E&OE...
Thank you very much John for that warm introduction. To Peter O'Brien, the President of the Australian Chamber of Commerce and Industry, Peter Hendy, the Executive Director, my many state and federal parliamentary colleagues and I particularly acknowledge the presence of Paul Omodei, the Leader of the Liberal Party here in Western Australia, Danielle Blain and Mark Neeham, the President and State Director respectively of the Western Australian division of the Liberal Party. I particularly mention them because I know what an important role they're going to play in the making of political history at the end of this year here in Western Australia.
Whenever I address a gathering like this here in Perth I always get my priorities right. I start by acknowledging the fact that Western Australia may only have 11 per cent of Australia's population, but is contributing something in excess of 40 per cent of the nation's export income and it's something of which, it's something of which Western Australian audiences are justifiably proud and as Prime Minister of the Commonwealth I don't mind acknowledging it. The extraordinary economic times in which we are living are dramatically exemplified on a visit to Western Australia. I'm very familiar with this state, I'm very familiar with the people of this city and I've admired all my public life the distinctively different entrepreneurial approach that so many Western Australians take to business. This mining boom, and I wish in a sense that we could find a different expression because whenever you say boom you think of something that's only temporary; I happen to hold the view that if we manage things correctly this resources surge or somebody described it to me last night as a long term resource readjustment, that we can maintain it for many years into the future. There is no shortage of product and I can assure you there is no shortage of customers. My view is that the Chinese economy in particular will continue to grow for many years into the future. There is a lot of capacity yet to be utilised in China. There is a degree of resurgence in the Japanese economy, the Korean economy remains very strong and India which has long looked towards the Middle East for much of its resources, is an economy that's also growing at a very rapid rate and that is not to mention the extraordinary growth that's occurring in the smaller economies of Asia.
So the message out of all of that is that we shouldn't see it as something that's about to come to an end, but nor should we take its continuation for granted and that is really a metaphor for what I want to say about the general strength of the Australian economy because although the mining boom has contributed mightily to the strength of the Australian economy in recent years, it's not the only cause. And it would be wrong to simply say it's due to the mining boom because the strength of the Australian economy is more broadly based than that. The falls in unemployment have been more dramatic in Western Australia, but they've also been evident in other parts of the country. We do live in wonderful economic conditions. That is not to deny that there are some in our midst, some of our fellow Australians who through no fault of their own have not enjoyed the same level of prosperity as the rest of the citizenry and we should never forget that. And we should also always look to the great human dividends of economic prosperity and the greatest human dividend of all has been the dramatic fall in unemployment. The fact that we have a 33 year low in unemployment, and astonishingly in the last 12 months the number of people who are counted as long term unemployed, that is people who've been out of work for more than 12 months, has fallen by no less than 28 per cent. Now that's an astonishing figure, but it's also a very heart warming figure because these are the people who've really struggled to be part of the bounty of our present generation. I can't prove this but I have a strong suspicion that one of the reasons the long term unemployed level has fallen so sharply in the last 12 months is that freed of the burdens of the old unfair dismissal laws thousands of small businesses in Australia have taken on more staff, safe in the knowledge that if unfortunately in some cases it doesn't work out, people can be let go without the past insidious practice of having to pay $30 or $40,000 go away money rather than waste endless days in some kind of litigation regarding unfair dismissal. I think that is very much at the heart of the extra spurt that we've enjoyed with the fall in unemployment.
