TRANSCRIPT OF THE PRIME MINISTER, THE RON P 0 KEATING, HP
ADDRESS TO THE ' NEW INDUSTRIAL REVOLUTION -YOUR BUSINESS IN
THE ' 908 SEMINAR', BANKSTOWN* 17 JUNE 1992
R OK PROOF COPY
can I say I amn very pleased to be invited to speak to you
about the subjects which flEET specialises in. And can I
again firstly congratulate DEEtT on holding this discussion
meeting and I'm particularly pleased to be talking to you in
Bankstown. It's always good to come back to the old town
and to be talking about issues which are relevant to people
and the way they live and how they'll work and what they'll
do in the future.
We are going through a very large Industrial transition and
the fact that a meeting like this is taking place is itself
a revelation because many years ago the whole notion of
training was simply trade training, apprentices,
apprenticeships and what have you and the comprehension of
many areas of business, the importance of education and
training was, not so many years ago, comparatively low.
In the early 19809 we had three children in ten completing
secondary school and one of the things that the government
wanted to do and has done over the period is to increase the
participation rate of kids in school.
That is now nearly eight in ten, three in ten in the early
19809 to nearly eight in ten now, is one of the basic things
one had to do to improve the skills base of Australia. And
if we are to be indeed a clever country or a capable
country, a clever and capable country, then education and
training are of course, the keystones of such capability.
All this comes from the great roll back of protection under
which Australia existed in most of the postwar years, and
began with the removal of exchange controls in 1983, with
the float of the Australian dollar and then more latterly
general changes to the external orientation of Australia
reductions in border protections, reduction in tariffs,
opening Australia up to competition and getting the focus
onto productivity, lower costs, lower inflation, import
competition, exports and a better current account
performance and with it more jobs, more interesting jobs and
better paid jobs.
We came through the 19809 with a growth strategy built
around those particular ideals. And we had a lot of
success. We had a lot of growth in the 1980s and we had a
lot of employment growth. We started of f with a work force
of six million and we ended up with a work force of 7.8
million which is nearly 30 per cent larger. We've lost now
in the recession unfortunately, 300,000 of those jobs but we
still held 1.5 million which means the workforce today is
about 25 per cent larger than it was in 1983, built around
the objectives of growth and lower costs and growth
efficiencies. Now we have come a long way, and I think Australia has
crossed the rubicon where now the country does look to be
Competitive. The whole notion of competitiveness is not
something which is just a lip servicie -thing but-omething
people mean. As well as that we've crossed a rubicon whore
we are now interested in exports and imports competition in
a way we were never interested before. One can see in this
period of recession we're emerging from now that the growth
which does obtain in the economy, a large part of it in
coming from the export markets or net exports, import
competition and exports. So it's holding up production and
employment. Whereas if we had a focus simply upon domestic
demand that wouldn't be the case.
I think now a lot of industrial companies who are now
exporting will continue to export when domestic demand picks
up. That is they won't say well look, the export market was
handy when were in a bit of a squeeze and we've got an
exportable surplus and is there someone to take it yes
there is, good, we'll let them have it, but now that
domestic demand Is up we won't bother any more.
I think many companies are now finding a great success with
exports, they're finding markets and they're finding them in
the Asia-Pacific, they're finding them close to Australia,
they're finding them in the area of the world economy which
is growing the fastest and the Strongest which is the Asia-
Pacific. This discovery if you like, by Australian
companies of these markets to our north and north Asia as
well, has I think, produced a cultural change which is going
to stand us in good stead.
The other great cultural change is the purging of
inflationary sentiment from the Australian economy. This
was the thing, of course, we could never seem to be able to
do. For nearly twenty years we had high inflation and
despite persistent attempts by all sorts of governments it
could never be conquered. It has been conquered now by
commitment on the part of organised labour and the
government and more latterly the deflationary influence of
the recession which has pulled inflation down, but the
important thing is it's stripping the culture, it's purging
the culture of Australia that people could do unproductive
things, do speculative things and try to seek from thoue
speculative things real increments to wealth and employment.
