E&OE....................
Thank you very much, Richard; to Shane Stone, the Federal President
of the Liberal Party, Ian Warner, Collin Barnett, my other Ministerial
and Parliamentary colleagues, ladies and gentlemen.
It is a great delight to be back again in Perth. Richard reminds me
of the visit I paid to Exmouth earlier this year. Yesterday when I
was flying back from the mine opening I had Barry Haase, the Liberal
member elected in the October election last year as the member representing
Kalgoorlie, the largest electorate of the world, and he pointed out
to me that in the nine months that he'd been the member for Kalgoorlie
in the National Parliament he'd found that as each month went by he
got increasingly quizzical looks from his Federal Parliamentary colleagues,
particularly those who represented safe Liberal electorates in Sydney
and Melbourne. And he said, 'I found out the other day the reason
why,' and he said, 'the reason, Prime Minister is that in the nine
months that I've been the member for Kalgoorlie you have visited my
electorate on three occasions.' And, in fact, I have. I went to Exmouth.
I went to the mine opening yesterday. And I'm told I was the first
Prime Minister for 19 years to visit Kalgoorlie only a couple of months
ago.
I mention that because one of the things I've endeavoured to do as
Prime Minister is to disabuse the Australian population of the idea,
however it might linger in the hearts and minds of some Australians,
that the centre of the world is that triangle of Canberra, Sydney
and Melbourne. And although I was born at one of the points of that
triangle I've tried very hard in the years that I've been Prime Minister
and the other jobs I've held to maintain very regular contact with
all parts of the country. And today, therefore, is not in any sense
a novel experience to address a business gathering in Perth. I've
done so on a number of occasions in a number of capacities over the
last 25 years. I'd have to say to you, though, that I can't remember
a time when I've addressed a business gathering here in Perth when
I could speak more unqualifiedly, If I can put it that way, about
the generic overall strength of the Australian economy.
As you know, a couple of weeks ago I visited Japan and the United
States. I didn't get very far on lamb and I was talking to John Rothwell
a moment ago and I told him I didn't get very far on the Jones Act.
The Jones Act is that little piece of perfidious American legislation
that says that unless it's an American based company and the keel
is laid in the United States you can't sell a ship into that country
to fly American waters or the American coast. But one thing I did
come away from America with and particularly from New York was without
doubt the most positive view that I have encountered in the financial
capital of the world about the general outlook for the Australian
economy.
I've been there 20 years ago as Treasurer. I've been there two years
ago as Prime Minister. I've been there on other occasions in other
capacities. But on this occasion I was able to tell a story and be
believed and hear good reports about the Australian economy in a way
that I hadn't experienced in the past. And one of the interesting
things about a political leader from Australia visiting the United
States is that there is often a sharp difference in the perception
of our country in financial centres like New York than there is in
Washington. Because sadly it remains the case that many of the senior
political figures in the United States have never visited Australia.
When I was in Washington I saw the Senate Majority Leader who's the
leader of the Republican Party. I saw the Speaker of the House of
Representatives who's also the senior ranking republican in the House
of Representatives. And I spoke to the man who I think could possibly
be the next President of the United States, the son of the former
President, George Bush Jnr, and none of those three gentlemen have
ever visited Australia. Yet when you go to New York and you talk to
the leaders of the financial community so many of them who have banking
and other interests in Australia, they have an intimate knowledge
of our country and they have an understanding of its great strengths.
And one of the many things I was able to tell them was that not only
did Australia get an enormous economic benefit from being able to
stare down the worst of the Asian economic downturn. But more importantly
than that the psychological gain to our country from knowing that
we were strong enough and good enough to work our way through the
worst downturn our part of the world has had since World War II has
given to the Australian community, not only to the business community
but to the Australian community generally, a belief in its own capacity
to do things that I don't think we've had at any time since I've been
in public life. And it's that belief in ourselves.
In the past we've talked confidently, we've felt confident domestically,
but in the minds of some there's always been a bit of a doubt as to
whether when the crunch really comes this country is efficient enough
and competitive enough and good enough to survive and beat the rest
of the world in enough areas to do well economically. And I think
any lingering doubts that any men and women in Australia may have
had about that have been removed in a very significant way by what's
happened over the last year. Because over the last year we have done
something that a lot of people in this room, I certainly would be
one of them, didn't think was feasible and achievable a year ago.
