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SPEECH BY THE PRIME MINISTER
NATIONAL FARMERS FEDERATION
NATIONAL BI-ANNUAL CONFERENCE
CANBERRA 22 NOVEMBER 1989
Last July, in Wentworth, New South Wales, I had the pleasure
of participating in an event unique in Australia's recent
history. As part of the launch of my Government's Environment
Statement I was able to stand with your Secretary
Rick Farley and Phillip Toyne of the Australian Conservation
Foundation and praise them for working together to help the
Government create a new program of soil conservation.
I said at the time that it was a remarkable alliance.
A few years ago an association of environmentalists, farmers
and a Labor Government would not have been seen as the most
natural or effective of partnerships.
But we have good reason to be pleased with the results of
our cooperation in this instance: we have created a $ 320
million package of measures to apply over the Year and
Decade of Landcare, protecting and rehabilitating as never
before the fundamental ingredient both of our natural
environment and of our agricultural prosperity our soil.
Indeed, the story the Labor Government has to tell about our
achievements for the rural community covers every crucial
aspect of the production cycle from soil conservation,
through the farm gate to reforms in the vital infrastructure
of transport and the waterfront, through to the consumer in
Australia and, of critical importance, to the consumer
abroad.
The hundreds of thousands of men and women directly
represented by the NFF contribute vitally to Australia's
economic life. All Australians depend on our primary
producers, not just to provide the staples of our diet but
also, through your massive contribution to Australia's
export earnings, to underpin the very prosperity of our
nation.
Quite simply, without an efficient and productive farm
sector, oriented to competition in the markets of the world,
Australians would be incapable of enjoying any sort of
prosperity.
But a good harvest or wool clip is not, by itself, a
guarantee of a good cheque.
If our soil is degraded, if our rail network is inefficient,
if our waterfront is clogged, if our marketing authorities
are operating poorly, if our price signals are not being
transmitted clearly, if access to markets overseas is
blocked, then the prosperity of individual producers, and of
the nation as a whole, is damaged.
I know the NFF understands the importance of micro reform.
We have achieved more in this area than any other Government
in Australia's history. That is not a bold assertion; it is
a fact.
And we have brought Australians With us, in a spirit of
co-operation the only workable way forward.
When we came to office in 1983, Australia still hid behind
defensive walls; it was inward looking and massively
over-regulated.
Conservative governments, which I remind you had ruled this
country for 30 of the 33 years before we came to office, had
made it virtually impossible through high tariff barriers
for many foreign goods to compete on Australian markets so
when we tried to compete against foreign goods overseas, we
found we were hamstrung by our own bad habits of
inefficiency and complacency.
This Government has provided the leadership and the strategy
to make Australia more outward-looking and competitive.
Let me repeat that, with different words: the turnaround
didn't happen by chance. It hadn't happened under virtually
three decades of conservative rule in fact progress had
been actively stymied.
It was only when this Government came to office that
Australia at last began to get it right.
So today I want to spell out -bluntly, so the record is not
blurred and cannot be ignored -just what progress we have
made. And when, later on today, I launch the Garnaut Report on
Australia and Northeast Asia, you will see demonstrated
again our capacity, our energy and our determination for
further progress down the road to micro-reform.
When we came to office, a precondition for change was a._
responsive financial sector. Our first priorities were to
float the dollar, relax exchange controls, free up the banks
and allow new bank entrants.
These reforms brought substantial benefits a more
responsive exchange rate; freedom for Australians to invest
overseas, and gain access to overseas ideas and markets; and
new forms of and readier access to financing.
And radical change in one area encourages change in others.
So we also began lowering protection for motor vehicles and
textiles, clothing and footwear protection that had been
built up by the conservatives.
Other important early micro reform decisions involved
deregulating foreign investment and abolishing State
purchasing preferences thereby eliminating the waste of
building factories in each State to benefit from local
preference arrangements.
Work in other areas advanced to the point where, in the 1987
election campaign at Ballarat, I made some very clear
commitments to pursue micro-economic reform during our third
term. My Government placed that issue firmly at the top of the
political agenda. It had never before occupied that prime
position. We didn't do it to buy votes or to placate sectional
interests. We did it for that oft-cited but rarely fulfilled reason,
the national interest.
And our success, in just over two years, has been without
precedent in this country.
When have the conservatives ever tackled tariff reform?
In 1988 we announced the reduction of most tariffs to 10 or
per cent over four years. We abolished the general
revenue duty of 2 per cent at a cost of $ 240 million. We
removed tariff quotas on motor vehicles and cut tariffs from
57.5 per cent to 35 per cent. Textiles, clothing and
footwear will have tariff-only protection by 1995.
