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Well thank you very much Peter, to your wife Carol, to my Federal
Parliamentary colleagues, Senator Synon, to John Richardson and
my other State Parliamentary colleagues, ladies and gentlemen.
There seems, at the moment in politics, to be a little bit of discussion
about nostalgia and about going back, and I have to say that no
one group in Australian politics, of course, has a mortgage on nostalgia
and being warmly reminded of one's roots. And I don't
think in a political sense there's anything quite so warmly
nostalgic about coming to a Liberal Party function in Victoria and
being introduced behind a pipe band given the great Scottish affections
and ancestry of the founder of our Party and the longest serving
Prime Minister in Australia's history, Sir Robert Menzies.
I am very happy to be back in the electorate of Aston, Peter, and
I will, of course, never return in any of my former guises to this
electorate having visited it on three occasions in different guises.
And you are absolutely right and you show an appropriate degree
of political emphasis and political skill in mentioning the fact
that this electorate does have the largest number of mortgage-ors
in Australia on a per capita basis. And I will complete that by
saying, of course, that the message for them is that my Government
has delivered the lowest housing interest rates for 30 years and
that's a message that will be repeated during the course of
the next few weeks, the next few months and indeed until some date
between now and when the election is due, which constitutionally
of course is about late May of next year, that's the latest
date. Now, I'm not, for the benefit of the press who are travelling
with me or indeed, and I don't mean this unkindly for anybody
else's benefit about to muse aloud about when the election
might be held. That is something that all Prime Ministers decide
at the right time and in the right circumstances after talking to
their senior colleagues. But I do want to share with you a few thoughts
about where Australia has some from and where we are going and some
of the political challenges on the horizon at the present time.
We've had in Melbourne over the last few days a very important
conference dealing with Australia's trade relationships with
the rest of the world. We've had a number of very well reported
speeches, one or two of them from some of our visitors, I think,
have been unduly pessimistic. I don't believe it is often particularly
helpful for some visitors to this country to use words like depression'
and to throw them around rather carelessly particularly given some
of the economic difficulties of our friends in the Asia-Pacific
region. But there is little doubt that the Asia-Pacific region is
going through its worst economic experience in the last 30 or 40
years. But it's also very important to keep the circumstances
of what is happening in the Asia-Pacific region in a very clear
perspective.
And let me illustrate by referring to a country like Indonesia.
Everyone knows that Indonesia's gone through a very difficult
time and there are many difficult months ahead for that country.
It has not only gone through difficult times economically but also
politically and there's been a change of leadership from President
Soeharto to the new President Dr Habibie. But even when you take
all that into account, the living standards of Indonesian people,
despite all of the downturn and all of the meltdown and all of the
loss of wealth, the living standards of the Indonesian people now
are dramatically higher than what they were at the beginning of
the 1990s.
So therefore what we have to do is to keep in perspective what
is occurring in our part of the world. The other thing that we should
remember, of course, is how Australia is effected by what is happening
in our region. Now it is quite impossible for Australia not to be
effected by what is occurring in our region. We now sell 34 per
cent of all of our exports to two countries alone - that's
Japan and Korea. Those two countries are far and away our most important
destinations for the goods that we sell abroad and inevitably because
of those linkages and linkages with other parts of the Asian region
we are going to be effected by a downturn in those countries. But
the reality is that we have not been effected nearly as badly as
we might have been and the reason for that, quite unmistakably,
is that when our Government took office we set about getting Australia's
economic house in order, and I am defiantly proud of what my Government
has done over the past two-and-a-quarter years. Peter Costello as
Treasurer supported by all of the other Ministers having responsibility
for economic management has done an absolutely superb job in turning
around Australia's finances.
Now, I know that there are some of the decisions that we have taken
that some in the community haven't liked, and I am sure there
are a number of people here tonight who personally haven't
liked some of the decisions that we have taken. I know that, I have
been in politics a very long time and I know that occasionally you
take decisions that adversely affect people who are even your loyalist
supporters. I know that, I am conscious of that. I know that some
of the decisions we took in relation to such issues as superannuation
a couple of years ago caused a deal of heartburning amongst some
of our own supporters. I also know that some of the decisions we
took in other areas affected people who were not necessarily our
supporters.
