PRIME MINISTER
SPEECH BY THE PRIME MINISTER, THE HON P J KEATING, MP
OPENING OF GEELONG WOOL COMBING LTD PLANT, CORIO
DECEMBER 1993
I am very pleased to be here today at the opening of this
wool combing facility in one of the great regional cities
of Australia.
This year marks the bicentenary of the invention of the
first mechanical wool comb, an event which was followed
by combers rioting in the streets of the English wool
towns. You can't help having sympathy for the old Luddites, but
historically speaking they won a few battles and
comprehensively lost the war.
It is very important that we Australians win the war: our
industry has to be at the leading edge of progress.
And this new plant is a perfect example: it will help the
industry and the region.
We are all well aware that the wool industry is going
through a major transitional period that has not been
easy for many growers. The collapse of the Reserve Price
Scheme, the accumulation of a large wool stockpile and a
massive debt, the effects of drought and a collapse of
wool prices have all posed very significant challenges.
Equally, we know that -Geelong has not had an easy time of
it recently.
But both the wool industry and the Geelong region are
resilient: the basis for recovery is there in the quality
of the product and the people.
Both the wool industry and the people of Geelong know
that our industries and our regions need to adapt to keep
pace with international developments. Increasingly they
know that unparalleled opportunity can come from a
readiness to embrace the necessary change.
And the Government is supporting them.
It is one of the truisms of the past that Australia
rode on the sheep's back. And it is a truism of our
present that for all the greatness of our primary and
extractive industries we have to add value to the
product. We have to get from our great resources the maximum in
dollars and the maximum in jobs.
Wool is a marvellous product a marvellous fibre. We
count wool as a primary product but nature has already
added value and marketability. Wool begins with a
distinct comparative advantage. This plant builds on it.
It adds more value.
It can't be said often enough that the image of Australia
stuck in a time warp where it is content to be a supplier
of raw commodities for others to transform is false.
The " dig it up and ship it out" mentality hasn't applied
for a long time not to the Government, not to our
businesses, not to our workers.
That this has happened is a consequence of the energy of
business and industry and the willingness of employees
to confront necessity and embrace change.
You will forgive me for saying that it is also the result
of government policies which we began to apply a decade
ago. Let me briefly run through a few facts.
The Australian economy is now around 30 per cent more
internationally competitive than 10 years ago.
In the last decade, exports have doubled.
They have grown from 13 per cent of GDP to 20 per cent.
Exports of manufactures have trebled and now exceed those
for rural products and minerals and fuels.
In the past six years exports of Elaborately Transformed
Manufactures have grown at an average rate of 19 per cent
per annum and nearly trebled in value.
Today, profits are at record levels.
Inflation is low and under control.
Interest rates are at historically low levels.
Investment is beginning to grow, just as manufacturing
output is growing strongly.
A new culture of industrial relations has been
established one which increases labour market
flexibility and productivity growth by widening the
spread of enterprise bargaining.
Our recent business tax initiatives have ensured that the
competitiveness of our system is on a par with comparable
OECD countries.
We have reduced our corporate tax rate to 33 per cent.
We have introduced a development allowance, a general
investment allowance, a substantial acceleration of
depreciation provisions and concessionally-taxed pooled
development funds.
And we have established an orderly and manifestly
effective program for reducing tariff protection.
There were those who doubted the wisdom of orderly tariff
reduction. What they failed to appreciate was that the existing
tariff regime was manifestly inefficient and unfair
unfair to our trading partners, unfair to employees in
other non-protected areas, unfair to consumers who had to
pay more for their goods.
We had no choice but to change the focus of those
industries, which survived only through border
protection. To bring them to an outlook which is more
conducive to wealth creation for this country an export
oriented outlook.
And we are being proved right.
Take one example. For years it has been axiomatic that
Australians could never be internationally competitive in
textile, clothing and footwear industries.
Well, last year, exports in the TCF area rose by $ 534
million, a 21 per cent increase on the previous year.
They rose because the TCF industries embraced the
necessity of a new industrial culture.
The opening of this plant, as with other recent
developments within the wool and wool processing
industry, is a welcome sign that the wool industry is
embracing this new culture too.
Embracing the need for increased value adding.
The importance of utilising new technology.
The crucial requirement to be market-oriented to be
closely attuned to the needs of its customers.
And to export, export, export particularly to the
rapidly growing markets in the Asia-Pacific region.
It is not enough, as everyone realises, that Australia
continue to dominate the global supply of wool. We
account f or some 30 per cent of world production and
per cent of finer apparel wool but that wool, of
itself, will not re-establish the pre-eminence of the
wool industry in Australia.
The bulk of our wool is still exported in greasy-form,
with little or no value added. For example, Australia's
production of wool tops accounts for only 4 per cent of
global supply and even less in later stage processed
products.
Compare this with a country such as Uruguay which
produces 3 per cent of the world's wool, but is the
second largest exporter of wool tops.