These measures cut costs to farmers. They enhance our
credibility in international trade forums. They send the
right signals at home and abroad.
Our tax reforms have been historic. The top personal tax
rate down from 60 per cent to 47 per cent; the company tax
rate down from 49 per cent to 39 per cent; dividend
imputation; and a significant widening of the tax base to
help remove distortions in the tax system.
Such reforms clearly improve economic efficiency. They.
benef it all Australians.
Look at coastal shipping.
We are on about practical, deliberate change. We considered
the options up to and including the abolition of cabotage.
We decided on change that is reducing industry costs,
broadening the system for entry of foreign flag vessels in
particular circumstances, and encouraging the replacement of
the ageing Australian fleet.
So far more than one-third of the coastal fleet have had
their crews reduced by agreement.
The average crew size of an Australian vessel when we came
to office was 33. It will be 21 by the middle of 1992 and
let me emphasise this will be down to the OECD average.
The industry has started to make major investments again in
new tonnage. They are building larger and more specialised
vessels. Firms such as BHP are now successfully employing large
Australian-manned bulk carriers around the coast and
overseas. And the Prices Surveillance Authority is reviewing the
industry to ensure cost savings are passed on.'
Could the Liberals and Nationals have done it? All they
would have achieved is closing down the waterfront.
So let us look at the waterfront.
Only last year the solution according to the NFF, and all.
other commentators, was enterprise employment get rid of
the pooling system.
We have achieved agreement to do just that. It was supposed
to be impossible we showed it wasn't.
It will shake this industry to its core, and that is good.
But ~ because it was achieved without a public brawl, and
because it isn't in place over a couple of weeks or months,
it's now said to be not enough.
We also plan a major phased redundancy and early retirement
program that will ensure a 30 per cent increase in
productivity; a younger waterside workforce; award
restructuring; and a career structure and training program
for workers and management.
What does the Opposition offer? In addition to company
employment their plan is to allow shippers to set up their
own stevedoring operations and to sweep away some
unspecified regulations.
Well, shippers can offer their own stevedoring services
right now.
And if you want to abolish ports regulation, you have to
tell that to States. We already have.
We are implementing change, responsibly. The alternativeglib
promises, in an industry noted for the intractable
nature of its problems is no credible alternative at all.
We have produced the most significant reform in the wheat
industry since the establishment of the Wheat Board.
We established a Royal Commission into Grain Storage,
Handling and Transport. It suggested ways to save farmers
up to $ 10 per tonne.
We acted, in our area of responsibility. The savings are
being achieved now.
Then we legislated to override restrictive State
legislation. Would the Coalition's adherence to States'
rights have stood this test?
We are ending the two airline agreement.
We opted for full deregulation, a more radical step than any
proposed in the report we had commissioned.
Could the conservatives have done this?
One of their last acts in Government was to bind themselves
and us into the protectionist trap of the two airline
agreement until 1990.
The completion of an all-weather national highway, 16,000
kilometres around this country: it's done. And while we're
on roads, what of the inter-state road transport
regulations, more uniform conditions and more efficient load
limits for trucks?
Let's move on to air freight. The protection Qantas used to
receive in this area was astounding. Regulations introduced
by previous Coalition governments allowed it simply to take
over the cargo of a charter competitor. This, and all other
constraints to competition from charters, have now been
virtually swept away.
Similar deregulation has occurred in-air passenger charter
policy.
And now we're examining the scope to designate a second
Australian airline to carry freight internationally.
We deregulated crude oil marketing. Existing small
producers were given special assistance more evidence of
pragmatic change but the red tape accumulated over a
quarter of a century was consigned to the shredder.
From January 1988 refiners and crude oil producers are able
to negotiate freely the quantities and prices of crude oil
they buy and sell.
We have also, with the Business Council of Australia,
developed a novel scheme for review of business regulation.
You nominate the regulation, in a serious-fashion we
review it. The Structural Adjustment Committee of Cabinet
has a standing item on its agenda for just this purpose.
Rail freight: we have been successful in substantially
reducing Australian National's call on the taxpayer.
Freight operations are now run profitably.
Moving this expertise from the Federal to the State sphere
is next.
We have developed a proposal with the States for a national
rail freight organisation. Should the States agree, this
will see a central management body dedicated to the swift
and reliable carriage of inter-state freight.
In telecommunications, we announced a major reform package
less than 18 months ago that provides for effective
competition in customer premises equipment, in value-added
services, and in maintenance and installation.
This has already spawned a whole new industry the best
proof that our changes were real and deliverable. They show
Telecom, too, and its employees, that competition will not
bring the system crashing down.
