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Thank you very much, Bob, and may I thank your company very warmly
for its sponsorship of this morning's breakfast. Can I acknowledge
the presence of the Premier of Queensland; the Deputy Premier, Joan
Sheldon; my many other State and Federal Parliamentary colleagues;
Tony Staley, the Federal President of the Liberal Party; Bob Carroll,
the Queensland President of the Liberal Party; many business observers
and participants; members of the diplomatic core and other guests.
I want to pick up a point that Bob made in his words of welcome. And
that is to stress the great importance my Government has placed, since
the day of its election, on the importance of continued communications
with the business community.
I made a very proud boast on the night of the election victory and
that very proud boast was that the Liberal Party was owned by no sectional
interest within the Australian community. The Liberal Party is a creature
of the Australian people and owes its allegiance to all of the Australian
people.
We are not owned by the business community. We're certainly not
owned by the trade union movement. And we're certainly not owned
by any elite, politically correct pressure group. What we are owned
by is a driving ambition to serve the interests of all of the Australian
people.
But having said that, can I emphasise that there are many points of
convergence and there are many areas of policy where the approach
of my Government, the philosophy of the Liberal Party and the philosophy
of the National Party is absolutely consonant with the goals and objectives
of all sections of the business community in Australia.
We agree not on all things but we agree on most things of overriding
importance to the economic future of Australia. And I've encouraged
all the members of my Ministry from day one to develop the closest
communication with the relevant sections of the business community
with which they interact. And I'm delighted that in so many of
those areas - and Bob touched on it this morning in his words of welcome
in the area of communications in which Richard Alston has done an
absolutely outstanding job in an area that's involved a great
deal of change and a great deal of development - that has been very
much to the fore.
I want to sketch a few thoughts with you this morning. I want to talk
about the goals we set ourselves just over two years ago when we came
into government, how we've gone in achieving those goals and
to state some of the goals for the Australian economy that I see ahead
over the next few years.
When we came to power in March of 1996, the biggest challenge we faced
was repairing the fiscal position of our Federal Budget. All political
rhetoric aside, the cold reality was that we were in the red to the
tune of $10.5 billion and that unless something were done about that
we wouldn't be able to do much else. Because if you're steadily
racking up debt, you're steadily going broke, your cash flow
is hesitant, whether you're running a business, you're running
a household or you're running a country, you really can't
do much by way of expansion unless you attend to that.
And we set about attending to it. We were criticised. We were criticised
by some of the economic writers, not by all of them. We were criticised
by the Labor Party. We were criticised by the pressure groups. We
were criticised by some of the media. And we were even criticised
by sections of the business community who said that we'd gone
too far and that really you needed a more moderate, a more modest
approach. And when I look back over that period of two years - and
I particularly set it against the impact of the Asian economic troubles
- I say every night to myself: thank heavens we took the action to
the degree we did, to the measure that we did, in the Budget of 1996.
Because if we had not got that budget deficit under control nothing
else would have been possible. If we had not got that budget deficit
under control we would not be grappling with the reality of some of
the Asian troubles affecting, in a very direct and profound way, Australia's
domestic economy.
Now, I don't pretend that we can argue that there won't
be any flow-through from what has occurred in Asia. But fundamentally
we have protected ourselves against the impact of that downturn because
of the action we took in 1996 in Peter Costello's first Budget.
And I say that defiantly, unqualifiedly, unapologetically and absolutely.
And it is the most important and enduring thing in the whole of the
economic debate in Australia at the present time.
It will cast the longest shadow of all in terms of the economic debate
over the next Federal election. Because our opponents will have to
argue to the business community of Australia. They'll have to
argue to the Australian people that somehow or other, having left
us with a legacy of a $10.5 billion deficit, having argued against
repairing it, having said every single measure we took virtually was
unfair or unnecessary and despite the impact of the Asian economic
troubles and despite having their own activities having already racked
up hundreds of millions, if not, billions of dollars of additional
spending promises, despite all of that and putting all of that together
they're still competent economic managers.
Now the reality is that all of those things can't be true. And
we have attended to what was the fundamental challenge and that was
to get the Budget in order. And it has given us a degree of domestic
stability and security that we haven't known for a long time.
