Subjects: Tax reform; welfare reform; petrol prices; Telstra; Michael Ronaldson;
E&OE..................
Well thank you very much Michael. I will join everybody in wishing the North Ballarat Roosters the best of luck on Saturday. I am not going anywhere near Sandringham between now and the weekend. I wish them luck and just to sort of let you know that there is a variety of football played in this country could we also spare a thought for the Australian Wallabies who take on South Africa in the tri-nations final in Durban at the weekend.
But Michael is right. He is always right. But last night was quite a night and there was quite a buzz. I got a buzz out of it and I went away feeling that there is a lot of life and heart and soul and hope and optimism in regional Australia. And when I think as I said last night that what seven, eight years ago there was an unemployment level of 20% in the city of Ballarat and the surrounds and now it is down to 5.7% which is below the national average. It does represent a quite remarkable turnaround and I want to congratulate everybody in the Ballarat district that has been responsible for that. The way in which the businesses and the community have rallied together and worked together to produce better solutions to find industries that can do better, can export, to modernise some of the older industries, to bring in new ones, it is a reminder to all of us of what can be achieved if communities work together in an effective partnership.
I have been visiting Ballarat over the years in various political capacities. It is a distinctive part of Australia. It's very heavily identified with the history of our country and it's a reminder of the enormous contribution made by areas like Ballarat to the development of Australia, first in the nineteenth century and now more recently. And I visit you at a time when it is fair to say that the Australian economy is performing, despite a few challenges which I will come to in a moment, is performing more strongly than it has since the late 1960s. We have now had twelve quarters of economic growth of more than 4%. You really do have to go back to the late 1960s and the early 1970s to find such a sustained period of economic activity, to find inflation rates which are as low as they are now. Indeed to find interest rate levels despite some recent movements which are as low as they are now. And when you think back to say ten years ago when Michael first began to represent the Electorate of Ballarat it the Federal Parliament. The inflation rates, the interest rates and the unemployment levels and the very depressed business activity, the difference is very stark. And it is a difference which has not happened by accident. There's a common misbelief often in the circles of those who comment on politics as distinct from those who are involved in politics that everything happens by chance or accident and that in reality the government has no say in it at all. Now there are some things that no national government has any control over. There are some world developments and world movements that no government, not even the government of the United States, the most powerful country the world has ever seen, can control. But there are many other things which are matters of individual national choice. A government can decide that it wants to be a reform government and it can decide that it wants to tackle the major challenges that face a community. And that is very much the attitude that the Coalition took when it was elected in March of 1996. We had been in opposition for the thirteen years which was a very long time. There were occasions when there might have been a change of government but there wasn't. So when the opportunity finally came our way, the first thing I promised myself was that I wasn't going to let the opportunity go by without spending every waking hour of the time that I was Prime Minister with my colleagues in endeavouring to change those things in Australia that needed to be changed.
We have been quite deliberately, as an act of choice, we have been a reform government. But we haven't been a mindlessly reform government. We haven't been a government that set out the pull down everything that existed in Australia when we became the government. The quality of government is measured by its capacity to discriminate between preserving those things that continue to work and are of enduring value and resolving to change those things that need to be altered. We have therefore set about to identify very much those changes that were needed in the economic structure of this country. We changed Australia's industrial relations system and we are a stronger and better country for it. One of the reasons why Australian exporters are doing better now is that we have a more competitive industrial relations system.
Recently I was in Perth and I opened a new factory for an exporter and the exporter which in effect services the frozen TV dinner for the Japanese market and the managing director of the company said that he had 450 employees, every single one of them was on an individual contract and he turned around to me and he said that if it hadn't been for your industrial relations reforms we wouldn't be opening this factory today and we wouldn't have a lions share of that very important export market in Japan. And those stories can be told again all over Australia. Because if you live in a competitive world economic environment, you need a capacity at each individual work place level to make agreements between employers and employees that will increase the productivity of that firm. And to complete the good news story of that man I spoke to in Perth, he also pointed out to me what little turn over there was within the staff, how well they were paid and as I moved around and talked to them it was driven home to me that they saw the export performance of that company as being very much a cooperative effort. They had the same pride of ownership in the company's achievement as did the managing director. Now that is the best industrial relations in the world and they are the sort of workplace relations attitudes that you have to develop. So we place a great deal of store on that change. We place an enormous amount of store on the change in the budget position. When we came to office our budget was running at a deficit of about ten and a half billion dollars a year which soon racked up something like $80-90 billion of government debt over the previous five years. And in the five budgets that we have brought down when this year's is completed we will have repaid about $40-50 billion of that debt that we inherited. And that's very important.
