E&OE.....................................................................................................................
Thank you Michael and to my Parliamentary colleagues, ladies and
gentlemen. I want to again thank the New South Wales Division for
organising this post-budget gathering, to give me an opportunity
in my home town and not very far from, if the curtains were open
I could wave to the family, but to say a few things about the Budget
and to say a few things about the current political context.
It is true that it was a good Budget and I think all of the nice
things that have been said about it were thoroughly deserved and
any of the ungracious things that were said about it were not merited
and not deserved because it is the first time in eight years that
we have an underlying surplus. It is true that we have achieved
in two years a turn around on $13 billion from a deficit of $10.5
to a surplus of $2.7 billion. But the story on debt reduction, which
in the long term is what the future prosperity of this country is
very much tied up with, the story of debt reduction is even more
spectacular. I don't want to burden you with a lot of dreary
figures but you've got to have some figures when you talk about
a budget otherwise people might think you are not taking it very
seriously.
In 1995 - 96, Australia's Federal Government debt accounted
for about 20 per cent of our annual wealth generation, about 20
per cent of our gross domestic product. When you factor in the proceeds
of the sale of the remaining two thirds of Telstra, by the year
2000 - 2001 we will have reduced that 20 per cent of annual wealth
generation to a bare 1.5 per cent of the annual wealth generated
by the Australian nation. And if we can go into the 21st century
essentially free of Federal Government debt, and the next Coalition
Government in New South Wales does as I know it will do, and that
is privatise the electricity authorities of this state and if we
can get a few other sensible privatisations carried out at a state
level we are going to be able to look at the next century largely
free of government debt.
Now that is something that I don't think anybody in this room
in their lifetime would have thought possible and if you are looking
to the future and if you are looking at the long term prospects
of this country, being able to give to the generations of the third
millennium, to the generations of the 21st century, being able to
give to them an essentially debt-free nation, is a remarkable aspiration
and I can't think of anything that would better set up the
society which my children and the children of many here today will
inherit, in fact to have something that is essentially debt-free
and I am very proud that it's been my Government through the
three budgets that we have now brought down, we has really been
able to get the debt monkey off the back of Australians and we have
been overburdened with debt for a very long period of time and there
are some in the community who have said to me, what do you do with
the surplus? You have $2.7 billion sitting there. Well it doesn't
of course sit there. It is used to repay the accumulated debts of
the last few years.
I notice that my opposite number said I was lucky, that I had led
a very lucky Government. I didn't think it was terribly lucky
when I discovered the state of the books that day after the election,
not far from here when I saw the then-head of the Prime Minister's
Department and he gave me the news, but putting that aside, I think
the debt achievements, the way in which we have been able to reduce
that debt has been a remarkable tribute to what the Government has
done.
Another thing of which I am immensely proud is that for the third
time in a row we haven't increased any taxes. There were no
increases in income tax. There were no increases in excise and there
were no increases in sales tax. Of course, when you were living
in an era of virtually zero inflation, which we are at the moment,
the nightmare of automatic indexation, which used to bedevil a lot
of people particularly if you are in the spirits industry or if
you are in some other, or you relied very heavily on fuel purchases
to run your businesses and so forth, they were a real menace and
we are living now in an era of virtually zero inflation, and it
is something that I hope will continue for a period into the future.
However, I repeat this. For the third time in a row, no increases
in tax, be it income tax, company tax, excise duty or sales tax.
All of these things have occurred according to a plan. When we
came to government we set out to get the country's books back
into balance and into surplus and to pay off all of the debt that
had been accumulated over the previous seven or eight years and
we decided to do it largely by reducing Government expenditure.
I am now very happy to say that we have in prospect Government expenditure
levels that we haven't seen in this country since the years
of the early 1970s. When you bear in mind that in the early 1970s
the unemployment rate was a lot lower than what it is now and that
the demand made on the social welfare purse by, for example, the
Sole Parents Benefit and so forth and the things that have increased,
I am not criticising this, I am simply making the observation that
there are now demands on the public purse that didn't exist
in the 1970s because of changed patterns in society and higher levels
of unemployment.
When you take that into account, it is quite remarkable that we
have been able to get back to the 1970 levels of expenditure because
when Gough Whitlam was elected Prime Minister of Australia in December
of 1972, the level of unemployment in this country was less than
two percent. Indeed, if unemployment in the 1950s or 60s ever got
anywhere near 2 per cent it was regarded as a national scandal.
