E&OE..................
Well thank you very much Paul, for those very kind words of introduction, Mr Chairman, my parliamentary colleague George Souris, ladies and gentleman.
I'm particularly pleased to be here this morning because it allows me to open a very large conference of a group of men and women who, when it all boils down, are very much in the engine room of what keeps our economy going. Financial Planners are in many ways a credential representation of the small business [inaudible] of this country. They're also people who relate to millions of Australians, who in their daily lives are exemplifying the Australian dream. And this it of starting with very little, working very hard, frequently looking after what you earn and how you invest it, and providing hopefully for not only a long life, but also a financially comfortable retirement. And on the way, you make a whole series of pedantical decisions, be those decisions relating to the purchase of a home - which is still far and away the single most important financial decision that most Australians make. Be it planning your superannuation, be it planning your investment, they're generally arranging the financial affairs of your family. And all of you play a very major part in that and therefore you are integral to the functioning of our economy and you are integral to the free enterprise system in Australia.
I can report to you, as I open this conference, that the Australian economy is in very good shape. We've had five years of almost four per cent economic growth. We've had the strongest performing of all of the developed economies in the world over the last few years. And although the growth immediately ahead is going to be less, because of the impacts of the severe and also the hesitancy which is surrounding the United States economy, the outlook is still extremely good. I can report to you that we have payed out a lot of debt. We have planned our finances very carefully. The Commonwealth debt now is only five per cent of GTP, only five per cent of our annual wealth generation. And when you remember that the average for the developed world of the OECD countries is 45 per cent, [inaudible] is a 130 and the United States is 45 - that is a statistic at which I am exceptionally proud. And it has been the result of a number of things. Sure it's been the result of applying the proceeds of some privatisations, to debt retirement, and it's also been the proceeds or the product of running budget surpluses of curving unnecessary expenditure. And in the process, we have been able to fail the tax package, deliver very significant reductions in personal and corporate income tax.
The drought will clip our economic wings a little. It will take something off growth. It's heading to be as bad as drought as the one 20 years ago and something like 75 per cent of Australia is either deprived or seriously deprived of water. So, that is something that we have to grapple with. It is not only very costly in economic terms but more importantly, it's very costly in human terms and the debilitating effect it has on the spirit and the optimism of our rural, our countrymen and women is at large. But as has always been the case in the past, they work their way though with extraordinary stoicism. Australia faces in the year ahead, on the economic front, a number of other very important challenges. Internationally, we have the opportunity over the next 18 months of negotiating a free trade agreement with the United States - the largest economy in the world by far. It won't be easy. We won't be able to sign a free trade agreement with the United States unless we can receive from the Americans some significant concessions in relation to agriculture. But it's a journey worth undertaking and it's a goal worth pursuing with perseverance. And because if it can be brought off, it will do an enormous amount to underwrite Australia's economic future.
We have a very simple philosophy as a Government when it comes to external trade issues. We are not the least bit ideological about trade. We are very pragmatic and we pursue one thing and that is the Australian national interest. And if that national interest can be pursued by negotiating a bilateral free trade agreement with a country like Singapore and we're about to conclude one. With a country like Thailand and we've started to talk. And very importantly, with a country such as the Untied States, then we'll do so. Side by side with that we'll continue to argue very strongly in the multilateral forum of the World Trade Organisation to bring about a new world trade round which might hopefully, at long last, get on to the negotiating table issues relating to agriculture which is so very important to Australia and Australians.
We are a nation that has trading interests all over the world. We demonstrated a few months ago when we won that 25 year, $25 billion liquid natural gas contract with China, that we have a capacity to inspire confidence because we are reliable and stable that within the leadership of the largest country of the world. And as we showed in 1997 when we shifted a lot of our exports away from the Asian Pacific region to North America and to Europe, that the diversity of our economy, our flexible exchange rates and the fact that we've undertaken a large number of economic reforms, not least labour market reform, that we were a country and were an economy that had a capacity to adjust very significantly through sudden changes and to sudden shocks.
Your industry, I know, is particularly interested in a number of issues that are on the Government's plate at the present time. When the budget was brought down by the Treasurer in May, Peter Costello released a document entitled the Intergenerational Report. And it's one of the most important pieces of economic and social analysis that the Federal Treasury has done for many years. Because what it did is to spell out in detail what we all sense - we had a partial growth loss - and that is that Australia's population in common with those of all western countries is ageing and that has implications. The problem is not as bad as it is for many other countries. Years ago we turned our back on the universal non-means tested notion of social security embraced by so many European countries after World War II. We also turned our back on the rather too harsh as a fair approach to social welfare embraced by our American friends. And as is so often the case Australia, I believe, got it largely right. We developed a social welfare system that did provide a safety net for the needy. It was not so all embracing and [inaudible] that it required ever increasing levels of taxation in order to fund it. That has been the curse of the social security systems, in my view, of many European countries where taxation levels are infinitely higher. And the [inaudible] effects and consequences more [inaudible] than what they are in Australia.
