E&OE……………………………………………………………………………………….
Well, thank you very much Mr Burt, to Minister, your Excellencies, the Australian High Commissioner, Mr Warner, ladies and gentlemen.
I was very pleased that it was possible to include in my itinerary for this visit to Papua New Guinea an opportunity to address this gathering because it is not only fundamental to the strength and the future of the Australian economy that its management and its goals have the support and the confidence of the business community but it is also fundamental to the future strength and direction to the economy of Papua New Guinea that what is being done in relation to that economy also has the support and the confidence of the business community.
Necessarily focussed as my visit has been on a number of the important bilateral issues between Australia and Papua New Guinea, it’s also a visit that takes place at a time when, as you rightly said in your introduction, the rest of the world is forming judgements about the capacity of Papua New Guinea to grapple with significant economic challenges and problems. And in this sense, Papua New Guinea is no different from any other country. We are all subject to international adjudication these days. Nobody is exempt from the scepticism of a global financial community. No country, however developed or whatever stage of development it may be, can imagine any more than it can seal itself off from the rest of the world, put some kind of barrier around its economic behaviour and then pretend that what the rest of the world says doesn’t matter. We’ve been painfully aware of that on various occasions in Australia. And so it applies with equal force and particular force at the present time to Papua New Guinea.
You are all aware of the long friendship and the very deep and close association between Australia and Papua New Guinea. And I don’t need to remind an audience such as this of just how intricate and detailed are the linkages and the associations and how personal and deeply felt is the sentiment between so many Australians and so many citizens of this country. And therefore it is an important part of the foreign policy and security policy projection of any Australian government and any Australian Prime Minister that we have good and friendly relations with the government and the people of Papua New Guinea.
And I’ve come here on this occasion as the Prime Minister of a very friendly country, a regional partner, a country that is anxious in an unobtrusive way to assist where it can the process of strengthening and developing the economy of this country. It was in that context that yesterday I signed, with the Prime Minister of Papua New Guinea, I signed the new aid agreement which will maintain at a nominal level of $300 million dollars Australian a year the aid that this country, our country, Australia, continues to provide to Papua New Guinea.
We have over the years of course as a deliberate policy design and I think quite rightly shifted the emphasis away from general budget aid towards project aid. And we in fact this year finished the last year in which money is directed generally to the budget so that we are on a proper basis of providing it for project aid. The new agreement does provide for a certain degree of flexibility, sought by the government of Papua New Guinea, and that flexibility will be available for utilisation if certain criteria under the agreement are met.
But this is an important, continuing earnest of our country’s commitment. Papua New Guinea is the largest recipient of overseas aid from Australia. It has been that for a long time and it is likely to remain so for years into the future. And we see this as a very strong ongoing way of continuing to support the people of this country and to continue to express the friendship that we feel towards them.
But over and above that we have recognised that given some recent events there has been particular pressure on the Papua New Guinean economy and particular pressure in relation to the balance of payments and the exchange rate. And it is for that reason that I announced yesterday that the Reserve Bank of Australia would make available what I rather euphemistically called a financial support facility, because it’s not quite a loan and it’s not quite a currency swap which is worth something in the order of $80 million dollars, United States dollars, and that is available initially on a ninety day rollover basis and that will be a payment that is made from the Reserve Bank of Australia to the Central Bank of Papua New Guinea. In turn there will be an account, a Kina account, established in the equivalent value and the proceeds of that account will be used to retire some of the government debt in Papua New Guinea.
This will provide a significant injection of confidence. It’s meant to demonstrate to the rest of the world that Australia supports the reform programme of the new government in Papua New Guinea. We believe that that reform programme is a courageous programme. We believe it is necessary. It’s not for us to say what other countries should do in relation to the management of their economies but it is within our capacity, particularly with close friends and neighbours, to say that we support what you are doing and we as a friend are here to help you in a very practical way.
The provision of this new facility will be conditional, of course, on initialling the letter of understanding which I believe is, it will certainly happen, the letter of understanding between the International Monetary Fund and the government of Papua New Guinea. We also have in mind, in the fullness of time through next year, when there is further meeting of minds between the government of this country and the World Bank and the International Monetary Fund, we have in mind the negotiation of a government to government longer term loan arrangement which will provide further support.
