PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P. J. KEATING MP
ADDRESS TO THE 1994 SUPERMARKET SHOW. DARLING HARBOUR, SYDNEY,
MONDAY, 3 OCTOBER 1994
E& OE PROOF COPY
Thank you very much Jim Fleming. distinguished guests and ladles and gentlemen.
Well, it Is a very groot plooure Indeed to come to the 1004 Supermarkot Show. My
contact with supermarkets Is fairly thin these days, but I occasionally dash in to buy
something mostly something for my children but. one Is always been Impressed with
the competition and the quality of the things which are sold In Australian supermarkets and
the way they are presented, the nature of the stores, and it comes as really no surprise to
me at all that the Australian Supermarket Industry in presentation, in competition, in
pricing, as Jim Fleming remarked in turn-over, ranks up there with the best in the world.
In fact. I'm sure some in Australia would believe better than any in the world. And, this has
been a good thing for the Australian consumer and again, as Jim Fleming remarked, a
good thing In restrainlng the prices In Australia and restraining Inflation because this Is a
very large Industry which turns over something like $ 17 billion a year and it has a decided
Impact on the standard of living of Australians the way they live and the quality of the
things they bury.
So, we have got much in this country to celebrate, I think, in the way in which our retail
sectors have developed over time and its, I think, a wonderful thing that the Australian
Retail Institute has developed this Supermarket Show so that the Industry can get togothor
and look at trends and discuss changes and we can also invite colleagues from around the
world including. of course, the Asia Pacific area where now Australian retailers and
wholesalers are starting to do business, and to try to make those connections and
underwrite some of the things we might do together.
I think that those of you, particularly from abroad, would have some idea of the perhaps
quiet sense of confidence that Australians currently enjoy about themselves, about their
country and about our economy. We were the first western country out of the world
recession. We are now growing somewhere between four and five per cent and as a
consequence we are seeing now a lift in employment and prosperity resuming once more.
By contrast, most of the western economies are growing at the moment on an average of
per cent. So. Australia's growth Is nearly double that of comparable countries and as a
consequence there Is a feeling of confidence about the place and Investment Is starting to
pick up again and wo are ltaiting to sco a long run, low Infltiounary recoveoy ahead of us
through the 1990s. And, I think, this is very encouraging for Australians that this position is
here because we have changed much about Australia In the last 10 years. Ten years ago
this was a very Inward looking economy with a ring fence, bound by tariffs, with a
managed exchange rate, wilt a scleiowUi; fnancial market, with a government budgetary
policy which was out of sorts with private Investment in this country and as a consequence
we were growing at a very small rate and we had very low omployment growth and high
unemployment Today we have still got high unemployment, but It Is off a massive level of participation In
the work force. If we had the same number of people looking for work today as we had in
1984 we would have unemployment at under 6 per cent. But now, because there are so
many people looking for work, particularly women with an enormous increase In the
participation rate for women we still have relatively high unemployment, but we are now
starting to see tremendous employment growth. In fact. over the last year we have had
employment growth of about four per cent.
This, I think, matters a great deal to greta because evory year the Government has
been in office real household disposable income has risen because there are more people
In households In work. So, while there has been a change in relative wages over the
decade, the relative price of labour tias changed and been reduced. The number of
people in households working has risen so that there was a very strong growth In
household disposable income over the decade and that has driven retail sales and it has
driven consumption which in turn has driven Investment And, I think, if one looks to the
growth of the supermarket Industry through the 1980s and early 1990s one finds that what
is the driving force behind it not simply population growth but the workforce growth and
the rise In household disposable income which has come with It thats resuming again
with, as I say, four per cent employment growth this year. So, we are going to start to scc
again a fairly strong pick up in household disposable Income during the period.
The other thing I think that Is worth saying to our partners from abroad Is that by and large
the Australian economy is in size just under the combined GDP of the ASEAN economies.
