PRIME MINISTER
TRANSCRIPT OF THE PRIME MINISTER, THE HON P J KEATING, MP
CLOSING REMARKS, PREMIERS' CONFERENCE; PARLIAMENT HOUSE
JULY 1993
E& OE PROOF COPY
PM: Well thank you very much, Marshall Perron. I might just recap on a few
points that Premiers and Chief Ministers have raised and then we might then
retire to the cabinet room. We have a lunch scheduled for 12.30 pm that we
can vary. So, at a conclusion to my remarks, I think we may, well it is really
your option whether w e go to the cabinet room, or have lunch a little earlier and
then return to the cabinet room, or go to the cabinet room first.
Could I lust begin by addressing some general comments. A few remarks were
made about the one day meeting being a farce. Well I think this belles a
tremendous amount of work by officials, as you know the Commonwealth and
State Treasury and central agency officials have now met consistently about
this subject for some time, particularly in the national fiscal outlook statement,
which is a joint statement of the Commonwealth and the States. It is the first
time that It has ever been produced, it is the first time any Commonwealth
Government has put estimates of receipts out into the medium term and
therefore estimates of deficit or surplus, as the case may be, when I became
Treasurer and John Dawkins became Minister for Finance in 1983, the then
Coalition Government didn't even publish forward estimates of outlays, much
less forward estimates of receipts, and forward estimates of the budget
balance, or let alone give any commentary on the profile of the receipts or the
outlays, or influences on the receipts or the outlays on the way through.
I don't know of any federal Government, -any national governmfent in the world
which publishes these sort of documents. So, the notion that this Is a day of hit
and miss type of things, is wrong. I mean it Is a tip of a very large iceberg and
there has got to be a point where the executive authority of the Commonwealth
and the States Is brought to bear to decide things. But that Is not taken without
undue consultation and understanding of the Issues which both the national
fiscal statement, the new loan council arrangements and the FitzgeraldReport
itself which backgrounds savings in the broad.
All of that means this is easily the best informed Premiers conference meeting,
ever. I think that we should understand just how much progress has been
made in trying to get a better understanding between us all about where our
fiscal needs are.
The Treasurer was just telling me the offer document went to States on
Thursday as well, not Friday. So there was a number of days there to consider
the distillation of the Commonwealths work In respect of the meeting.
Let me just brefly comment at least on some of the points that have been
made. John Fahey made the point In his opening remarks about the need for
certainty in fiscal finance and arrangements between the Commonwealth and
the States. We have tried to provide that in arrangements over periods of time
where we thought we could see some medium term horizon, and this is the last
year of a three year real terms guarantee, and we will try and devise some
method where the States can have some Idea of where we think we are
heading for the future. The problem with It Is the difficuity of getting the balance
between certainty on the one hand and the need for flexibility on the other, In
my opening remarlks I mentioned the question of the change In the world
forecast and Jeff Kennett picked me up on this point about the OECD, but I will
come to that in a moment, The OECD growth rates for ' 92 changed from a
positive 2.7 per cent to a negative That's nearly a four per cent change in
the forecast, and In 1993 from 4.3 per cent In forecast in ' 91 to .3 this year,
again, for the second year in a row a 4 per cent change In the forecast.
The OECD, I will come to Jeff Ken netts point, it is not a matter of we
Australians comparing our growth rates to the OECD, It Is a commentary on the
weight of the OECD economies in world output. They represent more than half
world output, and much of Australia's prosperity. We now have commodity
prices last this low In the middle eighties and I think from memory the last time
they were that low was the depression. We got very low commodity prices
because the US economy is down, the German economy has been in
recession, and the Japanese economy has been In recession. And so with
these very dramatic changes In the balance of world output, therefore we need
always the flexibility to adjust our own budgetary positions. And so I think the
reason while none of us, certainly on the Commonwealth side, wanted to deny
States certainty about having some predicability in their revenues, we always
do need that capacity to be flexible in the face of quite mammoth changes like
these. These are very large changes. The fact that we are still growing at
per cent -as a-developed-economy with theQOEOD shifting balance of growth,
shifting to the negative for ' 92 and barely positive for ' 93 means that we are not
doing too badly. But we have got to do much better, of course, for the point
which John Fahey also made and that Is respect of unemployment, where of
course rates of growth under about 3 per cent barely start cutting Into
unemployment at all.
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Could I just mention, Jeff Kennett mentioned, that we should meet to discuss
national outcomnes and to Improve ourselves. I mean, I don't think we should
underestimate our progress, as I said In my opening remarks we are 30 per
cent more competitive than we were In the middle 80s. We are now hugely
competitive in terms of our exports and Import replacement by virtue of lower
inflation, our wage costs, and a shift in our productivity. And as that Mcklnsey
study showed and pointed out so eloquently a week or two ago the big shift in
manufactured exports and elaborately transformed manufactures Is occuring
not because, amongst other things, because the competitiveness or the
economy, but the big shift Is In attitudes within businesses and the striking thing
about that result was that the survey revealed that It was the 90 per cent of
businesses that were not exporting which had exactly the same products,
exactly the same opportunities and exactly the same availability of
competitiveness, but we are not doing it because of attitudinal Issues. And that
is our big problem getting this attitudinal shift on the part of business to look at
the world as their market and not lust Australia.
