PRIME MINISTER
EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY
ANNUAL GENERAL MEETING OF THE BUSINESS COUNCIL OF AUSTRALIA
TUESDAY 29 OCTOBER 1985
THIS IS THE THIRD OCCASION ON WHICH I HAVE HAD THE HONOUR TO
ADDRESS THE ANNUAL GENERAL MEETING OF THE BUSINESS COUNCIL
SINCE I-TS INCEPTION IN 1983 THOUGH, I MUST ADMIT, ONLY THE
FIRST OCCASION ON WHICH I HAVE ADDRESSED THE BCA IN TWO
CITIES SIMULTANEOUSLY.
I CONGRATULATE THE BCA ON ITS INITIATIVE IN ARRANGING THIS
DUAL-CITY PRESENTATION.
THIS ADDRESS MARKS THE THIRD YEAR OF FRUITFUL DIALOGUE AND
CO-OPERATION BETWEEN THE COUNCIL AND THE LABOR GOVERNMENT. IT IS
A DIALOGUE WHICH HAS NOT SOUGHT TO DENY LEGITIMATE DIFFERENCES OF
OPINION WHERE THEY EXIST. BUT A DIALOGUE, NONETHELESS, WHICH HAS
DEMONSTRATED OUR SHARED AND UNAMBIGUOUS COMMITMENT TO A DYNAMIC
AND GROWING ECONOMY TO WHICH SUSTAINED EXPANSION OF THE PRIVATE
SECTOR IS OF FUNDAMENTAL IMPORTANCE.
I BELIEVE, AS I SAID AT THAT FIRST AGM IN 1983, THAT
REGULAR, INFORMED AND PROFESSIONAL CONTACT BETWEEN BUSINESS
AND GOVERNMENT IMPROVES THE QUALITY OF PUBLIC DEBATE AND
ADVOCACY IN AUSTRALIA. THIS IS SOMETHING THAT HAS TO BE
WORKED AT CONSTANTLY BY BOTH PARTIES, INCLUDING THROUGH
DISCUSSIONS SUCH AS WE HAVE HAD TODAY.
AND, ON BEHALF OF THE GOVERNMENT, I PLEDGE TO CONTINUE TO
PROMOTE A CLOSE AND FRANK WORKING RELATIONSHIP BETWEEN US.
IT IS NOW WIDELY ACKNOWLEDGED, BOTH HERE IN AUSTRALIA AND
OVERSEAS, THAT THE ECONOMIC POLICIES WHICH THE GOVERNMENT
FIRST ANNOUNCED IN 1983, AND HAS CONSCIENTIOUSLY APPLIED
SINCE THAT TIME, HAVE DELIVERED THE MOST CONSISTENTLY
SUCCESSFUL ECONOMIC PERFORMANCE IN AUSTRALIA FOR OVER A
DECADE. RECOGNITION IS ALSO SPREADING OF THE CENTRAL ROLE
OF THE ACCORD. TO QUOTE BUT ONE RECENT EXAMPLE, THE
SECRETARY-GENERAL OF THE OECD HAS DESCRIBED THE RESULTS OF
THE ACCORD AS " BRILLIANT". THESE RESULTS INCLUDE, AS YOU
ARE ALL AWARE, A SIGNIFICANT CUT IN INFLATION, A SHARP
WINDING BACK OF REAL UNIT LABOUR COSTS AND A CORRESPONDING
RESTORATION OF THE PROFIT SHARE.
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OUR ECONOMIC GROWTH RATES HAVE BEEN THE BEST OR CLOSE TO THE
BEST IN THE WORLD, AND WE ARE VERY NEAR TO DELIVERING ON OUR
COMMITMENT OF 500,000 NEW JOBS, WELL WITHIN THE THREE-YEAR
TIME FRAME.
OUR FORECASTS, BROADLY ENDORSED BY THE OECD, SHOW CONTINUED
STRONG GROWTH IN BOTH OUTPUT AND EMPLOYMENT IN 1985-86 AND
BEYOND. EVEN THE MORE PESSIMISTIC OF THE PRIVATE SECTOR
FORECASTERS HAVE BEGUN TO LIFT THEIR EXPECTATIONS IN THE
LIGHT OF THE STRONG GROWTH IN EMPLOYMENT WHICH IS OCCURRING.
NONETHELESS SOME COMMENTATORS SEEM SCEPTICAL THAT
AUSTRALIA's GROWTH PERFORMANCE CAN BE MAINTAINED INTO THE
MEDIUM TERM. I BELIEVE THAT, JUST AS IN THE CASE OF THE
SCEPTICS OF 1983, SUCH SCEPTICISM IS MISPLACED.
THE LESSON OF THE EXPERIENCE OF MANY COUNTRIES IN OUR
REGION, INCLUDING JAPAN, IS THAT IT IS POSSIBLE FOR
AUSTRALIA TO AIM TO GROW MORE RAPIDLY THAN THE WORLD AVERAGE
PROVIDED OUR PRODUCTS ARE SUFFICIENTLY COMPETITIVE:
COMPETITIVE IN BOTH THEIR HOME MARKETS AND ON WORLD MARKETS.
AS I HAVE OFTEN SAID, THE DEPRECIATION OF THE $ A HAS
PROVIDED BOTH AN OPPORTUNITY AND A CHALLENGE: AN
OPPORTUNITY BECAUSE AUSTRALIAN SUPPLIERS HAVE BECOME MORE
COMPETITIVE AS A RESULT, BUT A CHALLENGE TO ENSURE THAT THE
GAINS IN COMPETITIVENESS ARE SUSTAINED.