And that is to emerge from the Asian economic downturn stronger and
better than ever. I think the view of many, say in July or August
of last year, would have been, well, gee we've done well. We've eliminated
that budget deficit. We've got fairly strong growth. We've reformed
our industrial relations system. We've done a number of very good
things. We've got our interest rates down. We've got a good investment
climate. But sooner or later and probably sooner, that is by the end
of 1998, the Asian economic downturn will catch up with us and everything
will slow down and the economy will go into some kind of relatively
comatose state. Now, that didn't happen. And I think the realisation
that it didn't happen came to most Australians around Christmas and
in the early months of this year. And we began to see emerging a picture
of where because of a number of reforms that have been undertaken
in the Australian economy and because of very skilful management of
our exchange rate by the Reserve Bank we have been able to work our
way through the Asian economic downturn. And the secret of that, ladies
and gentlemen, was that the Australian economy has now become a lot
more flexible and competitive and resilient than what it was in the
past.
Although we've had our problems with the Americans on lamb - and I
make no apologies at all for the continued criticism we offer the
Clinton Administration regarding that - one of the interesting statistics,
and I try not to burden luncheons with too many statistics, about
the last year or so is that in 1998 we increased our exports to the
United States by 34 per cent. And that is an illustration of the way
in which, as Asia collapsed, we were able to shift the export destinations
of a lot of our products. And we were able to do that because we had
a flexible exchange rate. We were able to do that because we had created
circumstances of competition and flexibility in our community, particularly
our business community, that we hadn't had in the past. And when you
add together all of the reforms that have been undertaken, the fact
that we were able to get rid of that budget deficit of $10.5 billion.
We were able to reform our industrial relations system far more effectively
than many people believed so or gave us credit for at the time, particularly
in 1996. We were able to see the lowest inflation rate in 30 years,
the lowest interest rates in 30 years. All of those things combined.
So I am able to talk without fear of contradiction on the facts about
a very strong and optimistic business climate and economic outlook.
But in doing that I am very conscious that it is not uniformly a good
story. It is nationally a good story. The generic strength of the
Australian economy is greater and deeper now than I think it has been
for any time in the last 30 years.
And I do know, for example, that the mining industry, which is very
important to Western Australia, is suffering very badly from low commodity
prices. I'm particularly conscious, not only but including as a result
of my visit to Kalgoorlie, of the difficulties faced by the mining
industry. And I know how much the economy of this State depends upon
the strength and the resilience of the resource sector. I'm very aware
of the difficulty in many of the rural and regional areas of Australia.
I know that rural property continues to be a potential breeding ground
for radical and irresponsible political philosophies. We saw that
last year. We have seen a temporary abatement of the One Nation phenomenon
but we must keep the possibility of that in mind in all of our policy-making
decisions.
But overall, I'm able to paint an optimistic picture. I'm able to
report on the successful passage of the essentials of the tax reform
legislation. Now, I don't disguise my disappointment that we weren't
able to get 100 per cent of what we put up. Of course it would have
been better if the original package with the GST applying uniformly
to everything had been passed. But we lost our opportunity of doing
that when Senator Harradine said that he wouldn't support our legislation.
And we either faced the prospect of an unproductive election exercise
with no guarantee that even if we won the election we would have the
numbers at a joint sitting to pass the blocked legislation or we settled
for a compromise. The compromise like all compromises was not perfect
but to have delivered 85 per cent of what we wanted. It delivered
intact the taxation cuts to middle Australia that will mean 80 per
cent of Australian taxpayers will have a marginal rate of not higher
than 30 per cent after the 1st of July next year. With
some changes it has delivered the long-term reforms for Commonwealth/State
financial relations. It removes, and you saw the beginnings of it
yesterday, it will remove the wholesale sales tax and it will introduce
with more exemptions than we wanted, but nonetheless it is a huge
reform, it will see the introduction of a broad based goods and services
tax on the 1st of July next year. It will provide, I believe,
the biggest overhaul to Australia's taxation system that we have seen
since World War II.
So that, of course, is the first installment although by far the biggest
installment of taxation reform. The next chapter of taxation reform
is yet to receive in the course of the next week the final report
of John Ralph's Committee. I know he was here in Perth recently and
spoke to a number of you. I want to publicly record my gratitude to
him for the tremendous job that he's done. He's brought to that review
private sector sensitivities and an understanding of what is needed
in business tax.