A couple of years ago we wore about the somo. I think the AS. economies together
are slightly now ahead of Australia. That Is, In Australian dollars at aboLt $ 410 billion of
product. So. when you get an economy of this sl7a growing at four or five per cent one is
creating thu equivalent of $ 15 to $ 20 billion of extra value, extra wealth every year and that
is driving a tremendous amount of investment and consumption In this counly. ILit lw one
the reasons why there Is no substitute for growth for employment and there is no substitute
for growth for wealth and why, I think, the retail sectors have done very well and why, I
think, it is a good place to do busine. ss. In this country we have a corporate tax rate of 33
per cent about the same as Singapore, but this Is not a city state. This is a nation
continent with a very sophisticated level of public services and to provide that with a
corporate rate of 33 per cent is really at the leading edge of tax rates around the world for
corporations. As well as that, as domestic share holders will know, we have In this country a system of
full dividend Imputation. That is, we don't tax dividends twice, we do not classically tax
company income. So, we give our shareholders a tax credit for the company tax paid
when they rocolvo a dividend In their hands. This, along with vast acceleration and
appreciation makes this just about, In western world terms, the finest corporate tax system
In the western world and certainly comparabla to any country which is even near
comparable with Australia In the Asia Pacific.
So, all these things, I think, are bull points for growth and for the future and we have, as
Jim Fleming said, been able to provide Australian consumors with high quality goods at
very fine margins. I mean, a few years ago one would have to go to speciality shops to
find sophisticated foods and pay a very high margin on them. Today you would expect to
find these In supermarkets and that Is because, I think, of the ambition, thU aubitiuus
attitude of supermarket proprietors In this country and food wholesalers and retailers, that
they want to stock those Items and deal In them. And this, of course, improves the spico of
life for Australians and the food they consume and, of course, it guarantees them these
products at much finer prices and thinner margins.
So, retailing has done a lot for Australia, but competition here is very Intense and one of
the by-products of that Intonsity is, I think, it has distractcd some of the major companies
from looking at the Asia Pacific in particular or further afield to North American and West
European markets. As a consequence. I think, we are missing opporhinities now in this
part of the world partlcularly. Yuu nutic heur we have had a substantial history of
mergers and acquisitions In retailing now over an extended period of time. In fact we have
the heaviest retailing sector companios In the world. Companies like Colcs-Myer and
Woolw [ ths have unprecedented market shares in world terms. I think Coles-Myer has
something like ten times the size of market penetration as say a comparahln, the first
comparable US corporatiun. So, Lhre Is a very heavy concentration and the Government
has made It fairly clear to the major retailers, competition is one thing, but attempts at sort
of monopolisation of tho market in the end dont do any of us any good.
So, In a sense punching each others eyes out for another one per cent of market share Is
rairly counter productive when one can open themselves up to retailing in China, in
Vietnam, in the established markets like Singapore and Thailand wlere Ausltalian retail
capacity and rotailing skills can really lay down the foundations for the retailing sectors of
countries and regions.
So. I'd say that the Government would be urging Australian retailing and wholesaling
companies to go abroad and to find opportunities and relieve Uteumselvus arnd the Trac
Practices Commission of the burden of reminding them that large market shares are fine,
but to go beyond that essentially establishes a real tyranny for food supplors and clothing
suppliers and others who have to deal with very large quasl-monopoly businesses.
Now, I am delighted we au starting to see this trend. We have seen Davids' Holdings
John David Is here this morning go to the Asia Pacific area into co-operative ventures, in
Singapore in Indonesia and In other places. And, it is this sort of outward view that while
the Australian economy is growing quite fast In western world terms, in terms of population
growth we will still have modest popuilatin and a modest absolute size to our consumer
markeutt copared with the growth in population In some of the countries I have mentioned
and, of course, the absolute size and rise of Incomes in those markets. So, the markut
opportunities abound vory cloce to Australia whore it Is possible to ship food stuffs chilled
not frozen, perishables things which years ago we couldn't consider and where we can
establish the style of retailing or it not establish it certainly amend and change and adapt
the style of retailing In those markets. And. I think, this Is a very important thing and I
certainly congratulate those companies that have gone out there and have taken those
first steps to establish real market and growth opportunities for themselves, realising that
to stay In Australia and try to take over another wholesaler or another retailer, to have
another argument about competition policy, to fuither cunsrain the options of
manufacturers, to squeezo further wholesalers from the business and in the case of the
retail mergers Is by and large a pretty counter-productive activity.
