Thank you very much Matt for that very warm introduction. Danielle Blain, the State President of the Western Australian Division of the Liberal Party, my Parliamentary colleagues, Sir Charles and Richard Court, former Premiers of Western Australia, ladies and gentlemen. As always it's a real pleasure to be back in Perth. As always, it's a reminder when I visit this tremendous city, it's a reminder of the distinctive vibrancy of Perth, of Western Australia and the very special contribution that the industries and the people of Western Australia continue to make to the growing and spreading strength of the Australian economy. We are living in a remarkable time. The Australian economy now is the best and the strongest it's been since the end of World War Two. We may have had boom times in the 1960s. I was reading something in the Financial Review this morning that mentioned that in 1958/59 we had growth of 7% in the Australian economy. That of course, as some of you will remember was followed in 1961 by a credit squeeze which resulted in a near recession and also resulted almost in the defeat of the Menzies Government at the 1961 election when it survived mythically on those Communist Party preferences in Jim Killen's seat in Moreton. But I won't go into all the detail of that. I simply make the point that our economy then was growing quite strongly. But in a way it was a sheltered growth and it was a sheltered economic existence in the 1950s and the 1960s. We had very high tariff walls. We had a controlled exchange rate, indeed a fixed exchange rate. And every so often we would have a devaluation crisis. They're relics of the history books now. We had exchange controls. We had an even more centralised wage fixing system than we now have. And of course we hadn't even begun to think of the need for taxation reform or for deregulating the Australian financial system.
If you fast forward to 2005 our growth has now entered its 15th uninterrupted year. And that is an extraordinarily long period of time. It's steady and reliable. The last quarterly national account figures showed that the basis of growth in that quarter was high quality because it came off the back of very strong business investment. And we are succeeding courtesy of the extraordinary opportunities that the resource sector has and of which so many of you are very familiar. We are succeeding in rebalancing our economy as the housing sector in some parts of the country, not so much in Western Australia, recedes a little, it is being replaced by the extraordinary growth in our exports especially but not only to China. So we do have a remarkable economic picture. We have unemployment at a 30 year low. We have a record in the participation rate at 64.8%. The participation rate is the economist's description for the number of people wanting work, the number of people who are theoretically part of the labour market who are actually wanting a job and it's the highest ever. And that's a real mark of the strength of the economy because if the participation rate now were what it was say 10 or 15 years ago when people thought it was too hard to get a job because the economy was flat on its back,back in the early 1990s, people found it very hard then to think of even getting a job. If we had a participation rate now like it was then, our unemployment rate, which is at a 30 year low, would even be much lower than it is now. So all of that adds up to a very strong economic picture, an economic picture that is not without challenge and I'll come to that in a moment in relation to some of the international factors that we ought to be concerned about.
Now many people would think with a scene like that with strong business investment, very strong export prospects, very low unemployment, a very high participation rate, a great amount of consumer confidence despite the high price of petrol, one would think many would argue indeed that that is precisely the time that a Government should go away and forget about doing anything more. Can I argue to you today and many of you may have heard me say this before, but that in my view is precisely the wrong prescription for where we are the present time. And the message I want to leave with you today, and there's really only one message I want to leave with you today is that the Government remains very firmly committed to the ongoing economic reform agenda. We do not think for a moment that our task has been completed. One of the reasons why, in fact the overwhelming reason why the Australian economy now is as strong and that strength is as broadly based as it is, is that we have had in this country some 10 to 20 years of economic reform and economic change. And in its wake we have created a new Australia from an economic standpoint. It's a more adaptive, adaptable; it's a more flexible; it's an economically more aggressive country, it's more innovative and it's a country that as a result is held in even higher regard now than it has been held in the past because of that great economic success. We've had a wave of reform.
Some of those reforms were carried out by our Labor predecessors and I have never been reluctant to give them credit for that. The great difference of course is that when they tried to reform something and it made sense we supported them, we didn't oppose them. I have to report to you that over the last nine and a half years I can't think of one single major economic reform that we've tried to carry out that the Labor Party has supported. When the Labor Party decided to deregulate the financial system, following the recommendations of the Campbell Committee that I'd established as Treasurer, we supported them. When they floated the dollar, we supported that. When they decided to reduce tariffs which is such an important move for the rural community and also for mining industry, both industries of which are tremendously important to Western Australians, we supported them.
