E&OE...................................................................................................
Thank you very much Tony. To the Lord Mayor of Perth and to my ministerial
colleagues in the Government of Western Australia, ladies and gentlemen.
It is true that I am the first Prime Minister to go to Kalgoorlie
for 18 years and I am here alive and well to report to you that the
locals were very friendly and very pleased to see me and they had
one or two things to say about the mining industry and those views
were expressed in characteristically clearly understood, monosyllabic,
you know, direct terms.
But, ladies and gentlemen, thank you very much for the opportunity
of talking to such a cross-section of the business community of Perth
and Western Australia. I, of course, have had a long association with
Perth and this Chamber and its various antecedents over the years
in the different positions I have held in both Government and opposition.
And it really couldn't be a more appropriate time as we have
begun the countdown to the final vote on the goods and service tax,
it couldn't be a more appropriate time for me to address this
gathering and to say a few words about the Government's attitude
to the ongoing challenge of economic reform.
Can I reassure your acting President and all of you that the Government
remains very committed indeed to an ongoing economic reform agenda.
We are not committed to an ongoing economic reform agenda out of some
ideological commitment towards change for changes sake. I don't
believe in change for changes sake. I have often described myself
as a discerning radical or a selective conservative. That is I believe
in changing things that need change and I believe in preserving things
that continue to work. And I think the idea that you have got to change
everything just because it's been around for a while unless there's
a valid reason for doing so is a very foolish approach. But equally
when something doesn't work and when something is in need of
overhaul and change you have got to have the foresight and the courage
to pursue that change.
And that is certainly the case with Australia's taxation system.
As some of you will know, I have been campaigning for reforming the
Australian taxation system for probably 20 years. I have believed
as I am sure most people in this room have believed for a very long
time that the single biggest change that is needed to the Australia
taxation system is to replace the ramshackle indirect tax system that
we have at the present time which is replete with numerous inefficiencies
and inequities with a simple, across the board, broad-based indirect
tax, a goods and services tax.
We hear a lot about this or that model. Senator Lees of the Australian
Democrats today said that we should adopt the Irish model. Now, I
love the Irish, I really do. Having seen Paddy Hannan's handy
work in Kalgoorlie today I could hardly not. But for heaven's
sake why can't we for once have an Australian model? Why can't
we have a model that is suitable for Australia as we come towards
the end of this century and this millennium and we are on the verge
of the 21st century? And the tax plan that we took to the
last election was designed to underwrite the continued economic growth
of our nation into the next century. Not only does it sweep away the
ramshackle indirect tax system we have at the present time and replace
it with an exporter friendly broad-based indirect tax which is of
enormous benefit to all Australian exporters and to all Australian
businesses, but it also brings in unprecedented reductions in personal
income tax. In all the debate about whether you should have or not
have food included many people have forgotten the fact that under
our plan 80 per cent of Australians will be on a top marginal rate
of no more than 30 cents in the dollar. And that will inject an enormous
amount of incentive into the work effort of many low and middle income
earners in our community. And of equal importance is the absolutely
spectacular revolution in Commonwealth/State financial relations that
our plan represents.
Now, all of you are familiar with the charade and the nonsense that
often attends Premiers conferences in this State. One by one the Premiers
come, they stop at the doors of Parliament House in Canberra, they
give a doorstop saying that they have been short-changed by the Commonwealth,
we have a meeting and they come out and they say nothing has changed,
the Commonwealth is still short-changing us. But we had a meeting
last Friday week, Max Evans was there, it's the best Premiers'
Conference I have ever been to. I have only ever been to them, of
course, as either a Federal Treasurer or as the Prime Minister but
the ones that I have been to over the years none of them have been
as good as the one last Friday week. And the reason the one last Friday
week was so good was that all of us recognise that we are actually
participating in making a bit of economic and financial history in
this country.
We were signing a document that committed the governments of the six
States and the two territories of Australia and the Commonwealth Government
to a new financial deal that would secure the taxation base of the
Australian States into the next century. Year after year Premiers
quite properly, Charles Court did it, Richard Court has done it, Jeff
Kennett has done it, other Premiers have done it over the years, have
said what the States want is access to a growth tax so that they can
support and have underwritten their responsibilities in areas such
as government schools and police and roads and hospitals.
And under our plan, all of the revenue from the goods and services
tax, every last dollar of that revenue will go to the Australian States.
And can I say to those, and I know there are many here tonight who
are quite properly and very proudly concerned about the activities
of the welfare sector in Australia and many here tonight are directly
involved in helping the less fortunate in our community, that the
best way that you can help the provision of welfare in this country
is to underwrite the taxation base of the Australian States. Because
unless you have a situation where the Australian States have access
to a growth tax they are not going to be able to fund all of those
basic day to day services that are needed and are provided in our
system of government overwhelmingly by the State governments rather
than the Commonwealth Government.