So, I hope that our retailing sectors will now really understand that they have developod
here something really competitive and really good and that they can lake It out as a
product. That their systems, their warchousing, their retailing, they can take out as a
product to the Asia Pacificare Indeed, they can then buy market share In other countries
or develop buslne. sss in other countries, say in North America and Europe, where
retailing Is no more a developed art than it Is In this country.
So, at any rato, we arc told that there Is $ 160 billion of growth In Asia In food a lot of it
western foods and there is a great opportunity here and a great opportunity exists, not
just to retailers but, for our food Industries In particular the Agri-Foods business and It is
woith, I tliik, noting that growth In Australian high value food exports currently exceed 18
per cent a year and the Industry looks set to pass our Agri-Food Council's target of $ 7
billion of high value food exports by the Year 2000. So, there Is a tremendous, I think,
chance to sell what Australia does best, that Is high quality food, foods with disease free
status which Is fairly unique In this part of the world and to capitalise on tho food
technologies which Australia does well. So, there Is no rason. I think, why we would
leave the growth of these products and the growth of retail to the Sogos or Makros or
Park'n Shops or any of these other people, we have got to be out thera basically doing
these things ourselves.
Now. In terms of our own Industry, retailing acrrmnts for a very great number of
employcos, I think in the orde or hal a million plus people, and it Is continuing to adapt
and change and the Government has now sought to try to change the training agenda so
that retailing can pick up and train young people and actually pick them up from school
and train them while they are at school. A couple of weeks ago at a shopping mall in
Gosford I launched the Australian Student Traineeship Foundation which is letting young
people in years 11 and 12 pick up TAFE training technical and urther education,
vocational training while at school to give them accreditation in a TAFE coursesoey
can also do on-the job training while they are In their school years. So, wo can start to
stream young people In years 11 and 12 into vocational education and Into work and work
experience. And, the kny change In all of this is that In vocational education the
Government wants to see Industry essentially shaping the training agenda. Once it was
true In this country that In our vocational education, In TAFE as we call it. technical and
further education, the product of the system was the product divined by the suppliers or the
education themselves formerly trades people or spoclaliscd people who were thon
teaching what they knew to their student bodies and that was the product which Industry
then took. What we are trying to do is to get industry to decide what product they want and
then change the training profile of thu vocaional educational Instltutns to give them the
kind of trainees and people with the ss they nood and this Is whlum, I think, the
Involvement of let's say In retailing, the rotall sector in vocational education and in the
student foundation traineeships is, I think, going to be a very Important dovelopment in
Australia.
L
Now. we have now developed a body called NE-XF l and NETTFORCE is to seek
the development of trainltig comrpanles In particular sectors of Australian industry. So. In
the metals Industry there will be a training company. In tie ritail industry there will be a
training company. In other induotrlcs, In the motor car Industry, there will be a training
company. That will mean that any company In that sector can actually go to tho company
which it owns shares In and be advised and directed how It can best train young
Australians for their own purposes, for the purposes of that Industry or that particular
business. This comes as an initiative from the White Paper called ' Wurking NaUton' that I
had the pleasure of Introducing some months ago and, I think, we will see with
NETTFORCE and I know there is already a retail training company establishcd that we
will start to see some real progress In companies seeking then advice and direction for
their own training nueds from their very own Industry training company.
Now, in this you know tho Government has been committed to the long-term unemployed
In the White Paper Working Nation'. And this has two very important things about it. The
first thing IS we are saying as a society we won't have an underclass. If the Americans
want an undeiclass they can have one. If the British want an underclass they can have
one. But, we won't have one. We are not going to have a section of the community drop
off and find thomselves living on charity or living In the streets or on sub-poverty Incomes.
And the other thing about It Is why should just a proportion of the workforco carry the butt
of Structural adjustment or in the past. the recession? Why shouldn't we get them back
Into thU labour market? Why should the new jobs only go to those new entrants to the
workforce? And, we are having a great deal of success. We have got a program here as
many of you know colled JOBSTART which Is a Government subsidised labour maiket
program. Last year 150,000 people got jobs under JOBSTART, 70 per cent of them were
long-term unamployed and the retention rate, that is the rate of retention by businocscs
after the subsidy finishes Is exceptionally high indeed. So, we are s. oing now In this last
year more long-term unemployed people picked up Uhan we have evor seen. certainly In
the last 10 or 15 years.