THE NEW AGREEMENT CONCLUDED WITH THE ACTU UNDER THE ACCORD
IS DESIGNED TO MAXIMIZE THE ADVANTAGE REAPED BY AUSTRALIA
FROM THE SUBSTANTIAL OPPORTUNITY WHICH DEPRECIATION
PROVIDES. MOST COMMENTATORS HAVE FOCUSSED ON THE ACCORD'S AGREEMENT TO
SEEK A 2 PER CENT DISCOUNT FROM WAGES INDEXATION IN THE
FIRST NATIONAL WAGE CASE OF 1986, ON THE BASIS THAT THE
IDENTIFIED IMPACT OF THE DEPRECIATION ON THE CPI AMOUNTS TO
AT LEAST 2 PER CENT. ON CURRENT INDICATIONS THAT WOULD
INSULATE WAGE COSTS FROM THE DIRECT EFFECT ON PRICES TO THAT
TIME OF THE DEPRECIATION WHICH HAS OCCURRED.
IT HAS BEEN ARGUED BY SOME THAT THE GOVERNMENT SHOULD HAVE
ACHIEVED SOME PART OF THAT DISCOUNT IN THE WAGES CASE JUST
CONCLUDED. INDEED, THIS OPTION WAS CAREFULLY CONSIDERED BY
THE GOVERNMENT. HOWEVER, A M4AJOR FACTOR IN OUR FINAL
DECISION TO SEEK THE 2 PER CENT DISCOUNT NEXT YEAR WAS THAT
THE IMPACT ON UNDERLYING WAGES COSTS OF A SIX MONTHS DELAY
A DELAY UNTIL EARLY 1986 WAS FOUND BY TREASURY TO BE
MINIMAL BY THE END OF 1986. IN THE GOVERNMENT'S VIEW IT WAS
A SMALL PRICE TO PAY TO SECURE THE SUBSTANTIAL BENEFITS OF
DEPRECIATION WHICH THE BROADER PACKAGE CAN DELIVER.
THE REST OF THE BROADER PACKAGE WHICH HAS RECEIVED LESS
ATTENTION INCLUDES AN AGREEMENT BY THE UNIONS TO DELAY ANY
PAYMENT ARISING OUT OF THE PRODUCTIVITY CASE UNTIL JULY
1986, TO MODERATE THE EXTENT OF THE PRODUCTIVITY CLAIM TO 3
PER CENT, AND TO SPREAD THESE PAYMENTS OVER TWO YEARS I
WOULD NOTE, IN PASSING, THAT WORKERS ARE ENTITLED UNDER THE
CURRENT PRINCIPLES TO APPLY TO THE COMMISSION FOR SUCH AN
INCREASE IN RECOGNITION OF THEIR ENTITLEMENT TO A FAIR SHARE
IN THE INCREASE IN REAL NATIONAL INCOME. FINALLY, AND
IMPORTANTLY, THE NEW AGREEMENT ALSO RENEWS THE VITAL
COMMITMENT TO " NO EXTRA WAGE CLAIMS" FOR A FURTHER TWO
YEARS.
ALLOWING FOR THE GROWTH OF LABOUR PRODUCTIVITY WHICH COULD
REASONABLY BE EXPECTED TO OCCUR OVER THE PERIOD, THIS SET OF
AGREEMENTS TOGETHER IMPLY THAT REAL UNIT LABOUR COSTS IN TWO
YEARS TIME SHOULD BE NO HIGHER THAN AT PRESENT. THEY IMPLY
THAT THE IMPROVEMENT IN THE PROFIT SHARE WHICH HAS OCCURRED
UNDER OUR POLICIES CAN BE PRESERVED. MOREOVER THEY IMPLY
THAT INFLATION, HAVING RISEN AS A RESULT OF THE INITIAL
INCREASE IN PRICES OF TRADED GOODS, WILL HAVE RETURNED IN
1986-87 TO AROUND THE LEVELS OF THE PAST TWO FINANCIAL
YEARS, WITH A PROSPECT OF FURTHER SLOWING IN 1987-88.
IN OTHER WORDS THE PACKAGE WILL SUBSTANTIALLY ACHIEVE
PRECISELY WHAT IS REQUIRED. IT WILL INSULATE DOMESTIC COSTS
FROM THE REALIGNMENT OF RELATIVE PRICES WHICH WAS INITIATED
BY THE DEPRECIATION OF EARLY 1985, AND IS ESSENTIAL TO
ENABLE THAT DEPRECIATION TO BE EFFECTIVE.
SUCH AN OUTCOME WOULD BE FAR LESS CERTAIN IN THE ABSENCE OF
THE ACCORD. THE ATTEMPT TO ACHIEVE DISCOUNTING IN THE
ABSENCE OF THE ACCORD WOULD HAVE ENSURED THE RENEWED
OUTBREAK OF A WAGES PRICES SPIRAL FED BY EXTRA CLAIMS, A
SPIRAL WHICH WOULD INEVITABLY HAVE REFLECTED IN A DOWNWARDS
SPIRAL OF THE EXCHANGE RATE, AND A REDUCTION IN BUSINESS AND
CONSUMER CONFIDENCE. THIS WOULD HAVE MADE FAR HARDER THE
TASK OF RESTORING CONTROL OVER DOMESTIC COSTS AND INFLATION,
AND PUT THE STRONG RECOVERY ACHIEVED AT AN END.
