Subjects:? Telstra; Infrastructure; Economic reform
E&OE? ..............................
Thank you very much Mr Switkowski, to Shane Stone, the Federal President, my parliamentary colleagues, ladies and gentlemen.
I want first of all to thank Telstra for hosting this breakfast.? It is appropriate that a company that is at the leading edge of the information technology era in which we now live should host a breakfast at this National Convention and thereby provide a forum for me as Prime Minister to emphasis some of the Government's goals and objectives for the Australian economy and what kind of investment and business climate we generally want to create in this country in the early years of the twenty-first century.? It is appropriate because information technology has utterly transformed the world in which we live.? It has not only transformed the business environment, but it has also dramatically transformed and improved communication at a personal level.? It has demolished distance like no other experience that mankind has had.? And it has the potential over the next twenty-five years to play a major role in further exciting and dramatic developments in medical science.
Probably the most influential economic figure in the world today, Alan Greenspan, the Chairman of the United States Federal Reserve system has remarked on a number of occasions when he has endeavoured to explain the miracle of the American economy's continued strength and growth over recent years.? Dr Greenspan has remarked that if he were pressed as to an explanation as to why the United States, and because of that the world economy has done so well for such a sustained period, he would say that at long last the United States is reaping the benefit of its massive investment in technology.
And I think is probably as good and as accurate an explanation we're ever likely to get, because economics is notoriously an inexact science.? And it's probably, as it's true of the United States, it is also true of Australia.? We are now experiencing the longest continuous periods of strong economic growth that we've had since the 1960s.? In many ways it is a more broadly based period of economic expansion in the 1960s, it's certainly more soundly based because we now operate in an economic environment that is far less protected, is far more competitive, is far more export oriented, and is far more attuned to global changes in the economic environment in which we all operate.
And it is very important in this environment and particularly for the Liberal Party, as it quite properly focuses on all the goals that it has in Government.? It is important to remind ourselves of the ongoing need for economic reform.? There is a view in the current.. in some circles in Australia that the country has grown tired of economic reform, that we've reached the saturation point, that there is an element of reform fatigue within the community.? Now I can understand why people say that and I can understand people saying to me and saying to my ministers and saying to governments around Australia, that there is an increasing onus on all of us in Government to better explain and communicate and defend the value of economic reform.?
Because it's so terribly easy for people to lose sight of reality and let me illustrate by referring to something that you'd think it strange if I didn't refer to.? And that is the Government's view that we should proceed to sell the rest of the Government's interest in Telstra.? Let me say that the comments I am about to make are in no way influenced by Telstra's sponsorship of this breakfast.? But . . .? there is a lot of mythology about the privatisation of Telstra.? Myth number one is that it if a business enterprise remains in government ownership you have better customer service.? There seems to be an idea around that twenty years ago, service provision levels by the old Telecom in the bush were infinitely better than they are now.? There seems to be a view around that when Telstra was fully owned by the government, the former Government, then there was never any need for staff redundancies.? There seems to be a view around that in some way if you hobble an organisation like Telstra with the present untenable in the long term arrangement whereby the Government holds 50.1% of the shares, that it can compete on an open and equal basis in all circumstances against all comers in the competitive environment in which businesses are now obliged to operate.
That of course conveniently ignores the proposition that because of the government ownership of Telstra, the law prevents the issue of any further raising of any further equity by the company. ?Quite plainly the Government is not interested in using taxpayers money to buy shares in any future share issues by Telstra, we have far better purposes with which to use, or for which to put the resources of the Australian taxpayer.
We believe that the customer, we believe the efficient operation of the company will both benefit from the full privatisation.? I know that it is not the most popular in a top line sense of the Government's economic policies.? It is very easy for people to believe when asked the question, do you favour the full privatisation of Telstra - it is very easy to believe that in saying yes, in saying no rather, they in some way can retain a control or influence which is beneficial to the Australian community over the operations of the company.?
The customer service obligations, those requirements of law which oblige the provision of services at a particular level by telecommunications providers.? Those customer service obligations will endure irrespective of whether the Government owns 50.1% of the company or sells that interest to the men and women of Australia.? That is a separate matter of law, it does not depend in any way on the Government's ownership of 50.1% of the shares in Telstra.