Now, all of these things, ladies and gentlemen, are designed to send not only a message to the people and the government of Papua New Guinea, but also a message to the international financial institutions and to the rest of the world, and that is that we in Australia will support the government and the people of Papua New Guinea in their efforts to reform and strengthen their economy.
No country can give unconditional support to another country, but it can give support on a proper basis. And it is appropriate for Australia to provide support on the basis that there is a reform programme to which there is a strong commitment by the government of this country and it is a reform programme that makes a great deal of sense. The magnitude of the challenge in this society is of course greater than in Australia. But it is still nonetheless possible to draw parallels between the challenges faced here and the challenges that have been faced in Australia.
Because we live in this globalised economy and because instantaneous judgements are made around the world on how we perform, how we manage our economies and how we behave, therefore we simply, as I said at the beginning of my remarks, we cannot isolate ourselves from what is happening. And we undertook a number of major reforms in Australia. And many of you would be aware that over the past few years the Australian economy, and particularly over the last twelve months, the Australian economy has been able to stare down the worst economic downturn the Asian Pacific area has seen since World War II. I have to say to you, quite frankly that it has done better than I expected it would do a year ago. If I had been addressing this gathering in October of last year I probably would have said to you "well the Australian economy has done pretty well so far, we’ve got the budget back into surplus, or back into balance, we’ve just won an election where taxation reform was the main issue, now we’ve got to try and get it through the Parliament, and I suppose before too long, like the rest of the region we are going to be effected by the economic downturn".
Now it’s turned out to be rather better than that and I can report to you that Australia’s economy is performing better now that it has at any time since I’ve been in public life. And I hope that’s not just seen as a sort of rose coloured assessment by an incumbent Prime Minister, they never do that, I know. But I hope that it is seen as a realistic assessment because our growth rates are still very strong. Our inflation rates and interest rates are very low. Our budget is in strong surplus. And jobs growth is still continuing. We have created something like 520,000 new jobs since March of 1996. And importantly we are being seen around the world now as a very strong economy, even in some quarters as a standout economy in this part of the world.
Now that didn’t happen by accident, it happened because of the application of sensible policies. Some of those changes were undertaken years ago by former governments, and I’ve never been reluctant to give them credit for that, particularly in the area of tariff reform and financial system reform. But the reforms undertaken by my government over the last three and a half years, the industrial relations reforms, which are really turning out to be fundamentally far more deep-seated and far-reaching than some sceptics would allow in 1996 when those reforms were implemented. And only yesterday we had a major decision by the full bench of the Australian Industrial Relations Commission which demonstrated just how far those reforms had gone. And of course we’ve got our budget into healthy balance, surplus, and we’ve been able to deliver very low rates of inflation.
And we have now embarked upon the biggest economic change of all and that is fundamentally restructuring our taxation system. Not only through the introduction of a goods and services tax, accompanied by significant reductions in personal income tax which will mean that 80 per cent of Australian taxpayers will be on a top rate of no more than 30 cents in the dollar, but we’ve also recently announced some major changes to the business taxation system that will produce in time a corporate tax rate of 30 per cent, will bring about effectively a halving of capital gains tax, and other significant changes and incentives into the taxation system. And all of these are designed to continue the process of opening up and making more attractive for investment the Australian economy.
Now the relevance of this for Papua New Guinea is anything but incidental or peripheral. The stronger the Australian economy is the more capacity we have to help our friends and neighbours. I remember when Korea and Indonesia and Thailand all had economic difficulties as a result of the Asian downturn. Australia was able to assist the IMF bail-out packages in each of those three countries, and along with Japan, Australia was the only other country to participate in each of those bail-outs. Now that wouldn’t have been possible if our own economy had not been as strong. And the sort of role that we are now playing at the request of the United Nations in East Timor is in part a product of the economic strength as well as the political will and the military preparedness that has been involved in getting together our contribution.