I think we have crossed a very important rubicon. And I
don't know whether some of you might have noticed Weutpaa
taking a $ 2.6 billion hit on its accounts a couple of weeks
ago. In doing so it was basically saying, I think in a very
mature decision, look we won't moon around waiting for
inflation to pick property prices up, we won't do as we've
normally done, sat back and waited for a bit of inflation to
correct yesterday's decisions, we're now in a low
inflationary environment, let's basically reoognise it,
let's cut the ' 808 adrift and let's take our medicine on the
chin and go on and build our business. That was a pretty
hard thing for them to do, they've got to approach the
market again, they've got to get stock which dilutes the
rest of the stock in the business, to make the key decision
that they were not going to mess around with inflation any
longer.
That means that that institution and many others are now
going to look at productive investment. And the culture of
Australia is shifting away from speculation and passive
investment, mooning around waiting for inflation to reappear
so that those with assets can end up being more wealthy than
those without them and to transfer from the poor to the
wealthy by way of inflation. That culture is dying and the
culture that has come in its place is one of productivity,
of production where our focus is on adding value, employing
people and looking at businesses which produce goods and
services. Now that's a mighty change for a country which was taught to
believe that it was a lucky country, that it could do
unsmart things, that it could lock itself up behind a tariff
wall, that it could only educate three children in ten
beyond secondary school, that it could speculate its head
of f with double digit inflation rates, that the wealthy
could grow wealthier and the poor could go poorer, so that
young people would start with very big mortgages around
their necks paying for inflated values in property and that
the elderly would have their savings ripped to bits by
inflation. This was the sort of culture that this
government inherited in 1983. As you know by then, the
current account deficit in 1980 was already 6 per cent of
GDP. Already twelve years ago we could not pay for our
imports to the tune of 6 per cent of GDP a year. Now GDP
this year is $ 400 billion, 6 per cent is about $ 24 billion,
so we were $ 24 billion shy of balancing our trade accounts
twelve years ago.
Those who look for the resources boom twelve years ago, the
so called ' 80. resources boom, it was not a boom in reality,
it didn't answer the questions, and the real resources we
should have had burning were the intellectual abilities of
our people and of our children. They were the resources We
didn't worry about while we believed digging up another
mound of rocks and growing another paddock full of wheat was
all that was needed to be done so that the People in the
lucky country could go on in their torpor, in their mental
fog, not facing the real world outside and understanding the
simple fact that the post-war trade in goods and' services
had passed Australia by. That the policies of the Country
Party and Coalition governments preaching free enterprise on
the one hand and dolloping out dollops of tariff protection
and bounties end subsidies on the other, while seeking to
have an efficient primary export sector, wasn just a
dichotomy of policy that was bound to fail.
So in the change we've gone through, these important
psychological shifts, and as we had to move down aggregate
wages and rechange the level, that is restore the levels of
national income going to wages and profits and the ' 80s as a
result of the mad-wage mayhem of 1979 and 1980, the wage
share in CDP warn too high and the profit share in GDP was
too low and therefore profits fell and investment fell with
it, and when investment fell employment fell.
In the first seven years between 1983 and 1990 we had five
times as much employment growth as the last seven years of
the Fraser government five fold, because we got back to
rates of economic growth which could take people up out of
the workforce. That change of focus-, to going back to
fundamentals and being competitive, to letting the exchange
rate find its right level, living with the inflationary
consequences coming from it, then buying down wages so that
that inflationary surge was taken out of wages and then
through five Accords with the ACTU, build ourselves an
inflation rate down to two or three per cent, is a great
national achievement. It means that after the great shift
in aggregate wages we had to get around the wage
flexibility. Because between 1983 and about 1988-89 we did
succeed in getting aggregate wage flexibility, we did
succeed in lifting the profit share and we lifted investment
with it.
