Fax from 19 September 1996
TRANSCRIPT OF THE PRIME MINISTER,
THE HON. JOHN HOWARD MW
LUNCH HOSTED BY LEADING JAPANESE BUSINESS
ORGANISATIONS, TOKYO
IMO E 00
I am very pleased to be here today addressing major representatives of Japanese
business including some old friends.
The Australia-Japan rpartnershiD
A gathering like this underscores for me the special character of the Australia-
Japan association. It is a remnaflcble partnership. And I would like to
acknowledge before this audience the role of the private sector in laying the
foundations of this partnership.
Both Australia and Japan owe a great debt to the vision and commitment of the
Japanese business executives and their Australian counterparts who
pioneered the resources trade in the decades after World War 1I.
They laid the foundations of a trading relationship that fueled Japan's economic
miracle in the 1960s and 1970s. It is a relationship that-is stfil vitally important
to Japan's continued growth and to Australia's prosperity.
It is also a relationship that has had a sigificance beyond its bilateral character.
Because of its importance to Japan as the largest economy in the region, its
dimensions and its reliability, this trading relationship is one of the great sinews
of economic interdependence in the region as a whole. Faro m19/ 09/ 96 17: 46 Pg: 3
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Austr-flia trades more with Japan than we do with any other country. In 1995, a
quarter of Anstrnilia's merchandise exports and a fifth of our services exports
went to Japan.
From Japan's point of view, we are its fourth largest source of imports. We are
its largest supplier of energy apart from oil.
Our economic relationship has now become much more diverse. Australia is
exporting more services, manufactures and processed foodstuffs to Japan as the
Japanese market has opened up. As exports of manufactures and services grow,
small businesses are becoming increasingly engaged.
Japan is the third largest foreign investor in Australia with a current stock
worth around $ 50 billion. It may surprise some of you to hear that nearly
per cent of Japanese inveslunent flows to Australia in the past three -years have
been to the manufacturing sector. In 1995, Australia was the fourth largest
destination in the world for Japan's foreign direct investmnt
Our relationship of course, Ladies and Gentlemen, goes well beyond the
economic. Australia and Japan increasingly have similar strategic interests.
Both of us are inextricably tied economically and strategically to Asia. But
neither of us takes a narrow or inward-looking view of our region or one that
excludes others.
Japan and Australia both see their wider international links as bringing
something positive to the region. We both see our relationships with the United
States, in particular, as vital to the economic growth and to the stability of our
region. Hence, we both see APEC as a key framework for cooperation-
We also share an interest in the closest possible engagement of China in
regional and global affairs as a responsible partner. Hence, we would both
like to see China become a member of the World Trade Organisation on
reasonable terns.
The scale of human contact between our societies is now very large. Nearly
800,000 Japanese tourists visited in 1995. In the same year, nearly 80,000
Australians came to Japan. Six thousand Japanese students are in Australia,
while 1,000 Australians are studying in Japan.
So out of a trading relationship begun in more difficult times has grown a
strong economic and strategic partnership between our two countries and a
genuine friendship between our communities.
The purpose of my -visit is to assure you that my Government is strongly
committed to advancing Australia's partnership and friendship with Japan. I
see a dynamic partnership as serving Australia's and Japan's needs well into
the next century. I see it also as makcing a crucial contribution to the prosperity
and the stability of our region. Farxft 19/ 09/ 96 17: 46 Pg: 4
The new Australian Government
I am conscious Mrt Chairman that a change of government after 13 years will
inevitably arouse interest. Let me say that my Giovernment does have different
views on some issues from our predecessors. And I want to say something
about that in a minute.
But first I want to reiterate that I and my Government welcome the progress
made in the relationship with Japan under Mr Keating's government and under
preceding Australian governments. Successive Australian governments from
both sides of politics have made a contribution to building Japan and
Austi-alia' s relationship.
The foundation stone of the modem economic relationship between Australia
an~ d Japan was of course put down by the late Sir John McEwen as Deputy
Prime Minister in a Liberal/ Country' Party Government and the then Japanese
Foreign Minister, Mr Kihi, in the formulation of the Australia-Japan
Commerce Agreement in 1957-
1 would like to say somethig about the differnt policy perspectives of the new
Government because they are important and I believe will benefit our
partnership with Japan especially as they will make Australia's economy more
competitive and capable of sustaining growth in the longer term,
Australia's economy:, the challene
The key policy questions facing both Australia and Japan along with many
other developed economies are similar. Those questions include how best to
generate sustainable growth; how far should government intervene in the
economy, and how to lower unemployment*
Australia and Japan also need to ask how we can best promote continued
growth in our region. In the case of Japan, it is good news for all of us that the
Japanese economy is now beginning to grow more strongly.
