T2EL3:. Feb. 94 13: 15 No. 010 P. 01/ 07
PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEAING, MP
RESHAPING AUSTRALIAN INSTITUTIONS
AUSTRALIAN NATIONAL UNIVERSITY, 22 FEBRUARY 1994
E& OE PROOF COPY
Well, thank you, Phil lip ( Adams), Vice Chancellor, Dymphna Clark, members
of the Clark family, Professor, distinguished guests and ladies and
gentlemen. One has always got to be careful when one is sponsored to do a talk or a
lecture, universities generally appreciate the opportunities, media
organisations always hype it up. And Radio National has me tonight
announcing my vision for the future, and Phillip wants it all done in
minutes. Where, in fact, what they asked me to do was talk about reshaping Australia's
Institutions. I will do my best, Phillip, to get this in 20 minutes, but I think this
is going to be a splice job for you and your colleagues, because had I known
you wanted me to speak to a tight time table I would have probably had it
prepared. But the fact Is it is coming, I am afraid, as it comes.
Talk about reshaping Australia's institutions It might not have been possible
a decade ago to propose such a subject and expect a lecture or a talk whiich
went in substance to substantial changes in Australia's institution frame work
because In most of the quarter century before the early 1 980s there wasn't
much institutional change in Australia. It is not to say Australia didn't have
institutions of value, but there wasn't much institutional change.
So, I am tonight with some history and with some forethought, looking
forward, talking about what I think of some of the institutional changes that
have taken place, and which ones are currently moving and will take place in
this decade.
Perhaps the first one to start with is the appetite for change. Because there
was no appetite for change in the ' 60s and the 1 970s. Australia very much
was seeing change at the margins and the public, if you like, the public
clamour for change, the public pressure on the political system for change, on
TEL:
TEL: 23. Feb. 94 13: 15 No. 010 P. 02/ 07
2
clamour for change, the public pressure on the political system for change, on
our institutions in general was not as evident as now. I think what has
happened is we have developed a tremendous appetite for change, so that
when this Government in the 1 980s brought forward substantial and far
reaching changes it did so at its considerable political risk.
Now if Governments say, look we think we have had enough change, and we
don't want to burden you the public with more of it', the public said ' well thank
you we will have somebody else". They want change. And there is now a
very great appetite for change.
So, much of what we do these days, as a nation, is we manage change. And
I think we are now, we have seen unprecedented institutional reform.
Australia Is now working differently, within different structures, they think
differently, they have learned the need for change, but I suppose more
important then anything else, they have come to believe in their capacity to
change. And if the last decade means nothing, it means that our capacity for
change is very substantial and very great.
So, managing change, and keeping up with change is now a key matter in
this country, and the appetite for change is one of the background thoughts,
In a sense, across the country In the whole community which one could call
Institutional change of the variety which changes the character of the country.
Now, I have been one of the people Involved In public life through this period
of managing change, and I thought I would run through some of these topics
which come under this heading; ' Reshaping Australia's Institutions'.
One of the first places to start with this, is of course, the Cabinet of the
Government, and in 1991 1 gave a lecture called the ' Challenge of Public
Policy in Australia', the first Chris Higgins memorial lecture. The lecture in
the memory of the former Secretary of the Treasury. And I talked about the
importance of Cabinet, Government and the role of Ministers, because
Ministers until this Government came to office had never run the policy. The
policy was in part operated by Ministers within some vague parameters, and
then moved along further by the public service, but because the public
service was always limited in the political authority you could bring to bear on
public decision making, the changes were, of course only at the margin.
So, much of the institutional change we have seen devolves to the role of
Ministers. And I said this I will just read this to you from that lecture it said:
' while many decry the role that politicians play, only politicians can
make major changes to the way a country conducts its business.
Change can not come from a bureaucracy no matter how well
motivated or gifted because the bureaucracy has no authority to rank
priorities or make decisions, Nor can' change come from the media
and the opinions of columnists, no mAtter how imminent. In the end
politicians have to have the foresight to see the need for change and
TEL: 23. Feb. 94 13: 15 No. 010 P. 03/ 07
3
the courage and strength to carry It through. That's why a strong and
practical Cabinet Is absolutely essential for Australian at present and
will be for years to come".
And then I talked about the role of the public service and the compact which
has existed in this last decade, and still exists now, between the Cabinet, the
Ministry and the bureaucracy. And that's been a compact of cooperation and
change so that we have seen the very best technical capacities and instincts
of the civil service of this country brought to bear with a political authority
which Minsters could marshal around the Cabinet table, and as a
consequence Australia has advanced mightily, and we have seen Cabinet
Government in a new Institutional form, of a variety of which we've, perhaps,
certainly not seen in my lifetime. And because of the important need for
change, rebasing the basis of our wealth, and changing our society, this
came at an important time for us.