And under our plan, by the year 2005 the Australian States collectively
will receive $2.9 billion a year more than they would under the current
arrangements. And that amount over time will grow. And I would say
to every Labor and Democrat Senator from Western Australia that if
you vote against our plan you are voting against the Federal Government
giving the Western Australian Government more money in the years ahead
so that that money can be spent on schools and roads and police and
health services.
So this is not just a debate about indirect taxation reform, it's
not just a debate about cutting personal income tax, it is also a
debate about reforming the economic and financial structure of the
federation. And it has needed that reform for a very long period of
time. We took an enormous risk politically in going to the last election
with a goods and services tax in our campaign satchel. There were
many people who said to me, you are mad, there at some stages during
the campaign and I thought they were probably right. But in the end
we were able to win the election and no government in my recollection
has gone to the people with such a detailed plan in such a fundamental
area and been elected. I can't recall a previous government going
with such a detailed plan.
And I would say to those in the Senate who are now debating this legislation
and are now pontificating about what is right or what is wrong to
the Australian people. I just remind them that we had a vote about
that last October. If I had gone to the last election and said I am
going to reform the taxation system and said nothing more then they
might have an argument. If I'd have gone to the last election
as I did to the previous election ruling out a goods and services
tax they might have an argument. But we went to the last election
and put all our cards on the table, we explained it in minute detail.
We had the taxation scales, we have it all fully costed, we have it
all verified by the Treasury, they couldn't blow any holes in
the sums or any of the calculations. We couldn't have been more
open and candid and forthright. And in those circumstances if the
word mandate means anything in Australian politics we have a mandate
with a capital M' to see that legislation pass through
the Australian Senate.
And that is the view, might I tell you, of the Premiers even the Labor
Premiers of Australia. At the meeting last Friday week Peter Beattie
said to me, you have a mandate Prime Minister to introduce the goods
and services tax. It may not be the policy of my party, he said, but
you have a mandate to introduce it. And he was perfectly happy as
Labor Premier of Queensland to sign up. Bob Carr was more than happy
to sign up. I am quite sure he regards it as a very good deal. He
goes through the motions of saying, oh, of course you understand I
understand I don't agree with this but sighs "marvellous".
But of course he would do that. And why wouldn't he? Because
like every other Premier the States are going to benefit from this.
I can't think of any other way to break the sort of a log jam
of Commonwealth/State financial relations, and in the long run if
you secure the revenue base of the States you are going to provide
it.
So can I say to all of you that the Government remains very strongly
committed to the cause of economic reform. We don't believe in
reform for its own sake. We believe in it where it's necessary
and in the globalised economy in which we now all live we have no
alternative but to reform and to keep going forward. It's not
a question of how well you're doing with how you were doing 30
years ago or five years ago, it's a question of how well you
were doing with your competitors in the international environment.
And I'm very proud of the fact that over the last two or three
years this country has been able to stare down the worst of the Asian
economic downturn.
And one of the reasons that we are listened to with greater respect
in the Asia-Pacific region now is that we are stronger economically
than what we were a few years ago. It's funny like that. You
find it in your own business experiences, you find it at a government
level. You go to international forums with a strong economy and one
that's performing better than most you are listened to a lot
more than if your economy is just part of the also-rans. When I because
Prime Minister I had the sense that Australia was the anxious outsider
seeking admission to the rich club of the Asian-Pacific region. All
of that has changed over the last two or three years partly because
of the unfortunate of many of our friends in the Asia region but also
because Australia has done better than many people expected. We have
got our budget in order. We have a very strong fiscal position. We
may have a current account deficit now but is a little higher than
it was a year or two ago. But it's not of the same concern as
it would have been at that same level if our budget was still in deficit,
our inflation was high and our interest rates were high. We can service
that current account deficit. We can service it very comfortably because
the ratio of our export income to our GDP which is the determinant
of how you can service a current account deficit is much better now
than it's been for something like 10 or 15 years.
Now, all of these things speak of a strong economy. They speak of
an economy that has helped Australia ride out the Asian economic downturn.
But I don't come here proclaiming complacency or smugness. I
recognise as I said in Kalgoorlie earlier today that there are a lot
of challenges for the mining industry. Not only in Western Australia
but throughout Australia. And I want to make it very plain that none
of the policies of my Government are directed towards picking favourites
amongst the industry sectors of Australia. I know the importance of
service industries, and information technology industries, and high
tech industries to Australia's futures. But I also recognise
the ongoing contribution of the mining sector, the farm sector and
manufacturing. And any suggestion that our Government in some way
seeks to align itself with this or that sector of industry has been
the industry or the sector for the future is completely wrong. We
will always need a very strong mining industry in Australia, we'll
always need a strong manufacturing industry, and we'll always
need to have policies that first and foremost promote the maximum
level of economic growth.
Part of the taxation plan of course is to reform business taxation.
