E&OE..........................................................................................................................
Thank you very much Katie. I suppose, some corners are a bit longer
than others as far as election dates are concerned. To Ian Armstrong,
the Leader of the New South Wales National Party, my Federal colleague,
Judi Moylan, the Minister for the Status of Women, other distinguished
guests, ladies and gentlemen.
Today is an opportunity for me to put into context some of the decisions
that my Government has taken over the two and a quarter years that
we have been in power. And it's very important whenever you look
back on what a Government has done to remember as well as what it
has done, what things might have been like if some of the things it
had done over that period of time had not been done. And that is particularly
important against the backdrop of what is now occurring in the Asia
Pacific region. It's not possible to say anything about Australia,
about Australia's economic future or Australia's political
future without a few words about the very momentous events in Indonesia
over the past few weeks.
The resignation yesterday of President Soeharto was in every sense
of the word a moment in the history of that country and also a moment
in the history of our entire region. Whatever has been said about
him - and a lot has been said critically, and what will be said in
the future - nothing can gainsay the fact that that brought great
stability and a lot of well measured economic progress to the people
of Indonesia. It is no mean feat to be the governor for 32 years of
a country of over 200 million people, the fourth largest nation on
earth, comprised of an archipelago of more than 3000 islands with
an enormous amount of religious and ethnic diversity. He did bring
to that country a great deal of measured improvements for the poor.
Certainly the democratic processes that we take for granted were not
there but equally, it's very important in our relations with
the countries of the world to understand that our philosophical approach,
as much as we revere it, can be very different from the approaches
of other countries.
We quite sensibly, in my view, gave up the cheap option of giving
kerbside public political advice to the people of Indonesia about
who should be their government and we won't be departing from
that practice in the future. There must be more openness, there must
be more personal liberty and there must be a continued growth of economic
freedom in Indonesia if bloodshed and civil strife is to be avoided
in the future. We regard Indonesia as a very important country to
Australia, not so much because of trade, because our bilateral trade
is only about 2.5 per cent, but geographic proximity, historical experiences,
the fact that Australia was one of only three countries in the world
that contributed to the IMF bailouts of Thailand, Indonesia and Korea
is a demonstration that Australia is part and parcel of the Asia Pacific
region forever, and also in relation to Indonesia that Australia is
a reliable and durable friend in times of difficulty.
When I became Prime Minister I said that one of the things I wanted
to do with Australia's foreign relations was to move away from
what I saw on occasions as being a rather obsessive Asia-only approach,
which was adopted on occasions by the former Government, to a broader
and more sensible Asia-first approach, recognising that Australia
also had very important economic, historical and political relationships
with the nations of Europe and the nations of North America because
it's long been my strong personal conviction that Australia occupies
a rather unique intersection of history, geography, culture and economic
circumstance. We have deep cultural roots with the nations of Europe.
We share the common commitment to personal liberty and democracy with
the nations of North America yet geographically, we are part of the
Asia Pacific region and we have been able, to our great benefit to
welcome into our nation many tens of thousands of people from the
nations of the Asia Pacific region and they have added a very rich
and important cultural dimension to the modern Australia and I think
it's very important in the projection of our foreign relations
that we remember that unique intersection that we occupy and I think
we have understood that every well in the events of the past few weeks.
We will work with the Government of Indonesia appointed by the people
of Indonesia and that applies irrespective of the identity of the
people who are members of that Government. So it's really against
a background of what is happening in the Asia Pacific region, not
only in Indonesia but throughout the entire region that you must really
see what my Government has done over the past two and a quarter years.
If there is one very clear message that comes out of that turbulence
and that is that Australia needs a government that will give it economic
security, economic stability and economic safety. We don't want
a government, we don't want a set of policies that will play
fast and loose with Australia's economic stability.
