6 Dec .95 ' I
PRIME MINISTER
SPEECH BY THE PRIME MINISTER, THE HON P J KEATING MP
THE NATIONAL TRADE AND INVESTMENT OUTLOOK CONFERENCE
MELBOURNE, 6 DECEMBER 1995
I am very pleased tu be here to address this National Trade and Investment Outlook
Conference for the third successive year.
The innovative Minister for Industry Science and Technology, Peter Cook, was
instrumental In establishing the conference and the Australian Government is pleased to
sponsor It. NTIOC has become one of the more important conferences on the business
calendar. I thank you all for coming, arid In particular let me welcomne to Australia our visitors from
overseas. This conference is at once a manifestation of the change taking place in Australia and
throughout the world, and an agent of that change.
And that is what, primarily, I want to talk about today the change we are seeing, the
changes we can arid should make.
It is often said these days that we live In an era of unprecedented change.
In fact, I suspect politicians have been saying we are living In an era of unprecedented
change since politics was born. I'm sure I remember a former Prime Minister of ours,
Bob Monzies, saying we were living in an era of unprecedented change and Bob was
reluctant to change a light globe.
I'm equally sure that if anyone had kept an ear to the ground In the 1950s they would
have heard what we sormetimes hear now which is people saying they are tired of
change. These days the sociologists arid psychologists are warning us that people are
fed up with It, exh~ austed by it.
Yet we also see evidence of their willingness to embtrace change. The last decade bears
witness to that. In their workplaces and communities, on their farms and in their
businesses, In schools and universities, in their minds In the way they think about the
world and their country's relationship to It the Australian people have made changes.
They have made Australia a much more competitive country 40 per cent more
competitive than a decade ago. They have seen exports rise by one third in the last five
years. They have seen ETM exports grow by 17.5 per cent per annumn over the past
decade, so that they now make Up airTost 2~ 3 per cent of our total merchandise exports.
Put anotlii way. 17 out of the top 50 Australian export commodities last year were
ETM's In 1983 only 3 of them were.
All this is reason for optimism. So is the growth in Australian services exports 10 per
cent per annimun since 1988/ 89 w~ th the likelihood on current trends of a net surplus this
year. We have recorded national economic growth in every one of the last seventeen quarters.
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And we are looking to positive growth in the eighteenth quarter.
And of course we are becoming more closely integrated with the fastest growing region in
the world. By as early as next year, when our exports to Irdonesia and Malaysia will
each exceed our exports to the United Kingdom, all our top ten markets will be In the
Asia Pacific.
If all these developments give us cause for confidence, so does APEC. In fact few
developments in our recent history are such~ a cause for confidence and optimism as
APEC. The meeting In Osaka recently was an outstanding success. it cemented APEC as the
key regional body for coordinating the development and growth of the Asia-Pacific over
the next century. All APEC members will benefit fromn the liberalisation and facilitation
agenda. Once all the effects have flowed through, the Income of APEC members will
Increase by awound $ 1 trillion.
Australia's real income Is expected to rise by $ 40 billion, and growth of this order can be
expected to generate around half a million new jobs.
For Individual businesses the benefits will be substantial. For instance, differing
standards can add between S and 10 per cent to a new exporters costs. In OsakaIt was
agreed to harnionise and simplify customs procedures on an APEC-wide basis by 2000.
And within the next 10 years the requirement for paper work for key trade and transport
documentation will be entirely eliminated.
In a remarkable step, at Osaka the leaders demonstrated their seriousness of purpose
with down payments on their Uruguay Round commitments.
F or example, Japan accelerated its tariff reductions to the tune of $ 135 million; and
China brought forward to 1998 its WTO accession bid of reducing tariffs on more than
4000 items by an average of 30 per cent,
These were just two of many steps at Osaka which were unthinkable four or five years
ago. When some of them were mooted even 18 months ago, the cynics came out In
force. Seattle, Bogor and Osaka have proved the cynics wrong.