That still exists and the years have only strengthened it and we now look
forward in the 1 990s to the Cabinet Ministers, again deciding where the
envelope of change should be pushed out. Where we, with the history of now
much change behind us, where the direction should be and then having a
proper appropriate bureaucratic effort In there to make it work. Now, I think
that is developing the appetite for change and then being able to basically
spirit the change through, or many of the changes through, in the first
instance at the Government level and a wider economy I will come to later,
has been a very important and fundamental institutional change in this
country. Another has been managing growth and inflation. One of the other great
Institutional changes In Australia which we have had now for a decade and
which we are going to have In the future is a basic understanding between
the Government and the organised workforce. That is, the Government and
the workers of this country. It has come by way of the Accord between the
Government and the ACTU. But what started as simply a fairly simple
document of wage restraint In certain limited circumstances has become a
way of thinking, so that as a consequence a whole productivity culture has
grown up a low Inflation productivity culture, which could only be put together
by the cooperation between, and the common objectives between a
Government and the organised workforce of this country.
As a consequence today we are looking at an Inflation rate of under 2 per
cent. We saw Australia grow mightily over the last decade; bar for the
recession we are seeing that growth pick up again. Australia today has 26
per cent more people in work than 10 years ago, as a consequence of that
accord. And In the doing of it being able to focus on a whole range of other
things such as occupational superannuation, addition of national savings,
diminution, of course, of Industrial disputation, but more than anything else a
state of mind about productivity and being able to, at the same time, hold
workers Incomes up while reducing inflation, is something that didn't exist in
any institutional way before this time that exists now.
TEL: 23. Feb. 94 13: 15. No. 010 P. 04/ 07
4
The other element of that was, of course, developing a central bank, not just
as a branch office of the Treasury, but something which stood in its own right,
and with a great reform to the financial system of the ' 80s running a quantity
based system in the financial markets. So, now monetary policy is not set by
the bond selling program of the Treasury, it is set by a central bank which has
now, in an open quantity system, perogatives of its own which it operates in
tandem with the Government. And as a consequence, we have as a country
developed a new institution. It is still called the Reserve Bank, it still has the
same Reserve Bank Act as it had in 1959, devoted as it is to price stability
and full employment, but what we have is a new institution which we have
effectively used together in another institutional process of change between
the Government and the Board of the Central Bank to deal with growth and
inflation simultaneously. And as a consequence that is the other arm of the
anti Inflation machinery which institutionally we have set up between the
ACTU and the Government under the Accord, and with a cooperative process
of common objectives between the board of the Central Bank and the
Government. Now, I was going to quote here a couple of things from the Reserve Bank Act,
but for time I will shorten them. It says:
" The duty of the Board is to do in its opinion what best will contribute to
the stability of the currency and maintenance of full employment in
Australia, the economic prosperity and welfare of the people of
Australia. The Board shall from time to time inform the Government of
the monetary and banking policy of the bank, and in the event of a
difference the Treasurer and the Board shall endeavour to reach
agreement."
So, those very wise words drafted so long ago have been given new meaning
in an institution which Is effectively new, brought and given authority by this
Government in a new financial system which is helping us develop a low
inflationary culture. It is a very hard thing for any country to develop a central
bank of substance that can effectively deal with inflation and do it in the
context of a wage compact. So, these are significant and important
Institutional changes we have brought along with us.
The other, I think, enduring national institutional change is the change of the
Australian Labor Party. The Labor Party is now a party of economic reform; it
is a party of social democracy; it is a party of social progress; it is a party
which has developed an open competitive model for its society, and grafted
on to It a fair and equitable social wage and social system. As well as that it
is a party which understands the culture of the nation and it is a party which
feels that the identity of the nation, and issues of identity, are important to it.
Whatever people may think of the Labor Party it will never regress to being
what it was in the 1950s and the 1 960s or even the 1970s. So, in terms of
institutional change, if a major party of Government which is what the Labor
I-' 05 7
TEL: 23. Feb. 94 13: 15 No. 010 P. 050
Party is can in its, perhaps, most significant reformation, plot out for itself a
world ranking course in setting up a middle sized OECD economy in its image
as an open competitive economic society which also has tolerance and
fairness underpinning its social fabric, then I think, in institutional terms we
have done mightily to secure that change. It is one of the important ones.
But the changes in reshaping institutions have not been limited to just what
has happened in Australia, but what Is also happening and what we have
done for ourselves in the international market place. We have through our
foreign policy and our trade policies, built institutions outside of Australia and
let me just name a couple for you: The Cairns Group, which was influential in
the GATT Round, was largely managed by Australia, the United States and
France and the European community, APEC, Asia Pacific Economic
Cooperation, which throws an economic, if you like, net across the Asia
Pacific, which actually builds an institution for Australia to participate in;
outside of Australia the Asean Regional Forum for security dialogue, when
ASEAN was an organisation which had very tentative discussions about
many things it is now actually discussing full-bloodedly its security position;
and of course things we have done in chemical weapons, Cambodia and
other things.
This is another institutional change, that is, rather than simply playing a
marginalsed role In the foreign policy fora of the world, Australia Is actually
out there creating Institutions and finding a place for this country. Now, with
that background, that is these very important, I think, institutional changes
developing an appetite for change, being confident about the countries
capacity to change, that is the country itself being confident about its capacity
to change.
