C2HECK AGAINST DFLTVERY EMBARGOED UNTTIL nFrlF'
SPEECH BY THE PRIME MINISTER
BRW/ ALCATEL BUSINESS AWARDS
SYDNEY 27 NOVEMBER 1991
Thank you for the opportunity to present the 1991 Business
Review Weekly/ Alcatel Australian Business Awards.
Tonight is very important to many Australian companies and
business people. Winning one of these awards really means
something. Many of you might have predicted that I would have taken t,
opportunity to demonstrate to such a distinguished busines
audience the futility of the proposed Consumption Tax. I
wouldn't delay the announcement of the awards with somethi
like that. But what I will say is that the holes and gaps
which are already evident make it clear that the Consuznpti
Tax package would do nothing for Australia, either
economically or socially.
Instead I want to talk briefly about competition, and ahou
the General Agreement on Tariffs and Trade, the GATT.
Competition and the GATT are inextricably linked both
domestically and internationally. Competition and the resu
of the Uruguay Round are essential aspects of what my
Government has been doing for 8 years in reforming the
Australian economy, in changing it into a low inflation,
internationally competitive economy in fostering
competition across all industries through the adoption of
best international practice.
In business, as I'm sure you'll agree, without competition.
there is a weakening in the force for innovation; in the
need to reduce costs; in the fight for growth; in the
encouragement to seek new opportunities.
In Australia, we have experienced that problem first-hand.
In the past, we attempted to hold back the tide of
international competitiveness. For a time we might be sait
to have succeeded. But at what cost? What did that socalled
success achieve?
Ladies and gentlemen thirty years of policy mismanagement
successfully achieved an inward-looking, uncompetitive
industrial structure.
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My Government has been about the task of reversing the
mistakes of earlier years. The task has not been easy and
in no sense is it complete. Indeed it can never be complete
because a competitive world is a dynamic and changing world.
But it is inescapable that as we enter the 1990s no nation
can afford to ignore the force of global competition. The
growth of every economy, from the tiniest South Pacific
Island to the power-houses of Germany, the United States or
Japan depends crucially onr the growth in world trade
represented by internationralisation or its corollary the
ability of firms at home to compete with firms overseas.
Indeed, I believe we will soon reach a stage where there are
few if any industries which do not, in one sense or another
face genuine international competition.
Even in the classic examples of so-called naturallyprotected
industries such as bricks or bread, international
competition can arrive in the form of a foreign takeover.
With innovation or better technology or better marketing
or all the above and more international best practice can
arrive in even the most naturally protected industry.
We have some major Australian companies doing just this at
present in the United States, in Europe and in Asia.
We need to accommodate anti use this trend: it is the wave
of the future. Refuse to recognise it, and it will engulf
US. Ride it successfully and it can provide the momentum to
transform our economy.
There is an important obligation for a Government to meet in
ensuring competition provides the necessary momentum in our
economy. We must ensure that all our domestic markets, not just some,
operate efficiently, so that inputs are available as cheaply
in Australia as they are overseas.
The means of improving domestic markets to ensure inputs are
provided efficiently has taken many forms under my
Government: tariff cuts will reduce the cost of many
industries' inputs, both directly and through
their suppliers who use imported equipment or
products reform of industry structures in
telecommunications, aviation, interstate rail
freight, road transport, statutory marketing
authorities, capital markets, the waterfront and
shipping more and better 1: raining, both at school or TAFE
and in the work-place 3339
more flexible labour markets with a clear and
-explicit focus of improving worker productivity
mutual recognition of standards by States to
reduce barriers to trade within Australia; and
positive assistance to lift research and
development and encourage innovation
These reforms are, many of them, not simple. They involve
cost and pain and are often by their very nature slow and
hidden in their contribution in the short-term.
Putting together an approach which achieves the basic
objectives of more efficient markets while also providing
assistance with adjustment costs is what good government is
about. Poor government, on the other hand, involves plenty
of hype about zero tariffs and confrontation with unions;
and no consideration at all of the adjustment costs.
An essential accompaniment to these reforms is a means of
ensuring that markets operate to the benefit of consumers,
whether that consumer is a business buying an input or a
child buying an ice-cream.
My Government does not delude itself that all markets will
operate efficiently; and that the public benefit will always
be served by open and unfettered competition.
The Commonwealth's principal method of meeting the objective
of maintaining public benefit is the Trade Practices Act.
While much debate about the Act currently focuses on mergers
and media purchases with claims of inadequacy on the one
hand and over-kill on the other little attention is given
to the fact that the Act actually has substantial holes in
its coverage.
it is or it should be axiomatic that for markets and
firms to interact competitively, the framework which guides
their operation, which says what is fair competition and
what is not, should be applied equally in all markets.
Even where special cases can be claimed, their exclusion
from the Act, or the principles underlying it simply on
the grounds of Commonwealth-State demarcation must surely be
rejected as anachronistic.
So it was that I said on 12 March that my Government will
seek to address with the States these areas which are not
covered by trade practices law.
And the areas involved are hardly inconsequential. State
marketing authorities influence the cost of the food we eat;
and the cost of a major input to our food processing
industries.
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State business enterprises cover electricity, gas, water,
roil and offer a range of other businesses less directly
associated with normal public sector interests.
Unincorporated bodies, such as partnerships in the law,
medicine, accounting and other fields are State
responsibilities under the Constitution.
in all these cases, we are seeing pressures on Governments
for reform; to reduce costs to consumers, to allow markets
to develop. When those markets do develop, it is my belief
that we need to ensure that; the principles inherent in trade
practices legislation are applied, as a means of ensuring
that businesses and consumers benefit fully from such
reforms. It is an area often overshadowed in the thrust for
international competitiveness, but it cannot remain that
way. Notwithstanding the current hiatus in certain processes
involving Commonwealth-Stal: e reform, my Government remains
committed to pursuing changle in this and other areas.
