PRIME MINISTER CHECK AGAINST DELIVERY
SPEECH BY THE PRIME MINISTER
LAUNCHING OF IRON ORE INDUSTRY CONSULTATIVE COUNCIL
KARRATHA 11 AUGUST 1984
Today we are formally launchi-ng a new mechanism for
consultation amongst unions, business and Governments
involved in the Pilbara region's great iron ore industry.
We are doing this at a time when the iron ore industry is
facing the opportunity of a return to strong growth after a
decade of stagnation and several years of decline.
These new opportunities for growth will be fully realised
only if all of us involved in the industry's future work
together. The new Consultative Council will help us to work together
effectively. It will help us to achieve for this industry and this region
what Australians are seeking to achieve throughout our
economy and society.
And our success here depends on the same considerations as
those which will determine our success in lifting our
national economic performance on the effective employment
of our human and natural resources in their most productive
uses; on our application of the world's best technology,
sometimes by developing new technology ourselves, and
sometimes by absorbing it from abroad; on high levels of
investment from home and abroad; on our making effective use
of opportunities for profitable international trade,
expecially in our Western Pacific region where economies are
expanding more rapidly than any in the world; and above all
on our working together Commonwealth and State
Governments, unions, and business working together to find
solutions to the problems which inevitably arise in the
pursuit of growth.
In our free society, we cannot expect people to accept the
strains and costs of change and growth unless the benefits
of growth are Bhared equitably. This requires fair taxation
and social security arrangements and strong growth in
employment. The approach to these issues that emerged from the Summit,
built around the Prices snd Incomes Accord between the
Australian Labor Party and the Australian trade union
movement, has been bearing impressive fruit for the national
economy. During the financial year that has just ended, we have seen
the fastest growth in total production since national
accounts have been compiled in Australia; the greatest
growth in employment in our history, with 234,000 new jobs
being created within the year; and the lowest rate of
consumer price increases for over a decade, even after the
exclusion of the effects of Medicare.
The successful operation of the Prices and Incomes Accord
promises continued strong growth in output and employment
and continued progress in reducing inflation in the year
ahead. Our coming Budget has been framed with a view to
making the most of these possibilities.
These national efforts must be supported by special efforts
in every region and industry.
And from the iron ore industry in the Pilbara we look for an
especially important contribution.
Your industry was hit even more severely than others by the
recession which dragged Australia down in the early 1980' s.
The industry was damaged by the combination of adverse
international market conditions with conflict and
underperformance at home. Over a number of years the result
was a declining share of static or declining markets.
Inevitably this led to declining and increasingly insecure
employment, inadequate profitability, low investment and
pessimism in the Australian industry.
Already this outlook is changing, partly as a result of what
we have been able to do together.
The steel industry in the world, in our region and in
Australia is recovering more rapidly than anyone expected a
year ago. A more co-operative industrial relations
environment over the last ten months has improved our
competitiveness and enhanced our reputation as a reliable
supplier. After years of stagnation and decline, it is possible that
we will achieve higher levels of production and export in
1984 than ever before.
At home, the outlook for the domestic steel industry for
production, investment, security of employment and
profitability has improved dramatically within the
framework of the steel industry plan which we announced a
year ago. This plan, asgenerously recognised in B. H. P.' a
national advertising a couple of weeks ago, demonstrates
what can be achieved by co-operation amongst unions,
management, and State and Commonwealth Governments.
Abroad, the outlook is still dominated by conditions in our
major market, Japan. Economic recovery in Japan is being
accompanied by increased steel production, from last year's
depressed 97 million tonnes, possibly to around 105 million
tonnes this year.
Just as importantly for us, recently we ha've been securing a
higher share of the Japanese market in the June quarter a
little over 50 per cent, the highest for many years.
When I was in Japan early this year, Prime Minister Nakasone
assured me that Australia's position as a supplier to the
Japanese market would be maintained so long as we remained a
competitive and reliable supplier. In Japan, to Mr Nakasone
and his Ministers as well as to business, I stressed the
increased efforts that Australians were making to resolve
conflict through co-operation rather than confrontation and
the effect that this would have on our competitiveness and
our reliability as a supplier. My own representations have
been supported by the greatly improved state of industrial
relations in the nation, where the statistics have been
showing consistently the lowest proportions of time lost in
industrial disputes since monthly data were first collected
in 1970, and by an improved industrial relations environment
in this region.
Similarly, we have done well from the strong recent growth
in South Korean production of steel and use of iron ore. It
became clear in my visit to South Korea in February, . that
perceptions of Australia as an unreliable supplier had been
severely damaging our interests. Our improved performance
over the last ten months has been having its effects, but we
must build on this over long periods if we are to realise
fully the potential of this market.