My government in March inherited an economny that was growing well with
relatively low inflatiou-It grew by over 4 per cent in 1995-96 and is expected
to continue to grow by about 3 V2pzer cent in the current fispal year.
During the next eighteen months Australia is expectcd to grow faster thani any
member of the 07 and to be one of the half-dozen fastest growing countries i
the OECD. Inflation is low and should. fall to round 2 per cent by the middle
of next year.
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But my Gonvemment also inherited an economy with some pressing structural
problems. The most important were the problem of national savings, the lack
of flexibility and competitiveness of Australia's labour market, and the
constraints on small business,
If these problems are not addressed growth in Australia ' will not reach its full
potential, and we won't be able to reduce unemployment.
And these are the problems therefore that my Government's reform agenda
will tackle.
The role of government
Central to my approach is our view that government works best when it
supports people and business rather than ties them down in regulations and
bureaucracy. Government still has an important role to play at a strategic level. My
Government is certainly not driven by any blind ideological imperative to slash
the role of government for its own sake.
But the best contribution government can make is to lay down macro-economic
and micro-economic policies which create the conditions for business to thrive.
he budget
With this in mind, our first priority has been to get the budget in order.
We have cut $ 3.9 billion from the underlying deficit in this financial year and
cut $ 7.2 billion by 1997-98, bringing the budget into underlying surplus in
1998-99.
Government outlays will drop nearly 2 per cent from 27.2 per cent of GDP
last year to 25.4 per cent in 1997-99, the lowest level since 1989-90.
Increased national saving will help find investment, reduce pressure on the
current account deficit and interest rates, and enable Australia to sustain higher
rates of economic and employment growth.
My Government has also committed itself to a number of measures which will
make fiscal and monetary policy more transparent, This will improve the
quality of policy formulation and the degree of accountability of the
Govcrnment's performance.
We will legislate for a Charter of Budget Honesty. Amongst other things the
Charter will require the government of the day to publish an official budget
update at the beginning of each federal election campaign. 19/ 69/ 96 17: 46 Pg: 6
We have also announced an agreement with the Reserve Bank of Australia
which reinforces the Bank's independence and the shared commitment of the
Government and the Bank to an underlying inflation target of 2 to 3 per cent,
on average, over the economic cycle.
Industrial relations
My Government importantly is also committed to reforming Australia's
industrial relations system.
Our agenda for industtial relations reform is far-reaching and responsible. It
builds on the shift towards enterprise bargaining1 which business and unions
have supported. It will produce a more efficient and a more flexible labour
market. Under a new system of workplace agreements, employers and employees will
be able to enter into agreements on either an individual or collective basis.
Wages and conditions will be determined as far as possible in the workplace,
within a safety -net of minimum conditions and without the involvement of
uniions unless the employees want them involvedL
Inesponsible industrial action will also be minimised by guaranteeing genuine
freedom of choice for employees as to whether they belong to a union.
Penalties against unlawful industrial artion will be bolstered, including for
industrial action against companies not directly involved in a dispute.
The Australian community, understands the need for change in labour relations.
People understand the costs to the economy of uncompetitive labour practices.
Practical reform in industrial relations is absolutely necessary if we are to
increase job creation and reduce unemployment. Higher productivity will lift
economic growth and create new economic opportunities for all businesses,
large and small.
I am confident that our policies will engender more cooperation between
employers and employees and a greater sense of shared interest in the success
of particular enterprises.
Improving competitgveptess 2nd reducing re3LlatiOns
My Government is also committed to mak~ ing Australia's transport,
communications and other infrastucture more internationally competitive.
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A nntional elcctricity market wvill be established in which power retailers can
compete. The remaining barriers to free and fair trade between the states of
Australia in nata4 gas will be dismantled. These steps will greatly improve
the prospects for ventures in mining and minerals processing in remote and
regional Australia.
We will sell one third of Tcistra, our national telecomnmunications carrier. We
will privatise federal airports through the sale of long-term leases. And we will
encourage greater private participation in rail services.
A task force is currently reviewing business regulations in order to fulfill my
Government's commitment to reduce red tape for small business by 50 per cent
in our first term in office.
My government recently established an independent review of Australia's
financial system to ensure that our regulatory arrangements are as modemn and
cost-effective as possible.
I believe that these reforms will reduce the costs of doing business in Australia.
They will make Australia more competitive and a more attractive partner for
Japan and for your companies and your institutions.
Last week, my Government announced a Supermarket to Asia CounciL This
Council. which I shall chair includes sectorai ministers, farmers, the transport
industry, the food-processing industry, the packaging industry, the distribution
and retail industry, oir national scientific research body, and a representative of
the union movement.
