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PRIME MINISTER
CHECK AGAINST DELIVERK EMBARGOED UNTIL DELIVERY
SPEECH BY THE PRIME MINISTER
' THE MARCH STATEMENT WHAT IT MEANS'
AUSTRALIJIN FINANCIAL REVIEW SEMINAR
SYDNEY 18 MARCH 1991
The Australian Financial Reiew is to be congratulated for
arranging this seminar, and this impressive list of
speakers, to examine the Statement I delivered to Parliament
six days ago: Building a Competitive Ausatralia.
Before entering into the main subject matter let me briefly
express my best wishes to Peter Robinson who recently
announced his retiremrent. Peter has been an able Chairman
of the many Financial Review seminars I have addressed, and
has played a leading role in shaping Australian business
journalism over the decades. He leaves a newspaper and a
profession which are both considerably stronger for his
contribution to them.
Country race meetings are a fascinating feature of Australia
life. They can tell us a lot about ourselves. At one such
meeting a punter walk. ed up to the bookie who was fielding on
a three horse race. He asked for $ 5,000 on Blue Vein. The
bookie accepted the bet and after shoving the cash in his
bag, grinned and said " Thanks mate, that's my horse." To
which the punter replied: " Going to be a bloody slow race
isn't it, I own the other two."
And that really captures the truth of protectionist
Australia. People kidded themselves, did deals, cheated and
believed that they wore winners but it was indeed a terribly
slowly run race. And it was a race in which inevitably we
fell behind in an increasingly competitive world.
When my Government was elected in March 1983 1 decided it
was time to call in * rhe stewards. And we have been
tightening and toughening the rules ever since. The 12
March Statement was another decisive step in taking
Australia out of the era of cosy delusion and further
towards a stance and structure of tough international
competitiveness.
You have asked me today to speak about ' Policy Changes and
Objectives' and I will do so but in reverse order. To
understand the specific announcements I made and to perceive
their complex interrelationships, it is necessary to be
clear about the purpose of it all the objectives we are
pursuing. Worthwhile policy change can only be derived
from, and driven by, clearly stated objectives.
I alluded to these objectives within the Statement itself,
when I described the kind of Australia we wish to build a
modern, growing, prosperous and competitive economy, within
a tolerant and fair society; a nation where quality of life
counts for as much as quantity of output; an outward-looking
community, enmeshed with the dynamism of the Asia Pacific
region, and capable of taking on the best the world has to
offer and winning.
These are not, as I said on Tuesday, short term goals or
transitory values. But they are not remote from day to day
experience either indeed, they are intrinsically related
to the hopes that we all entertain, and the expectations
that each one of us holds, as Australians, and the
opportunities this country can offer.
It is only within such an Australia that opportunities can
be provided for those capable of contributing to the
national wealth; that support can be provided through social
justice programs to those whose disadvantage prevents them
from so contributing; and that protection can be provided
for the natural environment so that we can pass it on in a
healthy state to the next generation.
To achieve those goals we need first, sustained growth in
the material resources of the nation; and second, mechanisms
for the efficient deployment of these resources to the
various demands we may place on them.
And the master key to it all the route which leads
directly to this goal is the basic need, to quote the
title of my Statement, to build a competitive Australia.
It will be obvious to you all that Australia today is only
part way through the massive national transformation that
was necessary to ensure we can achieve these goals.
At the same time, it must be accepted that many of the
fundamental reforms necessary are, though not complete, well
underway. Understandably, there is some sense of impatience about the
time this transformation takes to bear all its fruit.
As the political leader of the community, I have the
responsibility of responding. And I do so, not by saying
that the transformation will be complete at some specific
point in the future -such as the mid-1990s or the end of
this century; change is, in fact, an endless process.
This is because we live in a world of endless change and we
need to learn the habit of adaptation so that we can
constantly attune ourselves to changing circumstances.
And never let us overlook the fact that Australia started
this transformation a long way behind square one.
Australia is richly endowed first our agriculture and then
our mining industries provided the basis for a standard of
living that was the envy cf the world.