Although we live in great economic times, we also have pressures, all economies have pressures. Fortunately the pressures we have the moment are the pressures of prosperity. They're not the pressures of recession, of stagnation and they're pressures nonetheless, but they're the best sort of pressures to have. As always, our economy is finely balanced and the pressure of prosperity creates a sharpness to that balance that is sometimes absent when conditions are not so good. Some of the pressures, of course, you are very well aware of. The shortage of workers, particularly those with the requisite skills; and I was saying to a group of business men and women from Perth last night that it's my universal experience now and for the first time I've had it in 33 years in public life, of travelling around this country and being told in every part of the nation that the biggest challenge people have is getting the right staff and more generally getting enough staff. I want to tell you that I'm acutely aware of that. We have done a lot in that area but there's more that needs to be done. There is no simple solution to it, it does represent a time in our history when because of demographic and generational changes there are fewer people traditionally available in the workforce for the jobs that are available. And although it is great to have too many jobs for the people available, I'm conscious of the challenges it does represent particularly but not only in the resource industry. But the message that we enjoy the pressures or suffer the pressures of prosperity; that has two messages for governments and these are messages for both the Federal Government and also for state governments around Australia.
The first of those messages is that governments by their own behaviour should not add to the pressures. We have a low inflation environment, we have still very low interest rates. Fortunately we haven't had a wages breakout which would put at peril both our low inflation and our low interest rates and overwhelmingly the main reason why we don't have a wages breakout is that we have decentralised our wage fixation system. The last time we had a mining boom in this country the high wages paid in the resource sector spread relentlessly and inexorably through the economy so that firms that couldn't afford to pay those high wages had to lay off staff in order to survive. Now that is not happening now and we are containing wage inflation now because we have a decentralised wage fixing system; and you'll understand the next point I'm about to make without my even making it but I will nonetheless, and that is that if we are so foolish as a nation to return to a centralised wage fixing system much of that stability and prosperity can be put at risk.
So governments shouldn't add to pressures by changing policies that are going to underwrite higher inflation. The other pressure that governments should add to is through their own borrowings. We used to have an economic expression in Australia and it was a real sort of jaw breaker and that's probably why we don't have it any more, called the public sector borrowing requirement and that used to collectively describe the aggregate borrowings of the Commonwealth and the states. Perhaps the reason we don't have that expression now is that there is no aggregate any more of the Commonwealth and the states, there's only an aggregate of the states because the Commonwealth doesn't borrow in competition with you any more, you of the business community, because we have eliminated the net debt of the Commonwealth. But the states still borrow, the states still borrow and they borrow in a way that is adding pressure to interest rates and I address this very directly because we all have an interest in containing pressures on interest rates. We can contain them by having a wages policy, an industrial relations policy which is decentralised and therefore sees only affordable wage increases paid by firms. We can also have a practice by governments around the nation, including the state government, somehow or other when you talk about deficits nobody ever mentions the debts and they're now something in the order of $50 to $60 billion accumulated of state government debt, and the more state government debt there is the greater the pressure on interest rates. That may be an old fashioned well understood theory of economics but in practice it is still very much the case. The Commonwealth has entirely vacated the field of adding to pressure on interest rate through its borrowings and I think it is a matter of great regret that at a time when we are well and truly out of the business of adding to upward pressure on interest rates, state governments around this country, not all of them, but a lot of them are doing the complete opposite.
The other pressure, of course, that governments shouldn't add to is to turn their backs on economic reform. The great economic conditions we have the present time are a combination of circumstances. They're of course a combination of the extraordinary energy and ingenuity of the business men and women of this country and the employees of this country. The egalitarian character of our society has worked greatly to our advantage in the early years of the 21st century. Our willingness to absorb people from the four corners of the earth and to judge them on their character and their willingness to work and contribute and not on their race or their colour or their background or their social status has also helped to underwrite the performance of the Australian economy. But fundamentally the other great contribution that has been made apart from the ingenuity of our people and the great endowment of providence of our resources has been the willingness of governments over the last 25 years, and I include in that a couple of the reforms of the former government and I've never been unwilling to acknowledge that, the willingness of governments over the last 25 years to undertake necessary reforms. And I often say to audiences like this that if you are thinking about the Australian economy 25 years ago you would think that it needed a number of great reforms. It would need financial deregulation, it would need tariff reform, it would need tax reform and it would certainly need industrial relations reform and it would also need a fiscal reform that embraced the government getting out of running business enterprises because governments are notoriously incompetent at running business enterprises. And if you think back over the last five years you can actually remark that we have achieved all of those reforms.