So the strength and the resilience of the Australian economy does have direct relevance to not only our relationship with Papua New Guinea, the relationship through the business communities of our two societies, but also our capacity to provide direct assistance. Now I am aware of the importance being placed upon not only the government of Papua New Guinea, but also many in the business community of particular projects, and yesterday in my discussion with the Prime Minister and his ministers we talked about a number of those. As you might expect me to say in the end, judgements about the gas pipeline and so forth are judgements that have to be made at a commercial level. Our government is very keen in cooperation with the Queensland government to facilitate and to play a very supportive and proactive part. But in the end judgements must be made at a commercial level in relation to those projects. And the stronger the domestic political and economic scene in both countries, the greater the commitment to economic reform that is being undertaken in both countries will in the end I think play a significant role in the individual commercial decisions that are made.
Can I say that I have been immensely impressed and warmed by the commitment to economic reform of the new Prime Minister of Papua New Guinea. We met in Sydney three or four weeks ago. It was our first meeting, and it was an opportunity for me to hear more of the plans that he had to tackle the difficult economic problems. His Independence Day speech recently outlined his acknowledgement that although Papua New Guinea needed help and assistance and understanding from the rest of the world, it realised that the prime responsibility for reform lies within the borders of this nation. And so it is with all of us. Australia appreciates assistance and investment and support and recognition from other nations, but in the end we have to be responsible for what we do, in the end we have to accept the particular burdens of reform and change. Now I know as a member of parliament of 25 years, as a former treasurer, as a former opposition leader, and a minister holding other jobs, and now Prime Minister for over three and a half years, I know that the reform process in a developed society such as Australia is challenging and not easy.
And I can understand that the reform process in a still developing country is even more daunting and even more challenging. And what is to me encouraging and warming and one that draws our support and our sympathy and our understanding, and our practical assistance is the evident resolution and commitment of the Prime Minister and his government to that reform process. I know it won’t be easy, but the important thing is that there is an acceptance of the need for debt retirement. There is an acceptance of the need to get the macro-economic fundamentals correct. There is a recognition that the international reputation of the country, the resilience of its domestic economic institutions is very important to the international judgements that are made about it. And most importantly to this audience, there is a recognition of how important it is to have a benign and encouraging business climate. Because in the end the strength of an economy is dependent ultimately on the confidence and the willingness to invest of its business community.
There is no example in the world left standing, and it’s been the judgement economically really of the 20th century, there’s no example in the world left standing of how you can run a strong economy without having a strong, confident, optimistic business community. And if you look back over the 20th century in a way that’s the greatest single economic lesson. All of the attempts that we’ve seen over the years to run anything remotely resembling command or highly planned economies have been left in a smoking ruin. And those economies that have emerged strongest of all have been those economies that have rested upon those simple principles, that it is the private sector, it is the climate you create to encourage people to take risks and to invest that ultimately determines whether you have economic strength. We have certainly found that in Australia, and I know that the government of Papua New Guinea is very strongly committed to implementing that kind of philosophy here, and I support them in that endeavour, I commend them for the commitment they’re making to the process of reform, and in the terms that I’ve explained, I commit the Australian government to be a partner and a friend with them in achieving those goals.
It is a pleasure to be once again in this country. As I said we have a long friendship, a very deep friendship in both peacetime and in war and it’s no ordinary relationship, it’s a relationship that has particular and very close and important characteristics. It’s a relationship as I said last night at the dinner at Parliament House attended by Sir Mekere Morauta, my wife and myself, it’s a relationship that like all good relationships has got to be kept in repair, and tended and looked after and not taken for granted. And like all relationships of course as I also remarked last night, it can be put under a lot of strain, and it has been for me. I’m after all the patron of the St. George rugby league club and it was put under an enormous amount of strain when I reflect upon the contribution of a remarkable citizen of this country to the victory of Melbourne Storm in the rugby league competition this year.
So that’s just an illustration, a humorous one, but nonetheless a relevant one, of the sort of linkages that in the end really matter between societies and they are the people-to-people linkages, because it’s through them more than any other linkages that one has an understanding and a respect for, and appreciation of the society and the culture and the commitment of the people, and so it is between our two nations and I couldn’t be more delighted and honoured to be a guest of your government, of your Prime Minister and I welcomed very much this morning the opportunity of addressing so many citizens of Papua New Guinea and also so many fellow countrymen and women of my own, and long may our friendship and association endure and grow even closer.
Thank you.
[ends]