He had a long experience in the mining industry. He is a respected
company director of a wide range of activities in his post Rio Tinto
days. And he has an understanding of the challenges of the political
process. And along with Bob Joss, the recently retired Chief Executive
of Westpac, and Rick Allert of the Southport Corporation, they represent
a very significant trio who have brought a great deal of business
understanding.
Now, I think all of us agree that there are a couple of goals we have
in common for business tax reform. We want change that will make Australia
more competitive. In a globalised world economy the name of the game
on all occasions is to make this country as competitive as possible.
And when it comes to attracting investment it means that as far as
possible the decision as to whether an American investor, because
that is still a major source of capital for this country, whether
the choice for an American investor between investing in the United
States and investing in Australia is as neutral as possible.
You are all aware that one of the issues that will need to be addressed
is the question of whether we opt for some lower general company tax
rate paid for in part by the removal of existing taxation concessions
that are of particular benefit to some companies but of less benefit
to others.
Now, I am aware of the arguments. I've had them put to me very strongly
and I will in the weeks ahead. And I can't at this stage predict what
our final decision on that will be. I do make some fairly obvious
points that people should wait until the report is in and the full
ramifications and the full detail of any recommendations made in that
area are in the possession of the Government and in the possession
of the community. But I can assure you that we aren't likely going
to embrace changes in that area that are going to cause unfair dislocation.
Equally, I want to see us have as attractive a general company tax
rate as possible because it goes to the increasing competitiveness
of the Australian economy.
And in this global world in which we all now live it's not any good
in two years time my saying that gee back in 1999 we were able to
boast that we stared down the Asian economic downturn if in two years
time some of the competitiveness we have now we have lost or that
our competitors have come from behind and moved ahead of us. Surviving
and doing well in today's economy is like a race that never finishes
and you have to always keep in front of the bloke who's there beside
you. And it's no good looking at it historically. It's no good saying,
look, we are doing better now than we were doing 10 or 20 years ago,
it's a question of how we are competing against the rest of the world
now. And we have no option but to accept that we are part of a global
economy and that, of course, has implications not only for the general
level of company tax it also has implications for capital gains tax.
I think there's a general feeling in the Australian community that
some changes to our existing capital gains tax regime are desirable.
I have had a lot of submissions, I have got a lot of advice and there'll
be a lot of detail in the report that Ralph delivers. But I think
at this stage all I can usefully say is that it wouldn't be a particularly
bold or reckless prediction to say that the capital gains tax is unlikely
to remain in precisely the form that it is at present. I think it's
fair to say that changes that make it more attractive for people to
invest in higher risk ventures, changes that will underpin the capacity
of this country to convert its inventive capacity to commercial advantage
are the sort of changes that the Government will be looking at.
Australia has a long and meritorious reputation for inventive discoveries.
For a nation of only just under 19 million people we have been very
inventive indeed. We have given to the world some remarkable ideas.
In a sense we have thought and punched above our weight in the world
so far as inventions are concerned. Sometimes we have been very bad
at turning those inventions to commercial advantage. And one of the
reasons could easily be, along with others, the inadequacies of our
existing taxation system.
Now, there are many other issues that arise out of business taxation.
Our goal is to retain the competitive edge we now have. If we retain
our competitive edge as a nation, if we run a low inflation, low interest
rate, flexible economy. Part of that is to make sure that our taxation
settings are right. Part of it is also to press ahead with further
reforms to the industrial relations system.
That is another area where the task of reform is never finished. And
two-and-a-half years ago we had people predicting that if a coalition
government were elected federally it would usher in a new era of industrial
disputation. It may not have escaped the notice of many people in
this room but last year, 1998, we had the lowest level of industrial
disputes for 86 years.
We have, in fact, seen in Australia over the last few years - this
has been aided by legislation at a State level as well as at a federal
level - we have presided over a quiet industrial revolution. We have
seen a gradual the accelerating change in attitudes in the workplace.
We have seen a greater concentration on workplace agreements. I am
increasingly told of the way in which in many areas of the mining
industry the negative implications of union membership have disappeared.
Now, that doesn't mean that there is no place for the trade union
movement in the Australian industrial relations scene, of course there
is. And that has never been our objective to remove unionism from
the industrial relations scene. But it has been our objective to elevate
the making of agreements at workplace levels between employers and
employees. And as Australia has increasingly done that so it is that
the productivity of our workforce has risen. But one of the reasons
why I can talk so confidently about the strength of the Australian
economy is that average wage and salary earners over the last few
years have enjoyed very significant increases in their real income.