Now over the last generation it has become much harder to return
unemployment to levels like that and that of course imposes a strain
on the budget that wasn't present back in those years and I
mention the point to illustrate the magnitude of the achievement
of the Government in bringing it back towards those levels.
It is also true, as Michael said, that we have been able to insulate
Australia against the worst of the Asian economic turmoil. It is
impossible of course to think about Australia's future without
looking at the juxtaposition of this country to the Asia Pacific
region. The Asian economies are important to Australia. The great
bulk of our exports go to the Asia Pacific region. Japan and Korea
between them take 33 - 34 per cent of all of the exports of Australia.
Although our outward foreign investment is more heavily directed
towards the European Union in North America, our trade future is
very much linked up with the countries of the Asian Pacific region
and it is impossible to believe that we can be left completely unaffected
by what has happened in Asia. The really good thing is that the
impact has been dramatically less than would otherwise have been
the case if we had followed a different economic path when we came
to power. If we had said, forget about the deficit, if we had said,
don't worry about getting the budget back into balance, can
you imagine the impact that would now be having on the sections
of the Australian economy. Can you imagine the impact that would
be having in places like Wall Street on the attitudes, the impact
of that on people's perception towards the way in which the
Australian economy was being managed.
By doing what we have done, by taking the sort of decisions we
did in the first couple of years, incurring some political criticism,
running the gauntlet of many interest groups who have naturally
criticised some of the decisions that have affected them, we have
delivered in 1998 a measure of protection and a measure of inoculation
from the impact of the Asian economic virus that would not have
even been remotely possible if we had followed a less responsible
course.
And we are able, as Peter Costello said the other day, to contemplate
the possibility that we could be the fastest growing country in
the Asia-Pacific region. Now that would have been unthinkable a
few years ago. Now that's not to strike any note of complacency.
It's not to discount the fact that because of what's happened
in Asia our growth is going to be less now than would otherwise
have been the case. But economic management and political achievement
is all about what is possible and what is realistic and what is
achievable, and what we have been able to do by way of insulating
Australia from the Asian turndown has been quite spectacular and
I think very very praiseworthy.
And we are of course now experiencing the lowest inflation rate
for more than 30 years, the lowest interest rates, and I'm
delighted to say that at long last it's starting to happen
in the small business area, where many of the interest rates are
starting to come down in the way in which housing interest rates
have come down. And some of that has been due, let me say, in so
small measure to the greater amount of competition which is in the
financial sector and I want to pay tribute to the way in which the
financial system's growing competition has contributed. Because
at the end of the day, those immutable rules of commonsense economics
normally work. If you have more competition in an industry, you
normally do get a better deal for the consumer. That of course is
what we have in mind when we try to do something about the waterfront.
Although I promised myself I wouldn't spend more than half
my speech talking about the waterfront, so I won't unless you
provoke me. It is very barely thought to salute the role of competition
in the Australian economy and competition in the financial sector
has meant lower housing rates and lower small business rates, and
we are very committed to a further expansion of that competition.
And I think we have a good story to tell. It's been a very
successful Budget, it's been a very well received Budget. It's
also contained a number of measures which recognise the contribution
of people, particularly older Australians, the contribution that
those people have made to Australia. But of course the Budget is
only one part of the economic story, and it's only one part
of the political responsibility of my Government. We are a reformist
Government and I am very very proud of that fact. I do hold the
view, as Michael said, that there is really no point in being in
Government unless you are willing to do something with it. I have
been in politics for, it will be 24 years on the 18th of this month,
since on a very rainy Saturday in 1974 I was elected as the federal
Member for Bennelong and I went in after Gough Whitlam had been
Prime Minister for 18 month, and it is almost a quarter of a century
ago, and it almost naturally seems like the proverbial yesterday.
And having become Prime Minister a couple of years ago, I've
taken the view that having been given that enormous privilege, there
is very little point in frittering away the opportunity and the
privilege by leaving untouched those things that ought to be changed
and ought to be reformed. And we set ourselves three or four major
reform goals.
The first and most important of those was to reform Australia's
industrial relations system, and I don't think there would
be anybody in this room, and I don't even think there'd
be any of our political opponents now, who would argue for a moment
that we haven't tried to reform Australia's industrial
relations system. And we have been very successful. The Maritime
Union of Australia the activities of the waterfront of course still
bulks very large in people's minds. Let me say to you again
that we are absolutely determined to finish the job that we started
in reforming the Australian waterfront.