As a result the process of' wealth creation came to be seen
to have more to do with the largesse of nature than with the
toil of people. Nature's bounty was so remarkable and so
consistently good that it shaped our national character and
institutions in fundamentEnl ways. Australian's faith in
that inevitable bounty became immortalised as ' she'll be
right mate'. Australians developed skills more in dividing
the spoils than in securing spoils for division. Our
manufacturing industries came to look to government for
protection from the world, and our industrial relations
became poisoned by confrontation as worker battled with
employer over their share of a cake that was not growing
sufficiently fast to accommodate all their demands on it.
These attitudes were reini-orced and entrenched by a long
period of largely uninterr~ upted conservative rule when
governments were too short:-sighted to realise that Australia
couldn't be the ' lucky country' forever. They simply put
of f the task of preparing for change. They put it in the
' too hard basket'.
Today, those postponed challenges have well and truly
arrived. Other countries, including in our region, are
developing highly competitive mining industries.
Agricultural trade has been thoroughly corrupted by the
destructive subsidies of -the EEC and the retaliatory actions
of the US. As the twentieth century draws to a close wealth
creation is now clearly as~ sociated, not with the cultivation
and extraction of natural resources, but with the exercise
of ingenuity with resource-poor Japan being the great
proof of that.
Our objective, then, must be to achieve the kind of
fundamental changes that allow us at last to meet those
challenges and to adapt to this new and more competitive
world. The policy changes I announced in the Parliament last
Tuesday constituted another instalment, and a significant
one, in our continuing progress towards this objective.
And in turning now to the content of the Statement, I would
first caution against any analysis which fails to put the
specific policy changes I announced into their complete
context.
Certainly, each of the measures is significant in itself.
But they must be related to each other and, beyond the
immediate parameters of the Statement, to our continuing
reform activities in other fields.
In the Special Premiers Conferences, our three year
waterfront reform program, our shipping reforms, our
historic opening up of telecommunications and domestic
aviation, the massive changes taking place in award
restructuring and union amalgamation, our continuing
expansion of training and re-training, our long-standing
commitment to ecologically sustainable development and our
continued improvement of social justice in Australia in
all these fields, that is across the broadest front of
reform, we are achieving, and will continue to press for,
dynamic and fundamental restructuring of both the
institutions of Australian economic and social life, and of
the attitudes Australians bring to then.
And, specifically on the Special Premiers Conferences, let me
point to the very substantial amount of work being prepared
for our May meeting.
Last October, the Premiers and I established working groups
of State and Commonwealth officials to prepare reports on:
regulatory reform, road transport, rail freight, Government
trading enterprises, non-bank financial institutions, and
electricity generation. These reports will create the
momentum for reform in each of these areas for the remainder
of 1991.
So as Prime Minister I can give you this double assurance.
Where reform can be achieved through the exercise of
Commonwealth power alone, we will achieve it as we are
doing in reforming work practices on the waterfront. And
where reform requires the co-operative endeavour of the
Commonwealth and the States, we are doing all we can to
secure that co-operation as we are doing in the case of
each of these working parties.
In all of these reforms, competitiveness is the key. A
critical element in building competitiveness is the
reduction, where possible, of the cost burdens imposed on
business. Cutting tariffs is one essential reform Australia
needed to make in order to reduce these burdens.
As I said in detail at the National Press Club on Wednesday,
tariffs penalise competitive, outward looking, export
industries to nurture uncompetitive, inward looking,
domestically-oriented industries. But tariff reductions
will not, of themselves, foster the growth of newly
competitive enterprises. Much more needs to be done and we
have set about doing it.
That is why, for example, we have set about promoting
improved efficiency in those sectors of the economy which,
although not themselves directly competing on international
markets, provide important inputs for those that do:
chiefly our services industries and, particularly,
transport. We have recognised and accepted this challenge.
I was pleased to be able to report on the Conaust agreement
last Tuesday, an important step in our three year program of
waterfront reform. The acceptance of this agreement by the
Waterfront Industries Re:;. orm Authority will see new
agreements in place for 180 per cent of our waterfront
traffic. We are determined to ensure that coverage is
complete within the timez: able we have laid down.