By contrast, in the nine and a half years we've been in office, every single major reform, tax reform, industrial relations reform, our attempts to sensibly deal with Government ownership of Telstra, getting the budget back into surplus, other reforms, the Labor Party has opposed them every inch of the way. For a while that worked to the extent that they could make life more difficult for us. But now as a result of the last election - we don't have control of the Senate- to use Peter Costello's very amusing and very apt phrase, we have a majority of one on a good day. And I think that is a reasonable description of just where we are in relation to the Senate. But a majority of one on a good day, providing you pick your day, is enough. And can I report to you that we've already seen the benefits of that in three crucial areas. We would never have got the taxation changes affecting the point at which the top rate of income tax comes in,from the 1st of July next year at $125,000. Only two years ago it was $60,000. We would never have got that through if we hadn't had a majority in the Senate. That would have been blocked as earlier attempts to do things like that were blocked. We would never have got the legislation establishing the building industry authority through the Senate and I know that is very important to many people in the construction industry here in Western Australia. We would never have got that through if we hadn't have got a majority in the Senate and of course, we would never finally have got the sale of Telstra legislation through the Senate. So I think all of those things are important. And they are a reminder; they are a sample of what can be achieved as a result of these changed circumstances. And I want to confirm to you today that the Government remains committed to an economic reform agenda. And the opportunity that the numbers in the Senate give us mean that the prospect of implementing that agenda are much brighter than they were a year ago.
In speeches I make around the country I describe the challenge of economic reform as being akin to participating in a footrace towards an ever receding finishing line. You know in your heart you can't ever get there because it keeps disappearing, but you keep running hard because if you don't, the two blokes on either side of you are going to run past you and they're going to go after that ever receding line. And economic competitiveness is a bit like that. We have plenty of competitors around the world. We shouldn't imagine that we are the only supplier of energy. We shouldn't imagine that Australia is the only country that has large reserves of natural gas. I know from the experience I had and I know Richard Court had the same experience, when we began to negotiate with the Chinese about signing that wonderful natural gas contract that we concluded three years ago that we faced very strong competition. And the world out there is fairly harsh and competitive and unrelenting. And we're now part of a global economic environment. There's no turning back, there's really no point in debating it because it's with us forever. And we have to compete and we have to do well. And therefore we have to keep our own economy highly tuned and highly competitive.
The other metaphor or perhaps analogy I use is to reflect upon the state of the German economy at the present time. I mean no unkindness to the country or to the German people, but we have to learn from the experience of others. When I became a junior Minister in the Fraser Government in the 1970s the country that was held up as the exemplar of economic reform and performance was the then Federal Republic of West Germany. And it had done wondrous things. It came out of the ruination of World War Two and within the space of thirty years had built the strongest economy in Europe. The Bundesbank Bank as a central bank was the envy of other central banks. Germany could export, outperform any country in exports. And people flocked to Bonn as it then was, to find out how it was done. Sadly for Germany, the reform process stopped in the 1970s and now some thirty years later, or a little less than thirty years later, the country's economy is seen as stagnating with unemployment at about 11% and in nominal terms as high as it was during the great depression. Now why did that come about? That came about because Germany downed tools on the economic reform challenge. Just when they had, in a sense, had it licked, they decided that was the time to stop.
Now there's a lesson in that for Australia. And there are plenty of people around who are saying reform has gone far enough. We're all tired of it; we don't want to do any more. Our opponents are like that. They're against industrial relations reform, they were against tax reform. I don't know what the attitude of the Australian Labor Party is on for example, uranium mining. They still, I think, have this three mines policy. Martin Ferguson their spokesman on one area of it is in favour of it. Some of the unions are in favour of it. The Australian Workers Union's in favour of it, but Dougie Cameron from the Manufacturing Union, he has a very different view about it. So one way or another I guess a policy will emerge. But the point I stress, and I stress with some fervour, is that it is precisely when the economy is doing well, it is precisely when we appear to be in a strong position that we have to redouble our commitment to reform. And that is why we remain very, very strongly committed to the programme of industrial relations reform that I outlined in May and I've spent some time talking about over the past few days since I've been in Western Australia.