In the past three years nearly a quarter of a million in this country with a workforco of just
on eight million, this Is a big number nearly a quarter of a million long term unemployed
people have bccn hired by employeis Uthuugh JOBSTART subsidies alone. And, as you
know we have introduced as part of Working Nation' a new training wage which is set
between $ 125 and $ 333 and payable to all unemployed people and new entrants to the
labour force. Together with JOBSTART the training wage means an employer con receive
subsidies ranging from $ 5.000 to for taking on a long-term unemployed person.
So, that Is $ 100-$ 160 a week subsidy If an employer takes on a long-term unemplnyed
person. By doing this, by changing the nature of TAPE, by getting the balance right between
tertiary education and vocational education as we see that four per cent employment
growth we want to be pulling up tho long-term unemployed with it because, I think, the
other thing that people have got to understand In ite Industy, and this Is Including
retailing, and that is skills formation in this recovery Is not going to come from migration. It
Is going to come from our own labour market So, to avoid bottlenecks and wage
pressures as the recovery continues to strengthen we have to have a greater complement
of trained people coming In to the labour market and that has tn come. amongst other
places, from the body of 300,000 odd of long-term unemployed people. But, the whole
focus or traineeships and training Is there because the Government and it is worth
recalling this ten years ago only three children In ten completed secondary school In this
country. Last year that was eight in ten and the Government has now added 65 per cent
of extra places to univorsities since 1985. So. we now have not just a very high retention
rate In secondary schools, but we have also provided the university places for those
students as they leave. So. our proportion of university places to tha school aged
secondary population Is as high as any In the wurld. The weakness In Australian
education has boon the Cindcrclla status of vocational education TATE. That is why In
' One Nation' in 1992 I announced the formation of the Australian National Training
Authority which has a national system of TAFE and where we are trying to develop TAFE
Into a national system to bring vocational education up to equal status with the universities.
So, a student has a real choice, that is, an accredited nation wide certlficate of status from
TAFE or a tertiary education and a tertiary degree.
In this way, we will be able to meet the training needs of Australia as we continue to
produce elaborately transformed products and elaborately transformed exports be they in
manufacturing or in food or ulucliunics or whereever It Is we will need a trained workforce.
One of Australia's great comparative advantages is education. There is only one other
country In the Asia Pacific with an education systom like Australia and that is Japan and
we should play to our comparative advantage and our comparative strengths by making
certain that the output of our education system kicks along product innovation In this
county and allows us to sell exports competitively to the rest of the world.
So, this, I think, Is an important thing for the country, for the economy, for the workforce
and for retailing because retailing is such a large employer and the skills changos are
going to need to be there to koop it at the forefront of ratailing techniques and abilities
throughout the balance of this decade.
So, perhaps let me wind up on thcoo points. To say firstly thank you very much for inviting
me to come. I think it is a very good thing that the Supermarket Show exists, that people
can actually exchange views, talk about developments In their Industry whore matters of
moment can be discussed, but It Is a particularly Important opportunity, I think, for
International visitors to come to Australia and to get to know our retailers and our
wholosalers and our diotributors in the various sectors and to see what opportunities they
can take and also our manufacturers, to see what products can come from Australia and
go on the shelves of supermarkets in thA region In which we live. This, I think, is very
Important to us.
I'd like to underline again just how competitive our supermarket and retail industry In this
country is and just again make the point, as Jim Fleming did, this Is a bull point for lower
prices and for restraining Inflation. We have got inflation now at somowhore between
and 2 per cent and we want to keep low Inflation very much in the torafrnnt of our mind In
terms of economic policy and prices in relailing Is an Important component and will always
be an important component of that And, the other thing is we will continue to wuik on
training and finally the Government will continue to encourage the development of an
outward looking retail sector as these rapidly growing markets in Asia emerge and where
we can obviously see or see obviously our capacity to participate in thnse markets and not
simply to participate, but In actually slaping them and shaping their fUture.
7
So. perhaps Ict me finish by congratutadng the Australia ' n S& perrrkt Institute once
again for this veiy Impressive superiuiarkel show and I look torward With some substangal
relish to the exhibits and to meeting somne of you who make this industry tkk.
Thiank you very much Indeed.
ends