FOR MEDIA 10 APRIL 1989
The Federal Government's goal for Australia's economy is to
make it strong enough to compete with the world's best.
Labor inherited a closeted economy denied access to goods
and services at world prices, which made consumers worse
off, and held back potentially efficient industries.
Australian industry was fragile, and uninterested in
competing on world markets.
A pre-condition of change was a responsive financial sector,
so early priorities were to float the dollar, relax exchange
controls, free up the banks and allow new bank entrants.
Other early changes included a range of industry plans to
revitalise several key industry sectors, and the abolition
of State purchasing preferences.
Work in an array of other areas advanced to the point where,
on 6 July 1987 at Ballarat, I was able to announce an agenda
of twelve areas for microeconomic reform during our third
term. Micro-economic reform since July 1987 has been
unprecedented in Australia's history, such that all areas I
mentioned in Ballarat have been addressed or will be
addressed over the coming two months.
The Attachment highlights some of the more important past
and foreshadowed microeconomic reforms of this Government,
against the background of the commitments we made to
specific reforms.
Today, the Minister for Primary Industries and Energy, Mr
Kerin, has announcedsignificant legislative change in
relation to wheat transport, handling and marketing.
The wheat industry provided $ 1.8 billion of exports in
1987-88. While this industry has shown it can respond to
change, it can only deal with the difficulties it currently
faces on world markets if it is allowed to transport, handle
and store its product as efficiently as possible.
This point was recognised by my Government and all States
when we jointly established the Royal Commission into Grain
Storage, Handling and Transport.
The Royal Commission recommended measures that offer cost
savings of up to $ 10 per tonne.
While the Commonwealth is implementing those recommendations
it can, the lack of general action at State level has been
disappointing, even though the States have acknowledged the
importance of the problems.
Given the importance of this issue for our national export
performance, and to ensure the grain industry can handle and
market our grain as efficiently as possible, we are prepared
on this occasion to legislate to override restrictive State
legislation.
We do not take this step lightly.
We are committed to consultation, not confrontation. In
this case there has been extensive, genuine consultation
from the establishment of the Royal Commission, a joint
project of ourselves and the States, to the protracted
discussions which Mr Kerin has conducted.
on Wednesday night the Treasurer will announce details of
the wage/ tax trade-off, which will facilitate the most far
reaching labour market reform ever attempted in Australia.
On Wednesday, the Minister for Industrial Relations, Mr
Morris, will provide details of further Commonwealth support
for this process. The Minister for Employment, Education
and Training, Mr Dawkins, will announce new measures to
improve the effectiveness of our vocational education and
training systems to underpin the award restructuring
process. The culmination of considerable work in other areas will
be seen in microeconomic reform announcements during May.
These will include announcements on coastal shipping, the
waterfront, science policy, air freight, defence industry,
and a statement about progress in government business
enterprise reform, particularly the communications pricing
formula to be administered by AUSTEL.
Continuing microeconomic reform is necessary to shape an
economy which can deliver durable improvements in the
day-to-day lives of Australians more jobs, more work
satisfaction, greater growth, fewer people dependent on
welfare and capacity to afford adequate assistance for the
truly needy. micro reform serves, very profoundly, human
needs.
While an unprecedented amount has been done, the Government
will continue to identify and pursue microeconomic reforms.
ATTACHMENT
MAIN MICROECONOMIC REFORMS
TO DATE IN LABOR'S THIRD TERM
A. DURING THE ELECTION CAMPAIGN LABOR FORESHADOWED TARIFF
REFORM Achievement has been as follows:
Motor Vehicle tariff reform. Tariff quotas on
motor vehicles were removed and tariffs are to be
reduced from 571% to 35% by January 1992.
Textiles, clothing and footwear protection reform.
Quotas are to be phased out by 1 July 1995 to leave
tariff-only protection.
General tariff reform. With the exception of the
above two industries and a small number of rates
that would otherwise have become anomalous, all
tariffs above 15% are being reduced to 15%, and
those tariffs between 10% and 15% are being reduced
to 10%, all over 4 years to July 1992. The general
revenue duty of 2% was abolished at a cost of
$ 240m.
May 1988 Agriculture Reforms. Assistance to sugar,
dried vine fruit, tobacco and citrus industries was
converted to tariff and subject to the same
reductions as applied to manufacturing industry and
some domestic administered price arrangements were
liberalised ( eg dairy). Removal of fertiliser
subsidy.
B. THE MAIN VEHICLE FOR ANNOUNCING THE IMPORTANCE OF MICRO
REFORM IN THE THIRD TERM WAS A SPEECH I MADE AT
BALLARAT, ON 6 JULY 1987. I LISTED " TWELVE ITEMS ON THE
IMMEDIATE ECONOMIC AGENDA OF A THIRD HAWKE
GOVERNMENT"( p. 6-9)
The 12 items were as follows:
1. Sweeping reform of the nation's transport
infrastructure. Specifically mentioned were:
terminate the two airline agreement, allowing
greater competition and lower air fares
announced on 7 October 1987, to take effect on
October.
complete the national highway of the
16,000km, only one small section ( 75 km) in
the Pilbara region remains to be completed.
improve performance in the rail freight
network, including grain hadig-addressed
by today's announcements to over-ride
restrictive State grain transport regulations,
particularly those establishing rail
monopolies. improve our performance on the waterfront to
be addressed in May.