And that reform really has three key elements. The first of those is to break the too close link that now exists between the awards system and workplace agreements. With a simplified new standard to replace the existing no disadvantage test, it will be easier to make workplace agreements. We won't be removing the opportunities for collective agreements. We won't be denying people the right to be represented by unions. We won't be denying people the opportunities to be covered by the awards system. But we will be providing a much simpler, easier facility for employers and employees to enter into workplace agreements.
The second element is to dramatically simplify the laws relating to unfair dismissals. Those laws which were only brought in in 1994 as a result of a secret election deal between the ACTU and the then Keating Government. Those laws, so far from protecting people, have actually destroyed jobs. And the war stories of small and medium sized businesses of dealing with the unfair dismissal laws are legion. And they have created a climate where go away money is freely paid rather than to allow firms of small and medium size to get tangled up for days, weeks, even months in protracted hearings and litigation regarding vexatious claims.
The third element is to create a national system and that is to use the corporation's power of the Constitution to create a single national system to respond to the reality that Australia is a national economy. When I practiced law in Sydney in the early 1960s,and I often use this to describe the way in which our country has changed,we had only a year or two emerged from the situation that if you incorporated a company in New South Wales and you wanted to carry on business in Western Australia or Victoria you had to register it as a foreign company in Victoria or Western Australia. Now that provokes laughter now. But I tell you what, it was a reality then. And I tell you what else was a reality - that the procedure that you had to adopt, the registration procedure to get it registered in Victoria or Western Australia was virtually identical to the procedure you had to adopt to get it registered in the United Kingdom or in Canada. It was a measure of how the Australian States then saw themselves in so many ways as separate economic units. We didn't have great national firms. I'd better not start naming any of them. I might get into trouble. But some of them are extremely well known to a gathering like this. You had a firm that was; well I will name one. I mean for example, you had a firm called Allen, Allen and Hemsley in Sydney. Its now Allens, Arthur, Robinson. And if you wanted a law firm to carry out your business in another State you had to engage them as an agent to carry it out. Now all of that has changed. We have in so many ways become a national economy. That doesn't mean to say that we don't retain distinctive characteristics and we don't retain distinctive needs. But there is a national character about our economy now. And I think that requires a national industrial relations system.
This is not going to be easy this reform process but I believe it's a fight worth having because it's a cause that will deliver a more productive Australia. We need a new round of productivity improvement in this country. We are in a sense living off the back of earlier economic reforms. And we therefore have to make sure that we lay the basis of further change and further reform in the future. And industrial relations reform is a crucial part of that.
Can I before I conclude just say a couple of things about the challenges coming from around the globe. The most important and difficult of those of course is that of fuel prices. I wish I could say otherwise but we are going to be stuck with higher petrol prices for quite a long time. They may not remain quite as high as they are now because to some degree the current spike has been caused by the expectation effects coming off Hurricanes Katrina and Rita. It's not just the refining capacity that has been knocked out in the Gulf of Mexico. But it's also the expectations that people have had about the consequences of that. The reality is that the demand for oil is much greater now than what it was expected to be as recently as two or three years ago. Part of that is due to wholly benign positive reasons. And that is the world economy is growing more strongly than was thought then. The Chinese economy in particular has grown in a spectacular way, and no country has been a greater beneficiary of that, or will continue to be a greater beneficiary of that than our own country. So it's not something that we would see with this disdain or dread or concern. In a sense, it's valuable for Australia.
The other factor of course is that the Japanese economy is also beginning to gather a lot of strength and I think one of the best political events in recent weeks was the re-election of Mr Koizumi as the Prime Minister of Japan. He's a courageous economic reformer and I think his election victory, which I welcome very strongly on both a national interest and a personal basis, I think that victory will embolden him not only to press ahead with post office privatisation, but also to press ahead with other economic reform. And that is valuable and important for Australia as well because we should never forget in thinking about China, we should never forget the fact that Japan still remains Australia's single best export destination, a position that Japan has occupied for so long and something that we should always keep very much in mind.
