E&OE...............................................................................................................................
Well thank you very much Mr Morgan, to Mr Peter
Sturrock, to my parliamentary colleagues, Ambassadors, High Commissioners,
ladies and gentlemen. I'm delighted to address the Chamber
not for the first time, but certainly for the first time as Prime
Minister. And I do so against the backdrop of what has been a quite
remarkable year for your industry. And I want to offer some congratulations.
I first of all want to congratulate the industry in all its facets
for a particularly successful year. To have reached record levels
of sales of units in 1997 of some 723,000 is no mean achievement,
and warm congratulations are due to all of you, not only to your
companies but also to your employees because those kinds of results,
including the profit results which were alluded to by Mr Morgan
of course cannot be achieved by companies and their executives alone,
but also involve the very considerable efforts of the men and women
who are employed by the various companies that make up the industry.
It's not only been a remarkable year for your
industry because of the number of motor vehicles that have been
sold in Australia and the success of the other parts of the industry,
it's also been a remarkable year because there has been a great
deal of policy activity which is not only directly borne on your
industry in relation to the decisions the Government took last year,
but also more generally the industry policy that the government
has laid down principally through the Investing for Growth
statement that I delivered on behalf of the Government in December
last year.
In this context I want to express my own personal
thanks to John Moore, my Industry Minister, the person who interfaces
most with your industry, and also Tim Fischer the Trade Minister,
who also plays a very important role in relations between your industry
and my government. We saw in 1997 exports grow in your industry
to $2.65 billion. We saw largely, but not only as a consequence
of the decisions taken by the government, we saw major investment
announcements made by a number of the major companies which operate
here in Australia. Those investment announcements, and the jobs
that will flow from those investment announcements, are an important
element of building confidence in Australian manufacturing industry.
And they are also a direct dividend of the decisions that were taken
by my Government and announced in June of last year.
I share Mr Morgan's remarks regarding the
cooperative process that occurred before those decisions were announced.
Making decisions about the long-term environment in which such a
basic industry as motor manufacturing will operate, making those
decisions are very important moments in the economic and industry
life of any government. If the decisions are wrong, if the wrong
settings are put down and the wrong signals given, then the consequences
can be felt for years into the future.
That particular industry decision generated an
enormous amount of debate within the Australian community. There
was no shortage at the time of simplistic solutions that were urged
upon the Government by those who wanted one or other outcome. In
the end we took a decision which I believe reflected both economic
and industrial realism. I said before the decision was taken that
I could not imagine Australia without a motor manufacturing industry
into the foreseeable future. But the idea that we wouldn't
take decisions that would give a sense of basic stability and security
and confidence to the industry was unthinkable. Equally, we did
have APEC obligations and world trade obligations more generally
speaking. And I believe that the decision that was taken in relation
to the tariff pause between the year 2000 and 2005 on the understanding
that there would be a further move down in tariffs in the year 2005
reflected precisely the right balance which it was the responsibility
of the Government to find.
And I believe the other aspects of the decision
which Mr Morgan referred to and the very positive response that
it received from all sectors of the industry is evidence of the
balance that was involved in it. And I believe that we have provided
a stable, predictable and secure investment framework and climate
for the industry. And we look forward in the years ahead to a repetition,
perhaps not in the precise numbers, but certainly in the general
direction, a repetition of the extremely successful year that your
industry has enjoyed in 1997.
We live as all of you know in a very turbulent
part of the world economically. Since you last met a year ago, the
economic situation in the Asian-Pacific region has deteriorated
significantly. A number of countries, Indonesia, Korea and Thailand
in particular, have needed substantial rescue packages from the
International Monetary Fund. And I'm particularly proud that
our own country has been strong enough to be, along with Japan,
the only two countries in the world that have participated in those
three rescue packages.
And our capacity to do that has been a direct result
of our underlying economic strengths and a direct result of the
economic policies we began to put in place when we were elected
in March of 1996. If we had not strengthened our fiscal position,
if we had not reduced our government outlays, if we had not sought
to move from a budget deficit to a budget surplus, if we had not
as a result seen significant reductions in interest rates and inflation,
we would not have been in a position to help, through the IMF, those
three countries.
It is equally fair to say that if we had not seen
major reductions in interest rates over the last couple of years
I do not believe that your industry would have experienced the boom
in sales that it did, particularly in 1997. Because lower interest
rates mean that more people, particularly young people buying into
the cheaper end of the market have a greater capacity to involve
themselves in motor car purchases than would otherwise be the case.
And lower housing repayments and obligations in that area free disposable
income for investment in the purchase of other goods, including
motor vehicles.
The events in the Asia-Pacific region have not
of course left Australia untouched, but it is fair to say that the
impact of those events has been less than many feared when the deterioration
commenced and certainly a lot less than would have been the case
if the corrective measures I've alluded to had not been undertaken
by the Government beginning in March of 1996. We are being affected,
but we are not being hurt and affected to the extent that we would
have been if we had followed a more lax and permissive approach
to economic management.
What we have endeavoured to do over the last two
years, be it in the area of motor vehicle policy, be it in the area
of repairing the budget situation we inherited, be it in the area
of industrial relations reform, all of those moves, all of those
reforms have been directed towards strengthening the Australian
economy. And I'm particularly pleased that we committed ourselves
down that path two years ago because if we had not done so then
we would have been more severely buffeted by the events in Asia
than has turned out to be the case.
