' 3.
CHECK AGAINST DELIVERtY EMBARGOED UNTIL DELIVERY
ADDRESS BY TEE PRIM MINSTER OF AUSTRALIA
THE HON R J L HUMlE AC HP
TRADE AND INVSTIT CNEEC
LONDON 22 JU= 1989
Mr chairman
Ministerial Colleagues
Distinguished Guests
I welcome you all most warmly to this significant,
unprecedented and timely conference. The concept which this
conference embodies originated in the discussions I had with
the British Prime Minister during her visit to Australia
last August for our Bicentenary. Mrs Thatcher and I agreed
and we do agree on many things that, strong as the
traditional association between Britain and Australia
remains, there was a need to inject it with a new vitality
and a new sense of purpose; in Mrs Thatcher-Is own words " to
modernize the relationship". And specifically, ye agreed to
set in train a process to identify and develop potential new
areas for trade and investment, to the mutual benefit of
both our countries. This conference is the first step
towards that very important objective.
in this process, the first need is to provide an opportunity
for British and Australian business leaders to get together
and explore mutually beneficial ways of advancing our
investment and trading links. This is what this occasion is
really all about.
I have taken a deep personal interest In the preparation for
this conference? and without presuming to speak for
Mrs Thatcher, I can say that we are both gratified and
encouraged by the enthusiastic response by so many
distinguished business leaders from both countries.
The importance the Australian Government attaches to it is
attested by the presence of my colleagues, the Minister for
Industry,, Technology and Commerce ( Senator John Button) who
is your Co-Chairman and the Minister for Foreign Affairs and
Trade ( Senator Gareth Evans). I should mention that the
Minister for Defence ( Mr Kim Beazigy) is also with us in
London. The four of us comprise the most senior Ministerial
representation assembled in London together for working
purposes, certainly since the war, and probably since
Federation. Mr Chairman
I put forward four interlocking propositions which, I
believe, underpin the purpose of this conference.
First, the traditional association between Britain and
Australia, based on a shared heritage of history, culture
and institutions, will in future increasingly draw its
strength, vitality and relevance from our economic links.
Second, while Australia seeks to enmesh its economy with the
rapidly growing economies of our region, and while Britain
merges its economy with Europe, then* historic developments
should not become mutually exclusive pre-occupations, but
rather, part of a comnon drive towards a more open and
expanding world trade order.
Third, the economies of both our countries are undergoing a
period of dynamic change in Australia's case, a massive
restructuring, and a move towards a greater capacity in
manufacturing and services.
And finally, I put a fourth proposition: that all of these
developments present new, challenging, and mutually
beneficial opportunities for the trading, business and
investing communities of both our countries.
Mr chairman
The most remarkable aspect of the British-Australian
economic relationship is not the profound changes which have
occurred over the past two centuries. What is really
remarkable is its enduring substance and strength.
The latest figures on foreign investment show that Britain
has overtaken the United States as the major investor in
Australia. That applies both to accumulated investment and current
investment in 1987-8B.
The total level of British investment at 30 June 1988 was
$ 44 billion. The investment flow for the year was
$ 6.7 billion.
Britain was also the principal host country for investment
from Australia $ 4.7 billion in 1987-88. Australian
investments in Britain totalled $ 14.1 billion, second only
to our investments in the United States. On the trade
front, Britain remains our third largest-source of imports
and Australia's sixth largest export destination.
Clearly, this is a very substantial association indeed. The
interdependence of our two economies remains significant.
our trade and investment flows are complemntary. They
continue to contribute to improved living standards in both
countries. This is a sound and broad basis for the
revitalisation of our relationship.
And we must not lose sight of the substantial
interdependence which already exists, even as we look
increasingly to new opportunities and new fields of
endeavour as Britain focuses on closer integration with
Europe, and as Australia seeks to involve itself in the
exciting developments in the Asia Pacific region, the
fastest growing region in the world.
It remains important that in pursuing these opportunities we
should recognise the mutuality of our interests and the
interdependence of our economies. And this recognition
should be reflected in our decision-making at both
government and business levels.
This will not only strengthen our bilateral ties, but
provide an example of potential gains from co-operation at a
time when the openness of the world trading system is under
threat.