There has been impressive progress in our trade with China
since February, when Premier Zhao and I established the
Australia-Chins Iron and Steel Industry Joint Study Group.
Already contracts have been signed for increased sales of
iron ore from the Pilbara. Yesterday the Deputy Prime
Minister and Minister for Trade, Lionel Bowen, signed on
behalf of Australia an agreement with China for technical
cooperation on iron and steel.
This treaty will provide a framework for close co-operation
across a wide range of activities in the iron and steel
industries trade in steel-making raw materials, including
iron ore; joint ventures between Australian and Chinese
interests in iron ore making and steel production; trade in
processed iron and steel; and mutual technical assistance in
iron and steel production.
Lost night's agreement between the CRA group and China on
the feasibility study for the Channar deposit, could lead to
the first new mine development in the Pilbara since the
first decade of export-oriented expansion that ended in the
early 19701s. The co-operation between China and Australia
at Channar, which would create large numbers of jobs both in
the construction and production phases, symbolises the new
opportunities open to us if we work together to strengthen
our competitive position.
The continuation of strong economic growth in the ASEAN
countries and the beginnings of recovery in Europe are also
opening new opportunities.. . The Australian industry has done
particularly well recently in sales* to the Federal Republic
of Germany. In these new, and in the case of Europe
distant, markets, it is even more crucial that we strengthen
our competitive position.
The impressive early development of our mines was on a large
scale and this coupled with our high grade ore were factors
which initially enabled us to enter the Japanese market so
successfully. The industry was responsible for the creation of large
modern social and industrial infrastructure, which helped to
attract the workforce of 8000 into the Pilbara.
To maintain its present competitive position the industry is
conscious that it needs to concentrate on quality control
and reduction-in operating costs including the entrenchment
of the present good industrial relations. The recent
deepening of the ports at Dampier and Cape Lambert and the
letting of contracts for deepening at Port Hedland will
allow ships up to 270,000 DWT capacity to load, thus
significantly upgrading all three ports and leading to
further efficiency gains.
The benefits of increased sales of iron ore are already
being felt by people in the Pilbara. After a period of job
insecurity, in which there was no confidence even that
apprentices trained in the industry would find secure
employment, new jobs have been appearing. Since the
beginning of the year, major producers have increased
employment up to 5 per cent.
While we are undoubtedly facing exciting new prospects for
expansion, we should be under no illusions about the highly
competitive environment in which we are working.
Prospective growth in Asian markets is as attractive to our
largest competitors, particularly Brazil and India, as it is
to us.
Brazil is developing enormous new reserves of iron ore at
Carajas in the Amazon basin. These reserves are being
developed particularly for the Japanese market. When ore
shipments commence around this time next year they will
greatly increase the total supply of iron ore available to
the Japanese.
India is also making determined efforts to regain some of
the market share they have lost in Japan over the last
years. The Indian Government is reported to be willing to
undertake the investment necessary to make India a
competitive and dependable supplier of iron ore.
The benefits of strong growth in the industry to all its
participants cannot be over-stated.
Only an expanding, profitable industry can provide secure
employment. Only an expanding, profitable industry can provide
employment within the region for the children of the
industry's workers. These are becoming more important with
increases in the proportion of the population of these towns
that has lived here long enough for their children to be
seeking work in the Pilbara.
Only an expanding, profitable industry can support the
improvements in conditions over time to which workers
aspire. The achievement of increased investment and production in
the iron ore industry, as in the national economy as a
whole, requires successful action on many fronts.
Underpinning the whole effort must be co-operative
industrial relations, based on shared perspectives about the
industry and its prospects.
For several years now I have felt a sense of tragedy that we
have too often dissipated our great opportunities as a
nation in fruitless, counter-productive disputation between
the great elements of our industrial structure.
This feeling on my part has not been associated with the
equally fruitless process of bl ame-al location; but rather a
sense of frustration that these great elements have not
grasped an essential truth i. e. that their legitimate
aspirations on the one hand for improved standards and on
the other for improved profitability should not be seen as
mutually antagonistic, but more likely of mutual achievement
through co-operation rather than confrontation.
I emphasise that in the iron ore industry, as in the
national economy, co-operative industrial relations does not
mean that any party must abandon its essential interests.
Indeed, as I have said, the workers' essential interests in
secure and expanding employment, at high standards which
improve over time, and investors' legitimate interests in
earning satisfactory profits, can be realised efficiently
only through such co-operation.
I believe that when all parties have a clear understanding
of the economic constraints under which they are operating,
many disputes can be avoided at the same time as both
workers and management realise more of their own aims.
No-one pretends that the unhappy history of industrial
relations in this region will be corrected overnight with
the establishment of this Council.
Problems will arise, and some will be difficult to solve.
But they can be fewer and less damaging than in the past.