THE NEW AGREEMENT UNDER THE ACCORD WILL THUS PROVIDE A SOUND
BASIS ON WHICH THE BUSINESS SECTOR CAN FUNCTION IN RELATIVE
CERTAINTY AND CONFIDENCE, AND ON WHICH AUSTRALIA AS A NATION
CAN BUILD ITS FUTURE PROSPERITY.
THE SEPTEMBER QUARTER CPI, SHOWING AN INCREASE OF ONLY
2.2 PER CENT, PROVIDES TIMELY CONFIRM4ATION THAT INFLATION IS
NOT ABOUT TO ACCELERATE AS RAPIDLY AS SOME OF THE MORE
PESSIMISTIC FORECASTERS OF A MONTH OR SO AGO WERE
PREDICTING. INDEED THE CPI IS WELL ON TRACK FOR AN OUTCOME
OVER THE COURSE OF 1985-86 IN LINE WITH THE BUDGET FORECAST
OF 8 PER CENT. BARRING THE UNEXPECTED, INFLATION SEEMS
LIKELY TO LEVEL OUT AT ABOUT THAT RATE BEFORE TRENDING DOWN
AGAIN.
THE NEW AGREEMENT IS SUPPORTED FIRST BY A CONTINUING FIRM
MONETARY POLICY A POLICY DIRECTED TO SUPPORTING THE
REQUIRED ONGOING RECOVERY IN ECONOMIC ACTIVITY, BUT NOT SO
RAPID A PACE OF EXPANSION AS TO REKINDLE AVOIDABLE INFLATION
AND, SECOND, BY RESPONSIBLE FISCAL POLICY.
THE GOVERNMENT THIS YEAR HONOURED A SERIES OF FISCAL
COMMITMENTS THE TRILOGY WHICH HAVE ONLY BEEN MET ONCE
SINCE 1961. NO OTHER GOVERNMENT HAS IMPOSED ON ITSELF SUCH
A DEGREE OF FISCAL DISCIPLINE IN. THE POST-WAR PERIOD.
OUR COMMITMENTS TO RESTRAIN OUTLAYS, TAX RECEIPTS AND THE
BUDGET DEFICIT AS A PROPORTION OF GDP WILL CONTINUE TO BE
HONOURED IN THE NEXT TWO YEARS. BUT IN REACHING OUR RECENT
AGREEMENT WITH THE ACTU,-THIS GOVERNMENT HAS WILLINGLY
ACCEPTED SPENDING RESTRAINT OVER AND ABOVE THE PRIOR TRILOGY
COMMITMENT. EVEN THOUGH TAX CUTS BROADLY EQUIVALENT TO 2 PER CENT OF THE
WAGES BILL WILL BE PROVIDED FROM SEPTEMBER 1986, THE CUTS
WILL BE FINANCED BY ADDITIONAL EXPENDITURE RESTRAINT AND NOT
BY ADDITIONAL BORROWING. THE GOVERNMENT IS THUS DETERMINED
TO ENSURE THAT, EVEN AS PRIVATE EXPENDITURE IS MAINTAINED,
THE SHARE OF GOVERNMENT EXPENDITURE IN GDP IS FURTHER
REDUCED. IN CONJUNCTION WITH THE MEASURES ALREADY IN PLACE TO CURB
THE BUDGET DEFICIT AS A PROPORTION OF GDP, THIS WILL HELP TO
CURB THE EXTENT TO WHICH AUSTRALIA NEEDS TO FINANCE DOMESTIC
SPENDING BY RECOURSE TO FOREIGN SAVING AND THUS INCUR A
CURRENT ACCOUNT DEFICIT.
IN TIME, THE IMPROVEMENT IN OUR COMPETITIVE POSITION WHICH
THESE ARRANGEMENTS PRESERVE WILL BEGIN TO REDUCE THE CURRENT
ACCOUNT DEFICIT AS A PROPORTION OF GDP. AS A CONSEQUENCE,
DOMESTIC PRODUCTION WILL BEGIN TO GROW AT A SOMEWHAT FASTER
PACE THAN DOMESTIC DEMAND AND, AS OECD FORECASTS TESTIFY, AT
A PACE WHICH IS FASTER THAN ALL COMPARABLE ECONOMIES AND
ABOUT TWIC9 THE AVERAGE GROWTH RATE ACHIEVED IN AUSTRALIA
OVER THE FRASER-HOWARD YEARS.
AS THE BUDGET PAPERS INDICATE, THE REDUCTION IN THE CURRENT
ACCOUNT WILL INITIALLY BE SMALL, REFLECTING THE USUAL LAGS,
BUT GROW AS THE YEAR PASSES.
THUS THE CURRENT ACCOUNT DEFICIT COULD AMOUNT TO ABOUT 5 PER
CENT OF GDP IN THE RECENTLY COMPLETED SEPTEMBER QUARTER, A
RESULT WHICH WAS INFLATED BY BOTH THE CELEBRATED J-CURVE.