This demonstration effect is vital for the further changes
we will consider. Cellular mobile phones is an area under
review by AUSTEL.
Telecom's ability to influence the regulation of its
competitors by setting standards has also been removed to an
independent body.
We have reformed Government Business Enterprises. Over
longstanding controls have been removed, including their
right to-enter contracts withmt-Ministerial-approval,
exemption from processes under the Public Works Act, their
ability to invest surplus moneys and enter contracts without
Government approval.
Simple things, but important. They stayed in place for
nearly 30 years of conservative rule.
Finally, I turn to labour market reform.
Change is not easy, particularly when employers are
confronted with a multitude of unions and awards that often
bear little relationship to the needs of individual
enterprises.
The Industrial Relations Commission has made it clear that
award restructuring processes can themselves be used as a
vehicle for reforming award and union coverage.
Looking beyond that, we are moving away from inter-industry
or occupational awards and fragmented, craft based unions to
arrangements which better reflect the needs of individual
industries and enterprises.
Wage negotiations must have an increasing enterprise focus
but this process must be underpinned by the Accord to ensure
effective aggregate wage outcomes.
The NFF opposes the centralised wage fixing system, a system
that has yielded an 11 per cent reduction in real unit
labour costs. The conservatives' approach to wage fixing
would trigger a wage explosion, just as it did in 1982.
They have learned nothing. I fear the NFF may not have
either. Ladies and gentlemen
Our record of micro achievement is impressive by any
standard, and, I repeat, unprecedented in this country's
peace-time history. Does anyone here suggest anything
remotely comparable in those 30 conservative years? But let
me assure you there is much more to come.
We have an ambitious and comprehensive agenda for future
reform. Clear evidence of this'is provided by the new inquiry
program for the restructured and broadened Industries
Assistance Commission, now the Industry Commission.
The Commission's work program includes references on
critical infrastructure services: railways, energy
generation and distribution, statutory marketing
arrangements, and raw material pricing for domestic users.
Unlike the Coalition, we will act against the States if
reform in their areas is too slow, as we have done in wheat
transport and handling.
What do the conservatives these Johnny-and-Andrewcome-
latelies say now about our micro-economic reform
achievements? That we made-the easy changes-first? They never-found them
so easy when they were in office.
That we aren't moving fast enough? They at least recognise
that we are moving in the right direction after decades of
Coalition inertia.
That we are protecting our friends in the unions? Well. L.
know a bit about trade unions, and let me tell you, we're
shifting and shaking trade unionism like it has never been
shaken before. Their inefficiencies and cosy deals have to
go just like anyone else's. And they are.
And may I say, much of Australia's management has a good
deal to learn from the preparedness of the trade union
movement to face up to and accept change.
But if protecting trade unions means talking to them,
cooperating with them, winning the best from them, making
sure they come along with change rather than dig their heels
in if that's protection, then I'll happily plead guilty.
Because in achieving micro-reform, the negotiated way is the
only way.
The bull in the china shop approach only produces broken
china. And let me tell you, when it comes to micro-reform,
the conservatives are full of bull.
Micro reform requires leadership, guts, creative ideas, and
a capacity to consult. The Coalition possesses none of
these. Can anyone seriously imagine the Coalition achieving
anything on the waterfront other than industrial chaos?
They couldn't stand up to the Australian Federation of Air
Pilots so how long could they last on the waterfront?
On wheat deregulation, on national companies legislation,
award restructuring, they either stuck their head in the
sand, or they whinged to try and win votes.
They certainly didn't do anything to show they are fit for
the task.
Now I know this has been a detailed exposition but John,
let me gently suggest you brought it upon yourself by your
suggestion that we've moved too slowly.
And in your analysis of the pace of reform, John, you allege
that the Labor Party badly mishandled the last referendum on
a four-year term. No mention that the Coalition'ss
opportunistic opposition to all four questions contributed
to the demise of the four-year term. And conveniently-no
mention of the NFF's opposition to all four questions. The
audacity of your criticism, frankly, is staggering..
Ladies and gentlemen,
I am aware that some of your members have gathered a
petition on interest rates that is being presented today to
the Opposition. The week's newspapers have been full of
comment from various business organisations on Australia's.
debt levels.
This rekindling of the public debate on the macro-economy is
welcome. I have believed all along that informed public
debate can only be helpful in formulating acceptable
solutions to the very real economic challenges we face.
I certainly don't want, in this forum, to underestimate the
very real problems that many farmers are experiencing as a
result of current levels of interest rates.