Some earlier Australian Governments have seen narrow
political advantage in blaming one side in industrial
relations problems, and in exaggerating the impact of these
problems on our nation's reliability as a supplier.
This exaggeration for narrow political purposes has in
itself damaged the iron ore industry and the Australian
national interest.
But while deploring these distortions of the past, our eyes
should be open to the real damage that has been done by
industrial instability. An improved capacity to resolve
conflict without disruption of production would have a large
and positive impact on the growth of production and
employment. We should not limit our ambitions in this industry to
expansion of our traditional role as a supplier of
unprocessed raw materials to international markets. There
is substantial growth potential some of it in the Pilbara
in further processing.
We have unique natural advantages in the processing of iron
ore, through the presence here of exceptionally high quality
deposits of the energy resources which are complementary to
our iron ore in steel-making.
There are good long-term prospects for us to establish a
major place for ourselves in international markets for
processed iron and crude steel.
But here, even more than in iron ore production, there is a
premium on high productivity, competitiveness and supply
reliability. Unlike mining, iron processing can be located either at the
market or at the source of the raw material, depending on
relative costs of production at the two locations, as well
as transport costs.
The strong productivity gains in Australian steel-making so
far under the Steel Industry Plan are an important first
step towards improving the competitive position of iron and
steel making in Australia.
But we must not confine ourselves to thinking about
traditional iron and steel-making technologies.
It may be that the proximity here in the Pilbara of
exceptionally rich deposits of natural gas and iron ore will
provide an avenue into internationally competitive iron
processing using direct reduction techniques.
It may be that the best possibilities will emerge at the
frontier of steel-making technology, for example through the
techniques of direct reduction from coal which have been a
focus of research and development investment by one
Australian company, CRA.
Superior natural resources, application of the world's best
technology, co-operative relations between unions,
management and Governments, and an effective trade policy
linked productively to domestic industry policy, are the
keys to future expansion of iron processing, as they are to
expanded sales of iron ore.
We have given high priority to the trade policy requirements
of expansion in processing and other manufacturing
industries. The building of confidence in bilateral
economic realtionships is of great importance, and an
important part of my visit to Northeast and Southeast Asia
earlier this year was directed to this end.
Australia's efforts to promote regional co-operation in a
new round of multilateral trade negotiations seek to
establish international trading rules which allow our most
productive industries to compete on equal terms with those
of other countries.
The domestic industry policy requirements are varied and
complex. Much depends on our maintaining a general
environment of interest rates, exchange rates and costs that
is conducive to high levels of investment. But successful
macro-economic management which will be advanced
significantly in the coming Budget is not enough on its
own. Taxation policy must be conducive to the encouragement of
productive investment. Aspects of this for example
questions of depreciation provisions within the corporate
income tax have been the subject of discussions within the
Economic Planning Advisory Council and the Manufacturing
Industry Council in recent months.
Community discussion and analysis of these issues has not
yet proceeded far enough for clear positions on what is
required to emerge, but these are clearly major issues on
the agenda of industry policy. Expansion of our own
internationally competitive production obviously requires
acceptance in Australia of expansion of other countries'
most productive industries and willingness to accept gradual
structural adjustment at home.
As is clear from our approach to the steel and motor vehicle
industries, the Government sees policy in these areas as
properly requiring close consultation and co-operation
amongst interested parties.
In all of these areas, we as a nation must have clear
long-term objectives. We must seek to overcome the
impediments to internationally competitive processing in
Australia in time to take advantage of opportunities for
investment that will arise as growth and structural change
removes the current over-hang of world processing capacity
later in this decade.
Let me say that I believe that the fundamental elements
already exist in the iron ore industry, and potentially in
the processing industries, for the strong expansion of
production and employment based on this region's rich iron
ore resources. It is in the cultivation and enhancement of
these essential elements that the Iron Ore Consultative
Council will prove to be most beneficial.
In providing a forum for wide ranging discussions of matters
affecting the iron ore industry, the workings of the Council
should contribute to improved understanding between the
parties of their respective problems and aspirations,
thereby fostering the continuation of a good industrial
relations climate in the industry. It will take some time
to develop the full potential of this process, and success
will depend a great deal upon the members establishing
mutual respect for each others points of view.
9.
Whilst it is not intended that the Council will displace the
traditional rights of the parties to the industrial
relations system, it is anticipated that improved
communication between those involved in the industry will
bring about a more co-operative approach to solving
problems. The establishment of the Council has been the result of
considerable efforts by many individuals and groups. It is
a credit to those individuals that we are here today in a
spirit of goodwill to witness the commencement of the
Council. I would particularly like to thank Senator Cook,
as my personal representative, for his consistent work on my
behalf in working to establish the Council.
I wish it every success for the future, for the sake of
people working in the iron ore industry, of the people
living in the Pilbara, and of the whole Australian
community.