While it is pleasing to note that over the last decade
Australia has doubled its exports of scoured and
carbonised wool, and increased wool top exports by 75 per
cent, there remains considerable scope for expansion in
this area.
It is clear that if we are to secure the Australian wool
industry's long term future as a world supplier of a high
quality wool and wool products, we need to strengthen
linkages between the various segments of the wool
production and marketing chain.
This view was endorsed by the Garnaut Committee, which
was established by the Government to review the wool
industry's institutional and operational arrangements.
The committee's recommendations for new institutional
structures and a new market-driven approach were in large
part taken up by both the Government and the industry,
and new legislative arrangements to give effect to them
have just been put into place.
There is a solid base for Australia to expand its wool
processing sector, particularly in early stage
processing. We have access to a high quality and diverse wool clip.
We have a close proximity to the growing markets of Asia.
Our energy costs are competitive.
For this industry, China will be a key. It alone has
been responsible fo~ r a 20 per cent increase in sales in
the region over the past decade.
In June this year, I discussed with the Chinese Vice
Premier the possibility of developing strategic long-term
linkages between our respective wool and wool textile
industries.
Following a series of negotiations at official and
Ministerial level, agreement was reached whereby China
would reduce, from 1 January 1994, its tariff on wool
tops to 15% that is to the same level as applies to
greasy and scoured wool.
This agreement is an encouraging step forward. It is up
to the industry now to follow it up. We simply cannot
allow such opportunities to pass us by.
The well justified satisfaction we take in the success of
our new manufacturing industries should not lead us to
conclude that our old established industries are of
declining importance. The wool industry remains a great
industry. The point which this new plant makes is that
it can become a greater one.
The decision by Bremer Woll-Kammerei ( BWK) to establish
its first plant outside Germany, is tangible evidence
that major foreign investors believe that Australia is a
location where the wool industry can renew itself.
The benefits that will flow from the establishment of
this plant are significant, both locally and nationally.
Total investment in the project is expected to be
million, and it will create more than 150 new long
term jobs, in addition to those that have been created
during the construction phase.
As a recognised world leader in the production of high
quality wool tops, BWK will also bring state of the art
processing technology to Australia.
I understand that the additional capacity of this plant
will increase to 8 per cent the proportion of the total
Australian clip processed to tops stage by 1996 about
$ 34 million a year of value will be added to the raw wool
processed at the plant.
The Government is substantially supporting this plant
with a $ 5 million grant and a $ 15 million low interest
loan
This plant is the first to be supported under a
million Further Wool Processing Program.
In future, the projects funded will generate over
$ 200 million of new investment, resulting in additional
capacity of over 30 million kilograms of wool tops, a
doubling of current top making capacity, and the creation
of 445 new jobs. Most of this additional output is for
export. This is yet another example of the importance to
Australia of market access, and why the Government has
placed so much importance on securing a successful GATT
outcome.
That outcome now looks like delivering dollar benefits
for Australia at a conservatively estimated
billion. The immediate benefits to Australia will be in
agriculture, but the result will also see the textiles
and clothing sector again coming fully under the GATT
through the phasing out of existing import restrictions
under the Multi-Fibre Agreement ( MFA), particularly in
the important US and European Union markets.
This will free up the world trade in textiles and
clothing, estimated to be worth more than $ 100 billion
annually.
Australia will directly benefit from the liberalisation
in this sector as a substantial supplier of textile raw
materials and a growing exporter of made-up articles.
It is also reasonable to conclude that increased demand
should also push up commodity prices.
We are now in an excellent position to seize the
initiative and capitalise on the opportunities opening in
the international market for wool. I am confident that
our wool and wool-processing industry can emerge as
leading players.
I am confident, too, that the Geelong region will play an
important part in Australia's future success in this and
other industries, just as it has in the past.
Regional development is a matter of primary importance to
the Government, and, as you may be aware, we will next
week receive the report of a Task Force on regional
development, chaired by Mr Bill Kelty.
The Task Force has been inquiring into impediments to
economic development in the regions of Australia, and
into the ways in which regions can use their comparative
advantages to build their future prosperity.
There is no doubt that the internationalisation of the
Australian economy has had differing impacts on different
regions. We believe that if Governments, industry and regional
communities get together, identify the opportunities and
develop the strengths that already exist in abundance in
our regions, it will have major consequences for the
future well-being of this country.
And for the regions themselves, it will ensure that new
jobs and opportunities for enterprise and our youth can
be offered, that the local knowledge and expertise
essential to a prosperous future will not be lost, and
that the regions, which give Australia not just strength
7
but character, will be revitalised for the twenty first
century. In conclusion, let me say again what a pleasure it is to
be here today at the beginning of a new partnership
between a great Australian industry and a great city of
Australia. And now let me officially declare the Geelong Wool
Combing facility open.