The actual vehicle of change, developing the Cabinet process, the role of
Ministers as the spearhead of change and doing it in a compact with a
cooperative altruistic civil service, managing growth and inflation, keeping the
core elements of competitiveness In place, are key to any institutional shift in
any country and the whole culture of productivity which has come into the
bargain and in the doing of it reshaping one of our major parties.
Now, for the future there is much that still has to be done about institutional
change. Perhaps, one of the changes is going to come, let me say two areas.
One is identity, us being, importantly, being confident about ourselves and
about those things which symbollse ourselves and the other is keeping the
economic and social change moving through our society. And a lot of this
goes after the great macro-economic changes of the 1 980s. It goes to the
micro changes in industry, in business, in the States, in this decade. And
what, I think, we will see is an Institutional change where we will see a much
more cooperative relationship developing between the Commonwealth and
the States. But built around, what I think, was one of the central institutional
changes of Australia In this century and that was uniform taxation in 1942.
Uniform taxation is the glue that holds the federation together. It is the
reason we are one nation with one economy. But with that foundation there Is
TEL: 23. Feb. 94 13: 15 No.
6
now much to be done about the perogatives of the States and the
Commonwealth In managing this great country of ours and choosing to work
cooperatively together to deal with the great micro-economic areas of this
country, much that we have to do.
Let me Just say that this change must also manifest itself in business and not
simply with the States. I think we need a new partnership, a new sharing of
responsibility for change. We mightn' t get it, but now Is the time, I think, the
natural time to invite one. And with the election behind us, with all these
benefits of the past we can, I think, enter a new period where we can call
upon a new commitment to advance ourselves.
Over the coming decade I would like to see a new relationship with the States
evolve, based on four principals. The first of these is that we recognise that
the States have a vital role as units of Government in Australia, because
there is this debate, which you often see from time to time, about abolishing
States. As I said some time ago, if we didn't have States we would almost
need to Invent them for the great regional, management and disparities of this
country. The second principal should be that both the Commonwealth and the States
should independently assess the value of reforms and use them for their own
sake, not as part of a deal in which the Commonwealth is supposed to buy
the cooperation of the States. That is, change in the great micro-economic
areas of the States, in electricity, in water, in gas, in ports, in rail, in all these
things, should be seen by States as a change of advantage to them and their
citizens and not something where the Commonwealth has to buy that change
and that cooperation.
The third principal should be that we are willing to enter into a genuine
discussion between heads of Government and portfolio Ministers to look at
the present roles and responsibilities of the States and the Commonwealth, to
see that where we can develop and deliver better policy outcomes, but where
the Commonwealth Government will always have a role in setting priorities
and national objectives to social programs such as health and education, as
well as the environment and economic programs.
And the fourth principal is that while the. Commonwealth believes the States
should be adequately resourced it should be taken as understood that the
Commonwealth will not be party to any substantial transfer of Commonwealth
taxing powers to the States.
Now, within those four principals we have the opportunity to cooperatively
develop, I think, a new commitment, if you like, a new consensus, a new
understanding between the Commonwealth and the States about how to
make these important areas of the micro economy change. The
Commonwealth has largely done Its things in telecommunications, in
banking, in air transport what remains to be, done now is largely with the
States and it is also with business, because a Commonwealth Government .010 P. 06/ 07
TEL: 23. Feb. 94 13: 15 No. 010 P. 07/ 07
7
can't change the productive culture of an Individual enterprise. That must be
done by business, and business should take up the challenge of enterprise
bargaining with the workforce to make that productive and institutional
change, certainly enterprise change, within those particular businesses.
So, we have got, I think, If you like, having come so far and now looking at the
areas where we need to see more sophisticated changes, put the polish on
the changes to find, If you like, another institutional shift. It is In a cooperative
venture between the Commonwealth and the States in these areas, and also
further cooperation between Labor and business under the aegis of
enterprise bargaining in search of higher productivity, higher incomes and
better profits. This is the institutional change we need for the 1990s.
Now, you have heard me say often I mentioned it earlier I don't think a
country can sell itself until it knows what it wants to sell of itself, how it wants
to present itself, how It wants to be viewed and be seen. And so, therefore, I
believe issues of identity, being clear about our identity, being clear about the
culture that we have become and that we wish to represent, its symbols are
an Important part of how we as a nation will behave and present ourselves in
the 1 990s. But we have seen much reshaping of Institutions in these last ten
years, my point Is we are going on doing it. And the changes we have see,
are changes I think forever, they are not changes which are going to be
turned back. But what we have to do now Is search out the new ones, so that
if we were giving a lecture on this topic In a decade hence, we would be able
to say that in these areas of productivity, of international engagement, of
change In the culture at the work place, change in the relationship between
the Commonwealth and the States, this was another great Institutional
change. I should hope In 10 or 15 years, we would have been able to reshape our
Institutions in a way that compensated for the quarter century or so that we
failed to do this. As a consequence Australia is stronger and better for it.
Thank you very much.