And we do have the lowest inflation rate in the Western world. I know
it's an era of low inflation rates but ours is lower than anybody
else's and that's not a bad achievement. We do have the
lowest housing interest rates since the late 1960s. And we do have
business interest rates that are dramatically lower than what they
were two years ago. We still have a very strong level of private sector
business investment. Our economy is likely to grow this year at the
top of the rate achieved by the member countries of the G7. We have
made inroads into unemployment. We now have the lowest unemployment
rate at the moment that Australia's had for seven years. We would
like to go further because the human face of economic failure and
economic distress is always, of course, unemployment and it remains
a major social challenge for any government.
So our great and first economic goal was to get the Budget back in
order and we have done that and we have done that magnificently. And
it will be a very proud Treasurer who will be able to stand up on
the 13th of May and announce that after two years and after having
inherited a deficit of $10.5 billion, he can announce that the books
of the Commonwealth have been returned to an underlying surplus.
We also set ourselves another great goal. It was a goal that had been
dear to the hearts of many of us over a long period of time. It was
certainly dear to my heart and I know it was dear to Ian McLachlan's
heart because he'd had a few scraps along the way in the good
cause. And it was dear to Peter Reith's heart and it was dear
to Peter Costello's heart. That, of course, was the great historic
cause of industrial relations reform.
And once again we had our critics. And I think one or two of them
could even be found in the business community who said: oh, you've
whimped it out, you haven't gone far enough, you've only
scratched the surface, you've haven't touched the side,
you've just sort of fine-tuned it. Now, of course there were
a few changes made as the legislation passed through the Senate. But
the fundamental integrity of that reform package was maintained to
the very end. And you see the full fruits of just how far we have
gone in reforming the industrial relations system in Australia as
you see working out right at the moment this great historic, I believe,
exciting and defining change which is now occurring on the Australian
waterfront.
As everyone knows, the uncompetitive character of the Australian waterfront,
the bloody-minded attitude of the Australia wharfies is part of the
Australian folk law. There's that lovely story told about the
old lady at Charleville when we she was told that a cyclone was coming
and she better get ready for it and she said: don't worry dear,
the wharfies won't land it.
I mean, it's deeply embedded in the Australian psyche. It's
something that you learn virtually from the day you're born that
we've got inefficient wharves and, of course, it's true.
I won't bore you with too many statistics at breakfasts like
this but for containers, the crane rate across the Australian wharves
is 18 an hour, our Asian competitors it's 30 an hour.
I know a man in the Riverina district of New South Wales who runs
a stock feed business and he competes. He sells into Japan and he's
competing against an American company that exports off the West Coast
of the United States to Yokahama. He's very competitive on everything
except the cost of getting the product from Australia into Japan.
And his American competitor can do it at
55 per cent - 55 per cent of the cost of what is involved in taking
it from Australia to Japan.
And what we did with that legislation was to change the legal monopoly
held by the Maritime Union of Australia. We made it possible for the
recruitment and use of non-union labour. We had no quarrel with members
of the trade union movement. We don't seek to smash any union.
But what we do seek to smash are union monopolies. They are wrong.
They are anti-productivity. They are against the interests of the
Australian community. They have destroyed jobs and they retarded and
deterred investment. And regional and rural Australia, the country
people of Australia, will benefit enormously from a reformed and more
productivity waterfront. I want to applaud and congratulate the courage
of the National Farmers' Federation of Australia for what they
have done.
But this is a defining change, it's a defining reform. It says
to the rest of the world that we are prepared to tackle those things
that have denied Australia's membership of the very top league
of the most productive and competitive nations in the world. Now,
I'm very proud that one of the great reforms that my Government
has introduced has been in the area of industrial relations.
And I want to record my gratitude to Rob Borbidge and to Joan Sheldon,
as the leaders of the Queensland National Liberal Party Government,
who have been absolutely uncompromising and absolutely and totally
supportive of all that we have done in this area. As people who represent
the most decentralised State in Australia, as people who lead a State
which is built very much on provincial cities and provincial towns,
they know the importance of that part of Australia - the importance
of that part of Australia of reform on the waterfront.
We also set ourselves a goal of reducing the costs of doing business
in Australia. That meant pressing ahead with micro-economic reform,
with competition policy. We honoured in full, as Bob acknowledged,
the promise we'd made abut the deregulation of the communications
industry in Australia. And many business surveys, as so many of you
here this morning know, will tell you that after rental costs, one
of the largest overheads of any average business in Australia is,
of course, the cost of communications. And the bonus for small business
out of a deregulated communication system is almost incalculable and
the way in which costs have dramatically fallen. No better illustrated,
I suppose, than something I read in The Economist a few months
ago that stuck in my mind. It said in 1930 it cost something like
$300 a minute to have a telephone call from London to New York. And
now, of course, it costs not more than a dollar or two. And it's
a dramatic illustration of how changes have occurred in that area.
