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Premier has 'magic opportunity' to reshape state: Bill Kelty

By Chip Le Grand

The COVID-19 crisis and the Reserve Bank's clear message that state governments should not be constrained by debt has given Premier Daniel Andrews a "magic opportunity" to build consensus for an ambitious reform agenda, former union leader Bill Kelty said.

Mr Kelty, a long-serving ACTU secretary who secured union support for the economic reforms of the Hawke and Keating governments, said "fundamental rethinking" about government debt could help deliver generational change to Melbourne and Victoria.

Bill Kelty says the financial parameters of Victoria's recovery have "fundamentally changed''.

Bill Kelty says the financial parameters of Victoria's recovery have "fundamentally changed''.Credit: Justin McManus

"We have got financial parameters in which the game has fundamentally changed," Mr Kelty told The Age. "You have trillions of dollars in superannuation ready to invest in infrastructure. You have got the governor of the Reserve Bank saying 'state governments, please spend money'.

"Right now is when you want to do things. Now is the time to do the big things."

Mr Kelty said the state should emulate the response to its last recession 30 years ago, when an unlikely coalition of political, union and business figures came together to plan Melbourne and Victoria’s recovery.

The disparate figures included brewing titan John Elliott, then inaugural chair of the Committee for Melbourne, then premier Joan Kirner, businessman and then Victorian Liberal Party treasurer Graeme Samuel, trucking boss Lindsay Fox and Mr Kelty.

Bill Kelty says Joan Kirner, pictured here with Bob Hawke, built a broad political consensus during Victoria's last recession.

Bill Kelty says Joan Kirner, pictured here with Bob Hawke, built a broad political consensus during Victoria's last recession.Credit: Staff photographer

"It was a coalition of interested people that wanted to change how Melbourne saw itself," Mr Kelty told The Age. "It was a coalition of interested people willing to put politics aside."

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The blueprint for Melbourne and Victoria’s revival that emerged from the consensus – the introduction of Sunday trading, investment in Melbourne Airport, redevelopment of Docklands and Melbourne’s sporting precinct and the highways, tunnels and bridges that would become CityLink – reshaped the city and state in lasting ways.

Mr Kelty believes the opportunities open to Mr Andrews – or any political leader willing to take them – are far greater than those imagined by his contemporaries.

While the Kirner and Kennett governments were confronted with high interest rates and high inflation, Reserve Bank governor Philip Lowe has said there are no such constraints today.

"That is not code; that is the governor of the Reserve Bank saying this fetish about deficits increasing inflation and unemployment is wrong," Mr Kelty said.

"This is a fundamental rethinking about debt in these circumstances.

"The first thing you do is ask yourself this question: Where should Victoria be in 25-40 years? What sort of the state do we want? What sort of society do we want? What are the things we need to do?"

Mr Lowe, in the published minutes from the RBA’s September board meeting, said the balance sheets of state governments were strong and the cost of borrowing and inflation was forecast to remain low.

Bill Kelty served as Paul Keating's industrial consigliere, securing union support for lasting economic reforms.

Bill Kelty served as Paul Keating's industrial consigliere, securing union support for lasting economic reforms.

"In an environment of record-low borrowing rates and significant spare capacity in the economy ... fiscal policy was well-placed to continue to support the recovery," he said.

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Bill Kelty led the national union movement for 17 years and served as a director of the Reserve Bank. He spoke to The Age as part of a series of stories in which prominent Melburnians offer constructive ideas about Victoria's way forward.

Mr Kelty said that before the first COVID-19 case was detected in Victoria, the state’s economy was already in decline and social fault lines had started to emerge. He nominated three: a critical shortage of public housing, a poorly regulated and supported aged care system and a road system built largely for the 1980s.

As COVID-19 restrictions across Victoria start to ease, Mr Kelty urged Mr Andrews to "extend his reach" beyond his natural political allies to business and community leaders willing to work towards the long-term interests of the state.

"Broad political consensus was the basis on which generational changes were made," he says. "Not all the good ideas are in the Liberal Party and not all the good ideas are in the Labor Party.

"What set of circumstances does a society need to produce a substantial degree of political and economic consensus in order to do things? Here are those circumstances."

Mr Kelty is a non-executive director with the Linfox Group founded by Lindsay Fox, a trucking and logistics magnate who has become a mentor to Mr Andrews. He also has a strong interest in regional development, which he said should be at the forefront of Victoria’s recovery plan.

Establishing political consensus in the current, fractious climate will not be easy. The Andrews government is responsible for decisions which unleashed a second wave of COVID-19 in Victoria, and the Opposition Leader Michael O’Brien has called for the Premier to resign.

Mr Kelty said Victoria was "slumbering" before the pandemic hit, but Mr Andrews was a "great leader" who had shown a willingness beyond his recent predecessors to get things done.

"He has got a magic opportunity," Mr Kelty said. "I know it is hard and he'll get tired, but do you know when you’d want to be the Premier? Now."

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Original URL: https://www.smh.com.au/national/premier-has-magic-opportunity-to-reshape-state-bill-kelty-20200916-p55w9j.html