And all of our reform measures, be they ones in
the past or be they ones in the future, are directed to one goal
and one goal alone, and that is to strengthen the Australian economy
and to give to the Australian economy a capacity to not only survive
but to prosper in a very competitive world environment. And it's
in that context that I turn very briefly to an area of economic
reform which is crying aloud for attention, and that is the area
of taxation reform.
Now I know that there is great interest in taxation
reform in your industry. If ever there was a sector of the Australian
economy which is penalised and denied the full results of its competitive
effort and achievement, it is in the area of export manufacturing.
And of course your own industry knows how counter-productive, penal
and old-fashioned is the existing indirect taxation system in this
country. And if one were looking in abstract, and one never does,
at the Australian economy, one would have to conclude that there
is something fundamentally myopic about a country maintaining an
indirect tax system which we do at present which directly penalises
people who wish to sell manufactured goods abroad. And that of course
is precisely the situation in relation to your industry. And one
of the strongest possible arguments for taxation reform in the area
of indirect taxation is to replace the existing indirect taxation
system with a taxation system that gives greater incentive and a
fairer go to those who export manufactured goods from this country.
Now there are many arguments in favour of taxation
reform but of all of them in the industry area none is more compelling
and none is more incontestable than the proposition that the existing
wholesale tax system blatantly discriminates against manufacturers
and particularly discriminates against manufacturers who are involved
in export.
We see taxation reform ladies and gentlemen as
the next logical step in the further strengthening of the Australian
economy. We don't see it as a revolution. We don't see
it as a process of turning the Australian economy on its head. Rather
we see it is a sensible further step to strengthen the Australian
economy, to arm it with a more competitive ambience in the outside
world, to give to it the break that more competitive taxation systems
that other countries employ give to the export industries of those
nations. Now, people will say it is hard, people will say it is
risky, but at the end of the day it is the responsibility of the
Government that is interested in the medium and the longer term
to design and structure policies which will strengthen Australia
in the medium to the longer term.
We are at the moment enjoying probably the strongest
economic fundamentals that this country has had for 25 years. You
have to go back that long or further to find interest rates that
are as low as they are now. We have the lowest inflation rate in
the OECD area. We have very strong levels of business investment.
We hope by the turn of the century, even without the sale of the
remaining two-thirds of Telstra to have halved our government debt
to GDP ratio from the level it was in 1995, and if we are successful
in relation to the sale of the remaining two-thirds of Telstra,
we will reduce it to a bare 1.5% of GDP compared with a level of
20% of GDP in 1995.
Now, that represents a very strong economic framework,
but it doesn't represent an economic framework that I feel
in any way complacent about, or one that should encourage us to
rest on our laurels. As you know as business men and women, competing
in the world is always about winning today's race. You can
never derive any satisfaction in saying that my time was a lot faster
than the time of an Australian competitor 20 years ago. You've
got to win today's race to survive, you've got to win
today's race and look forward to winning tomorrow's in
order to make a decent profit.
And so it is with the management of an economy.
Having achieved one reform goal and having been able to say that
the economic foundations of the country are in very good shape,
you must then go on to achieving the next goal. You must ask yourself
what is the next logical step that will strengthen the Australian
economy and enable it to win the next race and to win it very comfortably.
In our view, that next step is the very important one of taxation
reform. When I look back at the last 15 or 20 years of economic
management in Australia and I think of the barriers to competitiveness
that existed 20 years ago, and I think of how one by one those barriers
in different ways have been modified or removed, I think we have
been quite successful and quite mature as a country with our approach
to economic management.
But in the area of taxation reform, we've
had a few goes in the past but haven't been very successful,
and it is a challenge to our maturity, our capacity to look to the
medium to longer term, our willingness to worry about the kind of
21st Century economically that we are going to leave to our children
and grandchildren, it's in that context that we need to look
at those remaining areas of reform that need to be addressed.
So it is against that background ladies and gentlemen
that we are looking of course, and we'll be unveiling to the
Australian public the outline of our plans to reform and re-shape
the Australian taxation system. They are about making Australia
a more competitive nation. They are about improving the opportunities
for Australian manufacturers to export and export successfully,
and they are about looking to the medium and longer term prosperity
and strength of the Australian economy.
I want to take this opportunity again of thanking
the industry for the contribution that it has made to the Australian
economy over many years, and the contribution particularly that
it as made in recent years. I want to congratulate the new members
of the Automotive Trade Council, David Morgan, Sam Komori, Jim Wiemils,
Mike Quinn, John MacKenzie, Bruce Griffiths, Grant Anderson and
Graham Bulmer. The Automotive Trade Council will be charged with
directing the market access and development strategy and the council
will have a four year charter to deliver the markets which will
secure the industry's future. The Council will be aided by
Ian Grigg as my Government's special automotive envoy and he
will spearhead representations to foreign Governments and companies
with a view to winning market access, two way investment and strategic
integration into global supply chains. It has been a very good year
for the industry, it's been a momentus year, a year of very
frank and direct exchange between the Government and the industry,
a year in which long term stability was provided to the industry
by the decisions of the Government. I look forward very enthusiastically
to a continuation of that partnership and the opportunity in the
future to again hear of the great success of the industry and of
the contribution that it continues to make to the Australian economy.
Thank you very much.