, nursing homes, etc
gardening for government premises
laundry
services in hospitals, nursing homes, etc
storage
and
removals
asset
management
purchasing procedures
construction
and maintenance of transport networks
vehicle
repairs
and maintenance
planning, design and construction of government buildings
planning, design and construction of government equipment
electrical services in departments, government buildings, hospitals, nursing homes, etc
waste disposal in departments, government . buildings, hospitals, nursing homes, etc
maintenance of plants, paintings, etc in departments and government buildings
pest control in departments, government buildings, hospitals, nursing homes, etc
courier services
fire protection
tourist facilities
computer services
publishing and printing of government documents and stationery
technical research and development

other technical consultancy services
policing government licences and equipment standards
valuing, surveying and mapping
secretarial services
investment services
management of foreign exchange transactions.

Contracting out of a number of the above functions will be implemented with an estimated saving of
$160 million.
12 October 1989
GOVERNMENT SERVICES
Statement by Wal Fife, MP, Shadow Minister
for Administrative Services
In line with the Coalition's stated commitment to leaner government, it is proposed to cut expenditure
in the provision of government services within the Department of Administrative Services.
Accordingly, a Liberal/National Government will:
reverse the recently announced decision of the Hawke Government to provide additional postage
entitlements to Members of the House of Representatives ($4.2. million);
reverse the Hawke Government's recent decision to provide Senators and Members with
unlimited stationery entitlements ($500,000 plus);
abolish the National Media Liaison Service ($1.5 million)
abolish the Office of Government Information and Advertising ($3.3 million).
Estimated savings: $9.5 million plus
The Coalition's view of the threefold increase in MP's postage allowance to $30,525 is that it is
unprecedented and unjustified. The postage allowance was fixed by a determination of the Remuneration
Tribunal at $9,000. The Coalition believes that the Government should not have stepped in after this
determination was made.
In addition to that aspect, the Government's move is regarded by the Coalition as a move to allow Labor
MP's in vulnerable marginal seats to deluge voters in their electorates with a flood of political mail funded by the taxpayer.
For the same reasons the Coalition will reverse the Government's decision to provide Senators and
Members with unlimited stationery. Because of its openended nature it is difficult to cost this. It
could be of the order of upwards of $500,000. However, the provision is clearly extravagant and
unnecessary.
Equally unnecessary, particularly in view of its cost which is estimated to be $1.5 to $2 million, is the
taxpayer funded National Media Liaison Service. Its role is demonstrably purely political and a
Coalition Government will abolish it.
Selfpromotional Government advertising, again funded at the taxpayer's expense is also seen as
unnecessary and constitutes an area where an expenditure saving should be made. The Office of
Government Information and Advertising will be abolished. Under a Coalition Government political
advertising will not be funded by the Australian taxpayer.
12 October 1989
OVERSEAS AID
Statement by Senator Robert Hill,
Shadow Minister for Foreign Affairs.
The primary purpose of Australia's foreign aid is to relieve poverty and assist in the economic and
social development of developing nations. Secondary purposes include promoting Australia's foreign
policy and commercial opportunities.
Australia's capacity to maintain foreign aid is clearly related to the state of the overall economy.
Despite economic difficulties, the Coalition when last in government afforded foreign aid a high
priority and was able to maintain reasonable levels.
The last Coalition Government provided aid at the rate of .47% of GNP. This has been slashed by Labor
in six years of reduction to .33%. Since 1984-85 Labor has reduced the aid budget by a total of 19.8%
in real terms.
Australia now faces a major economic crisis and it is obvious that a part of the solution requires a
substantial reduction in government expenditure. Regrettably the aid vote cannot reasonably be
excluded.
A cut of $100 million or 8.59% of the 1989-90 foreign aid budget will move Australia's contribution
marginally further from the accepted UN goal of 0.7% of GNP. However this cut is necessary if in the
long term the ills of the Australian economy are to be healed and an upward trend in foreign aid restored.
This cut is made against the background of good faith in foreign aid established under the former
Coalition government. The Coalition's underlying belief in the importance of foreign aid has not
changed, but we recognise our reduced capacity to assist in the appalling economic predicament the
Coalition will inherit from Labor.
In making cuts the criteria for foreign aid set out in the Coalition's Foreign Affairs Policy will be strictly
applied.
Except for humanitarian aid, there will be a preference for aid which improves the economic base
of the recipient country.
Aid programs will have a considerable bias to democratic and market-oriented countries.
Aid will not normally be given to governments whose policies are hostile to Australia's interests.
Aid will not be given which facilitates repressive governments diverting domestic resources to
purposes we oppose.
Bilateral aid will be preferred over multilateral aid programs which may be administered in
ways contrary to Australia's interests and the administration of which is largely beyond our
control.
Project aid will be principally in areas in which Australia has demonstrated a particular expertise.
Countries in the Asia-Pacific Region will be given priority for development assistance.
High priority will be given to programs which will improve the health of children.
Recognising the linkage between sound environmental decisions, the relief of poverty and the
maintenance of human dignity, the objective of our aid program will be to promote the concept
of sustainable development.
Greater emphasis will be . placed on non-government organisations in aid delivery.
Country Programs
In 1987-88 the Hawke Government spread our aid dollar over 118 countries. Under a Coalition
Government, the number of countries receiving aid assistance will be reduced. Aid will be better
targetted and will be concentrated within our region.
It is also noted that in this year's Budget, aid to the South Pacific is reduced. The Coalition will not
be reducing aid to the South Pacific (including Papua New Guinea).
When assessing bilateral programs beyond the South Pacific, we will in particular take into account the
level of income of the recipient country. Some Australian aid recipients under Labor are in fact
countries classified by the OECD as `Upper Middle Income Countries'_ and a few are aid donors
themselves.
The extent to which the Hawke Government supports developing countries with excessive military
expenditure has also been noted. This assistance will be reduced by the Coalition.
Consistent with the criteria set out herein, the following cuts in Country Programs will be made:
Papua New Guinea