The APEC process has proved a triumph. The Leaders meetings have established a
unique degree of trust and good will and authority. And the decision to establish end
polits, and then move towards them with the weight of that authority arid the force of that
cooperation, gives the process much more momentum than the Uruguay Round and the
WTO could ever achieve.
That is why APEC should give us confidence: it has established enormous momentum in
a very short period of time, shorter than even its most passionate advocates anticipated.
Great as the economic benefits will be, there will hardly be a greater one than the lesson
about the potential for cooperation between countries. As I said after the Bogor
declaration this was not something which necessity demanded we do. It did not have to
be done, Instead, between us we Imagined what we might be capable of doing, and we
are doing It.
And, as I said before, once you create an environment for change and a framework for It,
change begins to grow of itself. Suddenly needs are recognised. Suddenly the solutions
are at hand. The advance on GATT commitments is one example. Another Is the
proposal we put to develop a working group on food security, which Is bound to become a
major Issue as the Asia Pacific grows. Another is our announcement of the APEC
business travel cardl to facilitate regional travel by accredited business people. Another is
the decision of the Leaders meeting to establish a permanent APEC Business Advisory
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One important way of Interpreting the policies and initiatives I am announcing today is
that I want Australia to be APECready: ready to respond to the challenges and to realise
the commercial opportunities of the free trade and investment environment we have In
the making.
The Initiatives In many ways reflect the new phase in our industry policy.
Our reforms In the early and mid 80s concentrated on opening the Australian economy to
the world and to global competition. Subsequent reform concentrated on building a
competitive domestic environment through microeconomic change. Neither process has
ended. They are ongoing.
But now we address the question of what it takes for the individual firm to maximise its
competitiveness, meet the challenges of open markets and take advantage of the
opportunities they present. And a key Is a commitment to innovation.
I can, perhaps, best Illustrate this by two very different industry examples. The first is
BHP, Australia's largest company. A little over a decade ago, BHP Steel was a
predominantly domestic producer threatened to the point of extinction by import
competition. In 1983, BHP, the Government and the unions agreed to a Steel Industry
Plan which saw BHP revolutionise its work practices and undertake almost $ 2 billion
worth of Investments, Including investment in new technology.
In a second phase of reform, since the late 1980s BHP has focussed on securing
productivity gains by improving skills, restructuring awards, total quality management and
encouraging a more customer oriented culture.
The effects have been dramatic and are perhaps best expressed this way: production of
tonnes of steel per person in 1982-83 was 175; in 1987-88 it was 257; last year it was
618. It now has one of the highest export/ production shares of any major steel maker in
the world.
In a sense, BHP Steel's story mirrors the story of Australia's reforms since 1983. And it is
not merely among big companies that versions of the tale are told.
Bllcon Engineering is a Victorian based manufacturer of quality precision metal
componenthy. After operating for 50 years, In 1990 it faced closure, but It re-made itself
through innovation and quality. Bilcon has achieved a 220 per cent turnaround in
profitability and more than 100 per cent employment growth and Bilcon components can
now be found in Europe, Asia and South America.
Good policy like good company management Is a process of continuous improvement.
Australia already has the Ingredients of a dynamic and effective innovation system,
ranging from the tremendous national asset of our excellence In science, to our very
strong propensity to take up new technology, to the surge of our companies including
the crop of export-oriented small and medium enterprises towards best practice and
commitment to quality.
So the policies we announce today are not the first word; and, certainly, nor will they be
the last. They represent steps along the road of continuous improvement.
In fact, today's statement provides for measures that will raise $ 353 million more in
revenue over the next four years than will actually be spent.
In this way, the Government Is making room for a range of other initiatives which also
build on success In other areas.
What we are about today Is good public policy and good government.
The Government has already done much to foster innovation by creating a more open
economy and a better macroeconomic environment where competition is more vibrant
and the rewards of Innovation easier to capture. There have also been significant
Investments In education and training and in our basic research effort.