But I do think it important that the reasons for the
Government's macroeconomic policy settings be fully
understood. It is nonsense to assert, as some commentators insist on
doing, that we are relying solely on monetary policy on
high interest rates to correct the nation's economic
difficulties. Fiscal policy is unprecedentedly tight. With the 1989-90
Budget, outlays are projected to fall for the fourth
consecutive year, taking them to 23.7 per cent of GDP back
to the level of the early 1970s.
We are continuing to repay Commonwealth debt, including
foreign debt, and largely because of our budget surplus the
overall net public sector contribution to savings has
improved by a massive 8 per cent of GDP in the last five
years, or around $ 30 billion.
The 11 per cent fall in real unit labour costs is testimony
enough to the tightness of wages policy.
But quite large increases in interest rates have been
necessary to complement the Government's fiscal and wages
policies in dampening domestic demand.
Monetary policy would have been even tighter but for our
achievements on fiscal and wages policy: achievements a
Coalition Government have never made and could never make.
Monetary policy has certainly been tighter previously:
day bank bill rates reached a peak of 22 per cent in April
1982, compared to just over 18 per cent now.
If the Government relaxed monetary policy prematurely the
wellbeing of the farming community, together with that of
all other Australians, would be devastated. The dollar
would plummet. No bad thing, you would say. But that would
happen only at the expense of skyrocketing inflation,
interest rates going through the roof and a collapsing
economy. The conservatives have no alternative economic policy
because there is. no alternative policy. When we are
convinced that demand is moderating we will allow interest
rates to fall, but not before. To do so now would be
irresponsible and certainly ruin the very farmers you are
trying to protect.
Ladies and gentlemen
We are engaged in a sweeping transformation of the
inefficient practices and institutions that have
traditionally served farmers poorly, and retarded the
nation' s progress.
But the benefits of our reform program cannot be fully
realised if efficiently produced Australian goods can't win
access to foreign markets.
That is why we have taken such a high profile
internationally to reduce and remove the barriers to trade
behind which farmers overseas in Europe, Japan and the US
have sheltered for so long.
Of course, the previous Government preached free trade toobut
the world was less than impressed by that posturing
because it was not supported by any liberalisation of
Australia's own protectionist practices.
You can't be a global free trader and a domestic
protectionist you get called a hypocrite.
This Government has determinedly pursued both domestic and
international trade reform.
We have given credibility to our international campaign for
trade liberalisation by making substantial cuts in domestic
protection while our domestic campaign to internationalise
the economy has been strengthened by our efforts abroad to
secure market access for efficient Australian producers.
That's why, I comment in passing, we combined the Foreign
Affairs and Trade functions of Government in one department.
The National Party leader, Charles Blunt, is talking about
splitting the department again because as he put it " Trade
and Resources and related e xport portfolios have been the
National Party's primary interest".
Of course, the very problems that, as I have described
today, this Government is tackling were caused by the policy
distortions the Nationals brought to the Trade portfolio.
With such foolish and regressive comments, Charles Blunt
shows only that, like the Bourbons, the National Party has
learned nothing and forgotten nothing.
The Cairns Group and Australia, are at the forefront of the
Uruguay Round and the recent announcement by the US of its
willingness to embark upon a dramatic reduction in
protection is in many ways a testament to our success.
In our bilateral dealings we are also taking the opportunity
to urge our partners to remove or reduce trade barriers.
11.
Last year we reached an agreement with Japan to liberalise
its beef market.
And we helped to convince the Americans to amend some of the
more damaging measures already proposed for their 1988 Trade
Bill. I take this opportunity of praising the way in which the NFF
in general, and your President John Allwright in particular,
has taken a higher and an effective international profile,
of assistance to Government on market access issues.
In this way we are working hand in hand to give a real and
enduring boost to the export capacity of our primary
producers. Ladies and gentlemen,
Rural producers play an important role in broad economic
restructuring, and my Government is providing, directly and
through the necessary infrastructure, the family farm with
the support they need and deserve. The Countrylink program,
the Rural Adjustment Scheme and the Income Equalisation
Scheme, and our package of rural education access programs
are some of the services this Government is already
providing to rural Australians.
Our social justice strategy for rural Australia will be
further developed in the Rural and Regional Policy Statement
that I will be releasing early in. December. The Statement
will announce a series of further measures modest, well
targeted measures designed to improve the access to
essential Government services of people living in rural and
regional Australia.
My Government is addressing the issues facing Australia's
farmers in the most comprehensive way ever.
Only by rejecting short-term, superficial solutions can we
guarantee a long-term, sustainable future, a future which
will be assured through a stronger economy, a better
environment, and an open world market on which Australians
can successfully compete.
By these means, we will build the more secure and prosperous
future to which we all aspire.