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SPEECH BY THE PRIME MINISTER
AUSTRALIAN CHAMBER OF MANUFACTURES
( VICTORIAN DIVISION)
MELBOURNE 19 SEPTEMBER 1991
Mr Latta
Premier Kirner
Distinguished[ Guests
Ladies and Gentlemen
It is a pleasure to be invited to address your Annual
Dinner especially one with the theme ' helping
Australians t~ o make it'. That phrase is one way of
describing our aim in government, a way of describing why
we have broug~ ht about fundamental and far-reaching
reforms in the economy. And I believe it is a way of
describing what we all want for the Australian people.
I would put i~ t a little more strongly. We not only want
to help Australians make it we want Australians to make
it better.
To do that we must have an economy that is
internationally competitive, one that is export driven.
We cannot have that, and we cannot compete with imports
with an economy that hides behind tariff walls.
We cannot andl will not have a private sector dependent on
policy handouts from the public sector. We must have and
will have companies which are strong and self sustaining,
that provide real jobs and real profits, because that is
the only way Australians will make it, in an increasingly
tough and competitive world.
That Of cour se,. is not to say my Government will stand
idly by. We are helping, and will continue to do so. We
are intent on creating the framework for Australian firms
to compete. lie are removing the impediments to investment
and development. We have reformed the tax system as it
relates to business, and continue to reform it. We are
providing specific, targeted help to ease the transition
of some industries to a more competitive environment.
This Government's objective in industry policy has been
to build a more competitive Australia. That is the
yardstick by which we have judged, and will continue to
judge, policy proposals that come before us.
There is an important distinction to be drawn between
policies that stimulate and facilitate the growth of
self-sustaining new industries, that rejuvenate old ones,
and policies that bring into existence industries whose
viability is dependent on special treatment by
Government. In our years in Government we have put in place various
policies of the former kind, and will continue to give
careful consideration to the merits of any serious new
proposals of this kind put before us.
Policies of the latter kind have not only failed to bring
about worthwhile change but have actually held back the
development of competitive industries. We have been
eliminating the obstacles to growth these policies
represent and will continue to do so.
Ladies and gentlemen
In the twenty-first century Australia will not be able to
look for special favours from special relations~ hips as we
have thought we could do in the past. We have to stand on
our own two feet, use our head and our hands, to think
and to produce, if we are going to make it.
We cannot allow our historic reliance on the export of
unprocessed primary products to persist. We must break
the cycle of a slump in commodity prices being followed
by a slump in our economy. We must not and cannot as a
nation be hostage to the fluctuations of commodity
prices. We have to create in this country an efficient,
innovative and competitive economic culture one that
adds value to our great national resources of products
and people.
Look around the world today and you will not find another
country which has a greater potential, and greater
opportunities than Australia located, as we are, in the
fastest growing and most dynamic region of the world, the
Asia-Pacific region. Indeed I maintain that no other
country in the world has the unique combination of our
people,. our natural resources, and our economic and
political freedoms.
What we have to do, not sometime into the twenty first
century, but here and now, is complete the work of
updating and revitalizing the economic framework. We have
to remove the impediments that prevent us becoming
efficient and competitive.
Ladies and gentlemen, it is very easy for us all to get
caught up in -the day to day issues, whether you are in
government, or in business. We can be easily distracted
by this week's figures, or by what someone says about
them. But something very important, very fundamental has
happened to the economy of this country over the past 8
years. The Australian economy has been transformed, and we are
beginning to see the scores on the board. There is still
a long way to go, but restructuring is not just being
talked about, it is being achieved and the
manufacturing sector has been in the forefront of that
achievement. Over the eight year period to 1990-91 the value of
exports of non-metal manufactures covering machinery,
transport equipment and other elaborately transformed
items has increased by 220 per cent, involving growth
in volumes of 149 per cent. Over the last two financial
years the volume of these exports has grown by an
astonishing 57 per cent.