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Today we take the next steps to strengthen Australia's capacity for innovation by which
we mean: generating ideas
a commercialisIng and using new ideas
linking Australia even more closely into ideas elsewhere In the world
0 encouraging new ideas in business and the work place
accelerating the application of ideas by using the Information super highway, and
promoting access to information technology for all Australians, Including people
with disabilities, those in remote areas, people on low incomes and women.
Put simply, Innovation Is about new products and services and new and better ways of
producing them.
For a company, innovation provides a key to Increased competitiveness.
In today's world, tastes and technology change rapidly information moves fast. And
good ideas are quickly copied or superseded. There is constant pressure to come up with
something new and better.
Success depends on being able to meet the needs of more discerning customers.
The firms that will prosper will be those committed to continuous renewal through
innovation the ones which are enterprising and skilled enough to differentiate their
product and create a distinctive competitive edge.
For the economy as a whole, Innovation lies at the heart of productivity growth. And at
the heart of Innovation lie Ideas. Innovation in putting Ideas to work.
It Is not just the skills of the workforce or management, or the capital they have to use,
but how these are used In ever more productive combinations, which Is the central driver
of economic growth and rising living standards. Fostering an environment which rewards
Innovation Is therefore a powerful lever In raising productivity and growth.
But Imperatives of innovation go beyond the economic. A sophisticated and just society
will be Information rich. It will be enterprising In Its response to new ideas and challenges
and It will utilise technology to its full capabilities. This will ensure the highest quality of
life for all Australians.
There Is no simple model of innovation. It can come from different sources, It can come
from basic scientific research which produces a result capable of commercial
exploitation. It can come from changing the way a workplace is organiised to improve
flexibility and responsiveness to customer needs. It can come from utilising existing
equipment In a novel way, not envisaged by the original manufacturer.
Innovation is a complex process of Interaction and Information transmission which is
strongly Influenced by a nation's culture, particularly Its willingness to rewarr enterprise
and risk taking.
Ideas can emerge from anywhere within such a system. Turning Ideas Into maximum
economic benefit depends primarily on a competitive and responsive private sector and
strong lines of communication between all parts of the system.
These outcomes will only materlalise where Information flows freely within the system.
The most successful firms are those that are highly attuned to the needs of the market,
have access to leading edge technology to convert market needs Into commercial
products or services, and the management and the financial resources to facilitate this
process.
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Australia already has the basis for building an Innovative and enterprising society. For
many reasons among them the quality of our education, our Investment in world class
science and research, our cultural diversity, our capabilities In technology and
engineering, our first class communications we can build an Information rich society
which complements the advantages which our natural resources and environment
provide. I do not say we have reached optimal levels In these. Indeed, I am very much aware that
we need to work on all of them. They are relative strengths, but collectively they provide
a very strong foundation.
So let me summarise the measures we are announcing today.
First, we need to keep generating new ideas.
The Government has chosen seven visionary science projects which will boost our
science infrastructure and link Industry with large scale collaborative research to keep
Australia abreast of the world's most advanced technologies.
The Government will continue its support for industry research and development
through the 160 per cent R& D tax concession, which will be fine tuned to improve
accessibility, management and cost effectiveness. Change will reduce uncertainties
for companies, while closing all opportunities for abuse.
The Government will renew the $ 40 million a year competitive grants scheme for
Industry research and development. The grants target high quality projects by well
managed companies, recognising that high-technology start-ups are the nurseries for
new Industries.
The Government will fund five new Cooperative Research Centres ( CRCs),
bringing the total to 67, and has decided to establish the CRCs as a permanent
program with new CRCs approved on a rolling two year basis. New CRCs are to be
supported in the areas of advanced engineering, sports science and medicine,
intelligent transport systems, textile technology and building and construction
technology. Next year the Government will contribute around $ 140 million to the CRC
program.
The second category of Initiatives will Improve the flow of finance into business
Innovation and our capacity to commerciallse our scientific research.