But I think we do face the reality of higher petrol prices and there's no easy fix to this. Anybody who imagines that it's easily fixed by fiddling with the excise level is wrong. If you wanted to make a serious impact on the excise, you'd have to take ten cents off it. And that would cost at least $3b a year. It's of no comfort to the Australian motorist for me to say it, but apart from the United States, petrol in this country is cheaper than it is in any country with which we'd want to make a comparison. It's about double. It's about $2, this is translated into Aussie dollars per litre, not English pounds per imperial gallon. It's $2.30 approximately in Britain. About $2.11 in France, about $2.19 or something in Germany and it's about $1.39 or 45 in Japan. Only in the United States is it cheaper.
Now as I say, none of that is of any comfort, but I don't think it serves the purpose of sensible discussion of this issue for me to pretend that there's some easy gimmicky solution as some have done. There isn't. There are things you can do at the margin. We decided not to go ahead with the minor increase in excise at the beginning of next year in order to fund some investment by the oil companies in certain pro-environmental activities. And we've, I think, begun a sensible discussion in alliance with the oil companies about the use of bio-fuels. But neither of those two things represents anything of a silver bullet and we have to understand that it's one of these things that we'll have to deal with and grapple with very significantly over an extended period of time.
Now that represents the most difficult challenge internationally. Of course domestically, once again Western Australia has rescued the rest of the country courtesy of the wheat crop of course. Western Australia again, perhaps courtesy of the climate. I wont be so crass as to emphasise that point, but I think you'd want to say, and Barry Court reminded me yesterday that once again Western Australia has come to the rescue of the whole country with a wonderful contribution to our wheat crop. But we still do suffer in some parts of the country severely from the effects of the drought. And although there are very promising signs that we are recovering, its still something that's going to leave its mark.
But overall my friends, it's a very positive outlook. It's an outlook that I like to believe the Government's policies over the last nine and half years have contributed to, but the greatest contribution I believe has been made by the way in which the business community of this country, and the way in which the workers of this country have adapted to the new and challenging economic environment. This country has changed very significantly over that period of time. There are a lot of things that haven't changed because they didn't need to change. They were going very well. And I've always been somebody who believes that those things that work well you should hang on to and it's those things that aren't working well that you should seek to change. And we have changed an enormous number of things. The way in which we work, the way in which we relate to each other in the workplace, the way in which we compete around the world. But the lesson we must learn from that, the lesson we must learn from others is that the reform task is never finished. It's always essential to keep running towards that ever receding finishing line. Its annoying, it's frustrating, you wish it were otherwise, but once you let up, several people will run past you. And then you're left to contemplate the missed opportunity of your lack of resolve and your lack of commitment.
Can I conclude my remarks by thanking the Liberal Party in Western Australia for the wonderful result that it delivered. And its now almost a year ago since I addressed a gathering here. I think it was probably the first gathering in this Convention Centre on the eve of the 2004 election. It was an election that delivered a result, the magnitude of which I had not expected. And it was an election that delivered a magnificent result here in Western Australia. Federally in Western Australia we did the second best of any State. On a two party preferred basis only Queensland delivered a better outcome for the Coalition than Western Australia. We were able to win two extra seats in the House of Representatives, the seats of Stirling and Hasluck and I visited both of them over the past two days. And I was out in Stirling this morning addressing a community gathering of almost 1200 people that had been assembled through invitation in a random fashion in the space of a short period of time.
And to see the enthusiasm of those two members, Stuart Henry in Hasluck, and Michael Keenan in Stirling, and added to the tremendous efforts and enthusiasm of all the other Members and Senators from Western Australia, the Division has done great things for the Federal Government. And Danielle, to you and to Paul I express my particular thanks for the tremendous work. And Matt, can I say that I look forward to working very closely with you. It's pretty lonely at those dinners at the Lodge on the eve of Premier's conferences when you're surrounded by 8 Labor Premiers and Chief Ministers. And I look forward to having some Liberal mates and I will work very hard with all of the State Parties to do everything we can to bring about that situation. Because the idea that we should exist in any kind of indefinite sense with this imbalance is something I'm not happy with and I know that Liberals all around Australia are unhappy with. But to all of you, thank you for the support that you've given to the Liberal Party over the years and the support that you continue to give to our great cause.
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