Michael spoke earlier about his children. The MC spoke earlier about grandchildren. It's very very important to remember what you do for future generations and the best thing that we can do for the future generations of Australia is to leave them debt free. If we can leave future generations of Australians debt free they can have a flying start. A start that many other countries' generations won't have. So I take particular pride in the work of the government in reducing the budget deficit, coming into surplus a year ahead of prediction. And now being able to look the rest of the world in the eye and know that even if we do from time to time import a lot and we do from time to time borrow a lot from the rest of the world to service the economic activity in this country our national debt level is very manageable and if we can secure the approval of the parliament to allow the Australian people to own 100% of Telstra instead of only 49+% then we will by the year 2004 have completely eliminated all of the federal government debt. Now that would be a very remarkable achievement. We won't have eliminated the debts owed by Australian individuals and corporations to overseas lenders, that will never occur because we will always be a country that needs to import a large amount of capital to service economic activity. But to have taken the government out of the borrowing and debt equation is an enormously important achievement.
So that was a very important part of our reform approach. But perhaps the most important reform change of all was the one that started on the 1st of July. The one that our political opponents hoped would reap disaster, havoc and ruin on the government and in the process of course, on the Australian economy. There were a lot of predictions made about how the world was going to come to an end on the 1st of July. The sky was going to fall in, the four horsemen of the Apocalypse were going to appear, everything would stop, there would be disaster and confusion and doom and despair and pestilence. Now of course it didn't work out that way. What happened was that the Australian people, as they normally do when confronted with a really important change that they are satisfied is for the benefit of the country they took it in their stride. And I am really tremendously proud of the way in which the business community, particularly small business operators have absorbed the new taxation system.
I don't pretend that there won't be some challenges and difficulties in front of us. I don't pretend that there wasn't a lot of difficult adjustment involved. And I don't pretend for a moment that some people aren't still grappling with some of the detail. But overwhelmingly it has gone very well. Overwhelmingly. The people not only came to grips with it, they understood it, they realised it was for the benefit of the country, they also saw the fundamental fairness of it. They believed after the 1st of July that there were significant personal income tax cuts. They found on the 1st of July that everything didn't go up by 10%. They found that many items did fall in price. That the supermarket trolley wasn't 10% more expensive than it had been the week earlier. In many cases the movement was only a few dollars. And people then realised that this was a fair deal. That the Government hadn't been misleading them when they said it was fair and balanced and that sure some things went up in price, some things went down, some things remained the same. And I think as the weeks and months go by, people will increasingly look back on the 1st of July and they will recognise it was very much a case of an exaggerated prediction of gloom and despair by those who didn't want the new taxation system to be effective. And it does represent the biggest single change to Australia's economic system since World War II. It is a vastly different way of running a taxation system and as the individual changes work their way through the abolition of provisional tax the benefits of the almost halving of capital gains tax, the reduction over a two year period from 36 to 30 cents in the dollar in the rate of company tax. All of those changes as they work their way through will make the Australian economy and the Australian business community a lot more competitive. And as I said at the export dinner last night that is really what the modern world is very much about. It is about ensuring that our economy and our country remains as competitive as possible because when you live in a globalised world economy, economic signals are transmitted at the blink of an eye. It doesn't take long, it takes a fraction of a second for economic news to travel from one side of the world to the other. That is the consequence of the information technology revolution in which we now live. And you can't shut out the world anymore. It's not an option for Australia to say to the rest of the world we have done pretty well, we have got a nice standard of living here, we don't need to make any more changes, we will say to the rest of the world leave us alone and we'll run our own race. It's not like that.
To start with we have to, in order to prosper and survive, we have to sell a lot of products around the world. That's what last night was all about. We have a constant flow of people. The flow of people across national borders now in some industries is becoming almost as intense as the flow of capital. The way in which it is possible for people to do a service job in one part of the world for a company located on the other side of the world is becoming a part and parcel of the operation of many international organisations. So it's tremendously important that we always keep in mind that the economic race now is not about being able to say we are doing better than thirty or forty years ago. That's important but what really matters is how well we are doing against the person who is in the race with us at the present time. And we have got to keep ahead of our rivals and keep ahead of our competitors.
So ladies and gentlemen, the message I bring you today is a message of tremendous enthusiasm and optimism and hope. It's a belief that we have achieved a lot together, that we do have a sounder, stronger, better, more durable economy than we did four and a half years ago. That is not to say that there aren't areas of concern. There seems to be a bit of debate around the Australian community now which I fully understand about the price of petrol. And I would like to say something about the price of petrol because it has been getting quite a run lately and can I say first up that I understand why Australians don't like paying higher prices for petrol. It is a very sensitive consumer item. We love our motor cars, we love using them, we love travelling, it's a big country, the price of fuel is a very important issue.
The second thing I would like to say is despite recent increases, our fuel is still extremely cheap by world standards, it's the fourth cheapest in the world after the United States, Canada and New Zealand. It is vastly cheaper than it is in Europe and many parts of Asia. This country is also fortunate because it has a high level of self sufficiency in relation to the supply of crude oil.
Overwhelmingly, ladies and gentlemen, the increase in the price of petrol which has occurred in recent months has been viewed of the increase in the world price of crude oil. It has also been significantly influenced by the change in the exchange rate relationship between the Australian dollar and the United States dollar. World crude oil prices are set in United States' dollars, and when the Australian dollar falls against the United States' dollar, the price each barrel of crude oil which is needed is increased thereby because of that changed exchange rate relationship.
Let me try and explain as best I can by illustration the way in which external factors have increased the price of petrol at the bowser in Australia over recent months.
Between April and August the average capital city price of fuel, petrol in Australia at the refinery gate, that is before any taxes are added, at the refinery gate rose by 12.2 cents a litre. The retail price, that's what was paid on average in the capital cities of Australia over that same period, has risen by only 11.9 cents a litre. In other words there has been a very close correlation between the rise in the price at the refinery gate of 12.2 cents a litre and the rise in the bowser of 11.9. Now that illustrates very clearly that the rise in the price of petrol has been due overwhelmingly to external factors, not to the goods and services tax. That is the great deception of this whole debate, that the goods and services tax has been responsible for this big increase in the price of petrol.
Even if the critics of the Government were right about the inability of the oil, the alleged inability of the oil companies to pass on that one and a half cents a litre cost saving as a result of the GST. Even if they were right about that, and I don't accept for a moment they are, even if they were right about that, that's only one to one and a half cents a litre. That doesn't explain why the price of petrol has gone from the late 70s early 80s up to the early mid or even late 90s or even more. That doesn't explain that at all.
Overwhelmingly it is because the world price has gone up and because of exchange rate variations. And they are factors over which no national Government of this country has control. That doesn't mean to say I find the increase in the price of petrol to my liking.
Now it is said that the Government could reduce the price of petrol by reducing the excise collected by the Federal Government. Now that is true. We could tomorrow have a discretionary cut in the excise per litre we collect on petrol. I would imagine that if that were something that we would contemplate, we would say, what would the Australian public see as a significant cut in the price of petrol? I think they would want at least a five cent a litre cut to think it was worthwhile.
Cutting the price of petrol by cutting the federal excise by five cents a litre would cost $1.7 billion dollars. Now I have to say to you, much in all as I am conscious of the sensitivity of the Australian public and the Australian motorist to the price of petrol, I think taking $1.7 billion off the Federal Government's surplus at the present time would be economically unwise.
The main reason why I think it would be economically unwise is that I think that it would put upward pressure on interest rates at a time when that is probably the last thing most Australians want to see occur. Particularly at a time when exchange rate fluctuations are putting some inflationary pressure into the system. So I am against doing that, not because I don't want to see the price of petrol fall, I would love to see it fall, but I think taking everything into account, having a discretionary cut in the level of excise by raiding the budget surplus would not make much sense. You could of course try and find the money from somewhere else but that immediately leads you into taking money out of other areas. Taking money out of road funding, school funding, health funding, defence funding, none of that to my way of thinking makes any real sense.
So I have to say, unpopular though it may be in many circles, that we don't see our way clear to cut the federal excise at the present time because we must either fund that by reducing the surplus which will put upward pressure on interest rates or we must fund it by taking money away from other programmes. And as I move around the Australian community, I don't hear people saying to me 'we want further cuts in the provision of necessary Government services. I hear people saying to me we want Government services maintained, and in some areas increased. That's the message I get from the Australian people.
I think the Australian people want a balance in their economic policy. They want a Government that gets rid of waste and extravagance and gets the budget back into balance and back into surplus, but they also want a government that is sensible enough to spend money where it is needed, a government that, for example, in the last budget was willing to put more than $500 million into attacking the problem of medical service in remote rural areas of Australia. They want a government that is willing to put more resources into national infrastructure. They want a government, as this government is willing to do, to put more resources into the defence of Australia.
I have said repeatedly, and I will say it again today, that this Government in the years ahead, this country needs to spend more and not less money on defence. And there are quite a number of areas where the Government needs to put more resources into very necessary areas. It is a balance. Good government is not, economically is not just about cutting expenditure in every single area. It is about cutting expenditure in areas where that expenditure is extravagant or unnecessary but it is, on occasions, about increasing expenditure in areas where it is necessary.
And in that sort of context, and with that kind of attitude in mind could I also mention that the Government that I lead is not just about economic issues. Economic issues are always very important because unless you have a strong economy, a growing economy, a prosperous economy there is so very little you can do to help the more vulnerable in our community, and there is so very little you can do to pursue other important national goals.
But, we're also concerned about having a decent welfare system. Australia I think has got many things right. One of the things that I think we have basically got right over the years is that our social security system has avoided the excesses of both the United States and Europe. On the one hand I think there are some aspects of the American welfare system that are too harsh and I would never count them as being introduced into Australia.
By contrast I think there are some elements of the European welfare system that are too interventionist and they have placed too great a burden on the people who are the taxpayers and as a consequence the government sector has got too big. And what I think we have been able to do in this country is to get the balance right. We have the Australian fair go attitude that says that we look after people who need help. We don't allow people to go without the necessary means of basic support. We do recognise that we have a moral obligation to help people who, through no fault of their own, need help. And there are a lot in our midst who fall into that category, there always have been and there always will be, and the challenge of social welfare policy is to find the best way of helping them in a dignified fashion that, where possible, encourages and aids them to get back into the work force.
And that is the aim of the recent review into social welfare, chaired by Patrick McClure of Mission Australia. It was a group of men and women with a good understanding of our system. They had a hard headed approach but they also had a compassionate approach. And there has been widespread support for the principles of that report and it is based on the Governments strong support for the principle of mutual obligation which is enshrined in our Work for the Dole programme that says yes if people are out of work and they're trying to find a job, they ought to be financially supported. But, in return for that financial support, its not unreasonable if they are physically able to do so, that they put something back into the community in return for the financial support they receive.
Now this principle of mutual obligation is now very widely supported in the Australian community and it has underpinned the recommendations of the McClure Report. We will respond to that report over the weeks and months ahead and in so doing we will demonstrate to the Australian community the capacity of this Government to use the economic strength brought about by our economic reforms to build a stronger social structure. Social structure that decently cares for the vulnerable in our community, because that's what a decent, humanitarian society is always about. And also a social structure that recognises that the solution to the problems of economic and social and family vulnerability involve a partnership between the Government, the welfare sector, Australian individuals and the business community. And we have, over the last four and a half years, in this area also been something of a trailblazer as a Government.
So, ladies and gentlemen, my message to you this morning is very much a message of hope and optimism, a degree of, how shall I put it, a degree of pride in achievement over the last four and a half years, but certainly not speaking, both as Prime Minister and leader of the Federal Parliamentary Liberal Party, certainly not speaking with any sense of complacency or smugness about what has been achieved.
It is important that Michael's campaign committee have raffle books on your table. It is important that you always wonder the charge he's made for the gathering is high enough and whether the venue is large enough. Because political parties do require the sinews of war. Election campaigns are not easy. Ballarat historically has been a marginal seat and I, in all of my political career, have learnt the value of caution, have sensed the danger of over exuberance, certainly have totally rejected any sense of complacency.
Winning elections in Australia is very hard. Good policy and good government does not have an automatic electoral reward. You have to keep working away at it. And can I say to those in the audience who want another Liberal government at the end of next year federally, you have to work very hard to achieve it. It won't happen automatically. Don't assume we've had a few sort of surprise election results around this country in recent years. Nobody should assume that that can't happen at a federal level. I don't take the next election for granted. I have never taken the Australian people for granted, and I never will. It's an enormous privilege to be Prime Minister of this country. I sort of count my blessings every day to have had that privilege come my way for four and a half years.
I want the Government returned because I think it is a very good government and I think it has done a lot of good things. I also want it returned because I think the people of Ballarat will be very well served by the re-election of Michael Ronaldson. I think Michael is an incredibly committed, exuberant local member who is so identified with this district. I go to a lot of gatherings. I go to a lot of breakfasts, I go to a lot of lunches, I go to a lot of afternoon teas and morning teas and dinners and suppers and cocktail parties, the whole lot. I mean, you know, Sunday brunches and so it goes on and I see a lot of local members. Some are good, some are splendid, some are not there for too long, but some of them are really quite outstanding, and Michael is one of them, because Michael has a strong identification with his district.
He's parochial to the extent needed to make the point that he is broad-minded enough to know that we're part of a nation as well as part of a state and part of a city. And that is a very very important quality for a local member to have so there are a lot of reasons why we want to do well politically in this part of the world at the end of next year and first and foremost is to make certain that the very high quality of federal representation that you had over the last ten years is continued and that can only be achieved by re-electing Michael Ronaldson.
Thank you very much.