EFFECT ON NOMINAL VALUES AND THE SEASONAL PATTERN OF TRADE
TRANSACTIONS. ON CURRENT FORECASTS, THE DEFICIT COULD
DECLINE FROM 4.9 PER CENT OF GDP IN 1984-85, TO ABOUT 4.6
PER CENT OF GDP IN 1985-86 TAKING THE YEAR AS A WHOLE. BUT
THE DECLINE IS EXPECTED TO BE MORE MARKED OVER THE COURSE OF
1985-86 SO THAT THE FIGURE AROUND THE END OF THAT FINANCIAL
YEAR IS EXPECTED TO BE ABOUT 4 PER CENT OF GDP, WITH FURTHER
REDUCTIONS IN LATER QUARTERS.
SUCH AN OUTCOME WOULD BE CONSISTENT WITH A GRADUAL EASING
OVER TIME IN OUR INDEBTEDNESS TO FOREIGNERS AS A SHARE OF
GDP. WHILE RECENT WORK PUBLISHED BY THE OFFICE OF EPAC HAS SHOWN
THAT AUSTRALIA'S PRESENT LEVEL OF NET INDEBTEDNESS IS LESS
CAUSE FOR CONCERN THAN SOME OF THE MORE ALARMIST
COMMENTATORS WOULD HAVE US BELIEVE, IT IS CLEAR THAT
AUSTRALIA COULD NOT LONG GO ON ADDING TO OUR OBLIGATIONS TO
FOREIGNERS AT THE PACE OF THE LAST FEW YEARS.
THE DEPRECIATION AND OUR POLICY RESPONSE, BASED ON THE
ACCORD PROVIDES A BASIS FOR ENSURING THAT AUSTRALIA'S
OBLIGATIONS ABROAD CAN BE SERVICED WITHOUT EITHER MASSIVE
DISRUPTION TO THE ECONOMY OR INTOLERABLE FUTURE STRAIN ON
THE EXCHANGE RATE. WITHOUT THE ACCORD THAT ADJUSTMENT COULD
ONLY HAVE BEEN ACCOMPLISHED AFTER A SHARP CONTRACTION OF THE
DOMESTIC ECONOMY WHICH WOULD BE COSTLY IN BOTH ECONOMIC AND
SOCIAL TERMS.
THE TRADE POLICIES PURSUED BY THE GOVERNMENT ALSO SEEK TO
ENHANCE AUSTRALIA'S GROWTH OPPORTUNITIES. WE ARE THUS
ACTIVELY SEEKING TO PROMOTE THE COMMENCEMENT OF A NEW ROUND
OF MULTILATERAL TRADE NEGOTIATIONS; A ROUND, MOREOVER,
WHICH PROPERLY ADDRESSES THE INTERESTS OF AUSTRALIA AND
OTHER COUNTRIES IN OUR RAPIDLY GROWING REGION.
IN ADDITION, AUSTRALIA IS ACTIVELY SEEKING TO DEVELOP
MUTUALLY BENEFICIAL TRADE LINKS WITH THE ASEAN COUNTRIES.
AND WE RAVE GIVEN PRIORITY TO THE PACIFIC REGION IN THE
DEVELOPMENT OF TARGETTED MARKETING STRATEGIES, WHICH SEEK
ESPECIALLY TO IDENTIFY THE SCOPE AND NATURE OF POTENTIAL
EXPORT OPPORTUNITIES FOR AUSTRALIAN INDUSTRY IN THE REGION.
THESE INCLUDE CHINA AND JAPAN, UNDER THE CHINA ACTION PLAN
AND THE JAPAN MARKET STRATEGY RESPECTIVELY. SUCH
INITIATIVES PROVIDE SUBSTANTIAL OPPORTUNITIES FOR AUSTRALIA
TO SHARE IN THE DEVELOPMENT AND GROWTH OF OUR REGION.
BUT TO CAPITALISE ON BQTH REGIONAL AND WORLD GROWTH,
AUSTRALIA NEEDS INNOVATIVE, FORWARD LOOKING, EXPORT-ORIENTED
ENTERPRISES. IT NEEDS ENTERPRISES PREPARED TO INTRODUCE NEW
PRODUCTS OR PROCESSES, OR TO EXPLOIT OPPORTUNITIES TO
POSITION. THEMSELVES IN NICHES OF THE WORLD MARKET WHERE
AUSTRALIA'S ENDOWMENTS OF SKILLS, RESOURCES OR TECHNOLOGY
CAN BE USED MOST EFFECTIVELY. OUR POLICIES SEEK TO
ENCOURAGE JUST SUCH INDUSTRIES.
WE RECOGNISE THE ROLE OF PROFITS IN PROMPTING INVESTMENT AND
FACILITATING STRUCTURAL CHANGE. WE SEEK TO ENCOURAGE A MORE
EFFICIENT PUBLIC SECTOR INFRASTRUCTURE AND TO KEEP THE
BURDEN OF REGULATION TO THE MINIMUM NECESSARY TO MEET THE
ASPIRATIONS OF AUSTRALIANS. AND, WHERE NECESSARY, WE SEEK
TO PUT IN PLACE PARTICULAR POLICIES TO FACILITATE FORWARD
LOOKING, GROWTH-SUSTAINING STRUCTURAL CHANGE.
DURING THE GOVERNMENT'S FIRST 2 1/ 2 YEARS IN OFFICE, THESE
HAVE INCLUDED THE STEEL AND MOTOR VEHICLE PLANS; THE
DECISION TO FLOAT THE AUSTRALIAN DOLLAR AND TO REMOVE
VIRTUALLY ALL EXCHANGE CONTROLS; AND THE MEASURES
SUBSTANTIALLY TO DEREGULATE THE BANKING SECTOR AND TO
ENCOURAGE INNOVATION AND COMPETITION WITHIN THE FINANCIAL
SERVICES SECTOR AS A WHOLE. I BELIEVE THE GOVERNMENT CAN
REASONABLY CLAIM THAT THEY HAVE ALL MET WITH WIDESPREAD
APPROVAL. WHEN I ADDRESSED YOU SOME 13 MONTHS AGO I OUTLINED THE
GOVERNMENT'S BROAD INTENTIONS IN RELATION TO BUSINESS
REGULATION AND INVITED THE BCA TO WORK WITH THE GOVERNMENT
TO ESTABLISH PRIORITIES FOR REFORM. I WISH TO RECORD MY
THANKS TO BCA FOR THE SUBSTANTIAL CONTRIBUTION WHICH
RESULTED. AND I AM PLEASED TODAY TO BE ABLE TO INFORM YOU
OF SOME DECISIONS WHICH WE HAVE TAKEN.
BUSINESS DEREGULATION IS AN ISSUE WHICH, IN THE PAST, HAS
BEEN LONG ON RHETORIC AND LAMENTABLY SHORT ON ACTION. BUT
AS HAS BEEN AMPLY DEMONSTRATED, WE ARE A GOVERNMENT PREPARED
TO GET THINGS DONE. AND WE HAVE TAKEN DEREGULATION OUT OF
THE " TOO HARD" BASKET.
THE GOVERNMENT APPRECIATES THAT COMPETITIVENESS IS NOT
ENHANCED WHERE ADDITIONAL COSTS ARE IMPOSED ON INDUSTRY
THROUGH UNNECESSARY REGULATION OR EXCESSIVE " RED TAPE".
WHEREVER IT IS POSSIBLE, SUCH IMPOSTS WILL NOW BE REMOVED.
IN CIRCUMSTANCES IN WHICH REGULATION IS REQUIRED IN THE
BROADER NATIONAL INTEREST, WE WILL BE CONCERNED TO ENSURE
THAT FOR THE FUTURE THE LEAST COSTLY REGULATORY REGIME IS
IMPOSED. AND IN TERMS OF CURRENT REGULATIONS, WE HAVE BEEN
IDENTIFYING AND TAKING ACTION WHERE INEFFICIENT
ADMINISTRATION OR THE NON-UNIFORM APPLICATION OF SIMILAR
REGULATIONS BETWEEN STATES HAS IMPOSED UNWARRANTED COSTS.
A PARTICULARLY DIFFICULT TASK FACING THE GOVERNMENT IS TO
RETAIN A RELEVANT, EFFICIENT AND EFFECTIVE REGULATORY
FRAMEWORK IN THE FACE OF DYNAMIC CHANGES TO ECONOMIC AND
SOCIAL PRIORITIES. THIS DIFFICULTY IS ALL THE MORE ACUTE
BECAUSE, AT THE SAME TIME, THE REGULATORY PROCESSES MUST BE
SUFFICIENTLY PREDICTABLE THAT THEY DO NOT THEMSELVES BECOME
A CONTINUING SOURCE OF UNCERTAINTY AND SPECULATION, OR OF
ADDED COSTS.
WITH THESE CONSIDERATIONS IN MIND, THE GOVERNMENT HAS
DECIDED THAT EACH MINISTER PROPOSING NEW REGULATIONS MUST
EITHER INCLUDE SUNSET PROVISIONS, OR DEMONSTRATE THAT THERE
IS A GOOD REASON FOR NOT IMPOSING THEM. I BELIEVE THIS
APPROACH STRIKES AN APPROPRIATE BALANCE BETWEEN CAPTURING
THE BENEFITS OF SUNSET PROVISIONS, WHILE AVOIDING THE COSTS
AND DELAYS OF TOO RIGID AN APPLICATION.
THE GOVERNMENT RECOGNISES THAT THE TASK OF DETERMINING THE
APPROPRIATE EXTENT OF REGULATION IN THE CONTEXT OF COMPETING
ECONOMIC AND SOCIAL POLICY OBJECTIVES IS A DIFFICULT ONE.
AS THE BCA HAS ARGUED, THE COMMITMENT OF BUSINESS, AND MORE
IMPORTANTLY GOVERNMENTS HAS TO BE A CONTINUING ONE.
SO AS TO FACILITATE THE CONTINUING PROCESS OF REGULATORY
REVIEW, A BUSINESS REGULATORY REVIEW UNIT HAS BEEN
ESTABLISHED WITHIN THE DEPARTMENT OF INDUSTRY, TECHNOLOGY
AND COMMERCE.
THIS UNIT WILL PROVIDE A POINT OF CONTACT FOR BUSINESS TO
PROPOSE REGULATORY CHANGES, AND IT WILL REPORT FREQUENTLY TO
INTERESTED ORGANISATIONS ON PROGRESS WITH THE GOVERNMENT'S
INITIATIVE. SENATOR BUTTON WILL BE SEEKING IN THE NEAR
FUTURE THE SECONDMENT OF BUSINESS REPRESENTATIVES TO THE
UNIT. TODAY I WISH TO REPORT TO YOU THAT, CONSISTENT WITH THE
PRIORITIES WHICH HAVE BEEN ESTABLISHED AS A RESULT OF
CONSULTATIONS WITH STATE AND TERRITORY GOVERNMENTS, UNIONS,
SCA AND OTHER INDUSTRY BODIES, THE GOVERNMENT HAS TAKEN
CERTAIN DEREGULATORY INITIATIVES IN RESPECT OF EXPORT
CONTROL GUIDELINES AND FOREIGN INVESTMENT POLICY AND WE HAVE
DETERMINED A SET OF PRIORITIES FOR FURTHER WORK.
THE GOVERNMENT HAS HAD UNDERWAY FOR SOME MONTHS A
CASE-BY-CASE RE-EXAMINATION OF EXPORT CONTROL GUIDELINES. OUR CASE BY CASE APPROACH REFLECTS THE INTRICACIES OF THE
ARRANGEMENTS, AND THE DIVERSE RANGE OF POLICY INTERESTS
WHICH VARIOUS CONTROLS SEEK TO FURTHER.
OUR APPROACH IS A CAUTIOUS ONE, AND DRAWS ON CONSULTATIVE
PROCESSES AS FAR AS POSSIBLE. BUT WHEREVER CONTROLS DO NOT
SERVE LEGITIMATE ENDS OR INVOLVE EXCESSIVE COSTS, OUR
INTENTION IS THAT THEY SHOULD BE RELAXED OR ABOLISHED AS
SOON AS POSSIBLE.
TODAY I WISH TO REPORT TO YOU THE STATE OF THE GOVERNMENT'S
THINKING IN THREE AREAS: BAUXITE/ ALUMINA, PETROLEUM AND
COAL. CONSISTENT WITH OUR GENERAL APPROACH, THE MINISTER FOR TRADE
IS RELEASING FOR COMMENT A PAPER PROPOSING SUBSTANTIAL
CHANGES TO THE ADMINISTRATION OF CONTROLS APPLICABLE TO THE
EXPORT OF BAUXITE AND ALUMINA.
UNDER THE DRAFT PROPOSALS, COMPANIES NO LONGER WILL REQUIRE
PRIOR APPROVAL BEFORE ENTERING INTO NEGOTIATIONS, AS HAS
BEEN THE REQUIREMENT SINCE 1978. EXPORTERS SELLING TO
UNRELATED PARTIES CAN EXPECT TO RECEIVE AUTOMATIC EXPORT
APPROVAL, THOUGH IT WILL REMAIN OUR OBJECTIVE THAT PRICES
RECEIVED SHOULD BE COMMENSURATE WITH THE NATIONAL INTEREST.
CONTRACTS BETWEEN RELATED PARTIES OR NOT AT ARMS LENGTH
WILL, NATURALLY, CONTINUE TO BE SUBJECT TO EXAMINATION BY
TAX AUTHORITIES. HOWEVER, OPTIONS WILL BE DEVELOPED
FOLLOWING DISCUSSIONS WITH THE COMPANIES INVOLVED TO
MINIMISE THE PROCEDURES REQUIRED WITH A VIEW TO REMOVING THE
EXISTING UNCERTAINTIES.
THE GOVERNMENT HAS ALSO HAD UNDER EXAMINATION EXPORT
CONTROLS APPLICABLE TO PETROLEUM. WE HAVE NOT, AT THIS
STAGE, TAKEN FINAL DECISIONS -IN RESPECT OF CRUDE OIL. BUT
THE GOVERNMENT IS NOW IN A POSITION TO ANNOUNCE THE
SUBSTANTIAL RELAXATION OF CONTROLS APPLIED TO MOST PETROLEUM
COMMODITIES. FROM TODAY, EXPORT CONTROLS FOR LPG, CONDENSATE
AND PETROLEUM PRODUCTS ARE TO BE REDUCED TO A MONITORING
ROLE UNDER TERM APPROVALS. THIS WILL REPLACE THE CURRENT
CARGO-BY-CARGO OR QUARTERLY APPROVALS, AND PROVIDE GREATER
CERTAINTY TO EXPORTERS SEEKING PROFITABLE OPPORTUNITIES IN
CURRENT TRADING CONDITIONS. A CONDITION OF THE RELAXATION
IS THAT COMPANIES CONTINUE TO COMPLY WITH GOVERNMENT
DOMESTIC PETROLEUM POLICIES, AND OTHER POLICIES SUCH AS THE
PROHIBITION ON EXPORTS TO SOUTH AFRICA.
THE MINISTER FOR TRADE HAS BEEN CONSULTING FOR SOME MONTHS
WITH UNIONS AND REPRESENTATIVES OF BUSINESS INTERESTS IN THE
COAL INDUSTRY ON EXPORT CONTROL MATTERS. THE GOVERNMENT IS
CONSCIOUS THAT THE INTERNATIONAL COAL MARKET HAS BEEN
AFFECTED IN RECENT TIMES BY A RANGE OF FACTORS SUCH AS
CHANGING PATTERNS OF DEMAND, CURRENCY FLUCTUATIONS AND RAPID
TECHNOLOGICAL CHANGES. THESE DEVELOPMENTS HAVE COMPLICATED
THE OPERATION OF EXISTING EXPORT CONTROLS.
IN VIEW OF THE IMPORTANCE OF THE COAL INDUSTRY FOR
AUSTRALIA'S EXPORT EARNINGS AND ITS SIGNIFICANCE IN THE
DOMESTIC ECONOMY, THE GOVERNMENT IS CONTINUING ITS
CONSULTATIONS WITH THE AIM OF EVALUATING THE EFFECTIVENESS
OF THE EXISTING CONTROLS IN MEETING THEIR STATED OBJECTIVES.
