The "Clark Report" 1997

The following is the text of the speech by Robert Clark, MP at the annual "Clark Report" public meeting held at Box Hill Institute of TAFE on 21st October, 1997

Mr Chairman, my Parliamentary colleagues Robin Cooper and David Davis, ladies and gentlemen -

As many of you will know, the giving of an annual public report has become a firmly established tradition in this part of the world.

The holding of an annual public meeting is particularly important these days, where the coverage of politics in the mass media is often trite and superficial. There are few opportunities now for electors to obtain a detailed account of the actions or thoughts of their elected representative, or to raise issues for public response by that representative. Although the Premier has made it clear yesterday that we politicians are only "riff-raff", at least we can try to be accountable riff-raff.

There are therefore three purposes of my report tonight:

• the first is to give my assessment of the events of the past 5 years since the change of government, and particularly the events of the last year, and of the challenges and opportunities facing us over the next 5 years.
• the second is to account to you for my actions as your representative over the past year, and I have produced the written report which has been distributed to you.
• the third is to discuss and answer questions on local issues and other issues of particular concern which you may wish to raise during the evening and on which Robin Cooper, David Davis and I would be happy to respond.

The past 5 years

In recent weeks, the newspapers have been full of articles analysing and dissecting the performance of the Kennett Government in the 5 years since it was elected. Unfortunately, a lot of this coverage focussed on the superficial - on personalities, on style and on perception. Whether favourable to the Government or unfavourable, it has essentially missed the point. What counts at the end of the day is what a Government actually does, for better or for worse, which affects the lives and futures of individual Victorians.

When you look at that, and stand back and take stock, you realise just how much has been achieved over the last 5 years, and what a remarkable time it has been in Victoria's history.

We all remember back to the change of government in 1992. There was a deep financial crisis and the need for drastic action. Expenditure was cut by about $500m, taxes were raised by a similar amount, and sweeping reorganisation took place in most portfolios to reduce the number of public service employees about 20%. That stabilised our situation, but there was still a pressing need to rebuild and restore the State from a very low base.

Over the 5 years since October 1992, the Government has focussed on some key priorities:

• restoring confidence and getting the State and the economy on the move
• restoring the State government's financial position
• providing services to meet people's needs in new and better ways
• reforming and privatising government owned business enterprises
• rebuilding our stock of public buildings, roads and facilities
• putting Victoria at the world forefront in the use of multimedia and other new technologies.

The economy

Getting our economy moving has had two aspects - the high profile aspect of attracting events to the State, and the lower profile aspect of attracting investment. Victoria's major events strategy is designed to develop a year round calendar of major events which will attract a steady flow of visitors to the State and put Victoria on the map internationally. The list is pretty impressive when you consider it:

• Melbourne Formula One Grand Prix
• Australian 500cc Motorcycle Grand Prix
• Melbourne Fashion Festival
• Melbourne International Flower and Garden Show
• World Police and Fire Games
• Avalon air show
• The Bledisloe Cup
• Three Tenors' Concert
• World Cup Soccer
• The Presidents Cup golf tournament
• the Interact Multimedia Festiva
• the 1999 world yachting championships
• hopefully, the 2006 Commonwealth Games.

The strategy of making Victoria the events state of Australia, backed up by the "You'll love every piece of Victoria" marketing campaign, has been remarkably successful in attracting both domestic and international tourism to Victoria. It has seen Victorian tourism grow to be an $9.4 billion a year industry - and increasing its job numbers from 87,000 to 169,000.

But this events strategy is not just important for what it achieves directly. By raising Victoria's international profile, it has also reinforced the strategy to attract international investment in new value adding industry to Victoria - particularly rural and regional Victoria.

Private sector investment in Victoria was $13,707 million in 1996, compared with only $7725 million in 1991. By the end of June this year, private sector investment had already reached $10,177 million. Major investment attracted has included: Olivetti, Ericsson, Netscape, Alta Vista, NEC and Kodak in the electronics industry, Bosch and Toyota in the automotive industry, and a host of new plants in the food processing industry

The resurgence in investment has been accompanied by a boom in exports. Between 1991-92 and 1996-97, exports from Victoria have risen a massive 70.6%, almost double the rest of Australia on 37%. Victorian exports now make up 15% of our GSP, double the level in 1990. Growth in elaborately transformed manufactures has grown by 120%. 43% of Victoria's exports last year went to East Asia, compared to 35% for the rest of Australia. Victoria's export surge is based on the high skill level of our workforce, our low business costs and a first class infrastructure.

In turn Victoria has had strong overall economic growth - 4.9% in 1996-97, compared with 3.3% for Australia as a whole.

The economic revitalisation of the State has been accompanied by a substantial improvement in employment. Since 1992, the number of jobs in the State has increased by 8.4% and the unemployment rate has fallen from a peak of 12.5% in September 1993 to 9.0%.