A good example of the sort of supportive interdependence I
have in mind is the adoption by the Australian coal industry
of longwall mining techniques which has provided an export
market for British mining equipment.
This has led to greater efficiencies in the Australian
industry. Obviously, what we are seeking now are assurances
of unimpeded access for that cheaper coal into the UK in the
light of pending privatisation of the UK electricity
industry. The domestic policy stance Britain takes on this issue of
this kind impinges directly on our bilateral relationship.
But against the backdrop of Europe 1992 it can have much
wider implications. The external policies adopted by the
European community at that time depend very much upon the
domestic policy preoccupations of member countries.
Australia looks to Britain to lead by example and to help
ensure that Europe 1992 becomes not " Fortress Europe", but a
mighty bridge to a more integrated and open world economy.
Like Britain, Australia is a committed aftocate of a more
open world trading system. Australia's interests will be
vitally af fected by the outcome of the current Uruguay Round
or multilateral trade negotiations. Our desire is to see
the GATT framework strengthened and trade placed on a fairer
and more open basis.
It is clear the Round cannot be brought to a satisfactory
conclusion in the absence of a package embracing all
subjects under discussion. The view of the Cairns group,
including Australia, and of the developing countries among
others, is that there can be no successful conclusion
without a satisfactory result on agriculture. We all see
agriculture as pivotal in securing a successful outcome to
the Round.
Some of you may be aware that there are Australians,
certainly one very prominent Australian, so enamoured of the
European Community that they want Australia to join it and
indeed believe that we should have little difficulty in
getting in. The concept has been expressed in the rather
eye-catching words: " Australia is the last bastion of
Europe". From the vantage point of the Treasury benches in Canberra,
this intriguing idea does not appear to fall within the
realm of politics as the art of the possible. In the
elegant phrase of my colleague John Kerin, the Minister for
Primary industries and Energy# who, with his agricultural
responsibilities, knows a little about the EC, it fails the
test of propinquity, let alone contiguity.
We are directing our efforts closer to home.
Colmeapdleimngen trinogl e oiunr pmroumltoiltaintge raglr eeaftefor rtesc, o noAmuics trcaoli-ao piesr attaioknin gIn
our region.
in recognition of the increasing interdependence of the
countries of our region, I recently proposed a formalisation
of regional co-operation aimed at better harnessing the
potential for regional growth and development through the
creation of new consultative and institutional arrangements.
Serious discuss ions are now underway in the region on ways
to implement my proposal.
we are hopeful that a vehicle f or intergovernmntal
co-operation in the region will. provide a mans for
encouraging competitive efftorts to enhance prospects for
trade liberalisation in the context of the MW Round. it
will also provide a forum to increase the dialogue on ways
to reduce regional trade barriers consistent with the GATT
and, generally, to help identify and build upon coon
regional interests.
Like Europe 1992, the emergence of the Asia-Pacific region
as a major economic grouping will have a profound impact on
the future shape and character of the world trading system.
It would be foolish to attempt to predict where that will
lead us as a global economy. What does seem obvious,
however, is that there will most likely be an
intensification of competition in both Europe and the
Asia-Pacific region.
Australian industry is veil placed to meet this challenge in
our region and a number of leading Australian corporations
have already taken up strategic positions in Europe in the
lead up to 1992, including forming alliances with British
counterparts. For example, a recent survey undertaken by our High
Commission of Australian firms established in the UK
revealed that most are well prepared for 1992, are intending
to inorease investment in both Britain and Europe and are
actively seeking British partners interested in joint
ventures. I congratulate this initiative and believe that there are
considerable benefits offered by such collaboration both
here and in Australia.
Much of the recent investment by Asia-Pacific countries in
the UK and mainland Europe has been reported an strategic or
defensive and aimed at securing a foothold in Europe before
1992.
Similarly, investment by Australian firms in the UK over the
last couple of years is seen as-providing a base to
penetrate the European market.
There is a degree of truth in these assessments. But they
can be simplistic and even misleading.
They contain a danger of a distorted view of our existing
bilateral association.
An important determinant of Australian investment flows into
Britain has been the relative openness of your economy.