Now what has happened in the Asia Pacific region has really dramatically
strengthened the case for on-going economic reform in Australia. So
far from what is happening in those countries taking the pressure
off us to change and reform, what has happened in those countries
has really increased the tempo and the nature of that pressure. And
that is why we adopted the approach that we did when we came to power
in relation to a number of areas. And I frequently ask the rhetorical
question, where would Australia now be if we had not taken the measures
we did more than two years ago to reduce the budget deficit? Where
would Australia now be if we had brought down two weeks ago a budget
with a deficit of $5 - 10 billion? Where would Australia have been
if we had not undertaken the measures to reduce the very, very large
Federal Government debt that we faced in March of 1996. And all of
the adverse developments in our region have totally vindicated the
economic approach the Government has adopted, sometimes in the face
of fierce criticism and always in the face of political obstruction
from the Senate the measures that the Government has taken over the
past two and a quarter years. Because if we had taken a looser, more
permissive approach to economic management, if we had said: we will
let the budget deficit correct itself in a cyclical fashion, if we
had not undertaken some unpopular spending reductions which affected
different sections of the community, if we had adopted that looser,
more permissive attitude, you really have to scratch your head and
wonder what the rest of the world would now be thinking of the Australian
economy against the background of what has happened in the Asia Pacific
region. Because in the global economy of the late 1990s you can suffer
the penalties of geography, irrespective of the virtue of your own
domestic economic policies. What has happened in our part of the world
has made it all the more necessary that the sort of reform measures
that we have undertaken be undertaken.
What we have done by reducing the budget deficit and what we have
done by tackling the debt problem is to create in many respects in
Australia, which is seen as a safe, reliable, secure economic haven
in a very, very turbulent part of the world.
I don't want to weary you with statistics but let me just give
you one. In 1995, the total federal Government debt of Australia represented
about 20 per cent of our GDP, that is 20 per cent of our annual wealth
generation. On current projections, and factoring in the acquisition
of the remaining two thirds of Telstra by the men and women of Australia,
that figure by the year 2001 will be reduced to a bare 1.5 per cent
of our annual wealth generation, or 1.5 percent of our gross domestic
product. And we often talk as we look forward to the next millennium,
and we look forward to the 21st Century, we often talk about futures
and visions and legacies. I would hope that one of the great legacies
of my Government for the children, particularly of the next millennium,
will be a debt-free millennium and I can't think of a surer economic
foundation for the 21st Century than for the people of Australia to
believe that they can go into that century on the basis of this nation
being a relatively free-of-debt nation.
That's not a mere academic exercise because when you reduce debt
and when you get rid of deficits, you create more favourable circumstances
in a lot of areas. I had the opportunity the other night of attending
one of those great sporting functions that comes the way of a Prime
Minister. I am very proud of the fact that I am the patron of the
greatest rugby league club in the world, that's the St George
Rugby League Club, and I went out there for the testimonial dinner.
I didn't get many arguments when I said that last Tuesday night
saying I went out there for the testimonial dinner for Mark Coyne,
the Captain of St George. And during the course of the evening is
the great opportunity at gatherings like that to get some free advice,
and you always do. And one thing you can be certain of if you go to
a sporting event in Australia that you'll always get plenty of
free advice. It's always free, it's not always friendly,
but it's always free.
And in the course of the evening, quite a number of people spoke to
me about something that really is the direct consequence of what I've
been talking about and that is the sharply lower interest rates that
Australian homebuyers and Australian business are now enjoying. Now
I know that there are a lot of you in the audience today who would
say that they're still not low enough and I know that none of
you would want me to ever say to any banker I run into that interest
rates in Australia are low enough. But I think it is indisputable
that over the last couple of years we have seen the most significant
falls in the interest rate structure of this country that I can certainly
remember. And they're worth, when you are talking about buying
the average home, certainly in Sydney, and on a national average they
are worth a gain of about $300 a month for somebody paying off a home.
And what is good is that the competition in the banking industry,
the greater competition, has now resulted in those reductions flowing
through into the small business area and they have been particularly
sticky and particularly resistant to reductions over recent years.
Now that would not have happened if it hadn't been for our Budgets
in 1996, 1997 and 1998. Because when you reduce government debt, you
get the governments out of competition for monies in the financial
markets and you create the circumstances, or you help create the circumstances,
for lower interest rates all around. So again and again you have to
see what we have done against the background of making this a more
secure, stable and safe economy.
You must see reform to the Australian waterfront, which we are absolutely
determined to see through to the end because we believe it is in the
national interest. We are not on some kind of ideological binge in
trying to reform the Australian waterfront. We have no desire to destroy
unionism. We have no desire to destroy individual unions. It's
a cornerstone of our approach that every Australian should have the
right to join or not to join a trade union. It should be a matter
of personal, individual choice. And our goal on the waterfront has
not been to destroy the Maritime Union of Australia. Our goal on the
waterfront has been to give to the Australian nation, to the economy
of Australia, the sort of efficient, economic waterfront that exists
amongst our competitor nations. And many of you have heard over recent
weeks and months the comparisons about the performance of the Australian
waterfront and waterfronts around the world.