Restoring the State's Finances

Restoring the State government's own finances has been a vital part of getting the State moving, as well as reducing both the present and future burden on taxpayers. In 1992 we faced a budget deficit of $2.27 billion out of total expenditure of $14.5 billion, which even the report commissioned by the previous government labelled as "unsustainable". By October 1992, our credit rating had fallen 4 levels from AAA to A1 in just the2 years from June 1990.

By contrast, the budget outcome for last financial year was a surplus net of privatisation receipts of $983.8m. On the strength of our improved financial position, tax reductions of $211m were made in May this year, as the first step in the Government's aim to reduce Victoria's taxes to the Australian average - which will be no small achievement as Victoria's and NSW's taxes have traditionally been the highest in the country as a result of the heavy Commonwealth government subsidy to the smaller States which our States have to fund.

After the tax reductions and after allowing for the cessation of short term revenues, our sustainable planning surplus is around $200m. As a result, since 1994 we have seen the State's credit rating upgraded 3 times from A1 to Aa1, one step away from regaining AAA. [In December 96 Moody's upgraded our rating from Aa2 to Aa1.]

Improving Services

Our improved financial position has also enabled significant increases in the funding provided to key government services, particularly health and education. Over the past two years [1995-96 to 1997-98], current spending on human services has risen by 7.9% [from $4,492.2 to $4,848.5], and spending on education by 8.1% [from $3,290.3 to $3,559.9].

This increase in spending, coupled with more efficient ways of providing services, has led to dramatic increases in the numbers of patients being treated in our public hospitals. In 1992, 705,600 patients were treated. In the year to June 1997, 855,612 patients were treated, an increase of 21%. Total waiting lists have remained stable at around 28,000, despite a fall in the number of privately insured patients from 49.6% in 1990 to just 31.4% today. However, the number of category 1, urgent, patients waiting longer than 30 days for surgery has fallen from 924 in October 1992 to nil today.

This improvement in hospital services can also be seen in our own local hospital, Box Hill. Box Hill has had a major upgrade of its accident and emergency centre, and significant upgrades of other parts of the hospital. Last year it treated 25,941 patients compared with around 20,000 patients in 1991-92. It has met all targets regarding treatment of emergency patients, and a recent survey showed over 90% patient satisfaction with the service they received at the hospital.

Our health system remains under pressure, as does every other health system in the country, and it is crying out for a rationalisation of Commonwealth and State responsibilities, but nonetheless, and despite popular opinion, the casemix system pioneered in Victoria has been remarkably successful and is now being closely looked at both interstate and overseas.

Health has not been the only area where new and better ways of providing services have been introduced.

Devolution of school budgets and school staffing to the local community has given schools far greater freedom to provide the curriculum and recruit the staff who will best meet their needs. The LAP tests of learning achievement are providing some valuable feedback to parents and educators alike. TAFE Colleges such as the one we are in tonight have been at the forefront of introducing new courses and in providing education services to industry, both in Victoria and, increasingly, overseas.

Providing services in better ways hasn't just been confined to the big areas of health and education. There have been scores of smaller innovations as well, such as the FReeZA drug and alcohol free entertain program for young people, a $100m support program for carers for people with disabilities or infirmities, introduction of mandatory child abuse reporting, introduction of compulsory fencing for all swimming pools, and compulsory fitting of smoke detectors, the closure of Pentridge Prison, the reform of our taxi industry, abolition of unsworn statements in criminal trials and introduction of victim impact statements, truth in sentencing and a major review of sentencing.

Reforming Government Business Enterprises

The reform of government business enterprises has been another area of remarkable change. Almost all of our electricity industry has now been privatised, yielding proceeds already of over $22.5b, compared with the $9b which critics of the privatisation claimed would be achieved. That has helped reduce state debt from $32b to $11.4b, in turn cutting the amount of interest paid we pay from 17.7c in every dollar of revenue the State earns to 7.4c, making a further 10.3 cents in every dollar of revenue available for more services or lower taxes.

This privatisation has been accompanied by major price reductions for larger customers already able to shop around for suppliers, with 78% of such customers achieving price reductions averaging 10%. and significant real price reductions for smaller customers, with further price reductions likely to come when household customers are also able to choose their own supplier. And, again contrary to popular opinion, interruptions to supply have fallen rather than risen, from an average of 510 minutes a year off supply in 1989-90 under the old SEC to only 218 minutes off supply in 1996.

The latest reform to government owned businesses has, of course, been to our water industry, where average household water and sewerage bills have been cut by 18% across the State, and the absurd regime under which what you pay for water depends on what your property is worth has been abolished. As well, $450m will be spent across rural and regional Victoria to give people in those areas the sort of water and waste water standards which we in the city take for granted.