Ladies and gentlemen,
I believe that, with co-operation, we could see these gaps
in the coverage of trade practices law addressed in the
course of 1992. After all, the countries of Europe now have
a unified competition policy. Surely Australia can achieve
that, too.
I have spent some time on -the issue of competition as it
applies domestically. Yet we can do all the work possible
to lift our competitivenesa, get our industries to focus on
international trade, and at the end of the day this can be
only of partial benefit if the export opportunities we seek
are denied to us by tariff and non-tariff barriers.
This is where the massive effort of the past five years on
. the Uruguay Round of negotiations under the General
Agreement on Tariffs and Trade comes in.
The GATT Round is our first and best means of ensuring that
Australia can exploit the opportunities that our low
inflation rate, our good education levels, our improving
research and development focus allow us.
As a relatively small trading n ' ation with an export base
heavily dominated by primary products, we are not, well
served by existing GATT rules because they have failed to
deal with trade-distorting domestic production subsidies;
barriers to entry; and export subsidies which characterise
support and protection in agriculture. Those subsidies and
barriers have grown to absurd proportions in recent years,
often in the guise of food security or social security
policies. 3341
if successful, the Uruguay Round holds out the prospect of
ensuring that everyone has the right to fair treatment, for
goods and also for the first time in the GATT for
services. While the success or failure of the round is
still uncertain, principally because of the gap that exists
between participants on agriculture reform, the scope of the
round is comprehensive and its potential for improving the
international trading framework is great.
After five years of painstaking work, a successful
conclusion to the Uruguay Round appears to be within our
grasp. Predictably, the last phase of the negotiations is
proving difficult as governments are forced to face the
tough options which will need decision in the next few
weeks. On g November, Presidents Bush and Delors met in the Hague
with Prime Minister Lubbers, and although many issues of
detail remain unresolved, they have added momentum to the
Geneva negotiations across a broad range of Uruguay Round
problems. In Hlarare in October, I discussed the urgent need for action
in the Round with the British Prime Minister John Major, who
is currently G-7 summit chairman. We are in regular contact
and he is taking a direct and constructive role both in the
EC and with his colleagues in other G-7 countries, in
following up the commitment they made in London.
If the political will is there to take the tough decisionS,
we should see the final shape of the overall round emerge by
Christmas. On many issues we already know what this package will
contain, and we have a clear view of the bottom line for
most of the others. Let me set out for you some of these
elements, with particular reference to those of priority
interest to Australia.
A good agreement on agriculture will comprise:
tariff ication of the many forms of agricultural protection,
with tariffs falling over time and current access expanding;
real cuts in export subsidies; and reductions in internal
support payments to producers, in particular those which
distort prices.
While press speculation on agriculture has understandably
focused on the size of the cuts in prospect, those close to
the negotiations know that the detail of the reform
commitments on market access, internal support and export
subsidies are just as critical to securing real, and not
just cosmetic, reform.
If we succeed in securing such a result Australia, with its
colleagues in the Cairns Group, will have played a crucial
role and will have demonstrated that not only the giants In
the trading system can influence the rules of the game.
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While agriculture has been a pivotal issue in the round and
is critical for our traditional export base, Australian
industry generally has a more direct interest in other
issues dealt with in the Round. Although the GATT creates
rules for trade in goods, there are no such rules for the
fastest growing sector of world trade: trade in services
as Australian exporters of services are very much aware.
To conclude the round successfully, however, will test the
ability of the western democracies to put a wider vision on
the future of the international trading environment ahead of
narrow national interest pressures. We are doing all we can
to ensure that that wider vision is sustained over the
coming weeks.
The Uruguay Round is set to produce a general agreement on
trade in services, to apply the principles of the GATT to
this sector. Negotiations to liberalise market access in
services trade have commenced. Australia along with some
forty other countries is taking an active part. Australia
has just tabled a very substantial offer to allow quite open
trade in a wide range of services, including financial
services, professional services, and telecommunications.
We have also made requests to our trading partners for
liberalisation in areas of export interest to Australian
services firms; and thus the process by which the GATT has
reduced the barriers to trade in industrial products has
begun for the services sector.
The program to lower barriers to trade in goods has of
course also been part of the Uruguay Round, like all such
rounds before it. These very detailed negotiations are not
complete, but tariff cuts by our trading partners can be
expected to average overall around 33 percent. For some
products of key interest to Australia the cuts could be far
greater. Think on that for a moment: a cut of one-third in the
tariffs affecting our manufactured exports, already
. experiencing unparalleled growth. It is possible that
tariffs and quotas could disappear for over 80 percent of
world steel trade. There could be no barriers at all in
major markets for our exports of non-ferrous metals in a
sector where Australian exports exceed $ 8.5 billion.
Possible commitments on cuts to coal subsidies particularly
in the EC and Japan could benefit Australia eventually by
more than Si billion a year.
Much of these reforms in prospect can be attributed to the
collective pressures brought to bear through multilateral
co-operation and shared interests with other participants in
the round. 3343
There is a number of other areas in which Australia will
benefit, including higher standards for the protection of
intellectual property, an area of significant Australian
comparative advantage through our innovative software
manufacturers; and of key long-term interest as my
Government underwrites a greater effort by Australian
companies in Research and Development.
If the Uruguay Round is concluded soon in the terms I have
described, the world will be a better place for a more
competitive and outward looking Australian industry.
Finally, I congratulate the winners of the awards, and BRW
and Alcatel for sponsoring them.
They are well earned by some great Australian companies arid
business people, and it will give me great pleasure to
announce them shortly.
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