The problem about aggregate wage flexibility is that one
builds pressures within groupings of employees for what they
think is salary justice which can't be provided by a system
of-rigid aggregate adjustment. So we then started looking
in Accords Marks V and VI for flexibility, productivity
based flexibility which started with a 4 per cent case under
Accord Mark V where 4 per cent was paid on productivity
adjustments, not that everybody took the productivity
adjustment opportunity up, and then in Accord Mark VI which
the ACTU concluded with the government just at the beginning
of the 1990 election, we moved then to the first time into
enterprise bargaining. And while we were doing that, moved
into a system of fewer unions, larger unions and more of an
industry union structure which could more accommodate the
shifts In fortunes of particular industry.
Now many of you know that enterprise bargaining has had a
pretty hard road to hoe, the Abtiiioziuionl told us
in the first instance we were not mature enough to handle
it, that if they weren't checking everybody's industrial
agreement then it wasn't worth having, and as everyone of
you running a business knows, if you're going to increase
the productivity of your business by changing the way in
which you operate it and the way in which your employees
operate within it, that can't be done through a central
bench in Melbourne, 0 it can only be done at the enterprise
level. That's why it was Incompatible to have the
Industrial Relations Commission vetting enterprise
agreements-and because the government and the ACTU took the
view they shouldn't be vetting them, they thought we were
perhaps not mature enough to have them.
As it is, the ACTU stood the Commission up and the result
was that in the reconsidering of these things, enterprise
bargaining is now a possibility and the great productivity
opportunities are there. I've never known a time when
unions have been more prepared to find wage increases from
genuine improvements in productivity an in these last few
years and particularly now.
But what went hand in hand with enterprise bargaining was
award restructuring. The problem we have with the award
system, the whole problem that we've had with the labour
market in Australia generally was that we inherited the
British craft union structure of industrial orgenisation.
There was no General Macarthur here, sweeping the system out
and building a new system and there was no General George
Marshall. So after the war we were left with what we began
with a system built on the craft structure and within the
Craft structure we had this very rigid awards system. So if
you got yourself to a place as a tradesman or a particular
worker and you secured a spot in that particular scale of
classification that was your spot for life. The only
negotiations that ever matter to you were whether you got a
national wage adjustment and if you worked a bit of
overtime. The notion of moving out of that rigid system and
retraining themselves into a multi-skilled position was
something which of course, was alien to the craft based
Oystem.
So to create a better market for labour, what the government
has sought to do is to move away from the rigidities of that
craft union structure to one where we're looking at. We're
looking at either enterprise agreements between employees,
unions and employers or we're looking at much more of an
industry based model. And in an industry based model one
can take account of different levels of prosperity and
different requirements
and imperatives for change. The employees of an industry
can respond accordingly.
So award restructuring is producing fewer but larger
categories of multi-skilled persons and the opportunity of
training and moving through those categories is now an
opportunity available to people where they can, if they
wish, do more things and do them productively, more
efficiently, earn more money and actually produce lower
coats for business.
So there has been a great change from a multiplicity of
unions down to 8 smaller number of larger unions, much more
industry based, and an enterprise arrangement between unions
and companies f or enterprise agreements about the way in
which they function and beyond that award restructuring to a
system which takes much more account of productivity in the
business and of course, in the economy in general.
This ha. always been the argument we've had with the
Coalition. What John Howard tried to do in 1980 was pretend
there was no craft structure so if you turned your back on
it you deregulated it. Well of course, he turned his back
on it and wages went to 16 per cent that year and the
inflation % ate went to 12. You can't deregulate, you could
never turn your back on that system, you had to change it
and that's what we've sought to do. Change the way in which
it works and get down to a much more flexible labour market.