A new package of measures designed to help finance the Innovation process will be
implemented. An important source of ' patient' or ' growth' capital will be opened up
with the new ability of the banks to provide equity capital to their clients needing to
fund business expansions. Initially the Investments are likely to be directed to firms
with strong growth potential and tumovers between $ 1 million and $ 50 million. New
programs will upgrade the financial management skills of SMEs to prepare them
better for raising debt or equity finance to make them ' investment ready'. Through
an education campaign, the Govemment will also help Increase the understanding of
the Investment community, particularly superannuation trustees, of the
opportunities for profitable Investment In Australian companies.
Three new Innovation Flagship Projects will bring science, Industry and user groups
together to speed the development of new products, processes and services. The
new projects, costing $ 23m, will comprise a mineral technologies pilot plant, a
hydrodynamic testing facility, and a facility for the development of magnetic
resonance in the advanced diagnosis of cancer.
An additional $ 20 million will be spent over four years to encourage greater access
to, and uptake of, new technology by Australian firms. More Technology Support
Centres, which were established to help SMEs with technical advice and access to
R& D facilities and skills training, will be established. Experience with institutions like
Germany's Fraunhoffer, and the Queensland Manufacturing Institute clearly
demuiinotiate the advantage of these centres to Innovative firms.
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A new Research Commercialisation Program will help get the high quality work
which is done in our public sector science agencies into the market. Tile
Government will also encourage the establishment of new companies as business
spin-offs from the research sector.
0 The Government will strengthen Australia's Intellectual property system to better
protect ideas developed in Australia.
A broad-ranging Innovation Culture Program will raise comnmunity awareness of the
Importance of science, engineering, technology and enterprise to Australia's future
economic and social well-being.
Third, the Government will spend $ 17 million over four years to expand International
science and technology links and cooperation and establish an International panel for
CSIRO to help promote Australian science to the world.
* Subject to private sector participation, the Government will provide funding for an
Australian Trading Company In Osaka, Japan, to help firms, particularly In the food
sector, sell to Japanese retail outlets: and, In addition, support stronger collaboration
between Australian companies and R& D agencies and partners overseas through
strategic alliances, joint ventures and consortia.
Fourth, we will stimulate Innovation In business and the work place.
9 Demand for new and better products Is a potent force for Innovation along the supply
chain. The Government will devote $ 6 million to a pilot Leading Edge Customers
program. Major commercial and Government customers, Including BHP, will
participate. The best Australian managers are equal to the best in the world, but there are nlot
enough of the best. Better management will help generate both employment and
productivity. The Government will support a range of management Initiatives In
response to the recent report of David Karpin's Committee on leadership and
management skills.
We will establish a National Centre for the Workplaces of the 21st Century, and a
Benchmarking Information Service to conduct and sponsor research projects and
spread best practice.
The fifth set of measures relates to information technology, probably the dominant force
Already in Australia the national digital broadband network Is being roiled out. By 1999
Teistra will be servicing 4 million homnes and Optus 3 million.
We are seeing Australians embrace the new on-line services In their schools, their work
places and their homes.
The number of Internet users is currently doubling every three months.
And only the United States has more Internet users per capita than Australia.
Of course, this Is not really surprising because Australians have always shown an
enthusiasm to adopt new technologies.
For example, we have the third highest number of personal computers per head in the
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Australia, as a sparsely populated Island continent, has everything to gain from
Instantaneous flows or Information and the capacity to do business anywhere In the world
at our finger tips. The comnmunications revolution also suits our social ambitions our
egalitarian and Inclusive ambitions.
The Government has created a national strategy for Information and communications
services and technologies.
Today's statement takes the strategy a step further, ensuring wide access throughout the
community to information services, developing content for the Information networks and
providing the support ot information technology to Australian Industry.
The starting point for access must be to ensure that all our school children have the
opportunity to benefit from the new Information services and the confidence to use them,
This will be vital to their future. That is why we have been working with the States and
Territories to establish the Education Network Australia ( Ed NA) to deliver a wide range of
services to every school, technical college and university.
It Is also why Teistra and Optus are spending $ 185 mnillon to provide the Infrastructure to
link our schools to Information services. By 1999, 97 per cent of schools will have ISDN
digital links and half of them Broadband links.