But that is not the point of who somebody affected by a decision
supports, it's a question of what the end product of all of
those decisions are, and the end product of all of the decisions
we have taken is that we have turned a Budget deficit of $10.5 billion
a year into a surplus of $2.7 billion. We have produced the lowest
interest rates in 30 years. We have the prospect of starting the
21st Century with virtually no Federal Government debt and when
you consider that in 1995 the Federal Government debt, the GDP ratio,
was about 20 per cent, that is a remarkable turnaround. We have
the lowest inflation rate in the OECD area and we have in prospect,
despite the difficulties of our region, some of the highest growth
rates amongst the industrialised countries for 1998 and 1999.
Now the net result of all of that is that we have given to the
Australian economy a degree of protection from what has happened
in Asia that would simply not have been there if we had not been
elected and would not have been there if we had listened to the
advice we received from our opponents in the Labor Party and the
Australian Democrats. Because one of the galling things about the
Labor Opposition is that not only did they create the problem we
were given the responsibility of fixing up, but at every step of
the way they have tried to prevent us fixing the problem. It's
one thing to create a difficulty and then hand it over to somebody
else and say: we'll give you two or three years to fix it up.
It's entirely another thing to create the problem, hand it
over to somebody else and go about trying to stop the other crowd
fixing the problem in the time that they are in Government. Because
all of the attempts virtually we made to reduce the budget deficit
and to get our economic house in order were obstructed by the Australian
Labor Party and others in the Senate. We were able, through a combination
of circumstances, to get most of those budget measures through.
But it oughtn't to be forgotten now that Australia faces this
great economic difficulty in Asia that not only did my Government,
the Coalition Government, set about building the strongest economic
foundations that Australia has had in 25 years but we did it in
the face of the strongest possible opposition from our opponents.
The truth is that if we hadn't have done what we have done
over the last two-and-a- quarter years Australia now would be weaker,
more vulnerable, more exposed, our living standards more at risk
and overseas confidence in the strength of the Australian economy
greatly reduced. So what we have done over that period of time has
been to build those very strong foundations and the reality is,
my friends, that there are more things that must be done. I know
that there are many in the community who are somewhat weary with
economic and social change. I understand that. Peter mentioned a
moment ago what happened in Queensland last weekend.
Most of what happened in Queensland last weekend, not all of it,
but most of it is due to the fact there are Australians who feel
a sense of vulnerability because of the economic and social change
that has occurred in our nation over the last few years. I understand
that. I sympathise with, and I regard the great bulk of those people
who feel that way as like the rest of us - ordinary decent Australians
who are concerned about their future and the future of their families.
But of course there are ways of securing your future, that will
secure your future. There are other ways which I'll come to
in a moment which in fact will make your future even more vulnerable
and even more precarious. But in the globalised world in which we
now live, and we have no option, we're all part of it. You
can't in the words of the old song "stop the world because
I want to get off". That's not an option. No country can
do that.
If we start being offensive to foreign investors they'll take
their investments somewhere else, and for good measure the jobs
in Australia that they would have created with that investment will
follow to the other destination. This idea that you can be rude
to foreign investors and say we don't want you but still keep
the jobs that foreign investment creates, is of course completely
mythical. I know that Australians worry when on occasions some of
our great brand names like Arnott's Biscuits, and Bundaberg
Sugar disappear and are bought by people overseas. I understand
that. But I also understand that those things result from decisions
made by Australian shareholders to sell their shares to overseas
investors. I also know that this country would have a lower living
standard and there would be fewer jobs for Australians if we had
not accepted investment from foreign companies.
I met a gentleman earlier this evening, forgive me Sir, I just
can't immediately recall your name, but you run the McDonald's
franchise in this area. Everybody else knows you. That man's
company, or that man's franchise company, employs 55,000 Australians.
Now that's a foreign company. If we hadn't been beckoning
to foreign investment, that's 55,000 Australians that wouldn't
have been employed. Everyone knows we would never have had a motor
manufacturing industry in this country if we hadn't way back
in the late 1940's accepted investment from General Motors.
And everyone knows that there are many other industries in this
country that simply wouldn't be here if it hadn't been
for foreign investment and every economy in the world worth its
salt at some period of its economic history has accepted investment
from abroad.
In the late 1890's most of the railroads and much of the major
investment in the United States was British and there've been
long periods in American history where foreign investment from Japan
and Britain and from other parts of the world, has bulked very large
in the economy of the most, the largest and most powerful economy
in the world. Now, of course you need rules that ensure that if
Australian equity is available it gets a fair crack of the whip.
I can remember when I was Treasurer in the late 1970's. I had
some fairly vigorous arguments with the then Queensland Government
when I insisted that there should be Australian equity in some of
the major coal mining developments in Queensland and I'm glad
I did because it ensured that Australia had a stake. But the point
ladies and gentleman is that we have a choice as a nation. We don't
have enough domestic savings of our own to do everything that we
want to do. Now if we want to continue growing our living standards,
if we want to continue to have more investment that employs more
Australians, then unless we save more as a community, and there's
no sign that we're going to change our habits dramatically
enough overnight for that to occur, then if we want those extra
jobs and that higher standard of living, we've got to draw
on the savings of foreigners and accept large amounts of foreign
investment in this country. You don't have the option of keeping
the living standards and not having the foreign investment. You
want the living standards, given our savings level, you've
got to take the foreign investment. Now I've gone on perhaps
for a few moments about that issue because it's in the news
at the moment.
We not only have before us at the present time in Australia, we
not only have on offer the failed debt and deficit policies of the
Australian Labor Party, but we now have on offer the rather unworkable,
impractical, utterly out of touch economic policies of the One Nation
Party. We had their national director the other day saying you could
have bank loans at 2%. I thought to myself that's an interesting
proposition. Who are the Australians lining up to lend the bank
their money at 1.5%. I wandered around, I stopped few people in
the street and I said would you lend at 1.5%, and they said no.
And then I heard on the radio that the national director was saying,
you don't, that's not the point. What you do is you print
the money. I don't think I've heard anybody for a decade
or more, twenty years, who regards himself or herself as a serious
player in Australia politics suggest that the answer to any economic
problem is to print money. Everyone in this audience knows that
such a policy would be fundamentally disastrous. That it would push
inflation through the roof and most seriously of all, it would destroy
the savings of retired people in our community. And it's very
interesting that some of the appeal of this party is directed to
older Australians. The clarion call of nostalgia of returning to
a past that did have some desirable features, but nonetheless is
the past, but that particular policy would do enormous damage to
retired people. It would do enormous damage to any Australians who
have saved.
But what I'm saying to you ladies and gentleman, and I think
you may have got my drift, that in these times of economic challenge
from abroad, it is no time to turn back to a party that gave us
deficit and debt. When Peter Costello became Treasurer, he found
that over a period of eight or nine years alone the former Government
had run up a Federal Government debt of about $95 billion. And it
was running at the rate of about $10 billion a year and we have
of course turned that around. So it's not a time to go back
to those sort of failed policies. Nor is it a time to experiment
with risky, faulty, out-of- touch, unreal, simplistic economic solutions.
Nor is it a time to sound unwelcoming to foreign investment because
if you don't welcome foreign investment in the globalised world
economy you chase jobs out of Australia and that is undeniably the
economic choices that face our country. But the other thing you
must do also is to continue to make further changes that are needed
to strengthen Australia. And that of course brings me to the issue
of taxation reform.
Australia, as anybody who cares about the future of our country,
as anybody who's thought about it knows, Australia cannot go
on forever with its present taxation system. Now I know that there
are people who are saying you don't talk about taxation before
an election, whenever that election may be held. You do something
about it afterwards. You go to the election and you say, well, we'll
have a meeting about taxation. Mr Hawke did that way back in 1984.
He had a meeting and now 14 years later, 13 years after the meeting
and 14 years after he promised the meeting, we still haven't
got a reformed taxation system. It's still ramshackle and out
of touch and yet some people say to me, John, have a meeting. Budget,
have a meeting. I can't do that. I've spoken so often
and Peter Costello has spoken so often of the need for tax reform
in this country. It's simply not credible for us to now turn
around and say, no we don't need that any more. We'll
have a meeting and we'll see if we can muddle through. There's
no chance on Earth that at a meeting you could get a consensus.
You'd get everybody in. You'd get the Liberal Party in,
the National Party in, the Labor Party, everybody else, the welfare
groups, the business community, the trade unions, you'd have
a talk and at the end of the day everybody would have their own
view. And you know what the commentators would say? It's now
up to the Government to make a decision. And that's fair enough.
That's what Governments are elected to do. They're elected
to make decisions into proposed policy description. Now I don't
think ladies and gentleman, if we want taxation reform in this country,
there is really no alternative other than to lay it out before the
election which we intend to do and to campaign on it and to ask
the Australian people to support it because it's good for Australia.
Not because we have some ideological zeal about tax reform, it's
because I believe in all my being and based on all the years I've
been in politics that the next logical step that's needed to
further strengthen the Australia economy is to reform the Australian
taxation system. That's why I'm in favour of it. And what's
more I know that Mr Beazley knows deep down that we ought to reform
the tax system too because back in the mid 1980's when Mr Keating
was trying to change the tax system, Mr Beazley and Mr Evans were
his two strongest supporters. And most people who've studied
the tax system know this. And even the people who are trying to
say to me. well look don't do it now, they say to me in the
next breath, we know it's got to be done but do it later, do
it some other time. But there comes a point when you can't
kid to the public about something like that. There comes a point
when you have to be absolutely direct about it. Now we do need a
new system. We're not going to bring in a goods and services
tax on top of the existing taxes. People run around, they hold up
these placards saying no GST. I mean they're very interesting.
Well of course I agree with them if you're talking about putting
a GST on top of the existing system. That would be crazy, it would
be unfair, and it would be unthinkable. It's always been the
case that if you look at a GST you are looking at it to replace
existing indirect taxes and you're also looking at accompanying
it with the introduction of personal income tax cuts. And you're
also looking at addressing the difficulties of the Commonwealth-State
financial relationship that cause the occasional exchange over the
airways between Commonwealth and State Government. And your also
looking at making certain that there is protection for the low income
in Australia. I mean these are the principles that I laid down.
I mean of course I'm not going to bring in a GST on its own
or whatever you want to call it. Of course I'm not going to
do that. It's never been in contemplation. But we do have a
system that's breaking down. I frequently say do you want to
go on with a system that allows the ten people in this audience
who can afford to buy a lear jet, or is it five, or is it twenty,
I don't know, maybe it's none, to buy it without paying
any sales tax at all. But the rest of us who buy a family car have
got to pay a wholesale sales tax of 22%. Do we want a tax system
that says that you pay a sales tax on flavoured milk and many household
utensils, but you don't pay any on caviar. You pay it on orange
juice concentrate but you don't pay it on other things. And
I could spend the whole night regaling you with a list of anomaly
of the wholesale tax system that was developed at a time when the
overwhelming bulk of economic activity in Australia was manufacturing
and the creating of goods and there was no service industry. Of
course we need a system, a new system and we need something that
gives more coherence and fairness and balance. And we certainly
need a system that helps our exporters. One of the great advantages
of a goods and services tax, or a value added tax, or broad based
indirect tax or whatever name you call it, is that it doesn't
impact on exports and that will make our exports more competitive.
And that is why most other countries, most of the countries with
which we trade have that taxation system. Why on Earth we continue
to burden our exporters with the old fashioned system that we have
is beyond my understanding. And they're the sort of issues
that our political opponents, whether in the Labor Party or One
Nation or whatever, have got to confront. I mean are Mr Beazley
and Mrs Hanson that the present system is perfect and they don't
want it changed? Are they really saying that after all the years
of study we don't need a new tax system and heaven knows the
tax system's been understudied for all the time I've been
in politics. I entered Parliament in 1974 and a year before I came
in, the late Billy Sneddon commissioned the Asprey Committee to
inquire into the Australian taxation system. And do you know what
it recommended. It recommended the introduction of a broad based
indirect tax to replace the wholesale sales tax. And it said that
marginal rates of income tax were further incentive, and it said
there need to be reform. And that report was delivered to the Whitlam
Government in 1975 which wasn't a good year for the Whitlam
Government, and of course there wasn't much done about it.
And then various attempts have been made ever since to reform the
Australian taxation system but nothing serious has happened. And
that is why I heard this morning on the radio as I was driving from
one electorate to the other here in Melbourne, I visited quite a
few today, I heard a report from the Institute of Chartered Accountants
in which they said that, that under the present taxation system,
a family earning $20,000 a year with two children and one bread
winner, that that particular family is relatively better off under
the taxation system than a family earning $30,000. In other words
the family earning $30,000 a year with the same structure, is in
fact $9 a week worse off after taxation. Now that's just one
example of how animalist the present taxation system is. And that
really does have to be addressed.
There are just two other things I want to say to you. And that
is that it is very important to different parts of Australia that
we do get the problem of native title resolved. This has been a
very difficult issue for Australia, and it has been a very difficult
issue for Australia because much of the debate has been exaggerated
and much of the debate has been the subject of emotional exchanges.
The bill that we have put forward, despite what has been said about
it, respects all of the basic principles of the original decision
of the High Court of Australia in the Mabo case. The bill that we
have put forward is already a compromise. The bill that we have
put forward does not meet all of the aspirations of people who believe
that when the original Native Title Act was passed in 1993, that
the grant of a pastoral lease completely extinguish Native Title,
and there are many people who said after 1996 when the High Court
brought down its decision in the Wik, that all you had to do was
to overturn that decision and go back to what the belief had been
in 1993. And we decided in the interests of trying