So that national wage cases will now look after basically
the low paid who are not in positions where obvious
improvements in productivity are available, where their
bargaining power is weak, but most other people will secure
wage increases through enterprise bargaining and lifting
their skills and improving the opportunities within
businesses. So much of that opportunity resides with managers. Whenever
you see a well managed business you'll see generally a cost
conscious, competitive business. Whenever you see good
managemnent you'll mostly see good labour relations. I've
never known an opportunity as now for the manager with a
sharp eye and a keen sense of relations with employees to
produce lower costs and make a business run more
productively and more efficiently. So enterprise bargaining
creates opportunities but it also creates greater challenges
because it will sort the wheat from the chaff as far as
managers are concerned and it will also do the same in terms
of employees and their willingness to make a business tick.
in the end it focuses on the ability of the business to
prosper and that focus is what's important in getting those
productivity agreements and improvements.
The training which is part and parcel of award restructuring
is taking place in the economy now, there is a much greater
emphasis on training and the government is now seeking to
improve that emphasis further.
Again, and let Me just say a few words about in the f irst
instance, about tertiary levels. We've added since the
middle 198s 120,000 places for universities. That in the
equivalent of twelve universities of an average campus size
of 10,000. That means that about 40 per cent of school
leavers, 3S-40 par cent find places in universities. That's
very high up the OECD average scale. We're just behind the
United States and the Unites States are miles ahead of
anybody else. So the growth path now, the trajectory for
university places will naturally find its own level now that
we've lifted the level so dramatically in the 19509. We've
got that retention rate from three kids in ten to nearly
eight in ten end about 35-40 per cent of them finding places
in university.
The next challenge is to improve vocational education and
it's more the pity that we've never had really a national
system of vocational education. Some of the TAFE systems
around the Commonwealth are more efficient than others, some
better reflect the requirements of the labour market, some
understand better award restructuring and what all that
means and making the country more clever and capable, some
are more client driven than provider driven. But one thing
we do know is as a system they are not fulfilling adequately
their national charter.
So at the Premiers Conference lost week I sought again, to
try to bring together prospects of the development of a
national system of TAFE, a national vocational and
educational system. I think with a bit of good will and a
bit of elbow grease in the right places we can do that, we
can build a national vocational educational system.
Not only is that important for education, cleverness, being
capable and all the other things that I've talked about the
country today, but it will be important to get that system
working and to provide people that come through it with
diplomas which have status in the community, which the TAFE
system to this point has not ever really enjoyed and we can
get to a system which is much more similar to the European
vocational education systems, where a status of a diploma
coming out of one of these institutions m~ eans more to
employers. If you look at countries like Germany and
companies like Mercedes Benz, Semens or BMW, the people who
run those companies are basically people with diplomas from
their TAFE system and not from their universities.
That's the sort of TAFE system I think Australia should
have. That will mean that 60 per cent of kids cascading out
of secondary school are cascading into some form of training
and it will mean that the sort of unskilled or low skilled
jobs that most of us grew up with as kids are disappearing
these people will be taken up into more trained, more highly
paid more interesting jobs. We did a lot of that in the
19808, it's stopped for the moment with the recession anid
with unemployment but as it resumes what we'll find Is that
job opportunities will not be dead-end jobs but they'll be
live-end jobs. Jobs which have training and skills about
them anid which will provide more interesting jobs and better
pay and conditions. So it In important therefore that the
TAFE system fulfils its role and plays its role ini getting
that focus back on education.
Australia has about it many comparative advantages, but the
more I go through Asia and other parts of the world the more
I'm convinced that one of those is education and that you
can't build a clever country or a capable country without
it, you certainly couldn't do It with three kids in ten
completing secondary school, you can't do It with a TAFE
system that isn&' t working properly, you can't Go it without
that kind of national focus that I'm talking about.
I think we do have a great chance not only to do it for
ourselves but also to provide a service. That is, sell
education services to the rest of the world and particularly
to our near North, but more particularly to build our
industrial base upon that sort of a skills base a truly
clever and competent country. That means of course, a focus
on research and development as well which must go hand in
hand with training. And that's why the Commonwealth's
contribution to research and development in this country is
important so that we start to make up f or the fact the
private sector of Australia Isn't spending a lot on research
and development and hasn't traditionally. The Commonwealth
in a number of ways will be doing that.