You are aware of the work of the Ralph Committee and you are aware
of the debate that is going on in general terms at the moment within
the business community about what is roughly called a trade off between
the removal of some of the existing tax concessions in return for
a 30% company tax rate. Now we have not made any decision on that
and I know that there are a variety of views within the Australian
business community. There's probably a variety of views in this
room tonight. I certainly got a very strong view on that subject when
I went to Kalgoorlie, but I equally got a very strong view from other
sections of industry in the opposition direction as I've travelled
around other parts of Australia. And we're going to listen to
all of those views and we're going to assimilate it all before
we reach a decision.
But we are committed, ladies and gentlemen, to an ongoing reformist
approach to the management of the Australia economy. I'm very
proud of what we've achieved. I'm very proud of the fact
that we stuck to our guns in reforming the Australian industrial relations
system. There is more work to do in that area. As I look around the
room tonight I can see a few veterans of the debate about reforming
Australia's industrial relations system through the 1980s. And
one of the constituent elements of the Chamber from the 1980s was
amongst the strongest proponents of industrial relations reform. And
people like Brendan McCarthy and Lyndon Rowe, and Ross McLean, and
others fought very hard against those within sections of industry
in other parts of Australia who wanted to cling to the old failing
industrial relations system that was built on the corporatist approach
of letting everything be run by the Industrial Relations Commission.
Now, we have brought in a new era in industrial relations. We are
seeing an historic change in community attitudes. We've achieved
it with a minimum of industrial disputation. In fact the number of
days lost through strikes last year was the lowest for 83 years. Despite
the fierce opposition of many sections of the media and other sections
of the community we did achieve lasting change in relation to the
waterfront. It's almost a year now since the waterfront dispute.
And although it took a number of turns that people didn't expect,
the bottom line is that the Australian waterfront will never be the
same again. And there are sections of the Australian waterfront that
are now enjoying much higher productivity. And the action taken by
the Patricks company and the support given to the reform process by
the Federal Government has resulted in fundamental change on the Australian
waterfront.
There is still work to be done, there are still further reforms to
be achieved. But it's an area where through a very, very difficult
time we have begun to see the benefits and the fruits of the Government
having taken a very firm line in relation to industrial reform on
the Australian waterfront. The reform process, when you are managing
a modern economy, is never finished. We are living in a very, very
fascinating time economically. The American economy is performing
better than it's performed probably at any time since the end
of World War II. The American economy has out performed the expectations
of many of the best observers of economic performance in that country
for many years. It may well be that the American economy and other
economies have reached a new and higher threshold of performance and
efficiency. I can well remember a conversation I had with the Chairman
of the American Federal Reserve, Alan Greenspan in Washington almost
two years ago. And I said to him: how is it that the American economy's
going so well? Do you believe it's going to continue? And he
said: I've been in this business for a long time. And he said:
I have to say to you that I can't believe the numbers that I'm
seeing. And if you ask my do I know why it's all happening, he
said, I have to say to you I'm not entirely sure, and I've
been an economist all my life. But he said: I think it may have something
to do with the fact that we are getting the full benefit of the enormous
investment that our country has made in technology, and the enormous
investment that our country has made in reform and modernisation.
And it's probably, as a statement, had more impact on me than
just about any other statement that's been made to me on economic
matters in the time that I've been Prime Minister. And it drove
home to me the fact that we may in fact be entering an era where the
efficiencies of economies and the efficiencies of economic performance
are delivering new possibilities and new openings.
Ladies and gentlemen, thank you very much to the members of this Chamber
for the support you have all given to the cause of economic reform
and many of the economic debates over recent years. The Australian
economy is strong. The Australian economy is doing better than most.
The Australian economy will remain strong. The Government will remain
absolutely committed to economic reform. We will remain absolutely
committed to taxation reform, absolutely committed to further industrial
relations reform. Having got the budget back into surplus we have
no intention of squandering that surplus on a new splurge of unnecessary
Federal government spending. You have lower interest rates now because
the budget is in surplus. If we hadn't wiped out that $10.5 billion
deficit interest rates in Australia would not be as low as they are
now and the benefits of those low interest rates would not be flowing
through, not only to small business people, but also to homebuyers.
Ladies and gentlemen, it's great to be back here in Perth. It's
a different city, it's a city with a great entrepreneurial spirit.
I've always enjoyed visiting it. You always get good value coming
to Perth in terms of getting a direct and frank reading on what's
happening, not only here in Western Australia but also around the
country. I'm occasionally reminded when I come to Western Australia
the contribution that your economy makes to the national economy.
Those export figures are permanently emblazoned in my political consciousness.
And why shouldn't you boast a bit about it because this State
does make an enormous contribution to the export earnings in particular
of our nation.
But it's great to be amongst you. We've got a lot of things
to do. We've achieved a lot over the last three years but we've
only really begun. And if we can maintain the reform process, we can
get that GST through, get that new taxation system operating, then
the opportunities for this country into the next century truly are
quite amazing and potentially quite unlimited. Thank you.
[ends]