THE GOVERNMENT HAS RECENTLY CONDUCTED A THOROUGH REVIEW OF
FOREIGN INVESTMENT POLICY. THIS POLICY HAS BROAD COMMUNITY
SUPPORT, REFLECTING THE STRONGLY HELD BELIEF THAT IT IS
ESSENTIAL TO STRIKE A BALANCE BETWEEN, ON THE ONE HAND, THE
NEED TO ATTRACT FOREIGN CAPITAL AND EXPERTISE IN ORDER TO
SUSTAIN GROWTH AND, ON THE OTHER, THE NEED TO ENSURE THAT
FOREIGN INVESTMENT IS WORTHWHILE AND THAT AUSTRALIANS
RECEIVE A FAIR SHARE OF THE FRUITS OF GROWTH.
THE GOVERNMENT HAS NOT ACCEPTED IN FULL THE RECOMMENDATIONS
FOR SWEEPING LIBERALISATION PROPOSED BY THE BCA. BUT WE
HAVE GONE SOME WAY TO TAKE UP THE SUGGESTIONS OF THE BCA AND
HAVE ALSO IDENTIFIED OTHER AREAS WHERE A RELAXATION OF THE
POLICY REQUIREMENTS COULD BE ACHIEVED WITHOUT COMPROMISE TO
THE GOVERNMENT'S BASIC OBJECTIVES.
A MAJOR STEP THAT WE ARE TAKING IS TO ABOLISH THE SO-CALLED
" OPPORTUNITIES TEST". WE KNOW FROM OUR DISCUSSIONS THAT
THIS TEST HAS BECOME A CONSTANT IRRITANT TO FOREIGNERS
WISHING TO INVEST IN EXISTING BUSINESSES AND DOMESTIC
VENDORS. BUT IN THE LAST FIVE YEARS IT HAS RARELY RESULTED
IN A SUCCESSFUL COMPETING AUSTRALIAN BIDDER COMING FORWARD.
HOWEVER, THE EXISTING AUSTRALIAN EQUITY PARTICIPATION
GUIDELINES IN RESPECT OF NEW MINING OR, WITH ONE EXCEPTION,
REAL ESTATE PROJECTS WILL BE MAINTAINED. THE EXCEPTION
RELATES TO SMALL DEVELOPMENTS FOR LATER RESALE, WHERE THE
GUIDELINE WILL BE ABOLISHED.
THE GOVERNMENT ALSO INTENDS TO ENSURE THAT THE SPUR TO
COMPETITION AND EFFICIENCY IN THE FINANCIAL SERVICES SECTOR
UNLEASHED BY OUR DEREGULATION OF THE BANKING SECTOR IS
MAINTAINED. ACCORDINGLY, PROPOSALS TO ESTABLISH NEW NON-BANK
INTERMEDIATIRES OR TO ACQUIRE AN INTEREST IN AN EXISTING
ENTITY WILL BE APPROVED, UNLESS IT IS DEMONSTRATED THAT THEY
ARE CONTRARY TO THE NATIONAL INTEREST. MOREOVER, POLICY
APPLICABLE TO THE INSURANCE SECTOR WILL BE EASED TO BRING IT
INTO LINE WITH THE APPROACH ADOPTED FOR THE SERVICES SECTOR
MORE GENERALLY, AND FOREIGN INVESTMENT PROPOSALS WILL NOW BE
APPROVED IF THEY DEMONSTRATE NET ECONOMIC BENEFITS TO
AUSTRALIA. IN ADDITION, ALL FOREIGN INVESTMENT POLICY THRESHOLDS ARE
BEING SUBSTANTIALLY INCREASED.
TAKEN TOGETHER THESE POLICY CHANGES WILL SIGNIFICANTLY
REDUCE THE EXTENT OF FOREIGN INVESTMENT REGULATION THEY
WILL EITHER EXEMPT FROM EXAMINATION OR SIMPLIFY AND
STREAMLINE THE EXAMINATION PROCESS FOR AROUND 1/ 3 OF ALL
FOREIGN INVESTMENT PROPOSALS.
FOLLOWING OUR CONSULTATIONS WITH INTERESTED GROUPS, THE
GOVERNMENT HAS IDENTIFIED A NUMBER OF ADDITIONAL PRIORITY
AREAS FOR DEREGULATORY ACTION.
THE LONG ADVOCATED NATIONAL UNIFORM CODE OF FOOD REGULATIONS
HAS BEEN AGREED TO IN PRINCIPLE AND IS CLOSE TO
IMPLEMENTATION. THE CURRENT NON-UNIFORMITY OF THESE
REGULATIONS IS ESTIMATED TO INVOLVE COSTS TO INDUSTRY OF
ABOUT $ 50 MILLION A YEAR.
PLANS FOR SIMILAR COMMONWEALTH-STATE CO-OPERATION WITH
RESPECT TO A NATIONAL BUILDING CODE AND CHEMICALS
NOTIFICATION AND ASSESSMENT SCHEME ARE WELL ADVANCED.
THESE ARE IN ADDITION TO EXAMINATIONS ALREADY IN TRAIN WITH
STATES TO REMOVE STATE PURCHASING PREFERENCES AND TO
STANDARDIZE WEIGHTS AND MEASURES REGULATIONS.