This will not only be a boon for people living outside the metropolitan area, it will be a major contribution to attracting new investment to rural and regional Victoria, as so many industries from food processing to high tech manufacturing require high quality water and waste water treatment.

Rebuilding our capital stock

Another area of revitalisation of the State over the past 5 years has been our public buildings, roads and facilities. In 1992 we had a sorry, run down central business area, schools falling apart and country roads wearing out. The last five years the Better Roads Victoria program has seen more than $840 million spent on more than 500 projects, including major roadworks including the conversion of the South Eastern Carpark into a freeway, completion of the Western Ring Road, extension of the Eastern Freeway, and major works on arterial roads in country Victoria. Substantial inroads have been made into the backlog of school maintenance.

In metropolitan Melbourne we have seen the Docklands project, inner city residential developments, demolition of the Gas and Fuel towers, re-opening of the Regent Theatre, the Melbourne Exhibition Centre, refurbishment of the State Library, construction of the new Museum, redevelopment of the National Gallery, establishment of the City Circle Tram, refurbishment of the Old Treasury Building redevelopment of Albert Park, construction of Melbourne Sports and Aquatic Centre, major improvements at the Botanic Gardens, construction of a new spire on the Victorian Arts Centre, construction of the Turning Basin on the Yarra, refurbishment of the Tea House to become Victoria's multimedia centre, the commencement of Federation Square, and the start of work on the Cathedral Place project.

Multimedia and new technologies

The Government's commitment to promoting multimedia and new technologies has seen a world leading project to provide government services electronically via ATM style kiosks, via the internet and via telephone. The first stage of this will commence later this year, and people will be able to renew motor vehicle registrations, pay water and electricity bills, and obtain birth certificates electronically. The system will be expanded progressively with the aim of allowing all State, Federal and local government services to be accessed through a single point of contact.

The Government is also connecting all 3,100 State Government facilities in the State with a data network which will allow messages, pictures and other data to be sent instantly across the State. Education, health, police and court services should be big beneficiaries from this system. It will also have the added benefit of speeding up access to these high speed communications for the private sector in rural and regional Victoria. Victoria's world leading role was recognised by the fact that our Minister for Multimedia was one of only two politicians around the world to be invited by the head of Microsoft, Bill Gates, to a recent conference of 100 top CEOs which he organised.

So the last five years have been ones of rapid change and revitalisation for Victoria, which has taken Victoria from being a rustbucket State and the butt of jokes to being at the forefront of reform and innovation in Australia.

WorkCover reform

Of course, there have been a number of difficult issues which have had to be worked through along the way, including some still being worked through at the moment. The latest of these is reform of WorkCover, where as you will have read unions are threatening a general strike over the issue. However, the bottom line of the reform proposals is that there is to be no reduction in the total dollars going to workers, it is simply a debate about what is the best and fairest way to allocate the available dollars to injured workers.

Although I am a lawyer by background, I am increasing convinced that a long and expensive court process is not the best way to determine how much an injured worker should receive, where legal and medical report costs can eat up $35,000 or more of an average settlement of $207,000. Disputes going to court should be the exception rather than the rule, and we want to promote a culture where workers can feel confident they will be treated properly by insurers and by the conciliation process without the need to bring in lawyers.

Ironically, it has been the other side of politics which in the past have been among the strongest supporters of eliminating common law as a system of determining compensation. However, since this reform is now being implemented by a non-Labor government, some in the union movement see it as an opportunity to start a political crusade against the government.

As always, the Government is willing to listen to constructive suggestions regarding the reform proposals which have been announced in principle, but it will not be intimidated by the threat of industrial action based on wild and inaccurate claims.

The future

That concludes my review of the first five years of the new Government. What do the next 5 years hold?

The short answer is that the Government will continue to be a Government of reform and innovation. Tonight I will mention just a few key areas.

In Health, the implementation of Metropolitan Health Care Service plan will see $900m spent on the construction of new hospitals, primarily to look after the growing population in the outer suburbs of Melbourne. This is an absolutely massive capital investment by any State government, but it is one which we can afford due to the financial successes which have been achieved in the Government's first term in office.

In education, reduction of the backlog of school maintenance will continue, with a new Statewide database which records the asset stock and condition of every school across the State and will ensure allocation of funds to the highest priority needs. The next few years should also see local selection of teaching staff come into full operation, giving school communities far greater flexibility to recruit staff to meet their needs, and providing incentive and reward for talented teachers. Curriculum reform will attract increasing attention, with a report on a major review of the VCE to be given to Minister Gude by the end of this year.

Multimedia will continue to be a high priority for the State Government, as the new information technologies come to influence more and more aspects of our lives. As well as introducing new technology within government, promoting multimedia skills in the community and attracting international investment, increasing attention will be paid to our laws relating to data protection and security and to the laws governing trade and commerce by electronic means. The State government has pushed the need for laws on these subjects and the next 5 years are likely to see a great deal of focus by both the State and Commonwealth government on this subject.

