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Transcripts from the Prime Ministers of Australia

Transcript 10899


Photo of Howard, John

Howard, John

Period of Service: 11/03/1996 to 03/12/2007

More information about Howard, John on The National Archive website.

Release Date: 14/03/1998

Release Type: Speech

Transcript ID: 10899


Thank you very much, Bob, and may I thank your company very warmly

for its sponsorship of this morning's breakfast. Can I acknowledge

the presence of the Premier of Queensland; the Deputy Premier, Joan

Sheldon; my many other State and Federal Parliamentary colleagues;

Tony Staley, the Federal President of the Liberal Party; Bob Carroll,

the Queensland President of the Liberal Party; many business observers

and participants; members of the diplomatic core and other guests.

I want to pick up a point that Bob made in his words of welcome. And

that is to stress the great importance my Government has placed, since

the day of its election, on the importance of continued communications

with the business community.

I made a very proud boast on the night of the election victory and

that very proud boast was that the Liberal Party was owned by no sectional

interest within the Australian community. The Liberal Party is a creature

of the Australian people and owes its allegiance to all of the Australian


We are not owned by the business community. We're certainly not

owned by the trade union movement. And we're certainly not owned

by any elite, politically correct pressure group. What we are owned

by is a driving ambition to serve the interests of all of the Australian


But having said that, can I emphasise that there are many points of

convergence and there are many areas of policy where the approach

of my Government, the philosophy of the Liberal Party and the philosophy

of the National Party is absolutely consonant with the goals and objectives

of all sections of the business community in Australia.

We agree not on all things but we agree on most things of overriding

importance to the economic future of Australia. And I've encouraged

all the members of my Ministry from day one to develop the closest

communication with the relevant sections of the business community

with which they interact. And I'm delighted that in so many of

those areas - and Bob touched on it this morning in his words of welcome

in the area of communications in which Richard Alston has done an

absolutely outstanding job in an area that's involved a great

deal of change and a great deal of development - that has been very

much to the fore.

I want to sketch a few thoughts with you this morning. I want to talk

about the goals we set ourselves just over two years ago when we came

into government, how we've gone in achieving those goals and

to state some of the goals for the Australian economy that I see ahead

over the next few years.

When we came to power in March of 1996, the biggest challenge we faced

was repairing the fiscal position of our Federal Budget. All political

rhetoric aside, the cold reality was that we were in the red to the

tune of $10.5 billion and that unless something were done about that

we wouldn't be able to do much else. Because if you're steadily

racking up debt, you're steadily going broke, your cash flow

is hesitant, whether you're running a business, you're running

a household or you're running a country, you really can't

do much by way of expansion unless you attend to that.

And we set about attending to it. We were criticised. We were criticised

by some of the economic writers, not by all of them. We were criticised

by the Labor Party. We were criticised by the pressure groups. We

were criticised by some of the media. And we were even criticised

by sections of the business community who said that we'd gone

too far and that really you needed a more moderate, a more modest

approach. And when I look back over that period of two years - and

I particularly set it against the impact of the Asian economic troubles

- I say every night to myself: thank heavens we took the action to

the degree we did, to the measure that we did, in the Budget of 1996.

Because if we had not got that budget deficit under control nothing

else would have been possible. If we had not got that budget deficit

under control we would not be grappling with the reality of some of

the Asian troubles affecting, in a very direct and profound way, Australia's

domestic economy.

Now, I don't pretend that we can argue that there won't

be any flow-through from what has occurred in Asia. But fundamentally

we have protected ourselves against the impact of that downturn because

of the action we took in 1996 in Peter Costello's first Budget.

And I say that defiantly, unqualifiedly, unapologetically and absolutely.

And it is the most important and enduring thing in the whole of the

economic debate in Australia at the present time.

It will cast the longest shadow of all in terms of the economic debate

over the next Federal election. Because our opponents will have to

argue to the business community of Australia. They'll have to

argue to the Australian people that somehow or other, having left

us with a legacy of a $10.5 billion deficit, having argued against

repairing it, having said every single measure we took virtually was

unfair or unnecessary and despite the impact of the Asian economic

troubles and despite having their own activities having already racked

up hundreds of millions, if not, billions of dollars of additional

spending promises, despite all of that and putting all of that together

they're still competent economic managers.

Now the reality is that all of those things can't be true. And

we have attended to what was the fundamental challenge and that was

to get the Budget in order. And it has given us a degree of domestic

stability and security that we haven't known for a long time.