And we are not doing that because we dislike the Maritime Union
of Australia, or because we want to destroy unionism or because
we want to discriminate against unionists. We are doing it because
it is in Australia's interests to have a more efficient waterfront,
and it is in Australia's interests to have voluntary unionism
on the Australian waterfront, and we remain absolutely committed
to that objective. We set ourselves, of course, the great goal of
fixing the Budget and economic mess that we inherited in March in
1996 and I've dealt at some length on that subject. But the
other issue we've set ourselves the task of tackling of course
was the fundamental issue of taxation reform. I have watched, and
I think there are few people in this room who have watched some
attempts being made by former Governments to reform the Australian
taxation system. As Treasurer in the Fraser Government I made two
attempts to persuade that Government to fundamentally reform the
Australian taxation system. Paul Keating when he was Treasurer in
the Hawke Government, to his credit, tried to reform the Australian
taxation system, and I might say on that particular occasion I supported
it, even though not everybody in the Liberal Party at that particular
time agreed with my doing so because I have always believed that
we had to reform our taxation system. John Hewson, to his credit,
tried very hard in the lead up to the 1993 election to persuade
the Australian public of the wisdom of taxation reform and unfortunately
through the efforts of the then Prime Minister, my predecessor at
that attempt was unsuccessful.
We now have what I believe to be the last great opportunity in
the foreseeable future of doing something fundamental to reform
the tax system. If you can't change it from the vantage point
of Government, if you can't change it where there's a
growing body of opinion in the community that it ought to be changed,
if you can't change it when the common sense of this country
needing a more competitive taxation system cries aloud for action,
I can't believe that there will ever ever be such a conjunction
of circumstances in the foreseeable future where you are going to
be able to change it. And if somebody comes along and says, now
look, we think it would be a good idea to fix the tax system but
this is not the right time. I mean we had almost zero inflation,
so if you are going to change the tax system on that score alone,
that is a tremendously good reason why you should try and do it.
We have the pressure of needing to be more competitive in our own
region. That's a reason to do it. We have the Budget in balance
- that's another reason to do it.
We have a greater congruence of support for tax reform between
the business community and the welfare lobby despite some of the
remarks that have been made in the past few days than we've
ever had before. Now, I can't think of a better circumstance
in the 25 years that I've been in politics which are more sufficient
so far as taxation reform is concerned than the circumstances we
now have . So if we blow this opportunity as a country, if all of
those who are collectively responsible and that includes the Opposition
as well as the Government, if we blow this opportunity, no public
figure in Australia will in the foreseeable future have any credibility
to say, oh well, now is not the right time but some time in the
future might be the right time. I mean, does anybody really believe
that we can go on indefinitely with the present ramshackle wholesale
tax system that we have.
Does anybody believe that we can go on indefinitely with a personal
income tax system which in a year or two's time we'll
have people on average weekly earnings paying 47 cents in the dollar
on some of their income. I don't think there are many people
when confronted with those realities that believe that we can go
on doing it. And therefore I am amazed beyond belief that the political
irresponsibility of the Leader of the Opposition Mr Beazley saying
last night : well, even if the Australian people vote for tax reform,
I Kim Beazley, I am going to try and frustrate it. Now not only
is that negative and destructive and the politics of a spoiler and
not a leader, it is also an attitude which is arrogant towards the
wishes of the Australian people.
I mean, one of the things you have got to do in politics, either
when you are Government, or when you are Opposition, there are some
things that cry aloud for a national interest decision and not a
partisan political decision. When I supported the efforts of the
former Prime Minister to change the tax system in the mid-1980s
I did that because I thought it was the right thing to do for the
country, and I think that the decision that Mr Beazley announced
last night, is a negative, spoiling, backward looking decision and
one that does no credit to him and no credit to the party he leads.
What could be fairer or better than an incumbent Government saying,
we will lay out a taxation plan, we will campaign on that, we will
run all the political rifts that are involved in that, according
to the conventional political wisdom, and if we win the election,
having laid out our plans, then we ask the parties controlling the
Senate, because under our present system, it is impossible for one
side of politics to absolutely control both Houses of Parliament
and that has been the case now for fifteen years since the size
of the Parliament was increased by the action of the Labor Party
back in 1983. Nothing could be fairer, nothing could be more open,
and I want to say to the Opposition Leader and to the people of
Australia, I think the public deserves better than that.