In 1990-91 manufacturing exports increased in real terms
by 26 per cent. In 1990-91 the share of manufacturing
exports in total exports was 18 per cent compared with 12
per cent in 1982-83.
Between 1985 and 1989 at the same time that we were
taking the first steps to wind back protection
manufacturing employment in Australia actually rose by 9
per cent, nine times the OECD average of 1 per cent.
The result has been a dramatically improved Balance of
Payments the balance on goods and services is forecast
to be in surplus in 1991-92 for the first time in over
ten years.
Ladies and gentlemen, manufactured exports exceeded rural
exports for the first time in December 1990. I know this
in part reflects the impact of the downturn in commodity
prices, but I also believe this it marks a turning
point in the kind of economy we have, and must have in
the future.
This process of fundamental change has been accelerated
by what has been achieved so far in 1991, this
unprecedented year of economic reform.
As I said at the Financial Review dinner, the night after
the Budget, 1991 is " the year of the most substantial and
far-reaching reforms, not just in the life of this
Government, but in the entire post war era." I challenged
anyone then to show me a year of more fundamental change,
and no one could. That is because no one can 1991 is
the touchstone of economic change in this country.
4.
1991 has been a year of exciting and rapid change all
over the world, and it is easy to forget how far, and how
fast we have come.
It is just six months since the March Economic Statement,
where further tariff cuts for both general manufacturing
and the passenger motor vehicle and textile, clothing and
footwear industries were introduced.
But we have not simply left industry to sink or swim. We
have put in place incentives to increase industry's
research effort, including the Co-operative Research
Centre Program and the indefinite continuation of the R& D
tax concession at 125%
And we are encouraging industry to adopt the latest
technologies through the Advanced Manufacturing
Technology Development Program. We have introduced a
program of international performance benchinarking Best
Practice to encourage companies to compare themselves
with the world's best.
Importantly, we also widened the exemptions from sales
tax for business inputs which will further increase
competitiveness. We also announced in the March Statement our intention to
introduce a definition of effective life for depreciation
purposes into the Tax Act. The technical complexities of
this change have caused it to take longer than we would
have liked, but the Treasurer John Kerin has moved to
accelerate the process and intends making an announcement
of the detail of the proposed changes in the very near
future.
The second part of the 1991 reform package was the
Special Premiers Conference in July.
Central to the reshaping of the economy for the twenty
first century is the reshaping of the relationship
between the Commonwealth and the States. To compete
internationally, we must think and act as a diverse but
single nation, not a gaggle of uncoordinated states and
territories with different rules and regulations.
Reform of transport and electricity supply are vital to
business,-and-have been among the first-fruits of the
Special Premiers Conference, but further reform of our
infrastructure is in progress.
Here I mention waterfront reform because the benefits of
this long and complex process will soon flow through to
export oriented manufacturers.
The Waterfront Industry Reform Authority have already
approved the exit of 1400 workers from the industry and
anticipate that by the end of this month that figure will
have climbed to 2200. By December 1992, when the reform
process is co'mpleted 3000 workers are expected to have
left the industry as direct consequence of reform from an
initial workforce of 9000.
The cornerstone of the reform is the move away from the
system of industry-wide employment to one that is company
based. This is making possible the negotiation of
enterprise based agreements. It is estimated that these
will give productivity gains of up to 60 per cent, and
indeed 70 percent in smaller ports and in grain handling.
In rail reform, the Commonwealth will become an initial
equity partner in the National Rail Corporation at a cost
of more than $ 260 million over the next four years. The
Corporation is being established on a strictly commercial
basis and is projected to turn a profit by 1994-95.
Business will no longer have to deal with five separate
loss-making rail systems instead, a single,
commercially-based company will be responsible for
interstate rail freight with a network extending from
Brisbane to Perth.
In road trans-port we will establish a national heavy
vehicle registration, regulation and charging scheme.
With the States we will set up a National Road Transport
Commission to regulate heavy vehicles on a nationally
uniform basis.