And we do have the lowest inflation rate in the Western world. I know

it's an era of low inflation rates but ours is lower than anybody

else's and that's not a bad achievement. We do have the

lowest housing interest rates since the late 1960s. And we do have

business interest rates that are dramatically lower than what they

were two years ago. We still have a very strong level of private sector

business investment. Our economy is likely to grow this year at the

top of the rate achieved by the member countries of the G7. We have

made inroads into unemployment. We now have the lowest unemployment

rate at the moment that Australia's had for seven years. We would

like to go further because the human face of economic failure and

economic distress is always, of course, unemployment and it remains

a major social challenge for any government.

So our great and first economic goal was to get the Budget back in

order and we have done that and we have done that magnificently. And

it will be a very proud Treasurer who will be able to stand up on

the 13th of May and announce that after two years and after having

inherited a deficit of $10.5 billion, he can announce that the books

of the Commonwealth have been returned to an underlying surplus.

We also set ourselves another great goal. It was a goal that had been

dear to the hearts of many of us over a long period of time. It was

certainly dear to my heart and I know it was dear to Ian McLachlan's

heart because he'd had a few scraps along the way in the good

cause. And it was dear to Peter Reith's heart and it was dear

to Peter Costello's heart. That, of course, was the great historic

cause of industrial relations reform.

And once again we had our critics. And I think one or two of them

could even be found in the business community who said: oh, you've

whimped it out, you haven't gone far enough, you've only

scratched the surface, you've haven't touched the side,

you've just sort of fine-tuned it. Now, of course there were

a few changes made as the legislation passed through the Senate. But

the fundamental integrity of that reform package was maintained to

the very end. And you see the full fruits of just how far we have

gone in reforming the industrial relations system in Australia as

you see working out right at the moment this great historic, I believe,

exciting and defining change which is now occurring on the Australian


As everyone knows, the uncompetitive character of the Australian waterfront,

the bloody-minded attitude of the Australia wharfies is part of the

Australian folk law. There's that lovely story told about the

old lady at Charleville when we she was told that a cyclone was coming

and she better get ready for it and she said: don't worry dear,

the wharfies won't land it.

I mean, it's deeply embedded in the Australian psyche. It's

something that you learn virtually from the day you're born that

we've got inefficient wharves and, of course, it's true.

I won't bore you with too many statistics at breakfasts like

this but for containers, the crane rate across the Australian wharves

is 18 an hour, our Asian competitors it's 30 an hour.

I know a man in the Riverina district of New South Wales who runs

a stock feed business and he competes. He sells into Japan and he's

competing against an American company that exports off the West Coast

of the United States to Yokahama. He's very competitive on everything

except the cost of getting the product from Australia into Japan.

And his American competitor can do it at

55 per cent - 55 per cent of the cost of what is involved in taking

it from Australia to Japan.

And what we did with that legislation was to change the legal monopoly

held by the Maritime Union of Australia. We made it possible for the

recruitment and use of non-union labour. We had no quarrel with members

of the trade union movement. We don't seek to smash any union.

But what we do seek to smash are union monopolies. They are wrong.

They are anti-productivity. They are against the interests of the

Australian community. They have destroyed jobs and they retarded and

deterred investment. And regional and rural Australia, the country

people of Australia, will benefit enormously from a reformed and more

productivity waterfront. I want to applaud and congratulate the courage

of the National Farmers' Federation of Australia for what they

have done.

But this is a defining change, it's a defining reform. It says

to the rest of the world that we are prepared to tackle those things

that have denied Australia's membership of the very top league

of the most productive and competitive nations in the world. Now,

I'm very proud that one of the great reforms that my Government

has introduced has been in the area of industrial relations.

And I want to record my gratitude to Rob Borbidge and to Joan Sheldon,

as the leaders of the Queensland National Liberal Party Government,

who have been absolutely uncompromising and absolutely and totally

supportive of all that we have done in this area. As people who represent

the most decentralised State in Australia, as people who lead a State

which is built very much on provincial cities and provincial towns,

they know the importance of that part of Australia - the importance

of that part of Australia of reform on the waterfront.

