Thank you very much John, my parliamentary colleagues, ladies and gentlemen. It's a real pleasure to be back again and to have the opportunity to address this annual dinner of the Australian Industry Group. And as I was reflecting earlier this evening on what I might say, I thought relevantly I hope, of two events, each of which in a way is very significant to the circumstances in which we now find ourselves. The first of those was the formation of the Australian Industry Group, and I had the honour of addressing the launch. I think it was at the National Press Club and I think it took place about two or three days after the launch of the new taxation system policy back in 1998. And I recalled, in relation to that gathering, two important things. I remember the very strong and early support that your organisation, I think in its earlier manifestation or part of it as the MTIA, had given to the new taxation system, particularly the very important changes to the business taxation regime, and I also recalled back in 1998 at the launch of that group that unemployment in Australia was still hovering around 8 per cent.
Well now, six years on, I don't hear much talk about the new taxation system. I'm sure from time to time, you all hear and experience and express the odd grumble, but by and large it is now a reform that we've taken in our stride and put very much behind ourselves. And I do want to say again how much I appreciated the very early and strong support that your organisation gave to the need for taxation reform. And as I speak, of course I remark, and as you're all aware, unemployment in Australia has declined from that level of around 8 per cent to now be around 5.5 per cent, with the hope that it can go even lower.
The other event I recall very vividly is a gathering I attended in New York in January of 2002, when the World Economic Forum was held symbolically and importantly in New York, only some five months after the attack on the World Trade Centre, and I attended a gathering of business leaders from both Australia and the United States, assembled by our country's outstanding Ambassador in the United States, Michael Thawley, to talk about the prospects of getting a Free Trade Agreement between Australia and the United States. And at that time, the mood of the gathering was very positive about the long-range outcome and very convinced that it was important to the economic future and the relationship between our two countries. The view was that it was something in the order of a six, eight or ten year journey, and it scarcely seems possible, even today, this week, that that journey should have lasted only a little over two and a half years. And I do again in the context of that, thank the Australian Industry Group for the very strong support that it gave to the negotiation of the Free Trade Agreement because it will be an historic moment when the legislation is finally passed through the parliament, and it is my earnest hope that that will occur this week. This Agreement is of great long-term significance to our country, to link ourselves, whatever the arguments may be about the dimension of the economic benefits, to link ourselves to the most powerful economy the world has ever seen and an economy that will grow even more significant as the years go by, is an enormous benefit to this country and will, as time goes by, be seen as a landmark in its economic growth and its economic progression.
The relevance of unemployment of course is obvious. We all hope to see further reductions in unemployment. I recall reading a document a few days ago indicating that when my Government came to power, there were 35 federal electorates in Australia that had double digit unemployment. That number has fallen to four. And I do believe that the major reason why unemployment has fallen steadily over that period of time has been the greatly improved productivity of the Australian economy, the much greater flexibility of our workforce, the recognition by both business and employees together that the future of this country lies in engaging with the opportunities that a globalised world economy present to us. Now I don't pretend that every challenge to the Australian economy is behind us and I don't pretend that there can't be legitimate argument about the pace and the rate of reform and different viewpoints from a political standpoint and otherwise, about the different weight that should be given to individual policy approaches.
But I do believe that if you look at the experience and the history of the Australian economy over the last eight to ten years, it is incontrovertible that reforms to our industrial relations system lie very much behind our improvements in productivity. We've seen, over the last few years, something in the order of a 23 per cent increase in the productivity of the average worker in the market sector. We've seen on the waterfront, reforms that have resulted in a 75 per cent improvement in the crane rates at our major ports. And I can certainly recall, in the long years of Opposition - and I remember those years, you always do - and also in some of the years earlier in Government, many businessmen and women telling me how important it was for one day a Government of this country to grasp the nettle about reform of our waterfront. That also occurred in 1998 and I think the industrial relations history of this country should be indebted to the contribution that a very determined Industrial Relations Minister at the time, Peter Reith, made to leading the reform push on behalf of the Government for changes to our waterfront. Over the last few years, industrial disputes have fallen very dramatically and we've seen importantly, and very pleasingly, we have seen a major increase in the real wages of workers. Over the last eight and a half years, real wages have risen by about 14 per cent, and what I can fairly claim on behalf of the Government over that period of time, that we've not only delivered more jobs, we've not only delivered lower interest rates, but we have also delivered significant increases in real wages.