I think the public is entitled to have an honest contest about
a policy, to have votes cast in a ballot box and then for the referee's
decision to be adhered to. And if at the next election the Australian
public votes for tax reform presented by the Government, I think
there's a moral and political obligation on the parties who
opposed it to accept the verdict of the Australian people. But apparently
those who sit opposite do not take that view, and apparently those
who sit opposite are determined to destroy and spoil and frustrate
no matter what the verdict of the Australian people is.
It would be a different matter if we kept our plans under wraps.
I mean, a lot of people have said to me, why do you talk about tax
reform before the election? I talk about tax reform before the election
because I don't think it's honest to say to the public,
I'm not going to change the tax system and then get into power
and say, oh look I've read the wrong page or something, I really
meant to say the opposite. I mean that's not very credible.
We are going to lay it all out so people know what they will get
and having known that I think the honest, decent thing for any self
respecting Opposition to do is to say, we'll accept the verdict
of the people.
But apparently that is not the case. I mean, I don't often
say nice things about my predecessor but I've got to say at
least he had the guts and the strength before the 1993 election
to say, if Hewson wins I'll let the taxation reform package
go through.' And that is the course of action that I thought
Mr Beazley was going to follow. It's the course of action that
he said he was going to follow. And he made it very plain a few
months ago, in fact in August of last year, and he said this, if
John Howard goes to the next election with a clearly and honestly
described GST tax proposal, and he wins the election, Labor will
regard that as a mandate and not seek to block the introduction
of a GST.' Well that's his sort of description of the
tax reform and he repeated that on a number of occasions. Anyway,
I think you've got my point. I think you understand that I
am not very impressed with what he's done.
And more to the point, I don't think the Australian public
will be very impressed with what he's done. I think the Australian
public is fed up with the politics of spoiling and destruction and
negativism. I think they are fed up with the situation where a government
can get a very large majority in the House of Representatives and
find that so many of the important elements of its programme has
been frustrated in the Senate. But we will all live to fight another
day on that, and at the end of the day the Australian people will
resolve these things exercising the great common sense that they
always do in relation to such great matters.
The very, very last thing that I want to say to all of you is this,
that we have absolutely no intention on giving up on our reform
agenda. We set ourselves a number of goals when we were elected
in 1996. We set ourselves the goal of IR reform, we had to stick
to that to the bitter end. We set ourselves the goal of fixing the
Budget. We've essentially, but not totally, done that job and
we can't afford to be complacent. We set ourselves the goal
of a great privatisation programme and we're well down the
track on that. And we set ourselves the goal of taxation reform.
And I believe that that last mentioned goal of reforming Australia's
taxation system is the greatest piece of unfinished economic reform
business in Australia. The financial system was fixed in the 1980's.
We are no longer a country that dwells behind high tariff barriers.
We are a country which now has a more modern, contemporary, flexible
industrial relations system. We have now recognised the wisdom of
governments not running business enterprises that they are not equipped
to run. But the last piece of really unfinished, big economic business
in Australia is taxation reform. We have a responsibility to do
it, despite the obstruction, despite the spoiling tactics of our
opponents, we intend to proceed.
And finally can I pay a particular tribute to the work that Peter
Costello as Treasurer has done, not only in preparing a large Budget
but also in the work that he has done in preparing the two Budgets
that went before it. And also because the Treasurer gets most of
the headlines and all of the publicity on Budget night that I also
pay a tribute to John Fahey as the Finance Minister who has worked
so very, very closely with Peter in preparing the Budget. I believe
that I am served by a very able group of Ministers. I think the
Government that I lead has the best reform credentials of any government
in the economic area since World War II. I made that claim a few
weeks ago and I was criticised, not surprisingly, by some of my
opponents for doing so. But I mean it very sincerely and if you
look at the checklist, if you look at the reforms that have been
undertaken over the last couple of years, I think they are plainly
thought out.
But I haven't been able to do that alone. I've needed
the assistance of a very able group of Ministers and particularly
in this Budget week I pay tribute to Peter Costello's work
as Treasurer. I pay tribute to the support that he's received
from John Fahey and I want to thank all of my other Ministerial
and Parliamentary colleagues, many of whom are here today for their
tremendous help. And really finally can I thank all of you for the
continued support you give to the Liberal Party, for the interest
you display in our activity and I know the great encouragement you
give to the party organisation which Michael Osborne and Remo Nogarotto
as the President and the Director find so very helpful and so very
encouraging. Thank you very much.