We also set ourselves a goal of reducing the costs of doing business

in Australia. That meant pressing ahead with micro-economic reform,

with competition policy. We honoured in full, as Bob acknowledged,

the promise we'd made abut the deregulation of the communications

industry in Australia. And many business surveys, as so many of you

here this morning know, will tell you that after rental costs, one

of the largest overheads of any average business in Australia is,

of course, the cost of communications. And the bonus for small business

out of a deregulated communication system is almost incalculable and

the way in which costs have dramatically fallen. No better illustrated,

I suppose, than something I read in The Economist a few months

ago that stuck in my mind. It said in 1930 it cost something like

$300 a minute to have a telephone call from London to New York. And

now, of course, it costs not more than a dollar or two. And it's

a dramatic illustration of how changes have occurred in that area.

We introduced specific reforms to help small business. We introduced

the capital gains tax rollover relief that means that now if you want

to sell your successful small business and rollover the proceeds of

the sale of that successful small business into the purchase of a

new one, you can do so without incurring any capital gains tax liability

up to the tune of $5 million. Now that represents the honouring of

an important promise that we made before the last election and it's

a huge benefit to small business.

We also promised that we would embark upon the largest privatisation

in Australia's history. And that, of course, was the sale of

one-third of Telstra. What a magnificent success on every front that

has been. And I want to congratulate John Fahey, the Minister for

Finance and the Minister in charge of privatisation, for the flawless

way in which he's handled the privatisation, not only of Telstra

but, indeed, of other assets that the Commonwealth has sold.

It has been a great success. And the thing that encapsulated more

than anything was the fact that 92 per cent, 92 per cent of the employees

of the company bought shares. I mean, they weren't too troubled

by the Labor Party's opposition. They weren't troubled by

the trade union movement's opposition. They liked the idea of

owning shares in the company that employed them. And that's a

magnificent idea, it's a magnificent ideal. And it's the

kind of thing that defines us and makes us different from our political

opponents and it's something that we'll always encourage.

Six hundred and two thousand Australians who've never owned shares

in their lives now own shares as a result of the Telstra float. It

was a booming, thumping, unqualified success which all of us as Liberals

can be proud.

On top of that, we've got $1.25 billion going towards the regeneration

of the Australian environment. And our opponents have got the nerve

to say: isn't it shocking that most of that money is going into

regional Australia. They're complaining about it going into fixing

the salination problems of the Murray Darling Basin. Well, it's

not surprising. You don't have salination problems in Killara

or Woollahra.

Ladies and gentlemen, of course the great environmental challenges

are to be found in the country areas of Australia and that's

why most of the money is going there. And if the Labor Party thinks

that's unfair they ought to set about trying to win a few rural


But we also set ourselves the task of further reforming the financial

sector. And Peter Costello said in the lead-up to the election that

we needed to do really a stocktake, an update of the Campbell Report

and we did that. And the Wallis Report was brought down and just about

every recommendation made by Wallis has been introduced including

measures that are going to bring far more competition to the Australian

financial system.

They are some of the goals that we set ourselves. And they are goals

that have been achieved on time, in full and in some areas, ahead

of schedule. And I'm very proud that in two short years we have

seen the greatest reform ever Australia's industrial relations

system. We have seen the most spectacular transformation of a budget

deficit towards a budget surplus. We have seen major reforms for small

business. We've seen a hugely successful programme of privatisation.

And in the process we have created a situation where this country

has bought itself protection and insurance against the ill-effects

of the Asian economic downturn.

But that is what we have achieved to date and any dynamic political

party never rests on achievements. It always looks to the future and

sets itself some more goals. And the goals that I have for my Government

over the next few years in the economic area will, of course, be dominated

by the great cause of taxation reform. It is the great area of unresolved

economic business on the Australian national agenda.

We have no hope of realising the full potential of this country in

the Asian-Pacific region as we move into the 21st Century unless we

have the guts to take on the challenge of taxation reform. It is difficult,

it is challenging. There'll be no shortage of people who say

it's too hard and there'll be no shortage of fear campaign

from the Australian Labor Party.

We are prepared to have a go. We are prepared to have a go because

we believe the present taxation system is fundamentally unfair. We

believe the present taxation system is imposing unnecessary burdens

on the Australian business community. We believe that the present

taxation system is out of date. We believe that the present taxation

system breeds resentment and envy because many Australians in the

middle feel that they are carrying all the burden. And a taxation

system that falls into public disrepute and into public contempt is

a taxation system that cries aloud for reform.