I am aware, however, that recent decisions to refer proposed
acquisitions to your Mergers and Monopolies Comission have
created some unease in Australian business circles,, concern
which my Government has also felt on occasion.
Short term social and cultural apprehensions in all
countries which encourage foreign investment are expressed
from time to time. However, unnecessary uncertainties or
delays must not be allowed to hamper legitimate business
decisions which ultimately underpin the living standards of
all countries.
We urge the British Government to ensure that decisions
relating to proposed mergers and acquisitions are based on
their economic merits and the processes involved and factors
considered made clear and open.
No doubt this conference will provide a forum for Australian
companies to air their misgivings and to become better
informed about investment policy in the UK. If there are
misunderstandings we have an opportunity to clear them up.
If there are effective non-economic constraints on
investment in the UK we urge you to make clear the grounds
on which such decisions will be made.
In Australia's case, the liberalisation of foreign
tnvestment policy is a significant element in the manssive
task of re-structuring the Australian economy we have
undertaken. we have moved on a broad front to open up the Australian
economy and to make our industries more outward looking and
internationally competitive.
We have deregulated the financial sector. We have reduced
tariffs substantially. We have overhauled the taxation
system to ensure that decisions are based on expected
economic returns, rather than on tax breaks.* We are tuning
our education and training networks to meet the emerging
needs of industry.
we are reforming the operating of Government business
enterprises to improve their efficiency and accountability
by requiring enterprises to operate on a more commercially
competitive basis.
These reform have applied to Australia's Telecom and
overseas Telecommunications Corporation and our domestic
aviation and international air freight sectors.
We have reduced public sector spending to its lowest
proportion of the Gross Domestic Product since 1972.
Our comitment to microeconomic reform is on-going and in
the recent months we have moved to reform the transport
sector including coastal shipping and the waterfront.
There have also been dramatic changes in Australia in wages
policy and industrial relations.
Due largely to the unique Prices and Incomes Accord
established between the Government and the trade union
ovemet, there has been unprecedented Wage restraint over a
aix-year period. industrial relations have improved
markedly with industrial disputes reduced by 60 per cent.
Unit labour costs have fallen by 10 per cent.
We have recently forged a wage/ tax trade-off package which
will help restrain wage costs and which links wage increases
to a fundamental restructuring of industrial awards. This
is a good package for individuals and families. But it
happens to be a very good package for business.
Award restructuring provides a unique opportunity to tackle
the barriers against improving efficiency and productivity
in the workplace; enhancing skills formation and
flexibility, and laying the foundation for greater
competitiveness and growth in productivity.
The combined effect of these domestic reforms has been to
improve the competitiveness of Australian industry, while at
the same time maintaining pressure towards efficiency by
increasing the trade exposure of the Australian economy.
Mr Chairman
These are fundamental strengths underpinning the Australian
economy. They are, of course, the very basis of our
capacity to surmount the current problems of economic
management we ar. addressing the problems associated with
strong employment growth, strong investment growth and
strong demand.
The policies appropriate for the solution of those problems
are firmly in place.
The over-riding fact for business, for investors is that
the essential basis for sustained and sustainable growth in
the Australian economy has never been broader or stronger.
Mr Chairman
I have indicated some of the areas for discussion at this
conference. But, just as important will be the informal
exchange of ideas and contacts that will no doubt be made
outside of the conference. The task before us does not, of
course,, end with this conference. It is only the beginning.
I said in my opening remarks that Mrs Thatcher and I
envisaged that this would be the start of a process.
Towards the close of today' s proceedings,-Senator Button and
I will be putting forward proposals to provide a follow-up
for the work we have begun today together.
While Mrs Thatcher and I have been concerned to bring you
together, and to do all we can to build on the
British-Australian friendship, both our governments have a
basic commitment to letting business make the running on
trade and investment decisions. Our main purpose today is
to point to the new opportunities before us.
But with opportunity goes responsibilityi and I hope that
you will take from today'* s deliberations a better
understanding of our respective economies and where we are
heading; and, a renewed commitment to build profitably in
all semnse of the word on the foundation we have mutually
established over two hundred year~ s of association in the
field of trade and investment.