The Government appreciates the Importance of assisting the wider community to be part
of this revolution as well. Homes and businesses are the key platform, but community
facilities must be Included, not least as a safety net. Accordingly, we will:
0 Ensure that every public library Is linked to on-line services.
Extend the comnmunity Information network, which provides a network of computers
In public locations, to all States and Territories by the end of 1998.
And provide a national Indigenous radio and news service and extend the Tanami
network.
The greatest benefits to flow from the new technologies will accrue to those countries
which create the content.
In the Government's cultural policy, Creative Nation, we Identified three waves of content
production, namely material for CD-ROMs, on-line services and broadband Interactive
services. The measures Introduced today will help see this momentum carry on to the second
phase, namely on-line services.
Ten million doiiars will be committed to a new program called " Australia's Story" to
digitise culturai material from our national collections and make them availabie on-line.
The ABC wiil be funded to digitIse Its radio and TV science archives to establish an online
science service for schools. Support wiil be provided for curriculum materials
showcasing Australian science, and for career education materials covering science,
engineering and technology-based employment.
As a result, all Australian schools and libraries will have access to a very rich array of
cultural and scientific material.
School chiildren wili be able to read the journals of Captain Cook, or explore Australian
flora or fauna, or view an Arthur Boyd painting by clicking on a few ( cons.
Information technology has Itseif become an Important Australian Industry. The
Government's decision to extend the computer bounty will secure Australian manufacture
of the computer and communications hardware to underpin development of new products
and services, Including software.
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But more broadly, Information technology Is vital to our Industry performance as a
pervasive enabling technology. It is, Itself, a key to Innovation across the range of
Industry sectors. Accordingly, we have decided to;
establish a $ 3.8 million Superhighway Ready Scheme to show how businesses,
Including SMEs, can use network information services.
support the new information system, Tradeblazer, to help Australian firms Identify
opportunities and do business by accessing information through the Internet.
accelerate Australia's effective use of High Performance Computing and
Communications through $ 24 million for broadband communications between
existing supercomputers, including between Australia and Japan. Centres of
excellence In supercomputing applications for example, in environmental modeliing
will be established.
I appreciate that many of these announcements today are of domestic Australian
government policy. However, to those of you visiting us from overseas, I say this all
these measures which encourage the Innovative thrust evident in Australian industry will
make us an even more attractive business partner In the years to came.
Innovation whether at the national level, the Industry level or the level of the firm Is a
matter of continuous creativity, adaptation and change. So Is good policy.
Which Is why over the past three and half years we have kept up the momentum. Not
because we think we wiil ever complete the task: we know you never get to the last
chapter in the story of change.
Not that we should find this too odious a fact of modern life I can't think of anything
more pointless than governing without a mandate for reform.
Our objective has always been not only to institute change, but to create an environment
In which change will breed change, and Indeed a greater capacity for change.
The same goes for our efforts Australia's and those of other nations In the GATT
Round and with APEC. The aim Is to create a world and regional environment in which
the great economic forces we are seeing unleashed, and the great revoiution in
technology and global communications, become waves we can all ride in the 21st
century. The emphasis must be on " all". We will meet less resistance, we will grow less tired of
change If we make it with the collective interest at heart. We will generate more
momentum and we will get more far-reaching reform, If we take up the challenge as a
cooperative enterprise one in which all may engage and from which all can benefit.
What is remarkabie about these times is their potential for cooperation. And what is
remarkable about cooperation is its potential to create more general prosperity, more
opportunities and better lives for more people.
Sceptical as Australians by nature are, I think the last few years have deepened our belief
in the potential of the times in which we live.
We recognise a much greater capacity to trade and constructively engage with our region
and the world, a much greater capacity to grow and manufacture products and services,
to work In more productive, creative and satisfying ways, to use technology in ways which
bring to our lives more knowledge, more security, more satisfaction to innovate in ways
which will bring us closer to realising our personal and collective ambitions.
This statement we have released today will help increase the potential of our times and
deepen our faith in it.
So will this Conference and I thank you for inviting me today.