Ziggy spoke quite appropriately of the importance of infrastructure to the development of Australia.? It's all part of our idea of what this country is about - infrastructure.? Anybody of my age will remember as a child the sense of excitement that surrounded the commencement of the Snow Mountain Scheme.? And we lived through that great period which was defining in terms of our capacity in a harmonious way to absorb people from all around the world and to help them and to help ourselves to get a better understanding of different communities within the Australian nation.?
And equally today the contribution that companies like Telstra are making to infrastructure is very important.? The sale of Telstra, the rest of Telstra, is not essential to the provision of a certain level of additional infrastructure.? That will continue to be financed by the Government.? But there is no doubt in my mind that if we could complete the sale of the rest of Telstra, through the additional retirement of debt, and it would help this country to become free of net commonwealth debt within three or four years time, or perhaps earlier.? There is no doubt that that sounder fiscal base would enable us to commit more resources at a faster rate to the development of further infrastructure in this country.?
But the reform process, colleagues and friends is not of course limited to the privatisation of Telstra.? That is but one high profile example of the need for the modernisation of the Australian economy.? On the first of July we will see the introduction of the biggest ever reform to the Australian taxation system.? And we're fast approaching the time and I think we've almost arrived where in a sense the political debate about the introduction of the new tax system is becoming very academic.? What really matters of course will be the actuality, the experience of it after the first of July.
All of you will know that the process of winning the argument and putting forward such a massive reform has not been easy.? Anybody who's made any impact on Australian politics from either side over the last twenty-five years has known in his or her heart that sooner or later, we would need to reform the Australian taxation system.? If you'd have sat down twenty years ago and written out the four or five great economic reforms that this country needed to guarantee that as it moved into the twenty-first century it would have a chance of surviving competitively, you would have said we needed to deregulate the financial system, and just imagine where the Australian economy would be today if we continued to operate the regulated financial system that we had in the late 1970's.? You'd have said that we needed a sound fiscal position, in other words we should stop running budget deficits and we should start running budget surpluses.? You'd have said very importantly that we needed to reform the industrial relations system.? And finally you'd have said very importantly of all we needed to reform the Australian taxation system.
And if you look back now at the beginning of the twenty-first century, twenty years on, you can tick those things off.? You can say that we have deregulated our financial system, and that was possible because both sides of politics on that issue took a constructive view.? I have never denied credit to the former Government for the work it did in that area.? We started the process with the Campbell Committee, they continued it.? But they were able to continue it because we helped them in Opposition, we didn't obstruct them in opposition.? And so it was with their attempts at privatisation.? One of the great ironies of this privatisation debate is it was possible for the current leader of the Opposition as Finance Minister to achieve the privatisation of the Commonwealth Bank because we in Opposition took a constructive view - we didn't oppose it.? And of course the other great irony of the debate is that everybody knows that if Mr Beazley were to become Prime Minister of Australia he would quickly find a reason to change his current opposition to the full privatisation of Telstra.? And I think everybody knows that.
But to return if I may, to return to the chronicle of economic reforms.? We have quite dramatically reformed Australia's industrial relations system.? One of the reasons why workers in Australia, the employees of this country are much better off now than they were four years ago is that their real incomes have risen.?? This Government has delivered the remarkable double of not only lower interest rates to the tune of $245 a month to the average home buyer, but we have also via increases in real wages, delivered additional disposable income.? And those real wage increases have been made possible by one thing more than anything else and that is that there have been significant productivity gains.?
And the ultimate of any exercise in economic management is to deliver sustainable increases in the incomes of the working people of this country.? And you want to do it in a way that is sustainable economically and we've been able to do it over the last four years because we've seen incomes go up, we've seen employment rise by over 650 000, we've seen inflation fall, we've seen interest rates being kept down.? And one of the reasons why we have been able to do that is that we have delivered a freer industrial relations system.?