Can I also say in TAPE one of the things we want to do is
build specialist training institutes and we want to do more
things with business. One of the great hang-ups in
Australian education is that everybody interested in it
wants to have a new building. The f irst thing they want Is
a big mausoleum to make themselves feel important with,
where in fact the place is strewn with schools, some of
which are unoccupied as the demography changes and where we
ought to be focussing on people rather than bricks and
build ing institutions.
One of the things I think we should do is in certain sectors
of industry, where industry can play a much bigger role in
training, the government and national TAFE training
institutions get together and develop courses which are
designed on a client-driven basis, in particular sectors of
industry. And where industries predominate in certain
suburbs of Sydney and Melbourne, in those pieces one could
see a specialised thing. Up at Bankstown TAFE for instance
there's an arrangement with Kaznbrook, the appliance
manufacturer, and the Benkstown TAPE to do special things
there. In the northern suburbs of Melbournhe, recently I
visited an automotive TAFE college which specialises in
automotive&. I visited, in the course of the sme period,
two tyre factories in Melbourne which are now doing very
competent things in technology but Can't find enough trained
people. There is no reason why a TAFE Institute and the
companies concerned couldn't put together a training
regiment, courses for that industry and in areas of advanced
manufacturing technology which are not being catered for
often in technical and further education. I think there In
also a case for specialist Institutes that focus on those
advanced manufacturing technique.
So I'd like to think that wee're not just building a national
Institute of TAFE which has common denominator features
about it, but we're also reserving the right to clever
things but not necessarily In the building of business as so
much focus as often been in the past. So TAFE is important.
The other thing which I think is important also and we are
talking about two things here, we're talking about the
training of young people and we're talking about the
retraining of older people, but youth unemployment is a
problem and it's got to be dealt with. It's a problem that
needs to be kept in perspective nevertheless. I notice some
headlines the other day saying that 46 per cent of young
people are unemployed. That's a distortion of, in fact, the
position. Seven or eight out of ten young people are in
education or in training. Two or three out of ten young
people in the 15-19 year age group are actually in the
workforce looking for work and about a third of those people
are actually out of work, that's one in ten. So seven to
eight in ten 15-19 year olds are in education and training,
two to three in ten are actually in the workforce and one in
ten is actually unemployed, that's 10 per cent of the age
cohort 15-19 not 46 per cent. in fact there are 40,000
fewer young people 15-19 unemployed today then there was in
the 1982-83 recession.
With that said It is still a problem and we have to deal
with it and we're going to try and deal with it by looking
at the whole question of entry level* training wages which
was addressed by the Carmichael Report, Laurie Carmichael
who you've known and read about in the Australian Vocational
Certificate Training system. We're looking at a new
vocational certificate training system with work-based
training places in industry, where we've got the opportunity
of taking many more young people up and at the same time
giving themt training opportunities.
So I think it is a very exciting prospect and one I'm
focussing on now. And we're hoping to have a meeting with
national employers and other people from various
institutions in the next little while to see if we can focus
on some of those problems and to see if we can do something
about streaming kids into work and training opportunities
under that Australian Vocational Certificate Training
system.
That will help deal with that one in ten young person who
doesn't have a job and to give them work experience and to
give them training. So I think It is of course, obviously
terribly important to us.
Like many things you can't change everything over night. We
started on higher participation rats back in the 1980s, we
started lifting the places in tertiary institutions, we
changed the way in which the tertiary system functions,
we're now focussing on TATE and while all that's been on
we've gone off aggregate wage movements to a more flexible
labour market, to award restructuring to change the basis of
the craft system to enterprise bargaining to lift
ef ficiencies out of companies and give managers a chance of
managing instead of being caught in simply a wage structure
which drops out of an Arbitration Commission decision which
takes no account of the capacity of business to produce, to
make profits or to run. So the opportunity there for
improvements in efficiency is quite profound.