So it goes without saying perhaps that reforms to our industrial relations system have in many ways been at the heart of the economic prosperity that this country has enjoyed over recent years. Your President indicated that I had a passion for the issue of industrial relations, and I guess of all of the policy issues in the economic area with which I have been connected and identified in the various positions I've held in public life, not only as Prime Minister, but also in earlier years in other positions, none has seemed to me to be more important than the need to reform and to maintain the reform of our industrial system, because deep down it's an expression of the modernisation and the embracing of the modern relevance of the Australian economy. There may have been a time when it made sense, not only in a social, but also an industrial context, to have an award dominated system. There may have been a time when a more centralised wage fixation system was right. There may have been a time when that was needed in order to protect the rights of individuals. But the experience of recent years has demonstrated that this country has gone ahead in leaps and bounds as a result of embracing higher productivity, and we would never have achieved the higher productivity of recent years without having a freer labour market.
I had the opportunity a couple of weeks ago of visiting the Pilbara and of being reminded yet again of the enormous opportunities that lie in front of this country, not only in the manufacturing sector, but particularly being in the Pilbara, in the energy sector, in opening up the great markets in China, and to be told that something in the order of 92 per cent of workers employed in a particular area were on individual contracts and to know that all of them are under the federal law, and to know that if that law changes, the productivity of that sector of our economy will be under significant challenge. And it's therefore self-evident that in the coming election campaign, whenever that may occur, industrial relations will and should be at the centre of the economic debate.
In all the areas of economic policy, there is no greater divide between my Government and that of the Opposition than in the area of industrial relations. We find it hard to accept that in a nation which has only 17.5 per cent of its private sector employees belonging to trade unions, that we should be contemplating a return to an industrial relations system that will essentially again be dominated by an awards system. We find it hard to accept that the alternative government should advocate the removal of the secondary boycott provisions from the Trade Practices Act, the abolition of Australian Workplace Agreements, greater rights of entry for unions, a requirement that companies doing business with the Federal Government should disclose the identity of their subcontractors. And I certainly hope it is not lost on those in business who are concerned about the industrial relations alternatives being offered at present that if there were to be a change of government at a federal level, there would be nine Labor governments, without let or hindrance or check or balance, throughout this country at a state and federal level, to introduce a significant change in Australia's industrial relations system.
Now I don't say these things out of mindless dogma. Of course there are ideological differences between political parties, and so there should be. It's part and parcel of a healthy democracy. It's fair to say that in many areas of policy, there has been something of a convergence over the last 20 years in Australia, and that makes to me all the more puzzling the embrace by our political opponents of an industrial relations agenda which will take us back some 15 to 20 years in terms of the changes that are being proposed. And I don't argue against these changes out of some kind of empty commitment to my own ideology, but I argue against them on the basis of the track record of our economy over the last eight and a half years.
As John pointed out in his remarks, we have sustained economic growth. For the first time since 1968, we have the double of unemployment below six per cent and inflation below three per cent. The regard of the Australian economy around the world is very high. We have a debt to GDP ratio of about 3.9 per cent. When you compare that with the United States in the order of 50 per cent, Japan something over 100 per cent and the OECD average of about 47 per cent, it is a remarkable achievement. And as your President quite rightly said in his introduction, there is a direct social and human dividend out of running a strong fiscal policy. It is often said that I agree with a lot of things that are said and done by the United States Administration. I want to make it very clear that there's one thing I very strongly disagree with about the United States Administration, and that is its persistence in running a very large budget deficit. The Government's capacity over recent years to run budget surpluses and to use those surpluses to repay debt has returned a great dividend to the Australian people. By paying back $70 billion of debt, we have annually about $5.5 billion to invest in education, in defence, in intelligence services, in taxation relief, in providing more incentives for retirement incomes, and generally in Australia's infrastructure future. And I think in particular of the investment of some $11 billion over a number of years not only in Backing Australia's Ability, but also in the area of AusLink.
