PM Transcripts

Transcripts from the Prime Ministers of Australia

Howard, John

Period of Service: 11/03/1996 - 03/12/2007
Release Date:
17/08/2001
Release Type:
Speech
Transcript ID:
12316
Released by:
  • Howard, John Winston
Prime Minister's Luncheon Hyatt Regency, Adelaide

Subjects: Economy; GST; Indonesia; Government achievements

E&OE..................

Well thank you very much John, Julie, Rosemary Craddock the President of the South Australian Division of the Liberal Party; my federal and state parliamentary colleagues, ladies and gentleman.

Thank you John for your very warm words of introduction. Your very warm encouragement of continued federal government support for the initiatives that your government has undertaken. And can I say without any sense of exaggeration or any sense of political rhetoric that I agree with your assessment of the fundamental strength of the South Australian economy.

In the almost twenty-seven or now twenty-eight years that I have been in federal politics and have therefore been visiting in one guise or another the State of South Australia on a very, very regular basis I don't think I have found a time when the sense of economic and business optimism has been better or stronger than it is at present. And I think there has been a transformation. I don't pretend that every problem has been solved. I don't pretend that there aren't continuing challenges. But there is more underlying strength and optimism and sense of purpose and a sense of hope about the future caused by a number of things, all of which John alluded to in his address.

But as we all know economic confidence is fundamental to the sense of optimism and the sense of hope that any state or indeed any nation can have. We are of course now barely a few months away from a federal election. This is a Liberal Party gathering and you will therefore not be surprised if I strike a slightly partisan note. And I encourage you to sort of focus on the sort of choice that lies in front not only of Australians living in South Australia but Australians all around the country.I can say to you that in straight political terms we are travelling a lot better than we were a few months ago. But I would hasten to add we damn well needed to be because a few months ago we weren't travelling very well at all. Things have changed. The Aston by-election in Victoria was quite a milestone in the government's recovery. That is a by-election that the Labor leader Mr Beazley knows that he should have won. And it's a by-election that he knows that I know that he should have won too. Because he only needed a swing of 4.2% and if the Opposition were on an unstoppable roll towards victory he would have gained that. Just as Oppositions in similar circumstances prior to earlier changes in government would also have won.

So it has given the Party not only in Victoria but all around Australia a great sense of heart and a great sense of hope and a great sense of optimism. But having said that we still face a very tough fight. We don't have a big majority. We're going for our third term. We've been a government that has undertaken difficulty policy changes and whenever you make difficult policy changes you always upset some people in the process. You always cause some transitional friction and you always create some hurdles for people to clear in order to get the benefits of the reform that you are offering.

And if you look back over the years that we have been in government we have been a very active reformist government. But as we get closer to the moment of choice I think a number of things are occurring. I think people are starting to focus on the alternative. It's one thing to ask a person when there is no election in prospect do you like or not like the government and that is essentially a judgement in isolation on how they are reacting to the government. It becomes a somewhat different thing when they are really making a choice not between liking and disliking the government but making a choice between hanging on to the present government or switching to an alternative.

We have made our mistakes. We have fallen short of people's expectations in a number of areas. But if you look at the fundamentals they have rarely been better in Australia's post-war economic experience. We have the lowest interest rates in thirty years. By the end of this financial year we will have repaid $60 billion out of the $96 billion of federal government debt that we inherited in March of 1996. We have a very low inflation rate. For the working men and women of Australia we have really delivered the trifecta. We have given them high real wages off the back of higher productivity. I mean one of the astonishing statistical differences between us the Keating and Hawke governments is that real wages fell under Labor and they boasted about it. But real wages have risen under us. They've risen off the back of higher productivity. So we've given them higher real wages; we've provided a reduction of $300 per month in the average mortgage repayment. I mean everybody will remember the housing rates of 17 or 18 percent. Or if you were a farmer a bill rate of 22 or 23 percent. And the 19 or 20 percent interest rates that small business used to groan under not so terribly long ago when Labor was last in government.

Thirdly we have generated more than 800,000 new jobs. The unemployment rate is markedly lower than what it was and the job prospects medium to longer term continue to be very strong. And there is another thing that we have done that often doesn't get the publicity it deserves. It's a constant focus when it comes to post school training and education. There's almost a constant obsessive focus on the people who go to university and that's important. But it is still only 30 percent of the people who leave school. Seventy percent of them don't go to university. And in that area in the five and a half years we've been in government we've done something quite remarkable. And that is we have achieved a doubling of the number of Australians in apprenticeships. For a period of something like fifteen to twenty years the number of apprenticeships in Australia languished between 120,000 and 150,000 and in the five and a half years that we have been in government because of the changes we've made to apprenticeships we have more than doubled that figure and it is now 305,000 Australians annually in apprenticeships. Now that is delivering in more than in full on a commitment that we made in March of 1996 to revitalise the apprenticeship system.