Two of them were carried out by the former government with strong support from the then Coalition Opposition. The other three have been carried out by the government I have led and on top of that we have historically returned the Budget to very healthy surplus and paid off $96 billion of Government debt. I have to report, of course, that in those endeavours, so far from receiving any assistance from our political opponents they have not repaid our compliment in our Opposition years, they have in fact opposed every single one of the major economic reforms that this Government has carried out over the last 11 years. They opposed industrial relations reform, the first time around they opposed the reform of the waterfront, they opposed taxation reform, they opposed the privatisation of Government businesses although they in Government themselves had privatised such bodies as the Commonwealth Bank and Qantas which they had said previously they wouldn't do, and of course they have opposed very strongly bringing the Budget back into surplus. But that is the past, what matters to me is the present. And what matters most to me, not only as Prime Minister and leader of the parliamentary Liberal Party and somebody wanting to again enjoy the favour of the Australian people at the ballot box at the end of the year, but what concerns me even more than that is the long term implications to the Australian economy if any one of those major reforms is to be reversed. What the Labor Party proposes to do if it is elected is to reverse lock, stock and barrel, and don't anybody be in any doubt about it, lock, stock and barrel, the industrial relations reforms that we have painfully, in a political sense, undertaken over the last few years. It's not easy when you are advocating and implementing a reform of that magnitude in the teeth of populist Opposition, but we have done it because we believe it is good for the Australian economy, it's good for our future and the evidence is in that it is. That we've seen 365,000 more jobs created since WorkChoices was passed. We've seen a continued rise in real wages, you have one in four workers in Western Australia on an Australian Workplace Agreement and overwhelmingly, and in many cases, they are hundreds of dollars better off a week as a result of those workplace agreements.
My great concern of course is that if those reforms were to be reversed it would be the first time in a quarter of a century that this country had turned its back on a major economic reform and if you believe as I do that today's prosperity is a product of yesterday's reforms and that necessarily tomorrow's prosperity can only be built on today's reforms, the implications of a major reversal of a significant reform are enormous. They would send a signal not only to Australians, but they'd send a signal to the rest of the world that this country had lost the zeal and the commitment for economic reform. That having put in what can only be described as a stellar performance as a nation over the past few years it had decided that it was all too much effort and that somehow or other we had to down tools on it. So in this area of industrial reform the choice is a very stark one. Let me put it to you this way, that if we are defeated at the end of the year, if the Labor Party wins, then the industrial relations laws will be reversed. Those reforms will be buried with all the damage that involves for Western Australia and for the rest of the country, for large companies especially but not only in the resource sector but generally, and also for small business, those reforms will be buried and they'll be buried lock, stock and barrel. But worse than that, they will never come back because if they are reversed as a result of a Coalition defeat at the end of this year no Coalition government in the future in my view will want to revisit the reforms. It will become part of the conventional wisdom of Australian politics that you can't reform industrial relations, that that's a no go area for any government and that any governments taking leave of its sense if it endeavours to undertake it. Now, I say that very deliberately to you all because I believe it. I believe it based on my observation of Australian politics, what I judge to be the mood of the Australian community. If, on the other hand, the Coalition is returned of course the laws will be retained and what is more even if there were to be a change of government in the future they will never be repealed because they will become so entrenched that they will not be capable effectively of repeal without enormous dislocation. And that some future Labor government will be forced to adopt the approach that was adopted by my friend Tony Blair, the former Labor Prime Minister of Great Britain, when he was elected. And he said one of the very first things he told his movement was that Britain would need to retain the industrial relations reforms of the Thatcher era.