Reform of land transport has to proceed in concert with the
States and has to deal simultaneously with road and rail to
ensure that relative prices to users of the two modes
properly reflect costs and encourage efficient use of
resources. Our land transport strategy being pursued
through the Special Premiers' Conferences will shortly see
the establishment of a National Rail Freight Corporation and
the institution of nationally based regulation and charging
for road use.
But in all this we did nat accept the argument that tariff
cuts had to be delayed until we were further down the path
of microeconomic reform. That would have been to ignore the
unassailable case that tariff cuts in themselves directly
and massively promote competitiveness through lower business
costs. At the same time, we hava reduced business costs through our
taxation measures. Taxation affects business costs in a
variety of ways: directly, in the prices of inputs, and
indirectly, through the deductions allowed against revenue
in defining profit for tne purposes of the Tax Act.
Measures in my statement addressed both these issues,
further widening exemptions from sales tax allowed to inputs
to production, and radically reforming the depreciation
provisions of the Tax Act. These measures build on our
earlier reforms that significantly reduced the burden of tax
on business, and the distortions it can create, through
reducing the corporate tax rate to 39 per cent and
introducing tax imputatiDn.
Finally, though not insignificantly, we have put Australia
on a low-inflation path thanks in large part to the wage
restraint practised by the trade union movement under the
Accord. We now have a rate of inflation lower, at 6.9%,
than the OECD average and trending lower. Lower inflation
means lower interest rates and less pressure on business
costs; and lower business input costs, through tariff and
taxation cuts, means in turn less pressure on inflation.
Competitiveness is created not just in the accounts of
businesses though that is clearly an important aspect.
Competitiveness requires attitudinal change on the part of
all Australians, throughout the economy. I
6.
The experience of the world's most successful wealth
creating countries teaches us we must become a clever
country. Our researchers must be encouraged; our educational system
must function as well as possible; our students must be able
to take the fullest advantage of their talents; all our
workers must have access to training and be encouraged to
participate fully in the labour market.
These have been high priorities for this Govern'ent. On
Tuesday I announced the award of the first fifteen grants
under the Cooperative Research Centres program; indefinite
extension of the tax deduction for research and development
at 125 per cent; measures to improve the quality of schools
and provide more post-graduate awards; provision of
resources to help maintain apprentice numbers through the
recession; and assistance, through work experience programs,
to the longer term unemployed to equip themselves to return
to employment.
In an important sense all these elements of competitiveness
come together in the workplace itself. If the activity that
goes on there doesn't pick up and carry through the building
of a competitive Australia, all the other measures will have
been in vain. My Government has, from its earliest days,
recognised the vital importance of a cooperative and
creative relationship between workers and employers and has
worked to overcome the destructive atmosphere of
confrontation that was the legacy of the years of
conservative rule.
My Statement announced further support for the processes of
union rationalisation and workplace reform which are
essential to the creation of an industrial relations system
that will contribute to building a competitive Australia.
But it went much further, recognising that we must compare
ourselves with the best in the world and strive to emulate
them. I was pleased to accept the Business Council's
suggestion for a project to provide international benchmarks
for the operations of our major public sector enterprises
and especially gratified that John Prescott accepted our
invitation to chair the board that will oversee our new
workplace culture program.
Let me come finally to the area that is, paradoxically, at
the greatest distance from, and at the very heart of, the
process of building a competitive Australia: our social
policies. A more competitive Australia will better provide
the resources to enable us to continue to provide an
adequate social safety net.
And part of our achievement has been to focus a greater
quantity of public resources on assisting those in real need
within a budget that is leaner and, through our successive
surpluses, making a smaller demand on national savings.
In the same way, we have made enduring and absolutely
essential decisions in regard to the preservation of our
natural environment, but we have done so within an economy
that has generated 1.5 million new jobs. And, with the
processes of ecologically sustainable development, we are
seeking to establish a way to resolve competing demands on
our precious natural heritage.
The aspiration to live in a fair and prosperous society, the
desire to pass on to our = hildren a rich and sustainable
environment, are surely fundamental values. They should be
values embraced by all of us.
In this fundamental sense, building a competitive Australia
is synonymous with building a better Australia. It is for
this deep yet simple reason that the challenges I outlined
last Tuesday are so vital, and it is why we must all, as
Governments, workers, employers and consumers, accept the
responsibility of meeting those challenges.
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