But in terms of our competitiveness we have been Improving quite markedly.
I am always quite receptive to proposals of doing things, more things, together
and I think we should. But can I just say and I do not want this to be too
negative a remark about Jeff Kennett's comments, but last Friday we had one
of the most depressing outcomes of any Commonwealth/ State meeting. At the
meeting of Commonwealth and State Ministers for Education and Training a
decision was taken to defer action on major reforms and refer them back to the
States and Territories. This is on the Implementation of a national curriculum. In
schools and I am sure many of you know that the question of key
competencies and the national curriculum In schools Is germane to the
adopting of an Australian vocational certificate. which of course, Is underpinning
our major reform In vocational education. One has got to ask oneself what kind
of country we may be if outside of the tertiary sector of education, at the
vocational area we can't get to a point where a vocational standard in technical
and further education In those thousands of jobs which will be needed to power
the economy along outside the tertiary area where we can't get to a national
certificate for a student who wishes to participate In Industry In those terms.
The more obvious thing why would we want any child not to be able to continue
their education in one State coming from another to find that there Is a dramatic
shift or change In the curriculum.
Apparently the reason these decisions were taken was because the
conservative States decided the States rights issues had to be dealt with. Jeff,
I do not mind * being enjoined to do things nationally, -but If we can not even g~ ve
our kids a national curriculum after five years of work on this between the
Commonwealth and the States to pull out now because of some notion about
States rights when the States have been absolutely the drivers in a national
approach here, then you do wonder where we can ever get to anywhere cooperatively.
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But the general view that we should work co-operatively Is coming through, our
nlational fiscal outlook, it is coming through the COAG meetings and we are.
registering important gains, but I think we have got to keep the spirit going. We
have all talked about Asia here today, anyone who has been to Asia particularly
In the last year or two knows what tremendous opportunities are there for
Australia and the notion that we should be bickering about educational
standards or something between States of Australia and not approaching these
markets as a unified national force is of course, folly in the long run.
Can I say a couple of other things then addressing concerns which were raised
by Queensland and Western Australia also South Australia, the ACT, the
Northern Territory and Tasmania about fiscal equalisation.
The Commonweaith Government in the last decade has remained committed to
fiscal equalisation. We remain committed to fiscai equallsatlon. That is not to
say that the Grants Commission should not from time to time examine the
methodology and the relativlties between States and It has taken that
opportunity and that Is why we seek to try and adopt a Grants Commission
Report when that opportunity is taken. That is why we have sought to give
expression to the current change In methodology and relatlvities coming from
the Grants Commission report.
We are one nation and to see ourselves as States and therefore to see only
areas of advantage and comparative disadvantage Is I don't think the way to
view the country and the fiscal equalisatlon has played an Important role In
binding the federation together and keeping some of the smaller States
committed to being part of national fiscal solutions, giving their communities a
standard of living they might not otherwise enjoy.
There is a view, and a very strong view from New South Wales and Victorla,
and I understand the view particularly when the value of the tariff to those
States has fallen and It has fallen notwithstanding the point which was made
earlier about Western Australia. The fact is New South Wales and Victoria
have been through a substantial adjustment to their Industrial base through
protection, declines In protection, and one hopes that these Grant
Commissions relativities at least understand that point and that the shift In the
relativities are fair to the change of position of the various States.
Can I just say a number of States took Up the question of the-Medicare
agreement and Its Influence on the current outcome. At the time of signing the
agreement we gave an-Indication to'States how much they would be better or
worse off from the Impact of the change to Financial Assistance Grants and the
Health Fund Grants Implicit in the Medicare agreement. And In that
Queensland was to lose $ 47 miliion; Western Australia $ 70 million; South
Australia $ 73 million; Tasmania $ 11 mlillion; and the Northern Territory $ 42
million. In fact as a result of in the ' offer document' those numbers have
Queensland losing $ 21.6 million; Western Australia $ 32.4 million; South
Australia $ 68.5 million; Tasmania $ 1 million and the Northern Territory gaining
$ 36 million. The difference Is that Queensland is $ 25.4 million better off than
expected to be; Western Australia is $ 37.6 million better off than expected to
be; South Australia $ 4.5 million; Tasmania $ 12 million; the Northern Territory
$ 78.4 million; the loser In this Is the ACT which loses $ 27.5 million and that is
why we have already put special financial assistance in for the ACT and I have
also In conversation with the Treasurer and the Chief Minister said that we will
consider additional special assistance as well.
But on the expectation versus the ' offer document' there are substantial gains in
there. We thank those Premiers and Chief Ministers who did make a reference to the
real terms guarantee, we think It was Important to keep that certainty, for the
Commonwealth to keep Its word on those things and that we can therefore at
least consider our respective responsibilities In the context of a pool which is
maintained In real terms.
There were many other Issues which were raised that are not appropriate here
to deal with In detail. I hope I have touched on the broad ones and couid I with
those words thank you for participating In the opening public session of the
Premiers' Conf erence and now invite Premiers, Chief Ministers and Treasurers
to the Cabinet Room.
Thank you.