Now, I've been up a few hills and in a few valleys so far as

taxation reform is concerned. And as I look around the room there

are a few other people who are in that category. But the experience

of battle gives you knowledge for your future encounters and for future

combat. I've learnt the bit about the failures in the past on

both sides of politics. But there's nobody who takes the future

of our country seriously that in their most honest, private moments

can seriously suggest that we can go on indefinitely with the present

taxation system. It does need reform and we are prepared to embrace

that reform. And it will be historic and significant beyond the experience

of any other economic reform that has been undertaken in the time

that I've been active in politics.

We will need the support and the understanding of the business community

of Australia. I welcome very much the cooperation that has already

occurred. The constant contact between representatives of the business

community and my Government over the last few months - I want that

to go on. At the end of the day we will produce a plan that is fair,

that will encourage competition that business will find will encourage

investment, the Australian public will embrace as being fair and reasonable.

And it is a very, very important cause and it is one that I encourage

you very, very strongly to support.

We must, of course, press ahead with the process of fiscal consolidation.

Having done the hard yards and made the gains we have no intention

of dissipating them in profligate and unnecessary government spending.

But that doesn't mean that there isn't a social bonus out

of fiscal restraint. I made that observation yesterday when I announced

the contribution of $65 million out of the Federation Fund towards

the light rail proposal. The visionary concept of Rob Borbidge and

Joan Sheldon that was announced in November of last year here in Brisbane.

There is a social bonus if you get your economic house in order. And

that social bonus will be directed in areas of greatest return and

areas of greatest need.

But I have one or two other goals that I would like to see realised

as we move into the next century. One of those goals is to see Australia

become the second great financial centre of the Asia-Pacific region

after Tokyo. I believe that more and more people will see Australia,

the cities of Australia, the financial centres of Australia, as being

the place to locate their regional headquarters, as being the major

financial area after Tokyo.

We have an almost irresistible combination of attractions. We have

a strong economy. We have a stable political system. We have a benign

and friendly environment. We have a coherent legal system readily

understood. We speak the English language. And we have a banking system

which is sound and stable, prudentially regulated and regarded throughout

the world as being of high integrity. Now, you can't get a better

combination. You can't get a better brace of attractive conditions

for a financial centre than that. And one of the things to which I

commit my Government into the next century is to build Australia as

a great financial centre for the region. And there is no reason in

the world why by the year 2010 there can't be four great financial

centres of the world: there can't be London and New York and

Tokyo and Australia. And I'll leave it to the competitive spirit

of the financial community of Australia to decide which city will

be the financial capital of Australia.

Who am I to spoil a nice breakfast by saying anything about that.

Good luck to all of them. And that's one of the great advantages

of the Australian federation, you can have a bit of competition. Queensland,

incidentally, led the way in many areas of taxation reform. If it

hadn't been for Queensland we would never have, I think, as early

in the piece, we would never have abolished probate and succession

duties. So Queensland has an enviable record in setting the pace in

some of these areas. And they never let us forget and good luck to


But, ladies and gentlemen, they are the goals, some of the goals that

my Government has. And I speak to you this morning with a mixture

of emotions, all very positive. I speak to you with the emotion of

pride that in two years we have done great things for the Australian

economy. We have given it a low inflation, low interest rate, high

investment environment. We have protected it against the worst effects

of the Asian economic troubles.

We have had some spectacular successes against all odds. Robert Hill's

triumph at Kyoto at the end of last year in relation to greenhouse

gases is one of them. We have given, through the industry policy statement

I delivered on the 8th of December last year and to which John Moore

made such a magnificent contribution, we have given a greater sense

of direction and a greater sense of certainty to the business community

of Australia. We have made some intelligently pragmatic decisions

in the industry policy area. This country has a very low tariff regime

by comparison with the rest of the world. And the decisions that we

took in the motor vehicle industry and the textile, clothing and footwear

industries are decisions that I will defend and support anywhere in

this country. Because they are decisions that have already returned

a lot in relation to the investment that has been made in those industries.

But that is what we have achieved in the past and I'm very proud

of all of those things. I'm very grateful that I have such a

strong team of economic Ministers. They are an outstanding group of

people. All of them for what they have achieved. Peter Costello has

done a superb job as the Treasurer of this country. I know how hard

that job is. I had it for a long time. It's a lousy job on occasions.

And he's done it very well and I thank him for it. And I thank

John Fahey, the Finance Minister, who supported him so well. And I've

spoken of the contribution that Peter Reith and Richard Alston and

others have made to our economic goals.

So I'm grateful as well as proud. But most important of all,

I'm excited about what lies ahead. In politics you keep renewing

Transcript 10899