But the last of those, that quartet of economic reforms that you would instinctively have written down twenty years ago, and which every single person who's made a contribution over the last twenty-five years - be it myself, be it Bob Hawke, or Paul Keating or other leaders on the political horizon over the last twenty-five years - we have all known in our hearts that if you were serious about economic reform in this country you would have to ultimately do something about the taxation system.? And so it was that we went to the last election, risky though it was, criticised though it was, heart failure though we gave to some of our political strategists and pollsters who sort of were exasperated that anything so politically perilous could be undertaken.? But we did do it, we have lived to tell the tale and we are now on the verge of seeing its introduction.? And I believe that in a year's time, the introduction of tax reform will be seen as one of the defining things that has been done by this or any other government over the last twenty-five years.?
And it's a reform of which all of us can be immensely proud, because economic reform in this country is incredibly difficult.? We don't control both houses of Parliament, we have an Opposition which is being blindly and irresponsibly obstructive on just about any genuine issue of economic reform.? In contrast in the 1980s we facilitated by refusing to adopt an opportunistic stance economic reforms in the area of financial deregulation, privatisation and tariff changes that were sponsored by the Hawke government.? And I guess particularly at a gathering which has a business flavour about it this morning, the important message out of all of that is there is really on one political grouping in this country and that's the Coalition, that continues to be in favour of serious economic reform.
And we're not interested in economic reform out of some kind of blind ideology.? We don't believe in economic reform to satisfy a theory.? I said yesterday when I opened the Women's Conference, that we have now reached a stage in political debate, we've reached an understanding that the Government continue to have a limited but strategic role in the operation of the Australian economy.? There was a time 30 years ago when people believe every problem could be solved if you had more government intervention.? The Americans called it under Lyndon Johnson the Great Society.? Gough Whitlam tried it with disastrous consequences between 1972 and 1975.? And then perhaps we swung back a little too far in the other direction in various parts of the world, we believed that every problem could be solved by the unrestrained operation of market behaviour and some naive notion that trickle down economics from that unrestrained operation would solve every problem.? Well, that's not realistic either.? And what you need is to have government displaying and demonstrating a limited but strategic role.? And so it is in many of the social policies that we are going to demonstrate, we are going to talk about for the rest of this weekend.
It is also a very strategic role for government in setting the economic climate.? But the goal of economic reform is human contentment and human achievement and human happiness.? You don't reform an economy in order to pass some kind of exam.? You don't make the Australian economy more competitive so you can go along to an international meeting and say 'look we were tenth last year, and now we are number five'.? That doesn't matter to me, it doesn't matter to the Treasurer.? What matters to me is that I can say after four years that we have higher employment, we have lower inflation, we have higher real incomes, we have lower mortgage interest rates, we will have after the first of July lower personal income tax.? I will be able to look 80 per cent of the taxpayers of Australia in the eye and say 'you will pay no more than 30 cents in the dollar'.? I will be able to say to every self-funded retiree that we are abolishing provisional tax.? I will be able to say to the companies of Australia that your company tax rate is 30 per cent whereas it is now 36.? I will be able to say that we are halving capital gains tax.? I will be able to say to the exporters of Australia that your exports will be more competitive because there won't be any GST on them.? I will be able to say to people in rural Australia that your fuel is cheaper than it would otherwise have been.? And I will be able to look every last one of you in the eye and say we have delivered in full on our commitment that the price of petrol need not rise as a result of the introduction of the GST.
So economic reform is not some kind of academic exercise in intellectual self satisfaction.? It's a flesh and blood way of delivering benefits for people.? And if economic reform doesn't deliver benefits for people then it's not worth embracing.? And that's why we have been strong economic reformers but with a social purpose.? It's why we remain committed to economic reform.? And it's why any political grouping in this country that seriously claims credibility at this stage in our history, can't do other than continue to embrace economic reform.? And our credentials on that front are very strong.? But we are not complacent about them, we don't underestimate the difficulties after you've been in office for four or five years, the difficulties of continuing to win public support for needed economic reform.
I don't underestimate the fact that there are many people in the community who will argue about, argue with me about some of our economic goals.? But I am undeterred, and the government is undeterred because we believe that when a government stops being interested in further reform, it stops having any real purpose in remaining in office.
Government is not about having the motor just idling and ticking over.? Government is very much about achieving new goals, overcoming additional challenges and providing further benefits and matching the aspirations of the Australian people.
So, we remain a genuine reformist government.? A government that believes that there have been great benefits for the ordinary people of this country as a result of the reforms to date and that above everything else is the reason why we will continue down that path.
Thank you.
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