The next 5 years will also see the privatisation of Victoria's gas industry. As you know, the gas industry has already been restructured into separate retailing, distribution and transmission businesses. Unlike electricity, where virtually all of the State is already connected to the electricity grid, gas industry reform offers enormous potential to extend gas supply to many of the 50,000 Victorian households in rural and regional Victoria who do not have access to reticulated gas supply to date, as well as establishing interstate pipelines to allow interstate supply and diminish Esso-BHP's dominance of gas supply to Victoria. The gas industry privatisation will allow an unprecedented freedom for new entrants to the industry to extend the coverage of our gas transmission and distribution systems.

The Minister has spoken about rail industry reform, which to my mind is one of the most exciting areas of reform both in Victoria and Australia generally in coming years.

Port reform will also continue apace. The recently privatised regional ports of Geelong and Portland have had record years in private ownership, a strong third general stevedoring company has established operations in Melbourne, port charges have been reduced by about 1/3rd in recent years and despite the breakdown of negotiations with one potential third container terminal operator, Melbourne has the available land, trade growth and transport infrastructure to make it the logical first port for new international entrants to the Australian ports industry. One small illustration of the benefits of competition is that the cost of mooring a ship in Melbourne, where there are two fierce competitors, has now fallen to around $1,100 , compared with up to $5,000 in Sydney.

Another emerging area of reform and economic growth for Victoria is in timber plantations. New Zealand has achieved massive improvements in productivity and exports in recent years from its privatised pine plantations, not only in woodchips and logs but in value added timber. Annual plantings in New Zealand have jumped from 31,000 ha pa in 1991-92 to 80,000 ha pa in 1994-95, and exports of processed timber have jumped from less than ½ m cubic metres pa to around 4.5m cubic metres. Victoria has a similar export potential.

Already timber plantings on private land have increased significantly, and publicly owned pine plantations have recently been transferred to the Victorian Plantations Corporation, with a view to privatisation. Under private operation, our three regional ports have been working hard to promote and facilitate timber exports.

Commonwealth-State relations

The final area I want to mention tonight is perhaps the most crucial overall area of reform, namely that of taxation and Commonwealth-State relations. In one sense, these are remote from the everyday needs of citizens and taxpayers, but on the other hand they are probably the single greatest obstacle to further reform of Government and economic development in Australia.

I bundle tax and Commonwealth-State financial relations together, because in my view, you cannot have effective taxation reform at either a Commonwealth or a State level without reforming relations between the two levels of Government, and you cannot reform relations between the two levels of Government without also reforming Commonwealth and State taxation.

I need hardly go over the arguments in favour of taxation reform. We all know of the punitively high marginal rates of income tax we pay, and of our illogical and complex wholesale sales tax. We also know of the absurdly broad definition of excise which the High Court has adopted, which has effectively prevented the States from deriving taxation from any tax related to goods. The State's revenue base is effectively confined to payroll tax, land tax, stamp duty, financial taxes and gambling taxes. While in theory the States have the power to impose income tax and taxes on services, practicalities make these taxes highly unlikely without overall Commonwealth-State agreement.

What Australia needs is for each level of Government to take responsibility for raising the revenue it needs to pay for its own activities, and to do so with forms of taxation that are simple, fair, enforcable, and inexpensive to administer. Not only will this provide a better tax system, it will avoid the duplication, blame-passing and cost-shifting that dogs Federal-State relations at the moment and means that citizens do not get the standard of service, and the accountability of government which they are entitled to.

The Victorian Government has made clear that it is willing to contemplate a radical re-assessment of Commonwealth and State government responsibilities. We have already passed virtually complete responsibility for industrial relations in Victoria to the Commonwealth government, because with an increasingly integrated national economy it makes little sense to divide industrial relations between intra-state and interstate disputes. There would also be a strong case for the Commonwealth to assume full responsibility for funding health care, as there is little logic in the Commonwealth paying for treatment outside hospitals, and the States paying for treatment within hospitals.

On the other hand, there is a strong case for States assuming total responsibility for education, since centralisation offers little benefit, and we are better off having States striving separately to achieve excellence in education, and learning from each other's experience.

As you know, the Premier has been at the forefront of pressing for these issues to be put on the national agenda. The Commonwealth has now commenced the process of tax review, which now seems to be gaining increasing momentum. Australia does seem to have once again the opportunity to achieve some valuable reform, and it is an opportunity we need to grasp vigorously.

Ladies and Gentlemen, the first five years of the present government have been ones of far-reaching change. While the next 5 years are unlikely to be a dramatic as the first 5 years, there is every reason to expect that if we remain focussed as a government and as a community the process of transforming our state will continue and that the next 5 years can be as successful as the past 5 years.