South Pacific
South East Asia
Other Regions
Cross Regional
1989-90
Budget
($m)
Reductions
($m)
309.4
85.3
137.6
124.7
76.0
Nil
Nil
10.1
33.7
10.0
$733.0
$53.8
Global Programs
Funds for emergency and refugee assistance will not be reduced.
Although contributions to many international organisations are locked in years in advance, there is a
capacity for some reductions without affecting the quality of our contribution significantly.
Funding for the Development Import Finance Facility (DIFF) under Labor has escalated from $16.4m
in 1985-86 to a budgeted $93.3m in 1989-90.
This increase has been driven by a larger percentage of successful tenderers than the Government
anticipated, no doubt facilitated by the aid contribution. DIFF funding is severely criticised by the
OECD as poor quality aid. Expenditure will be reined in.
Cuts in Global Programs will be as follows:
Emergencies and Refugees

International organisations
Community and Commercial
1989-90
Budget
($m)
Reductions
($m)
55.2
158.5
1 41.2
Nil
10.5
33.3
$354.9
$43.8
Corporate Services
AIDAB has budgeted to increase staff positions this year by 65 positions, up from 477 to 542. Whilst
we accept that the overall efficiency of AIDAB has unproved significantly since the Jackson Report,
it is believed that administration should at least share part of any new cuts. The Budget figure for
1989-90 of $30.4 million will be reduced by $2.4 million.
The result of cuts outlined herein would be to provide an aid program more strictly focused towards
the criteria as set out in the Coalition's foreign affairs policy. Total reductions will be $100m. ,
12 October 1989
ASSET SALES
Statement by John Moore, MP, Shadow Minister
for Business, Privatisation and Consumer Affairs.
The Liberal and National Parties privatisation programme will include the sale of QANTAS, Medibank
Private and some smaller entities within the first year.
Total proceeds in this period are conservatively estimated at $1600 million, which will be assigned to
retiring Commonwealth government debt.
Britain's privatisation experience has shown that the total taxation receipts of government increase
significantly as a result of privatising particular enterprises.
This occurs as a direct result of the enterprise becoming more efficient and profitable. The better
performing asset invariably returns more tax than it previously provided in the form of a dividend
payment.
(This expected increase in revenue has not been reflected in the Coalition's overall taxation and
spending policies.)
12 October 1989
Authorised by Tony Eggleton, Federal Director, Liberal Party of Australia, Cnr Blackall and Macquarie Streets, Barton ACT 2600
and Paul Davey, National Party of Australia, National Circuit, Barton ACT 2600
Printed by Online Offset, 5f79 Gladstone St, Fyshwick, ACT 2609

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ECONOMIC

COALITION ECONOMIC POLICIES

THE LOOMING CRISIS

THE RESPONSE REQUIRED

THE ECONOMIC LIBERALISATION PROCESS

FAMILY TAX PACKAGE

THE COALITION'S APPROACH TO WAGES

SUMMARY OF POLICY DECISIONS

FAMILY TAX PACKAGE

CAPITAL GAINS TAX ABOLISHED

NOTES ON EXPENDITURE DECISIONS

SOCIAL SECURITY AND WELFARE

AGED PENSION IMPROVEMENTS

RESTRICTION OF UNEMPLOYMENT BENEFITS

CULTURE AND RECREATION

HERITAGE AND ENVIRONMENT

TRANSPORT AND COMMUNICATIONS

AUSTRALIAN NATIONAL RAILWAYS COMMISSION

INDUSTRY ASSISTANCE AND DEVELOPMENT

PRIMARY INDUSTRY AND ENERGY

SCIENCE AND ENERGY

LABOUR AND EMPLOYMENT

EMPLOYMENT CREATION AND, SPECIAL TRAINING PROGRAMS

a far reaching program of reform to transport, communications and other

key areas of the economy;

a major program of privatisation to transfer to private enterprise what it

can do more efficiently and at lower cost;

Economic and Tax Policy - 1

A major commitment is given to hand back the increase in tax caused by

the provision of substantial child tax rebates estimated to cost $1000

Economic and Tax Policy -2

Economic and Tax Policy -3

FAMILY TAX PACKAGE

OTHER TAX CHANGES

Abolish the coal export duty.

Economic and Tax Policy -4

Economic and Tax Policy -5

Economic and Tax Policy -6

COALITION ECONOMIC POLICIES

THE LOOMING CRISIS

PROPERTY INCOME PAYABLE OVERSEAS

Economic and Tax Policy -7

Sources: BIS, OECD

Economic and Tax Policy -8

THE RESPONSE REQUIRED

Economic and Tax Policy -9

This is a firm commitment for our first term of office.

Unit Labour Costs in the Business Sector

Average Annual Rate

Source: OECD Economic Outlook, June 1989

Under Labor inflation is endemic in our society.

Economic and Tax Policy - 11

reduce our inflation rate;

increase competition in the economy;

raise incentives to work and invest;

reduce the size of government and the burden of business regulation;

increase flexibility in labour markets; and

lift the efficiency of our infrastructure.

Economic and Tax Policy - 12

THE ECONOMIC LIBERALISATION PROCESS

THE COALITION'S APPROACH TO WAGES

Economic and Tax Policy - 13

Economic and Tax Policy - 1 4