We introduced specific reforms to help small business. We introduced
the capital gains tax rollover relief that means that now if you want
to sell your successful small business and rollover the proceeds of
the sale of that successful small business into the purchase of a
new one, you can do so without incurring any capital gains tax liability
up to the tune of $5 million. Now that represents the honouring of
an important promise that we made before the last election and it's
a huge benefit to small business.
We also promised that we would embark upon the largest privatisation
in Australia's history. And that, of course, was the sale of
one-third of Telstra. What a magnificent success on every front that
has been. And I want to congratulate John Fahey, the Minister for
Finance and the Minister in charge of privatisation, for the flawless
way in which he's handled the privatisation, not only of Telstra
but, indeed, of other assets that the Commonwealth has sold.
It has been a great success. And the thing that encapsulated more
than anything was the fact that 92 per cent, 92 per cent of the employees
of the company bought shares. I mean, they weren't too troubled
by the Labor Party's opposition. They weren't troubled by
the trade union movement's opposition. They liked the idea of
owning shares in the company that employed them. And that's a
magnificent idea, it's a magnificent ideal. And it's the
kind of thing that defines us and makes us different from our political
opponents and it's something that we'll always encourage.
Six hundred and two thousand Australians who've never owned shares
in their lives now own shares as a result of the Telstra float. It
was a booming, thumping, unqualified success which all of us as Liberals
can be proud.
On top of that, we've got $1.25 billion going towards the regeneration
of the Australian environment. And our opponents have got the nerve
to say: isn't it shocking that most of that money is going into
regional Australia. They're complaining about it going into fixing
the salination problems of the Murray Darling Basin. Well, it's
not surprising. You don't have salination problems in Killara
or Woollahra.
Ladies and gentlemen, of course the great environmental challenges
are to be found in the country areas of Australia and that's
why most of the money is going there. And if the Labor Party thinks
that's unfair they ought to set about trying to win a few rural
seats.
But we also set ourselves the task of further reforming the financial
sector. And Peter Costello said in the lead-up to the election that
we needed to do really a stocktake, an update of the Campbell Report
and we did that. And the Wallis Report was brought down and just about
every recommendation made by Wallis has been introduced including
measures that are going to bring far more competition to the Australian
financial system.
They are some of the goals that we set ourselves. And they are goals
that have been achieved on time, in full and in some areas, ahead
of schedule. And I'm very proud that in two short years we have
seen the greatest reform ever Australia's industrial relations
system. We have seen the most spectacular transformation of a budget
deficit towards a budget surplus. We have seen major reforms for small
business. We've seen a hugely successful programme of privatisation.
And in the process we have created a situation where this country
has bought itself protection and insurance against the ill-effects
of the Asian economic downturn.
But that is what we have achieved to date and any dynamic political
party never rests on achievements. It always looks to the future and
sets itself some more goals. And the goals that I have for my Government
over the next few years in the economic area will, of course, be dominated
by the great cause of taxation reform. It is the great area of unresolved
economic business on the Australian national agenda.
We have no hope of realising the full potential of this country in
the Asian-Pacific region as we move into the 21st Century unless we
have the guts to take on the challenge of taxation reform. It is difficult,
it is challenging. There'll be no shortage of people who say
it's too hard and there'll be no shortage of fear campaign
from the Australian Labor Party.
We are prepared to have a go. We are prepared to have a go because
we believe the present taxation system is fundamentally unfair. We
believe the present taxation system is imposing unnecessary burdens
on the Australian business community. We believe that the present
taxation system is out of date. We believe that the present taxation
system breeds resentment and envy because many Australians in the
middle feel that they are carrying all the burden. And a taxation
system that falls into public disrepute and into public contempt is
a taxation system that cries aloud for reform.
Now, I've been up a few hills and in a few valleys so far as
taxation reform is concerned. And as I look around the room there
are a few other people who are in that category. But the experience
of battle gives you knowledge for your future encounters and for future
combat. I've learnt the bit about the failures in the past on
both sides of politics. But there's nobody who takes the future
of our country seriously that in their most honest, private moments
can seriously suggest that we can go on indefinitely with the present
taxation system. It does need reform and we are prepared to embrace
that reform. And it will be historic and significant beyond the experience
of any other economic reform that has been undertaken in the time
that I've been active in politics.
We will need the support and the understanding of the business community
of Australia. I welcome very much the cooperation that has already
occurred. The constant contact between representatives of the business
community and my Government over the last few months - I want that
to go on. At the end of the day we will produce a plan that is fair,
that will encourage competition that business will find will encourage
investment, the Australian public will embrace as being fair and reasonable.
And it is a very, very important cause and it is one that I encourage
you very, very strongly to support.
We must, of course, press ahead with the process of fiscal consolidation.
Having done the hard yards and made the gains we have no intention
of dissipating them in profligate and unnecessary government spending.
But that doesn't mean that there isn't a social bonus out
of fiscal restraint. I made that observation yesterday when I announced
the contribution of $65 million out of the Federation Fund towards
the light rail proposal. The visionary concept of Rob Borbidge and
Joan Sheldon that was announced in November of last year here in Brisbane.
There is a social bonus if you get your economic house in order. And
that social bonus will be directed in areas of greatest return and
areas of greatest need.
But I have one or two other goals that I would like to see realised
as we move into the next century. One of those goals is to see Australia
become the second great financial centre of the Asia-Pacific region
after Tokyo. I believe that more and more people will see Australia,
the cities of Australia, the financial centres of Australia, as being
the place to locate their regional headquarters, as being the major
financial area after Tokyo.
We have an almost irresistible combination of attractions. We have
a strong economy. We have a stable political system. We have a benign
and friendly environment. We have a coherent legal system readily
understood. We speak the English language. And we have a banking system
which is sound and stable, prudentially regulated and regarded throughout
the world as being of high integrity. Now, you can't get a better
combination. You can't get a better brace of attractive conditions
for a financial centre than that. And one of the things to which I
commit my Government into the next century is to build Australia as
a great financial centre for the region. And there is no reason in
the world why by the year 2010 there can't be four great financial
centres of the world: there can't be London and New York and
Tokyo and Australia. And I'll leave it to the competitive spirit
of the financial community of Australia to decide which city will
be the financial capital of Australia.
Who am I to spoil a nice breakfast by saying anything about that.
Good luck to all of them. And that's one of the great advantages
of the Australian federation, you can have a bit of competition. Queensland,
incidentally, led the way in many areas of taxation reform. If it
hadn't been for Queensland we would never have, I think, as early
in the piece, we would never have abolished probate and succession
duties. So Queensland has an enviable record in setting the pace in
some of these areas. And they never let us forget and good luck to
them.
But, ladies and gentlemen, they are the goals, some of the goals that
my Government has. And I speak to you this morning with a mixture
of emotions, all very positive. I speak to you with the emotion of
pride that in two years we have done great things for the Australian
economy. We have given it a low inflation, low interest rate, high
investment environment. We have protected it against the worst effects
of the Asian economic troubles.
We have had some spectacular successes against all odds. Robert Hill's
triumph at Kyoto at the end of last year in relation to greenhouse
gases is one of them. We have given, through the industry policy statement
I delivered on the 8th of December last year and to which John Moore
made such a magnificent contribution, we have given a greater sense
of direction and a greater sense of certainty to the business community
of Australia. We have made some intelligently pragmatic decisions
in the industry policy area. This country has a very low tariff regime
by comparison with the rest of the world. And the decisions that we
took in the motor vehicle industry and the textile, clothing and footwear
industries are decisions that I will defend and support anywhere in
this country. Because they are decisions that have already returned
a lot in relation to the investment that has been made in those industries.
But that is what we have achieved in the past and I'm very proud
of all of those things. I'm very grateful that I have such a
strong team of economic Ministers. They are an outstanding group of
people. All of them for what they have achieved. Peter Costello has
done a superb job as the Treasurer of this country. I know how hard
that job is. I had it for a long time. It's a lousy job on occasions.
And he's done it very well and I thank him for it. And I thank
John Fahey, the Finance Minister, who supported him so well. And I've
spoken of the contribution that Peter Reith and Richard Alston and
others have made to our economic goals.
So I'm grateful as well as proud. But most important of all,
I'm excited about what lies ahead. In politics you keep renewing