And that has been our goal, and the reason why we are committed to
it is that it's part of the exercise of making Australia a more
stable, secure and safe economy.
And it's made all the more necessary, not less necessary, by
what has been happening and the turbulence that's been occurring
in the Asia Pacific region. And it's really against that background
that we come to what I have described in the past as the greatest
piece of unfinished economic business in Australia and that is taxation
reform. I've now been in Federal Parliament for 24 years and
over that period of time I have seen major reform in many areas affecting
the Australian economy. I've seen the opening up of the Australian
economy through a very extensive dismantling of tariff barriers. I
have seen the dramatic transformation to greater openness of the Australian
financial system. I have seen tremendous changes in many other areas.
I have seen the extensive privatisation programme embraced on occasions
by both sides of politics but pursued very persistently by the Coalition
since the mid 1980s. I've seen, particularly under my Government,
and I am very proud of the achievements in this area, a change in
our approach to industrial relations, an overturning of the rather
cloistered, inward looking industrial relations system that we inherited
in 1996 to a more open system. And reforming the waterfront is an
individual projection of that industrial relations reform.
But there does remain one very big piece of unfinished economic business
and that is to reform Australia's taxation system. And this shouldn't
be seen as some kind of economic revolution. It shouldn't be
seen as something that involves turning conventional economic practice
on its head. What it should be seen as is the next logical, inevitable,
absolutely necessary step in the process of making Australia a more
secure, stable and reliable economy.
We can no longer afford an old fashioned inefficient taxation system.
And what is happening around us drives that point home all the more.
I mean it's going to be a harder world in which to compete so
therefore you should arm yourself with a modern, competitive taxation
system. It's got nothing to do with ideology. It's got an
enormous amount to do with competitive survival and it's also
got a great deal to do with fairness.
I've always believed that you can sell major reform to the Australian
people if you satisfy two criteria. First of all, you have to persuade
them that it's in Australia's interests because Australians,
despite their reluctance sometimes to be too overt about it, are deep
nationalists and deeply concerned about the welfare and the future
of their country. And if you can persuade them that it's a good
thing for Australia that we have a new taxation system, that's
half the battle. The other half of the battle is to persuade them
that the change is going to be fair to all Australians.
If I could deal with the first part of those criteria and that is
the national interest criteria and the case on national interest grounds
for a new modern taxation system is overwhelming. There's hardly
a credible commentator on taxation left who would argue seriously
against the need for reform. The wholesale tax system of Australia,
which is the principle vehicle through which indirect taxation is
raised in Australia, the wholesale tax system is outdated, outmoded,
and in every sense of the world, unfair and old fashioned. It is a
system which severely penalises Australian exporters. It is a system
which is lopsided in its treatment of different industry sectors.
It is a system of indirect taxation that has parallels in only a handful
of countries around the world and we wouldn't normally like to
compare ourselves economically with those nations. It was a system
that was introduced at a time when services bulked very small in the
Australian economy, and it was introduced at a time when the dynamics
of a global economy in which we now live were literally light years
away. And on every score it has to go and it has to be replaced, and
many other indirect taxes along with it, by new and a better, and
a different system.
If we really want to do well as exporters in the Asia-Pacific region
if we really want to nail down the gains that we have made over the
last few years, if we really want to permanently waterproof ourselves
against the turbulence of that region, we have to undertake taxation
reform. We've got to give ourselves a system that gives a competitive
edge with that part of the world. We can't, to use the example
that I frequently used, have a taxation system that is so lopsided
and indiscriminate, it taxes the family car at 22%, but taxes a Lear
jet at zero. Or taxes orange juice concentrate at 20% and taxes caviar
at zero.
And one could spend the whole afternoon giving examples of that sort
of lopsided treatment and of the disparate way in which different
industry sectors are treated. So the case for that reform on national
interest grounds is overwhelming and there comes a time in the political
and economic life of any country, and in the political life of individuals
on the political stage, where you really have to ask yourself, what
is the point of being in public life on either side of politics unless
you are prepared to embrace some kind of national interest concern.
I mean we have debated this taxation issue for years and years in
this country. I can remember it being debated when I was the Treasurer
in the Fraser Government. I can remember that when Mr Keating was
the Treasurer in the Labor Government he advocated reform and as the
Opposition spokesman on economic matters then, I supported him. And
I think Mr Beazley and Mr Evans also supported him very strongly.
I can remember it came back again in 1993 when John Hewson led the
Coalition. And it is now back on the agenda and back on the table.