I listened with interest to what your President had to say about the skills shortage which challenges Australia at the present time. Despite the fact that we have seen something close to a tripling of the number of Australians in apprenticeships and traineeships over the last eight and a half years, it remains a serious problem that too few of those people are in the areas of traditional trades. And I understand and accept the concern that has been expressed. I find it everywhere. I have over the past few weeks travelled quite a bit around Australia, which is my habit, and wherever I have been I have heard the same story, and it does represent a very significant challenge and one that the Government has begun to respond to in relation to its National Skills Strategy, but one that obviously needs, not only in the context of the upcoming election but more generally, no matter who is elected to govern this country for the next three years, it's an issue that deserves very serious attention.
I think one of the problems in this area is a deep and unfortunate cultural prejudice against people going into traditional trades areas. I think this country in some respects has become too obsessed with the relentless ideal of everybody who leaves school having to receive a university education. I know it's dangerous in a sense for me to say that because those who are unkind might say that I'm seeking to denigrate the importance of giving people a tertiary education, but the reality is that we have in the process, I think over the last 20 or 30 years as a community, we have wrongly and unfortunately and to our great cost, we have devalued the importance of apprenticeships and devalued the importance of a trade skill and of course we've also underestimated the impact that it was going to have on the workforce that we need for the future.
This country does face the problem of an ageing population and there are different ways that the Government has begun to respond, not only in the area of retirement incomes, but also in the area of ensuring that our health services are kept on a sustainable basis. And part of the problem of course is to encourage greater workforce participation, and the answer to that challenge lies in a number of areas. It lies in achieving a more effective balance between work and family responsibilities, and I think we have made significant progress along that front over the last few years. But it also lies in recognising that the challenge of the future is going to be a shortage of trained and skilled people, particularly in areas of manufacturing and other areas, which are of great concern to your organisation. So can I say to your President that I well and truly understand what you had to say about this issue, and it's one the Government is very conscious of and very responsive towards.
Can I just conclude on a note of very great optimism, and that is that over the years I have in different responsibilities and different positions, had a long association with your organisation and its predecessors, and I want to record my gratitude and my respect to it for the way in which it has sought to place the national interest up there with the legitimate interests of your members. I haven't always agreed with you. I can remember some very vigorous dinner conversations with many of your former members of your National Executive over industrial relations policies in the 1980s. I've been understandably the butt of criticism and rebuke on occasions in relation to particular stances I've taken or my party has taken. But I've always believed that your organisation has wanted a strong, prosperous and fair Australia, and I've always known that your organisation has accepted the need for change and adjustment.
And many people say to me, what are the reasons behind our economic success of recent years? And quite naturally I say one or two things about the success of the Government's policies. But the other thing that I try invariably to mention is the fact that one of the great qualities that Australians have is that they are very adaptable people. And the way in which your organisation has embraced a more global outlook, the way in which I know some years ago you made a decisive change in policy towards tariffs, the way in which you've recognised the need for a different approach in industrial relations, has been emblematic of the recognition that you've always had about the long-term importance of change and adjustment for the future. That really is a metaphor for the success that this country has had over recent years. We have adapted. We've done it better than most because we're better at adapting than most. Our relatively classless character as a nation enables us to change together and change for the better, and that really has been very much part and parcel of the Australian journey and the success of the Australian economy, and your group has played a very major part in it. I thank you for it and I wish your members great prosperity and success for the future.
Thank you.
[ends]