In addition the Government liberalised air freight
restrictions on the mix of cargo consignments
have been removed, and a large degree of
automaticity is now provided in approving
charters. These moves have increased air
freight capacity, and the policy has attracted
a number of new operators.
coastal shipping to be addressed in may.
2. Deregulate crude oil marketing
Effective from 1 January 1988 refiners and
crude oil producers are able to negotiate
freely the quantities and prices of crude oil
they buy and sell.
In addition Natural Gas The Government has terminated
the administered pricing formula allowing a
more flexible approach to price setting, and
relegating export controls to a strictly
reserve power.
3. Help treble the size of Australia's high technology
computer and communications industry
Telecommunications reform package of May 1988
allows effective competition in the
provision of customer premises equipment ( eg
PABX), value-added services ( eg answering
machines) and other telecommunications
services ( eg phone maintenance, installation
of second and subsequent phones) through
regulatory changes and the establishment of
AUSTEL. This latter independent body will
subsume Telecom's regulatory functions, so
allowing effective competition.
Information industries plan The Government
in 1987 established the Partnership for
Development program to encourage multinational
computer companies to increase their R and D
and manufacturing operations in Australia.
4. Ensure spin-offs from the construction in Australia
of six new submarines and eight new frigates
Significant electronic and software work from
the submarines contract awarded to Australian
Submarine Corporation has flowed to industry
in NSW, Victoria and SA. The total contract
value is $ 4.3 billion ( April 1988 estimate).
Proposals for the Frigate project are
currently being evaluated but both tenderers
( AMECON and AWS) have offered domestic
industry work in excess of that flowing from
the submarine project. Over 70 per cent of
the total cost of the 8 Australian frigates is
expected to be accounted for by Australian
content.
Encourage gradual amalgamation of trade unions and
make necessary reform to the industrial relations
system. The Industrial Relations Act 1988 places
special emphasis on settling disputes at the
workplace level, provides scope for greater
flexibility with respect to working
arrangements and remuneration, requires unions
to increase membership to at least 1000 and
facilitates union amalgamation.
6. Steadily continue to eliminate unnecessary business
regulation Request and response procedure for review of
existing regulations announced in December
1988, provides for industry-driven regulatory
reform.
7. Take further steps to help Australian firms tap
export markets
Particulalry Retain Austrade, and the Export Market
Development Grants Scheme Done ( Liberal
policy was to abolish the former and slash the
latter).
Attack protectionism which has corrupted the
world's agricultural markets. The Cairns
Group's success was reflected over the weekend
in Geneva.
8. Further refine our research and development skills
Particularly Create an Australian Research Council Done.
The 150% tax deduction for R and D to be
retained until 1991, when it will be replaced
by a 100% deduction.
In addition a Science Policy Statement will be released in
May.
9. Continue to encourage the elimination of outdated
work and management practices.
The Government has actively supported both
second tier agreements and award
restructuring.
To be further advanced by the Treasurer's
Statement on Wednesday.
Further steps to build value-added processing
industries As part of the TCF Plan, incentives for
further processing are offered, mainly AIDC
equity participation and grants of up to
$ 800,000 for approved projects. Some 10 new
operations are being established in Australia.
Under the joint DITAC/ AUSTRADE Investment
Promotion Program the Government has
encouraged direct investment in early stage
processing of wool, cotton skins and hides.
11. Promote further enmeshment of the Australian
economy with our dynamic regional neighbours
Most recently, I launched a new initiative to
ensure greater regional co-operation. The
proposal has received wide regional support.
12. Further develop the tourism industry
Terminate the two-airline agreement, as
already mentioned.
Liberalise international passenger charter
policy, as of 7 October 1987.
Build third runway at Kingsford-Smith Airport
and commence wo rk at Badgery's Creek.
Award restructuring, which will progress the
removal of restrictive work practices in this
vital area.
C. OTHER INITIATIVES DURING THIS THIRD TERM
Company tax -reform. Reduction in company tax rate
from 49% to 39% and rationalisation of a range of
distorting tax deductions.
Establishment of Resource Assessment Commission.
Announced in November 1988, to inquire into major,
complex land use proposals via public hearings and
reports.
Reform of Government Business Enter prises ( GBEs).
Over 40 longstanding controls have been removed
from nearly all GBEs, including their right to
enter into contracts without Ministerial approval,
exemption from processes under the Public Works
Committee Act 1969, their ability to invest surplus
monies and enter loan contracts without Government
approval, the right of the board to dismiss the
Chief Executive, the removal of many public service
staffing and administrative practices, and their
right to establish their own superannuation
schemes.
D. MAY ANNOUNCEMENTS Coastal Shipping
Waterfront Science
A statement on continuing change in defence
industries
Air Freight arrangements
Continuing progress in GBE reform, particularly
communications pricing forumla to be administered
by AUSTEL.