In many respects, this is our last, best opportunity for half generation
to do something sensible about our taxation system and if we lose
that opportunity I think we're selling ourselves short. If we
lose the opportunity I think we're doing a lot of damage to Australia's
economic future and we aren't providing that big extra element
that is going to deliver the stability and the security and the safety
that we all know is necessary and we have all been reminded is necessary
as a result of the turbulence which has occurred in our part of the
world.
It is often said, fairly or unfairly I never quite know, that Australia
is the lucky country. And we are lucky that we have been able to survive
some of the worst effects of what's occurred in our region. But
it's also said that you've got to make your own luck and
the fact that we have been able to survive some of that impact is
a direct result of many of the measures the Government has taken.
But we can't rest on what we so far achieved. We've got
to embrace the next necessary element of reform. And the next necessary
element of economic reform is, of course, reforming Australia's
taxation system and that is why we remain very, very strongly committed
to it. And there are a host of reasons, of course, you are all aware
of, other reasons why we need a new and better taxation system.
It is quite ludicrous that 30 to 40 years ago you didn't pay
the top marginal rate of tax unless you earned something like 16 to
17 times average weekly earnings. There aren't all that many
people in Australia in that situation and there weren't then.
Now you pay the top marginal rate if you hit one-and-three-quarter
times average weekly earnings. And in the early years of the next
century, if we don't make any change, that is going to be an
even lower proportion.
Now that is a plainly ludicrous personal taxation system. And it does
need change. I don't pretend that you can wave a magic wand and
get rid of all the problems of the taxation system by reform. But
I do believe that if you identify a national economic need to change
something and you make a compelling case, than I believe that it will
be embraced by the Australian community.
And it can be done in a way that is fair to low income earners. And
I want to repeat an undertaking I gave a couple of weeks ago, and
that is that there is no way that we are going to change the taxation
system to hurt the poor in Australia. I do believe that Governments
and the rest of the community have social obligations to those in
the community who are less fortunate than the rest of us. Those social
obligations have to be delivered in a targeted way, they have to be
delivered in a sympathetic way and they have to be delivered in a
efficient way, but they must, nonetheless, be delivered. And part
of that process is to have a taxation system and a taxation reform
that takes proper care of the less well-off in the community. And
it can be done. The idea that there's something immutably fair
about the present system which can't be delivered in some other
system is absolutely illogical. Of course you can have fairness in
any system if you build in safeguards and you build in protection
for the less well off and we certainly intend to do that.
So ladies and gentlemen, as you may have gathered, I remain rather
committed to the cause of taxation reform. Not once again because
it's some kind of ideological beacon not because I want to win
some kind of ideological argument, but because with all the sincerity
and conviction I can muster I believe it is important for the welfare
of my country, particularly against the background of the economic
and political turbulence of our region, that we do everything we possibly
can to make this a more secure, stable and safe society economically
as well as socially. And the only way you can do that is to tackle
obvious problems. Governments are elected to govern, they are elected
to lead, they are elected to deal with problems. And when I became
Prime Minister in March of 1996 I identified a number of problems
with the Australian economy. I identified a big budget problem. I
identified the need for changing our industrial relations system.
I identified the need for the Government to get out of those business
undertakings that are not properly the business of Government. And
I also identified the need to have a more balanced approach to environment
concerns and development. And I also identified the need in our foreign
relations to bring about more balance in relation to the various regional
interests that we had.
And one by one we have tackled those problems and they've been
tackled against the backdrop of what was then unexpected turbulence
in our part of the region - in our part of the world. And what that
unexpected turbulence has done is to reinforce the need, the urgency,
the necessity to undertake fundamental reform to make us a stronger,
safer community. And that's why we did what we did in relation
to the Budget. That's why we had to take some decisions that
some people, including some in the business community, I guess some
people in this gathering didn't like in the 1996 Budget. And
we have offended, in the process, different sections of Australian
society but those decisions were taken out of concern for the mainstream
Australian national interest. And that's why we fixed the Budget.
That's why we are trying to reform the waterfront. And lastly
and most importantly, it is why we are so committed to the cause of
changing the Australian taxation system.
Can I finally say to you, ladies and gentlemen, that I have greatly
appreciated, and my Government has greatly appreciated, the links
that it has developed with the business community of Australia. I
came into office with a very strong personal commitment to the cause
of small business. I've had that commitment all of my life. I
guess it's something to do with the fact that I grew up ve