Now I know how important workplace reform is to this Chamber, I know how important it is to the business community of Australia. And I don't pretend that every single thing my Government has done has met with approval in the business community and nor it should because although we are close to the business community unlike our opponents we are not owned by any section of the Australian population. No business organisation sends delegates to the floor of Liberal Party conferences and we genuinely do represent the entire Australian community. But there is a lot at stake on this issue and very dramatically this morning the Australian Building and Construction Commission released a report carried out by Econtech, a very reputable economic organisation based in Canberra, that has done good work for both sides of politics. And it indicated just how dramatically industrial relations reform through a combination of the Cole Commission inquiry and also WorkChoices, what a dramatic impact it had had on the construction industry. The $15 billion boost to the industry, the 9.4 per cent rise in productivity, the dramatic contraction of the differential between commercial construction costs which for about a 10 year period were running some 10 per cent ahead of residential construction costs to a differential of about 1.7 per cent in January of 2007. But even more heroic than that has been the extraordinary transformation in the industrial scene on building and construction sites around this nation where the number of man hours per thousand, or whatever it is, has fallen by something like a factor of 35 to a factor of two or three in the space of about two years. And wherever I go in the country company after company will tell me that the transformation in the industrial relations climate brought about by these changes has been dramatic. And once again the choice is very stark. The stay of execution has been granted for 2010 but if a body is slated for execution its authority drains away once that announcement has been made. And it's quite within the capacity of a newly elected government to deny funds to the body before it is formally abolished.
Now I have spoken very directly and with feeling on these issues because I regard them as enormously important to the nation's future. The implementation of our industrial relations changes has not been easy but it has been necessary and it has been beneficial. And the benefits of it are beginning to be more and more apparent to the Australian people. I welcome the fact that the Chamber is running a public information campaign on these laws and I look forward to seeing and learning about that campaign. Because it is important that we explain to our fellow Australians the importance of maintaining the gains of this legislation and the gains are there to be seen. The lower unemployment rates, the continued rise in wages, the much greater flexibility, the capacity of employers and employees if they wish to bargain directly with each other, the proper maintenance of people's right to join unions and to have those unions bargain on their behalf if that is their wish. It is not the goal of this legislation to destroy the union movement in this country. It is the goal of this legislation to enhance the right of choice of the employees of this country and the employers of this country to bargain directly with each other without the intervention of a third party if that is their joint desire.
Can I finish, ladies and gentlemen by returning to the point I made at the beginning of my remarks and that is that we are living in, historically speaking, quite remarkable economic times. This is the strongest economy Australia has had since World War II. We had high rates of growth and very low unemployment in the 1960s but then we were a very protected and cloistered economy. We are now an economy that is open for business around the world. We are part of the global economy forever and we have only one way to go and that is to continue to remain competitive. I often use the metaphor of economic reform being like participating in a foot race towards an ever receding finishing line - you never reach it but you have got to keep going knowing nonetheless that you are never going to reach it because if you don't keep going the other blokes in the race are going to go past you and that's the nature of the world in which Australia is living. And although we are entitled to feel pleased about the good economic times we have we should not complacently imagine that the economy is on auto pilot. We should not imagine for a moment that if we just ease up it will all keep going because there are others seeking to grab our market share. Even in the fabled resources sector there are competitors in other parts of the world, and those in the industry will know this only too well, whose governments don't require quite the same standards in relation to a lot of other things and they can grab a market share as quickly a possible if we drop our guard and allow them to do so. That requires of us a modern sophisticated humane western society which does require appropriate standards in relation to so many things. It requires particular vigilance to retain our competitive edge.
So my message very simply my friends is, we are living in most remarkable economic times but we can't be complacent. As always economic management is a finely balanced challenge. But to come here again to Perth is a source of great energising for me. The spirit of this great city, the spirit of Western Australia, its entrepreneurial flair, its desire to look to the future is quite remarkable and I compliment it and I finally compliment the Chamber on the way in which it has led debate on so many important economic issues. I haven't always agreed with you and you haven't always agreed with me but we have always been working together to build a more prosperous Australian community. And we both know that you can't build and maintain that prosperity unless you are prepared to carry out reforms and unless you are prepared to argue and advocate those reforms to the broader Australian community.
I thank the Chamber, I wish it well and let us all remember the challenge of prosperity and that is to work hard to maintain it for future generations. Thank you.
[ends]