Now, let me just say a couple of things about our opponents
while I'm at it. They have got two policies, one is to put
a 15 per cent goods end services tax on everything. This
will put 6 to 7 percentage points into. inflation and take
the inflation rate from 1.7 per cent, where it now is, to
around about 7 or 8 per cent. And with it the bill rates,
now at 6. 5 per cent, will have the same 5 to 7 percentage
points added to them and they will be going back to 13 or 14
and then you will have all the add ons after that.
They have no policy of wage discounts. They don't want to
talk to the unions. They have no mechanism whatsoever of
securing a wage discount for a consumption tax. A
consumption tax is simply a device which will explode the
national inflation rate and put us back where we were two
decades ago with high levels of Inflation.
And the reason I dropped the proposal in the middle 1980s is
that I couldn't guarantee the wage discounts then, I didn't
have the right to blow the national inflation rate to pieces
anymore than John Howson has that right today. it won't remake
Australia, it is just another tax. And another tax
which will very heavily impede business, and I don't know
whether many of you have read experiences from Britain or
New Zealand, or any other countries with a goods and
services tax, but the great burden of the goods and services
tax in terms of compliance cost falls on small business.
And it is the small business sector which will carry the
great burden of this and the result is that most people Will
spend the better part of one day per week accounting for the
system and seeing that there is a responsibility beyond them
to account it and to remit to the tax offtice the proceeds
all in the name of the ideological shift of taxing
expenditure Instead of Income.
Secondly, the other policy in the policy we saw at APPM, but
two weeks ago. That is, that employees shouild not have a
right to group together and be represented by a union in
dealing with their company, or employee, that they should
only have a right to deal with them individually. And of
course once that happens and you have common law contracts,
all the things which Australian workers have built up for
themselves over the period, their annual leave, sick leave
and other rates of pay and terms of conditions of employment
will be swept away as each individual person will deal with
their employer.
Well of course organised labour in Australia would fight
that one to the bitter end. And as the f ight went on, the
national inflation rate would go up beyond that of a goods
and services tax, and the sort of mayhem and picket lines
and police pushing and shoving that we saw down In Tasmania
two weeks ago would be the order of the day. We are now in
a period of industrial peace which has been unprecedented.
We have now got average weekly earnings for the year to
March at 3.1 per cent, the inflation rate is at 1.7 per cent
and industrial disputation in. I think, is probably at an
all time low.
To jeopardise that system and go back to' the sort of
industrial confrontation chaos is about the last thing
Australia needs, but that Is all, I'm afraid, Dr Hewson has
to offer. Two very sterile ideas. Belt everything with a
per cent consumption tax and try and to push people of f
federal awards or state awards and let them into
commonwealth contracts where they can only do It
individually with their employer.
It is not much of a solution, it Is not going to do anything
about training. In fact they will add S50 million onto the
Fightback proposals for TAFE. Well big deal, big deal. The
kind of responsibility that TAFE is going to have in the
system and the labour market programs like iobskill and
Jobstart, will all be chopped to pieces as Dr Hewson trys to
cut $ 10 billion out of outlays to pay his tax cuts.
With us, there will be focus there on training and retraining,
on labour market programs, upon award
restructuring, upon productivity based enterprise bargaining
by agreement, about working to a national consensus with the
Government, the employers end employees working together for
a low cost, low Inflation, high productivity country. That
is where we are going now.
Now we have paid a price for some of that in the recession,
but the benefits are going to be quite profound as we go
12
into the ' 90s with a low Inflation culture and with a high
productivity culture and being truly competitive for the
first time in probably, on a long term basis, in the postwar
years. That is the importance of having a consensus basis
to national policy and that is the importance of having a
focus on educational training so that when we start selling
those products we are not at the bottom of the international
division of labour, doing dead-end jobs at dead-end prices,
but further up the international division of labour doing
clever things, clever prices, with clever people.
Thank you very much.