RECENT REVISIONS TO ENTRY PROCESSING ARRANGEMENTS HAVE
SUBSTANTIALLY CUT SEA AND CARGO CUSTOMS CLEARANCE TIMES.
FURTHER REFORMS TO CUSTOMS ADMINISTRATION ARE PLANNED TO
SIMPLIFY CLEARANCE PROCESSES AND' FURTHER REDUCE COSTS.
ACTION HAS ALREADY BEEN TAKEN WHICH HAS STEMMED THE GROWTH
OF DUPLICATION OF STATISTICAL COLLECTIONS. MAJOR BUSINESS
ORGANISATIONS WILL NOW BE INVITED TO IDENTIFY EXISTING CASES
OF DUPLICATION WITH A VIEW TO. ELIMINATING THEM WHEREVER
POSSIBLE. FOLLOWING ON FROM THE SUBSTANTIAL DEREGULATION OF THE
BANKING SECTOR, OFFICIALS ARE TO EXAMINE THE SCOPE TO
RATIONALISE CONTROLS ON NON-BANK FINANCIAL INSTITUTIONS. WE
ALREADY HAVE REVIEWS AND STUDIES UNDERWAY OF THE REGULATION
OF THE TRANSPORT AND AVIATION INDUSTRIES.
A LARGE NUMBER OF INITIATIVES HAVE ALREADY BEEN IMPLEMENTED
OR SET IN TRAIN IN RESPECT OF PRIMARY INDUSTRY REGULATIONS.
THESE INCLUDE REDUCED REGULATION OF WHEAT, CANNED FRUITS AND
EGG MARKETING. FURTHER ACTION IS PROPOSED TO MINIMISE THE
IMPACT ON COSTS OF THE EXPORT INSPECTION SERVICE, AND TO
CURB THE ADMINISTRATIVE CONTROLS ON THE TEN STATUTORY
MARKETING AUTHORITIES RESPONSIBLE TO THE MINISTER FOR
PRIM4ARY INDUSTRY.
A NUMBER OF COMPANIES PARTICIPATING IN THE AFFIRMATIVE
ACTION PILOT PROGRAM EXPRESSED INTEREST IN PROVIDING
WORK-BASED CHILD CARE FACILITIES FOR THEIR EMPLOYEES BUT
WERE FRUSTRATED BY REGULATIONS GOVERNING THE PROVISION OF
SUCH FACILITIES. THE GOVERNMENT HAS DECIDED TO APPROACH THE
STATES TO ASK THEM TO REMOVE EXISTING LICENSING REQUIREMENTS
AND REGULATIONS RESTRICTING CHILD CARE FACILITIES TO GROUND
FLOOR LOCATIONS.
MANY OF THESE AREAS REQUIRE THE CO-OPERATION OF STATE
GOVERNMENTS, BUSINESS AND UNIONS IF MEANINGFUL PROGRESS IS
TO BE MADE. I TRUST THAT SUCH CO-OPERATION WILL BE
FORTHCOMING AND TIMELY.
THE INITIATIVES TAKEN OVER THE PAST YEAR OR SO, AND THOSE
ANNOUNCED TODAY, GIVE CREDENCE TO THE GOVERNMENT'S POLICIES
ON BUSINESS REGULATION. AND IN CASES WHERE IT CAN BE
CLEARLY DEMONSTRATED THAT DEREGULATION IS IN THE BEST
INTERESTS OF THE PUBLIC OR WHERE MORE EFFICIENT
ADMINISTRATION WILL REDUCE THE BURDEN ON BUSINESS, WE WILL
CONTINUE TO TAKE SUCH ACTIONS.
LADIES AND GENTLEMEN
I HAVE JUST RETURNED FROM THE MEETING OF THE COMMONWEALTH
HEADS OF GOVERNMENT IN THE BAHAMAS. AMONGST OTHER THINGS
THIS BROUGHT HOME TO ME YET AGAIN THE RELATIVE STRENGTH OF
AUSTRALIA'S ECONOMIC PERFORMANCE: NOT FOR US THE 13 PER
CENT UNEMPLOYMENT RATE OF THE UNITED KINGDOM; NOR THE 16
PER CENT INFLATION RATE OF NEW ZEALAND; NOR THE MAMMOTH 7
PER CENT OF GDP BUDGET DEFICIT OF CANADA. AND THE ECONOMIC
SITUATION IN DEVELOPING COUNTRIES WHO ARE MEMBERS OF THE
COMMONWEALTH IS OF COURSE MUCH MORE SERIOUS.
ALL AUSTRALIANS, INCLUDING BUSINESSES AND UNIONS, CAN
JUSTIFIABLY FEEL PROUD OF WHAT HAS BEEN ACHIEVED. WE SHOULD
ALL RECOGNISE THE CRUCIAL ROLE WHICH CO-OPERATION AND
CONSENSUS HAS PLAYED IN BRINGING THOSE ACHIEVEMENTS ABOUT;
AND COMMIT OURSELVES ONCE AGAIN TO CONTINUE TO WORK FOR A
BETTER AUSTRALIA.
THE WORLD DOES NOT OWE US A LIVING. CONTINUED ECONOMIC
SUCCESS NEEDS TO BE WORKED AT, TO BE EARNED. WE MUST ALL
REMEMBER THAT IMPERATIVE AND STRIVE FOR THE REWARDS WHICH
ONLY SUSTAINED ECONOMIC GROWTH CAN BRING.
L