In regard to electricity we will establish a National
Grid Management Council which will deliver a more
rational use of the nation's resources, and through a
more efficient and national approach to future generating
capacity will provide electricity cheaper than it
otherwise wou: ld have been with clear benefits for the
cost structures of all Australian industries.
It is absolutely stupid that in Australia we should have
6 different sets of regulations and standards in
packaging, emiLssions into the environment, health, motor
vehicles and other areas with which business must comply.
Australia is over-regulated and if we did not do
something about it we would have had more barriers to
free trade in our single nation next year than would the
twelve member nations of the European Community.
From January 1993 we have agreed that regulations and
standards covering goods and occupations in each
jurisdiction will be recognised in each of the others.
Those words represent a genuinely historic breakthrough
in Commonwealth/ State relations and in the task of
creating a unified and competitive Australian economy.
Last month's Budget also advanced our micro reform
agenda. Ladies and gentlemen, if Australia is to have an
internationally competitive economy Australians must be
better trained and better educated. We must improve the
skill level of our workforce we must improve apprentice
and trainee intakes, and enhance labour market assistance
to the unemployed.
As we come out of this recession we must have the skilled
workforce to take up employment. That is why we have, in
this year alone, increased expenditure on labour market
and training programs by 50 per cent in real terms. And
in addition about $ 420 million has been allocated to TAFE
including $ 40 million in 1991-92 for extra TAFE places.
Another important initiative is the Small to Medium
Enterprise Development Program which will run for three
years at a cost of $ 14 million.
A key element of this program is the new export
development initiative for small and medium enterprises
to be administered by the Australian Chamber of
Manufactures with the support and involvement of other
major national industry associations.
Ladies and gentlemen, as we look ahead to the twenty
first century it is quite obvious that Australia will
have a significantly older population.
An ageing population will impact directly on your
businesses. Will there be enough people young enough to
do the work? How will a reduced working population
support an increasingly aged one? We have to act now, not
only in the interest of social justice, but in the
interest of your future.
That is why we announced in the Budget our intention to
legislate for the phased implementation of a minimum
level of employer superannuation support of 9% by the
year 2000.
In addition to ensuring we have the capacity to meet the
needs of an ageing population, superannuation provides a
pool of national savings that will help fund the
investment -we will need to keep up the pace of
restructuring our economy.
The Government appreciates the apprehension many of you
may feel about the impact this initiative might have on
your businesses. That is why it will be phased in over
nine years, 1992 to the year 2000. That is why we intend
to cushion the impact on smaller businesses by adopting
an initial target of 3 rather than 5 per cent.
Some have sought to portray this reform as an additional
cost impost on employers. This view is without
justification. Everyone, including the trade union
movement, recognises that it constitutes an improvement
in conditions of employment, and it has been agreed that
it will be taken into account in future wage negotiations
under the Accord.
Ladies and gentlemen
In addition to contributing to our reform agenda, the
Budget has, of course, played its more traditional role
of establishing the appropriate settings for macro
economic policy.
In particular we have been at. pains to protect the
structural integrity of the Budget to ensure that the
public sector once again contributes to national savings
as the recovery lifts Government revenues and reduces
outlays. The Budget forecasts show a steady, moderately paced
recovery of a kind we will be able to sustain. The
forecasts include: 3 per cent inflation rate and a drop in the
current account deficit to around $ 14 billion
or : 3.5 per cent of GDP in 1991-92, from $ 22.3
billion or 6 per cent of GDP in 1989-90
exports to grow by 5.25 per cent while imports
will remain subdued. Growth is coming from net
exports which is a sign that the structural
change in the economy is beginning to work for
US.
Ladies and gentlemen
Australia is, for the first time in a generation, a low
inflation country. Australia's inflation rate, at 3.4
per cent, now stands below the 4.3 per cent average of
our major trading partners in the OECD.
More importantly, for the first time in a generation, we
have the opportunity to make this situation permanent.
The continuing success of our wages policy will be
crucial to achieving this objective. It is firmly based
on two complementary and equally vital elements.
First we have the commitment of the trade union movement,
to secure a wages outcome in the order of 5% this year.
In future years they have agreed to work with us towards
wage outcomes consistent with keeping Australia's
inflation rate at levels comparable with those of our
major trading partners.
Second, we are seeking to achieve greater flexibility and
decentralisation in the wages system. Through
productivity based workplace bargaining, we can reduce
real unit labour costs and lift living standards.
It is unreasonable and inequitable to expect further
reductions in real unit labour costs to be driven by
reductions in workers' living standards.
The enhanced flexibility we are working to achieve in the
wages system offers the opportunity for management and
workers to achieve mutual benefit by co-operating in the
common objective of making their enterprises perform
better. The signs are that the recession has bottomed and that
the recovery has commenced.
That most valuable if intangible economic indicator,
confidence is making a come-back, not least here in
Melbourne. The announcement of the $ 420 million Toyota Engine Plant
to be built in Altona, following the opening of Melbourne
Central, is a wonderful example of confidence in action.
In welcoming the Toyota project to Melbourne, I think you
would all join with me in paying a special tribute to one
man, who convinced Head Office that this was the right
place, and the right time: Toyota's Chief Executive,
Robert Johnston.
Over a wide range, key indicators are on the upswing.
the Westpac/ CAI survey of industrial trends
indicated that new manufacturing orders in the
coming quarter would be the best since 1989
manufacturing industry inflation expectations
for the December quarter are the lowest on record
housing statistics confirm a pick-up in housing
starts. The recent cuts in interest rates will
consolidate this recovery
Despite a slight fall-back in the last two months,
the index of consumer confidence has risen by
since the February trough
recent retail trade statistics suggest that
spending is beginning to pick up
consumer inflation expectations in the
September quarter are down to 4% from 6.1% in the
June quarter, after having been above 10% through
the 1980' s
4 9.
there i~ s clear evidence that the rundown of stocks
has slowed.
Ladies and gentlemen, I have gone into some detail about
how the government is creating the climate, the framework
for the revitalization of Australian industry and the
reform of the Australian economy.
That action : Ls the kind that government could and should
take. It looks to the future, it looks to the structure
of the econoray. It is of direct benefit to industry.
But we need to0 be careful in how the Government
intervenes in the economy. We must not repeat the
mistakes of t: he past, where a few industries were
protected at the expense of the development of the rest.
There are times when it is appropriate for government to
act to help Ft particular industry, as we have done with
the steel industry, pharmaceuticals, information
technology and aerospace. But we must avoid the trap of
creating industries that will never stand on their own
feet, and continually demand ever bigger subsidies.
We are about removing obstacles to investment and
development. But we are not going to abandon our
responsibilities to the environment and to aborigines
nor do I believe you would expect that of us.
We want development, but it must be ecologically
sustainable development. We are committed to reducing
duplication and inefficiency in environmental assessment
and protection processes, but it is no time to be
lessening our environmental responsibilities, standards
or controls.
Achieving an internationally competitive, ecologically
sustainable Australian economy is the responsibility of
business as much as the Government.
Government can set the framework, but it is up to you,
who make decisions about the what happens on the factory
floor about where the factory floor is about what the
factory puts iLnto our land and air to play your part.
The great task ahead of us, drawing upon our unique
national strengths and characteristics, is to create an
internationall~ y competitive outward-looking economy which
encourages and enables our ongoing program of economic,
environmental and social justice.
This is the challenge. It is one that I accept, and my
Government accepts. It is a challenge that the
Australian pecople through their steadfastness and
farsightedness through these difficult times, have
accepted.
But it is a challenge in which business must continue to
play an important part. You must we all must think
and act on a larger and more imaginative time frame than
the next financial year.
What we do, what we make and what we sell must be seen in
the context of a world which won't do us any favours
but will buy when we produce our best. I am certain that
with the advantages we enjoy, with confidence in
ourselves and commitment to one another, Australians
will make it because we will make it better.