But the things we have done of course go beyond the economic area. And although policies that strengthen business and policies that strengthen the economy are tremendously important, indeed overwhelming important, there are other things that are very important to the health and the life of the nation. I have just come back from a visit to Indonesia and in a sense that visit completed the circle of a very significant change in Australia's relations with that country. Our relations with Indonesia are now on a more realistic plane. We no longer indulge the insubstantial notion that there is some kind of special relationship between our two societies. It is very important in international relations to be realistic, to have expectations at the right level. I have described our relations with Indonesia as 'positive realism'. We're realistic enough to recognise that there are big differences between us. We are also realistic enough to recognise that we do have a number of things in common. We are close neighbours, we are forever part of the Asian pacific region, we need to know each other better, we need to work with each other more closely. But we need to build that relationship and develop it on the natural strengths it has and not pretend that we can build it and achieve something that the relationship can never deliver. And I believe that our relationship with that country is now on a more realistic plane.

We have moved on from the obvious differences that we had over East Timor. But we haven't moved on on the basis of Australia in any way resiling from or in any way taking a step back from what we did two years ago in relation to East Timor because it was the right thing for us to do not only in terms of the stability of the region but it was also morally the right thing to do in defence of a small country. That change of relations and that restoration of realism with Indonesia is part of a process that we've undertaken of rebalancing Australia's foreign relations over the last five and a half years.

When I came to Government there was in my view an almost total pre-occupation with Australia's relations with the South East Asian and Asian Pacific region to the detriment of our relations with other parts of the world. I haven't sought in any way to downplay our relations with Asia, but I've sought to remind Australian's that we are in every sense of the world, every sense of the word a citizen of the world as a nation. And we need to have strong links with North America, we need to have strong links with Europe both politically and economically. Because we are unique we're the only sophisticated western society that has both a geographic presence and other linkages with Asia, but also very strong and profound links with North America and Europe. And I ask the rhetorical question, where might Australia have been when the Asian economic crisis hit us in 1998 if we had not been able to divert many of our export to Europe and North America. Where indeed would Australia be if we had not remembered that we had important trade and other linkages with those parts of the world.

And in his introductory remarks, John was kind enough to mention the contribution the Government has made to tackling the problem of salinity and water quality, which is so very important, particularly important here in Adelaide. And I'm very proud of the environmental credentials that the Government has achieved over the last five and a half years. We have not pursued a mindless obsession with development at any cost, nor have we mindlessly embraced the radical green agenda and the stance that has been taken by Australia so ably articulated by Senator Robert Hill as Environment Minister on behalf of Australia at two very significant conferences on climate control. One in Kyoto and the other in Bonn, I think have given Australia a new standing and a new respect in the area of climate control and climate change. Australia is almost unique, we are as a highly industrialised country a net exporter of energy. And in those circumstances our position and our needs are different from the countries of Europe. And what we have consistently said is that we favour an effective international protocol on climate change and greenhouse gas emissions but there are two very important elements that must be part of that protocol if it is to be lasting and be effective. And the first of those is that it must embrace the developing countries. It is self evident to an audience like this that if Australia were to accept a protocol that imposed restrictions on a nation like Australia but didn't impose on countries to which certain industries could easily transfer and relocate that would be of enormous disadvantage to Australian industry. And the second condition has been that as the major industrialised power and the major emitter of greenhouse gases in the world, the United States, must be part of any international protocol for it to be effective. Now I remain optimistic that we can in time achieve an effective international understanding on this issue but it has to include those two very important elements.

Inevitably ladies and gentlemen much of the economic and political debate over the past few months has continued to centre on the implementation of the Government's new taxation system. If I had my time over again I would not have behaved differently in relation to our embrace of a new taxation system. I have no doubt that the new system has contributed already in a very material way to Australia's economic strength. We've had a wonderful trade performance and one of the reasons we've had a trade performance is due to what I call our super competitive exchange rate. It's also due to a wonderful recovery in many areas of the farming sector and the commodity prices that we're getting in areas like beef and lamb and grains are the best we've had for many years. And all I can say is that the Australian farmer has long deserved a break and it's the first time in years that many of them have got a decent return on their investment and I think all Australians will say to them they deserve it and long may it last.

But one of the other reasons that we're doing well on the trade front is that for the first time in our history we have removed the impact of $3.5 billion of embedded indirect taxes in the cost of our exports. We tend to forget that. So much of the media commentary is focused on implementation details of the GST, we tend to forget some of the simple facts of the new tax system. And one of those simple facts is that by getting rid of the wholesale tax system we got rid of a whole lot of embedded indirect taxes that affected our export performance. And one of the many reasons why our exporters are doing better is that we no longer have that burden because of course the GST does not apply to exports.

I acknowledge that there have been some transitional difficulties and some transitional friction with implementation of the GST. We have made a number of administrative changes in response to what people have put to us and I certainly make no apology for that. I've always believed that with a change as big as the GST administrative complexity was going to be present and Government needed to be responsive and fine tune the administration and the implementation of the new system in order to minimise that friction. So the fundamental justification for tax reform remains as valid today as it was in August of 1998 when I launched in Canberra the proposals for the new taxation system. We do have a simpler more comprehensive broad-based indirect tax. We are paying $12 billion a year less in personal income tax, the company tax rate is now 30% and not 36%. Capital Gains Tax has been effectively halved for individuals.

But importantly, perhaps more importantly than all of that, we have provided ourselves with a long-term revenue base to fund the services that will be increasingly required by an ageing Australian population. Like every other country in the world, Australia has an ageing population and unless we had introduced a broad based indirect tax, a GST, we would have faced the unavoidable future of having to pay ever higher rates of personal income tax in order to fund the services needed for an ageing population. People often forget that the indirect tax base we got rid of when we brought in the GST was a declining and wasting indirect tax base. In 1975 the wholesale sales tax was 25% of GDP. By 1996 it had fallen to about 17.5 to 18% of GDP. Now you superimpose that on an aging population and see what happens, inevitably to the level of personal income tax. And this is very relevant to this whole debate about the tax alternatives that are going to be offered in the next few months because he who argues for a lesser contribution to revenue from GST is arguing for a higher contribution from personal income tax. Because the demand for Government services is not going to decline with an ageing population, it is going to increase. And therefore from a long term revenue base point of view a broad based indirect tax has been absolutely imperative for introduction in this country now for many years. And for us to roll it back or turn our backs on it or pretend that you can roll it back and simultaneously as the Labor Party is pretending that that doesn't have implications for the level of personal income is to defy arithmetical gravity. Because ageing population equals demand for greater services, equals demand for a revenue base that grows with the economy. And that is what the GST delivers you, it's a revenue base that grows with the economy and all of the proceeds of it of course are going to my very good friends the State Premiers and they will have over the years, they'll have over the years the opportunity as a result of that to fund the increasing demand of an ageing population for services such as hospitals and community services and all the other things that are necessary to accommodate an aging population.

We will have a tough fight to win this election. I think our prospects now are a lot better than they were. Here in South Australia the Liberal Party has magnificently delivered to us an above average representation in terms of quality and in terms of numbers you have great representation in South Australia but we have three very marginal seats held by three magnificent marginal seat holders and campaigners. And we need all our effort and all our resources to hold on to those seats here in South Australia. If we can hold what we have in South Australia that is a magnificent base on which to hold Government around the country. It will be a difficult campaign, I'm encouraged by the inability of the Opposition to articulate what three or four months out from the election precisely what they stand for. Five and a half years as Leader of the Opposition and I still find my political opponent to be somebody who is very vague at the edges when it comes to questions of policy alternatives. One minute roll back is number one, next minute health and education are number one, the next minute they are equal number one. And so the list goes on. Our position is clear. We've had the courage to reform the tax system, we've had the courage to reform industrial relations, we've reduced Australia's debt, we've cut interest rates, we've produced a low inflation economy, we've generated 800,000 more jobs. But we've also committed massive additional ongoing investment in education and health. It was this government that revived the private health insurance industry with a rebate that costs $2.5 billion a year. And it's this Government that has increased the payments to the states under the Health Care Agreement by 28% in real terms over the next five years to assist the funding of public hospitals. And having done those things and having provided ongoing increases of investment in health and education and related areas our view is that if there are available surpluses in the future then those surpluses should be applied towards further income tax relief. Because we need a society that balances the provision of services with the provision of incentives and the creation of an aspirational sentiment within our community. We've always got to keep government responses properly balanced. We don't want a society that ignores the need for basic services. But we also don't want a government that ignores the fact that you've always got to give people an incentive to work harder and to aspire to do better because that is very fundamental to the Liberal Party ethic and the Liberal philosophy of life.

I've spoken both as Prime Minister and as Leader of the Opposition and as a Shadow Minister to many gatherings here in Adelaide and most particularly here in this room at the Hyatt Hotel. The next few months are going to be very challenging for me, they are going to be very challenging for my colleagues and they are going to be months in which we are going to be asking our friends and supporters to come to our aid, to advocate our cause to fund our campaigns and to remind their friends and their work mates of the sort of choice that is going be involved at the end of the year.

I believe in all my heart that this is a better, stronger, more respected, more secure Australia than what it was five and a half years ago. We have tried to tackle the difficult issues, we haven't shirked the responsibility of sometimes radical reform, and I think as a result the Australian nation is more widely respected now than it has been in a generation. To risk all of that, to through away the industrial relations reforms, to hand the national government of Australia over to a union dominated, a union boss dominated Federal Labor government on top of five state Labor governments will be to undo all of the progress that we have made on industrial relations. And if we were to lose the next election, the thing that would grieve me most would be that I would know, as surely as night followed day, Federal Labor would roll back, not only the GST but also the industrial relations reforms that this country has enjoyed over the last five and a half years and have made such a tremendous difference to our productivity. There is a lot at stake when the election comes. We are working very hard. We appreciate the loyalty and support that you have given. We ask you to re-double it and to work hard for the return of the government when the opportunity comes.

Thank you.

[ends]

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