The rate of wage increases has run well ahead of the rate of inflation.
But that has not created an economic problem because the productivity
of our workforce has risen by a significantly higher rate than was
the case five or 10 years earlier.
And when you add those real wage increases to the fact that the average
wage and salary earner in this country paying off a mortgage on the
family home is paying about $320 a month less - $320 a month less
- on the family mortgage. You have a recipe for a workforce whose
living standards now are significantly ahead of what they have been
for a long time.
But as all of you know the responsibility of a national government
and the responsibility of a prime minister is not just about economic
issues important though they are particularly to the business community.
But there are other challenges of a social character which are very
important and one of the things that I have tried to develop as important
to the Government that I lead is this notion of a social coalition.
The idea that the Government acting alone can't achieve all of the
community's goals, the idea that people left without any kind of support
or activity by the Government can't achieve their objectives. And
from that comes the idea that if we can marshal the collective resources
of the Government, the business community, individuals and the more
forward looking elements of the welfare sector in this country we
can deal more effectively with many of the social problems that we
face. And this is the philosophy that we try to bring to bear in things
like tackling the problem of drugs. And over the last couple of years
the Federal Government has committed itself to additional expenditure
of $500 million to try and reduce the devastating impact of drugs
on the Australian community. It's not an easy problem. I don't pretend
to have all of the answers to it, nobody has. And I don't pretend
that any one prescription is the right answer. And I think we can
find in the debate the threads that bring us to agreement in a number
of areas. We need to educate young people against the menace of drugs.
We need to provide resources to our law enforcement agencies to capture
and jail as many of the criminal peddlers in drugs as we can. And,
very importantly, we need to provide rehabilitation and support to
those who've been addicted and are trying to break the habit. And
amongst the things that I've done here in Perth was something I did
this morning in going to Cyrenian House just on the outskirts to re-name
that magnificent centre the Rick Hammersley Centre in memory of somebody
who made a great contribution to fighting the drug problem. And that's
a magnificent example of the coalition of which I speak. It has great
support from the State government. Rhonda Parker, the Minister responsible
was there. It had great support from the business community. It had
support from the Federal Government. But very importantly I spent
20 minutes or so talking to some of the people who were there, away
from the glare of the media and talking to them and getting their
reaction and how they said that it was a facility that gave them,
for the first time, a sense of security. These are people who decided
to do something to break the habit. And they decided to go there as
a residential facility and I said, what's good about it. And they
said what's good about is that it gives us a sense of support and
safety and security while we grapple with trying to beat this devastating
habit. And those things are important and policy in those areas are
tremendously important to any government, be it a national government
or a State government. And that kind of facility is a great example
of how governments and the business community and the welfare sector
and individuals working together to achieve community goals can realise
great things.
Ladies and gentlemen, I want to thank you very much for the support
you show by coming along to this lunch. I can say on behalf of the
Federal Government that although we have achieved a lot over the last
three-and-a-quarter years that we are in no sense complacent. The
first party meeting I had after the victory in 1996 I warned my colleagues
about any sense of complacency. And over the last three-and-a-quarter
years we've, like any other government, we've had our ups and downs.
But we have kept our objective very clear and that is, at an economic
level, to make this country a world class competitor in a globalised
economy. And whether we like it or not we are a globalised world economy.
We can't change that. We either become a successful part of it or
we become an economic irrelevance. And that is the thing that has
guided us in getting the budget back into surplus a year ahead of
time. That guided us when we reformed the industrial relations system.
It guides us in our plans to privatise organisations like Telstra.
It guides us in our plans to maintain the rigor of competition policy
and it most certainly guides us in our plans to reform the Australian
taxation system. And I would like to be able to come back here in
a few months time after we've negotiated changes to Australia's business
taxation system through the Parliament, and that will be no easy task,
I'd like to come back here in a few months time and be able to report
to this gathering and a similar gathering here in Perth that we have
been able to bring about a major transformation in the Australian
business taxation system. So that once again the test and the yardstick
of competitiveness in the globalised economy can be applied in a very,
very positive manner.
Can I finally thank the Liberal Party organisation here in Western
Australia which is responsible for organising today's lunch, can I
thank you for the support that you've given me over the last year
as Prime Minister and the support that you and your colleagues continue
to give us in our great endeavour to maintain the competitiveness
and the strength of the Australian economy, the like of which I don't
think we've seen for more than three decades. Thank you.
[Ends]