Its aim is to remove unnecessary regulations and generally improve the
effectiveness of the food export chain from production on the Australian farm
through to distribution into the Asian retail outlet
Japan has undertaken significant steps to open its markets. This has led to
increased market opportunities for countries like Australia in areas such as
housing and construction, processed food and information technology.
Australia is conscious that it will only succeed in taking advantage of new
openings if we are a ful~ ly competitive nation. But there are still areas where
we would like to see further liberalisation and deregulation in Japan, including
in the agricultural sector.
Finally and importantly. we in Australia know that living cheek-by-jowl with
the fastest growing economic region in the world is no automatic guarantee of
economic prosperity, success or market access. We must compete effectively
in order to take advantage of that geographic prornixity. Fa rom19/ 09/ 96 17: 46 Pg: 8
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AklEC I mentioned earlier the importance to both A'uvTalia and Japan of doing what
they can to support continued growth in the wider region as well as at home.
Last year at the Osaka APEC leaders' meeting, Japan demonstrated her
credentials to regional economic leadership. That meeting set out a blueprint
for implementing the goal leaders had set the year before in Bogor.-free and
open trade and investment in the Asia-Pacific by 2010/ 2020-
My Government is committed to APEC and its free-trade goal. I look forward
to discussing the forthcomi~ ng leaders meeting with Mr Hashimoto tomorrow
and to exploring how I can cooperate with him in consolidatinig APEC.
The fact is that economic srowth in East Asia beginning with Japan's own
spectacular experience in the 1960s has relied to large extent on finding open
markets for its exports. We cannot simply assume that markets wilt. become
more open or even stay as open as they are now.
There will always be pressures in Australia, Japan and elsewhere to slow the
pace of liberalisation and deregulation. I understand those pressures and the
social and political considerations behind them
APEC offers the opportunity to help balance the short-term costs of domestic
structural adjustment by improving access to export markets and by easing the
burden on consu~ mers. APEC also helps maximise the benefits of liberalisation.
The greater the number of economies that liberalise together, the greater the
beneit to each-
But for the process to work it is important that all APEC economies contribute
to liberalisation and that all sectors of the economy are involved.
As you know, each APEC couny must produce an individual action plan
setting out how it intends to achieve the free-trade goal. These plans, I believe,
must include substantial trade liberalising and facilitating measures that will
bring concrete benefits to our business communities. They should go beyond
existing Uruguay Round commitments.
I think business should play more of a role in evaluating the progress of a-ade
liberalisation in APEC. One practical way of doin this would be for the
A2PEC Business Advisory Council to provide an independent report to APEC
m Isters on the individual action plans.
With substantial progress towards the Bogor target, APEC leaders can credibly
urge the World Trade Organisation to agree on goals at its inaugural ministerial
meeting in Singapore in December that will generate a renewed sense of
purpose in global trade negotiations. Fafr~ i19/ 69/ 96 17: 46 Pg: 9
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This is important to help prevent the world from frapnenting into in protective
regional trading 3rrangements. Neither Japan nor Australia is part of a trading
bloc. We share the very strongest interest in the success of APEC and in the
strengthening of the WTO.
APEC members could also look at steps to accelerate liberalisation. At the
recent APEC energy ministers' meeting in Sydney I proposed that APEC
economies consider achieving free trade in primary energy by, for example, the
year 2000. Bringing forward the target for free trade in primary energy would
boost regional growth and make it much easier to find the enormous private
sector funding needed to build the required infrastructure,
Conclusion Ladies and gentlemen
I have appreciated very much your hospitality today. On my first visit to Japan
as Prime Minister I am indeed privileged to have had the opportunity to speak
to you.
I chose to come to Japan in the first seven months of my Prime Ministership
quite deliberately.
I did it to demonstrate the ongoing commirnent of my government and of the
people of Australia to the strong relationship, the deep and mature relationship,
the remarkable relationship that does exist between Japan and the Japanese
people and Australia and the Australian people.
I wanted to convey to you some of the messages both about continuity and
about change.
There is continuity about the commitment of Australia and the Australian
people to our relationship with your country and your people. There is also
inevitably, and naturally and properly, in the democratic process an agenda for
change now that a new government has been elected in Australia.
I want to say to you that I bring the goodwill of the government of Australia, I
bring the goodwill of the people of Australia, and I want to conclude by again
thanking those people in the business community here in Japan and back home
in Australia who from very small beginnings have built a great economic
partnership a partnership built on mutual advantage and co-operation, and a
partnership that has brought the two nations and the peoples of those two
nations very close as we move together towards the next millenium. 19/ 09/ 96 17: 46 Pg: