E&OE........................................................................................................
.... I do want to say a number of things tonight about the economic
and the strategic agenda that my government has, and I want to touch
upon some of the issues that no doubt you have touched upon during
your conference, but it is also appropriate that I say one or two
words about the very disturbing developments within Indonesia, because
the relationship between Australia and Indonesia is one of tremendous
significance to the future of our country.
In direct economic terms trade with Indonesia only accounts for
about two and a half per cent of Australia's total world trade,
but there's little doubt that the relationship between Australia
and what is our nearest neighbour, and a very large country, the
sixth most populous country in the world, is of enormous significance
to our strategic future. We view what is occurring in Indonesia
as a matter of very, very deep concern. It is of course for the
people of Indonesia to resolve the identity of the government of
Indonesia. It is not for the head of government in Australia, or
representatives of the Australian government to give public advice
about who should be in charge of foreign countries. It is our role
to be a helpful neighbour and a good friend in a time of difficulty
and Australia has certainly been that.
One of the things that I resolved to do when I became Prime Minister
was to ensure that there was a proper balance in Australia's
foreign relations between the nations of the Asia-Pacific, the nations
of Europe and North America. I thought, without being ultra-critical
of my predecessor, that there was perhaps too much of an obsession
with what I described as an Asia only approach by the former government.
And I set out in no way to reduce our links with the Asia-Pacific
region, but to supplement them by consolidating our links with other
parts of the world. But one of the things that we were determined
to do within the embrace of that approach was to continue very close
relations with Indonesia. And in her time of great economic difficulty,
Australia has been a very good friend. Along with Japan, Australia
is the only country in the world which has contributed to the three
IMF rescue packages in the Asia-Pacific region. We've also
provided other assistance to Indonesia. Because it is in our direct
national interest to do so. And the amount of difficulty that the
adjustment required of Indonesia by the International Monetary Fund
is imposing upon the people of that country, particularly the poor
of that nation, is a matter of concern.
But in looking at what is unfolding in Indonesia we shouldn't
lose sight of the fact that that country has made remarkable strides
over the past twenty or thirty years. The level of absolute poverty
in Indonesia has been dramatically reduced over that period of time
and the economic performance of the country has improved enormously.
It is going through an enormous amount of pain and suffering at
present, and I think it needs as a people the understanding and
the sympathy and the practical response of the Australian nation.
But by the same token we must recognise that the forces of individual
liberty and the desire for political freedom are very strong forces
within any nation and in the end as we know from our own experience,
they are forces that can never be kept back and in the end they
must be recognised and given effect to. And I just want to say to
you that naturally the Australian government will follow very closely
all of the events as they unfold. We have a priority of course in
terms of the safety of Australian citizens in Indonesia, we want
to remain a good and enduring friend of the Indonesian people, and
that is something that, a view we hold irrespective of the identity
of those who may be in charge of that country from time to time.
Your conference has been ladies and gentlemen about the challenge
of leadership, and I thought coming up in the plane this afternoon,
that I would share a few thoughts with you about how I see the role
of political leadership, particularly in the economic policy area.
And drawing upon some of the experiences that I've had in the
now almost 24 years that I've been a member of the national
parliament. I've seen over that period of time a number of
major challenges for change and reform and forward looking attitudes
in the economic management of our country.
There have been many big changes in the way in which the Australian
economy operates over the past quarter of a century, and when one
reflects on what the Australian economy was like in 1974 and compare
it with what the Australian economy is now, there have been some
very dramatic changes. Of course 1974 was the beginning of the enormous
change that the Australian economy experienced when we moved away
from that period of an almost unending boom that followed the early
years of the 1950s, through to the onset of the oil shock and all
the other world economic turbulence in the early 1970s.
And I developed after a few years in Parliament a view that there
are a number of fundamental areas of reform that were needed to
be undertaken and would require political leadership on both sides
of Australian politics to achieve. And I think it is fair to say
that we should give the system, and this includes both sides of
politics, and it also includes the contribution of the business
community of Australia, we should give the system some credit for
having achieved a remarkable amount of reform over that period of
time. When we think of how regulated and cloistered the Australian
financial system was in the middle 1970s. When then had, when I
was Treasurer, the establishment of the Campbell Committee of enquiry
into the financial system. We had some of the reforms recommended
by that Committee implemented by the former Coalition government,
but a large number of them also implemented by the Labor government
that replaced the Fraser government in 1983. And I might say those
reforms were implemented by the then Treasurer Mr Keating with the
enthusiastic bipartisan support of the then Opposition. And I'm
very proud of the fact that in Opposition between 1983 and 1996
I was able, and a number of my colleagues were able in the various
roles that we occupied, we were able to argue for and articulate
from Opposition the need for economic reform and to play a very
constructive role with those in the former Labor government who
were also interested in economic reform.
Mr Keating found it easier to implement financial deregulation
because he had our assistance. The former Labor government found
it easy to privatise the Commonwealth Bank and the old Australian
Airlines, because he had our assistance. And it's fair to say
that in the political process, Oppositions have responsibility as
well as governments. Now that I think when you look back over that
period of time I think we can all give ourselves some credit for
the tremendous strides that were made in the area of financial deregulation.
Moving to the area of industry protection which has long been an
area of some controversy within economic and political debate in
Australia, it's fair to say that the Australian economy now
is an infinitely more open and less protected economy than what
it was in the 1970s. And although I acknowledge that there can be
a variety of views about the level of tariff protection in particular
industries, and I would be the first to acknowledge that there is
no such thing literally speaking as a level playing field anywhere
in the world, and that there is no such thing as perfect free trade
anywhere in the world, and every nation has its own blind spots
when it comes to particular industries and particular areas of economic
activity. We have as a nation become a lot more open and I think
we are the better and we are the stronger for that. And the programme
of tariff reform that was undertaken during the 1980s has been of
enormous benefit to the Australian economy and to the Australian
people.
Of course an area with which I strongly identified myself a few
years ago, indeed for many of the years that I was in Opposition,
was the cause of industrial relations reform. And I think of all
of the areas of institutional rigidity that was still largely left
untouched when the Coalition government was elected in 1996, industrial
relations was the outstanding example. And a number of us in Opposition,
and I know many people in this audience, also played a role in it,
fought a very long and ultimately successful campaign to change
the mindset not only of the Australian community but also of sections
of the business community towards the industrial relations system
of this country.
And we now have a system which is fundamentally very different
from that which obtained twenty years ago. We have a system which
is built very substantially on the notion of direct relations between
employers and employees at the workplace level. It is not a system
which is built on a rejection of trade unions, it is not a system
which says that people should not have the absolute right to join
or not to join a trade union. Rather it is a system that recognises
that the association at a workplace level between employers and
employees is infinitely more important than membership of the institutions
on both sides of labour and of capital and I think as the years
go by the changes in that industrial relations area will be seen
to have been of enormous benefit to our country.
That of course allows me to say something about the issue of waterfront
reform. I don't think there is any area of industrial relations
activity which has been more in need of fundamental change and reform
than the Australian waterfront. Much has been said and written about
the waterfront over the past few weeks, and much water is yet to
flow under the bridge. Let me simply say to you that the government
remains absolutely and totally committed to the cause of waterfront
reform. And I also want to take the opportunity as Prime Minister
of warmly congratulating and expressing my total support for the
role that my Industrial Relations Minister, Peter Reith, has played
in conducting the government's case and prosecuting the government's
cause in the area of industrial relations reform.
Let me also say that our goal has been to reform the Australian
waterfront and make it more efficient because that is in Australia's
national interest. And we have also had as a goal the removal of
compulsory unionism on the Australian waterfront because we also
regard that as being in Australia's national interest. It has
never been our goal, despite what some have said, to destroy the
Maritime Union of Australia. It has never been our goal to remove
unionists from the Australian waterfront. And by any measure, and
I won't bore you with statistics tonight, the Australian waterfront's
current state demands fundamental reform. And we intend to stick
with it, we intend to go the distance to achieve that very important
and that very fundamental reform.
There are of course one or two areas where reform is yet to occur.
And I think there is little doubt that the area which is most in
need of reform and which is an area that I have frequently described
as comprising the greatest area of unfinished economic reform business
in Australia is of course the cause of reforming Australia's
taxation system.
Over the years a number of attempts have been made. I've been
in it long enough to sort of be open enough to reflect on the attempts
that have been made on both sides of politics over the last 18 or
20 years to bring about change. I had a go or two when I was Treasurer
in the former Coalition government, and didn't succeed. Mr
Keating had a go when he was Treasurer in the Hawke government,
and I must say that he received a great deal of support from me
as the Opposition economic spokesman, but he was unsuccessful. And
then John Hewson as Leader of the Opposition, quite courageously
and with a great deal of support from many in the community also
attempted it from Opposition before the 1993 election. And on that
occasion Mr Keating ran a very negative and destructive, but in
political terms albeit short-term political terms, he ran a very
successful negative campaign and destroyed Fightback and was re-elected
in 1993.
We now have what I regard as the last great opportunity in the
foreseeable future to reform Australia's taxation system. If
we fluff it on this occasion, if it is defeated on this occasion
by essentially negative, short-sighted attitudes, then I don't
think the opportunity is going to come our way again for a number
of years. The circumstances at the moment for fundamental taxation
reform are as good as they will ever be. We have a very low rate
of inflation, we have quite solid economic growth, we have a greater
recognition within the Australian community of the essential unfairness
of the present system and we also have I think a more mature approach
from the spokesmen representing the welfare lobby than we've
had in recent years. And I want to congratulate the business community,
I particularly want to congratulate John Ralph and Stan Wallis and
many others here tonight who've played such a very constructive
role in trying to represent the legitimate view of business to the
government about the need for reform.
At the end of the day it will fall to my government and a small
group of senior ministers within the government to decide the final
shape of the package. But we have been greatly aided by what you've
put to us and we've been greatly encouraged by the way in which
you have sought to establish a constructive understanding with the
welfare sector. Because fairness and equity is very important. You
won't sell to the Australian people fundamental tax reform
unless they believe it is fundamentally fair. In all the years I've
been in politics, I've had a very strong view that you can
sell fundamental reform, you can persuade the Australian people
of the need to change something that they've had for a long
time if you satisfy two conditions. The first of those conditions
is that you've got to persuade them that it's in Australia's
interests, because at the end of the day they are a patriotic lot
and they do worry about the future of the country. And the second
thing you've got to do is you've got to persuade them
that it's fair. In other words that those who need protection
are protected, and that those who've been getting away with
rorting the system through whatever device are prevented by the
change from doing so into the future. And they are the two conditions.
And I believe that we can achieve both of those objectives.
I have no doubt that the case in the national interest for reforming
the tax system is overwhelming. A new taxation system would of course
greatly boost the prospect of Australian exports. A new taxation
system would even-out the bumps that now exist in our totally outdated
wholesale taxation system. A taxation system that reforms many of
the mechanisms that now affect business operations would also be
of general benefit to the business community. A reform that recognises
that in 1956 when I left school you were only paying the top marginal
rate of tax if you earnt something like 18 times average weekly
earnings, and by the year 2000 if we leave the current system untouched,
you'll be paying the top marginal rate of tax at one and a
quarter times average weekly earnings, and that is a taxation system
that cries aloud for fundamental reform.
But in the process of making the change and introducing the reform
we must of course ensure that there is a proper level of protection
for the less fortunate in our community. And I'm determined
that the test of fairness will not only be met, but it will be passed
with flying colours. And can I say ladies and gentlemen without
wishing on an occasion like this to introduce too much of a discordant
note, how tremendously disappointed I am that the Leader of the
Opposition last night in his Budget reply chose to take such a negative
approach. Chose to say to the Australian people, even if you re-elect
the Coalition government on the basis of the Coalition government
has unveiled its tax reform plan at the next election, which is
our intention, even if you do that, we in the Opposition will not
accept that verdict and we will do everything we can to prevent
the introduction of tax reform.
I think that is a very negative attitude. It is if I may say so
in stark contrast to the rather more constructive approach that
we in Opposition took to a number of important Labor government
measures which could never have become law without our support.
And I'm often reminded of the fact that if the Liberal and
National parties in Opposition had taken a blindly negative approach
to the then Labor government's plans to privatise the Commonwealth
Bank and to privatise Australian Airlines, neither of those events
would have occurred, but in the process we would have traded-in
and pawned our own credibility. And credibility in politics, as
in life generally, is a very important commodity. So I do express
my very deep disappointment that such a negative attitude should
have been taken because the cause of taxation reform is something
that goes very directly to the national economic interest. Taxation
reform is needed to make Australia a stronger, more competitive
and a better country in which to do business into the 21st century.
And there are leadership obligations on both sides of politics when
it comes to something as fundamental as taxation reform.
Can I just say one or two other things before I conclude. I can't
of course sit down without saying something about the Budget that
Peter Costello brought down on Tuesday night. I'm immensely
proud of the fact that in just over two years we have brought around
a quite remarkable fiscal turnaround. One of the most remarkable
things about what was projected in the Budget last Tuesday night
is that back in 1995 the debt to GDP ratio taking into account federal
government debt was about 20 per cent. Twenty per cent of gross
domestic product. On current projections, and on the assumption
that we allow as I put it, the men and women of Australia to buy
the remaining two-thirds of Telstra, on that basis by the year 2000-2001,
we will have reduced the federal government debt of Australia from
20 per cent in 1995 to one and a half per cent only of gross domestic
product by the year 2000-2001.
And we will be able to say to the people of Australia, particularly
to the younger generations of Australians, that one of the greatest
legacies we have given you is the legacy of living in a comparatively
debt free nation. And I don't think it would be in the experience
of anybody in this room that such a low level of federal government
debt would have existed. And it does represent a huge turn-around,
and the great bulk of that turn-around has been achieved through
the device of expenditure restraint. Because for the third budget
in a row, the Treasurer was able to say that there was no increase
in income tax, there was no increase in company tax, there was no
increase in excise duty, and there was no increase in sales tax.
So we are very proud of that particular achievement.
And all of this was done according to a plan. We knew that we had
to take some difficult decisions in our first budget. We knew that
we had to lay the groundwork for that fiscal turn-around in that
first budget, and I'm very glad indeed that those decisions
were undertaken in 1996 because, as the Secretary to the Treasury
said to me on Budget night, this Budget has been made possible by
the Budget that the government brought down in 1996 when some of
the many difficult expenditure decisions were undertaken. And can
I also in that context take the opportunity of
congratulating in this gathering the work that Peter Costello as
Treasurer has done over the last two and a quarter years. I think
he's done the job with flair, I think he's delivered the
Budget with flair, and I think in every sense of the word he's
a person who is very much in full control of the responsibilities
that I have given to him as Federal Treasurer.
My final word ladies and gentlemen is about government-business
relations. When I was elected Prime Minister, or perhaps on election
night in 1996 when I knew that I was going to be sworn in as Prime
Minister, I said that one of the things that I valued most was the
fact that the Party I led was owned by no section of the Australian
community. That the Liberal Party was a Party composed of men and
women from all walks of life and supported by Australians from all
walks of life. And that has remained the case in the time that we've
been in government. We have very much tried to govern for the mainstream.
We've tried to look to and achieve the national interest, rather
than a sectional interest.
But that doesn't mean that we don't have close links
with the business community. We share many of the goals of the business
community of Australia. We all believe in decent capitalism. We
all believe in the profit motive, we all believe in investment,
we all believe in private enterprise. We all believe that governments
should stick to the things that are the real responsibility of the
government, and leave commercial undertakings and commercial decision-making
to people who are best able to undertake them. The longer I stay
in politics the more persuaded I am that governments are very bad
at trying to run businesses. And the more persuaded I am that there
are skills required for business which are handy in government but
not necessarily transferable and that there are also skills required
in government which might be handy in business but are also not
necessarily totally transferable. They are different disciplines,
they intersect, they overlap, they have a lot in common. And what
I have tried to do is to build over the past two and a quarter years
a good and open relationship with the business community. We don't
always agree. We accept that from time to time you'll criticise
us. You will accept that from time to time we may express dissatisfaction
with some of the things that business does. I think it is very important
on big national economic issues that there be as many spokesmen
for the business community out there arguing the cause as there
are spokesmen for contrary points of view out there arguing the
cause. Because capturing the hearts and minds of people on the need
for economic change and industrial and other reforms is a 24 hour
challenge. And in living as we do in a media driven and a media
dominated society in so many ways, that particular part of the equation
is tremendously important.
But I value very much the links that my government has built with
the business community. I value enormously the contribution of the
Institute of Company Directors. I think we do have a very direct
and open relationship. It's a relationship that I hope all
of us will see in the future as being one that must be moulded to
the national interest and that on all occasions we will work as
best we can to achieve those goals.
I congratulate you on having such a successful conference. I thank
you very warmly for asking me to come tonight. It's a great
pleasure to be once again in your company.
Thank you.
[Ends]