But we are an ageing population. We have to face that. We have to realise that that has implications for funding health, funding things like a Pharmaceutical Benefits Scheme. It also has implications for retirement incomes policy. As a nation we have to encourage people, if they wish, to stay in the workforce longer. Australia has a marginally lower participation rate in the age cohort of 55 to 64 than other [inaudible] countries. It's about 39 per cent in Australia, against a figure of 58 to 60 per cent in countries such as the United States and New Zealand. There has to be a reason for that. That reason has to be addressed and there have to be changes. We have to recognise that the cult of early retirement that we encourage so enthusiastically as a community a generation ago, it should be changed because we have a valuable asset - people with enormous experience, increasingly better health and enthusiasm to make a commitment and a capacity to do so. We have to become ever more flexible in our attitudes to working hours. Professional firms have to abandon many of their automatic retirement polices which have [inaudible] firms at far too early an age, people who have an enormous contribution to make. And we must as a community understand that if we are to sustain valuable universal services such as the Pharmaceutical Benefits Scheme, it must be put at a properly sustainable basis.
Nothing is going to be more spectacular, in my view, over the next 25 years than the additional advances that medical science in developed countries will make. And that will carry with it not only exciting breakthroughs in the treatment of life threatening diseases, but it will carry with it the availability of drugs that will further save and prolong, in an effect and an enjoyable way, the lives of millions of men and women around the world. And here in Australia that means that the Pharmaceutical Benefits Scheme we have right at the moment needs to be preserved and kept at a proper financial basis so that we can afford these new wonder drugs that will come in the market. And that importantly, they can be available for all of our people and not just available to people who can afford to pay for all of them themselves because it's always been the corner stone of egalitarian Australia's beliefs that every person in this country is entitled to the hope and the expectation of proper and decent medical treatment.
I look to a Pharmaceutical Benefits Scheme because it's a metaphor for many of the challenges we face as an Asian community. We're going to need it ever more as the years go by by definition. We're living longer. There are more effective drugs available and therefore the demand for them is going to be greater. What that means is that if these new drugs are to be available, it means that we have to make certain that the scheme is an assigned financial footing, otherwise it will become unaffordable and the benefits that I've described will disappear. That's one the reasons why we proposed a very modest increase in the co-payment in the last budget. At the moment that is being blocked in the Senate and I'm angry about that because it's so short-cited and it goes so much against long term planning for the future. We have an ageing population, the cost of the Pharmaceutical Benefits Scheme will continue to rise very sharply, much greater than the ordinary rate of inflation because the population's ageing. More and more drugs are becoming available, we want people to have them but the only way that we can make certain people have them is that the contribution that all of us make is kept in touch with reality. And that's why we're proposing that particular change. And we'll face a lot of these challenges as a community in the years ahead. And also as a community, we must properly harness and utilise more and more of our citizens of more mature years retain their contribution and retain the role that they are playing within our community.
Paul mentioned a number of things that we have had a dialogue with your association about. I do remember the discussions concerning the application of the GST. I am very pleased that that issue was properly resolved as it should have been. And the views that were put to me in particular to my office were put very cogently and very effectively. And I believe that the way in which the matter has been resolved has been extremely satisfactory. But I mentioned briefly the issue of choice in superannuation. Choice is a cornerstone of what my Government is about in so many areas. We believe in choice in heatlhcare, that's why we provide tax help for private health insurance. We believe in choice in education and that's why we support both government and independent schools. We believe in choice in superannuation that's why we have been trying for six and a half years really to change the present system which we both believe [inaudible] enough choice. I know this is very important to the operation of the members of your association, but it has merit in its own right. It is as natural as anything that allowing people to choose their superannuation fund is an ordinary element of a capitalist society. We're still negotiating it, I hope, through the Senate. There are some interesting, let me put it that way, in neutral way, oppositions as to how it might operate. And I hope in the end the essential direction of what the Government has been trying to achieve now in this area for a very long time has achieved.
Ladies and gentlemen, I know something of the agenda for this conference to a large gathering it brings together people who are, as I said at the beginning of my speech, very much in the engine room of economic activity and economic growth in Australia. It meets at a time when Australia's mind is very preoccupied with issues of security, of issues of terrorism, at a time when the nation is still in a sense of grief and shock about the atrocity of Bali on the 12th of October. But in the wake of that an in present circumstances all of the things that we hope and believe were good and strong about our country has been demonstrated to be good and strong and that is very reassuring. The fact that we still work together and don't allow differences on other issues to prevent us from doing so, in a time of national adversity, that has shone though brilliantly in recent weeks. The fact that beneath that sometimes rather brusque, and tough, and [inaudible] exterior, Australians are deeply compassionate and sensitive people. That has shone though very strongly. Also what has shone through very strongly, but although some of the circumstances in which we may have to live our lives have changed, some of the things we thought would never come to this country have come, it hasn't in any way altered the fundamentally enthusiastic, and optimistic, and hopeful, and positive attitude and spirit of the Australian people. If anything, I detect a determination that it won't be allowed to get us down. Of course we will take appropriate precautions, of course we will be more vigilant, of course the world has changed and none of us like it, but it's not going to stop us living our lives, it's not going to stop us being open, tolerant, friendly people. I think that is a spirit which is immensely reassuring to all of us.
So, with that sense of continuing optimism and recognising very much the contribution that so many of you are making and your association is making to the growth and the change in the Australian economy, I hope this conference is a success. I wish you well. I thank all of you for the contribution that you are making to the modern Australian economy. And I have great pleasure in declaring this conference of the Financial Planners Association of Australia open.
[ends]