E&OE...............................................................................................................................
Thank you Mr Blank, Mr Spring, my friend and colleague, Phillip Baressi,
my other Parliamentary colleagues, ladies and gentlemen.
It is a delight to be back in Ringwood. It is not, as Phillip reminded
you the first time, but it is an opportunity for me to renew some
associations that I've made over the years particularly with
the small business community in this part of Melbourne. And can I
thank those who have put this afternoon's gathering together
because as Phillip Baressi said at the end of his introductory speech
that Members of Parliament do need to retain very direct methods of
communication with the people who elect them.
Government in modern times is more complex, more difficult, more challenging
than ever before. Expectations are high. The sense of disappointment
and the sense of frustration is also high if expectations are not
realised. It is therefore important that this kind of personal contact
be achieved on as many occasions as possible and I personally have
endeavoured in the two and a quarter years that I've been Prime
Minister to visit all parts of our country and to talk to all sections
of the community to listen to what they have to say and to communicate
the reasons why the Government has taken certain actions.
Over the past couple of days that we've had in Melbourne, a major
economic conference which has been addressed by international visitors,
by world economists, by officials of the World Banks, by leaders of
Asian communities and Asian countries including the Chief Executive
of the Hong Kong region of China and [inaudible] Ministers from Singapore.
I thought some of the reporting and some of the messages that came
out of yesterday's section of the conference were excessively
pessimistic. There are difficulties economically in Asia and many
of the Asian countries are going through a greater economic melt down
than they have previously experienced. But I thought the use of the
word depression was a little excessive and quite alarming and certainly
doesn't represent the reading of the situation that I have that
is available to me from our economic advisers.
Nonetheless, we are now in Australia operating against the background
of an Asian Pacific region dramatically different than what it was
two or three years ago. And as a result of that I am all the more
of the view that the actions that the Government has taken to strengthen
and protect the Australian economy over the last two and a quarter
years were absolutely essential. Without in any way winning the sound
of self congratulatory which is always a mistake in public life, can
I very simply say to you that if we had not set about reducing the
very large budget deficit we inherited, if we had not set about reducing
debts, if we had not set about making other changes to the economic
infrastructure of Australia, we would not now have what are in truth,
the strongest economic foundations that Australia has had for a quarter
of a century. And if we had not done those things we would now be
a lot weaker and a lot more vulnerable as a result of what has occurred
in our region of the world. Because whether we like it or not we do
live in a global economy.
Some of us may want it other ways. We may think it would be terrific
in the words of the old song, Stop the World, I Want to Get Off. But
you don't have that option. The world won't allow you the
luxury of stopping and getting off. And whether we like it or not,
if we are not an attractive location for investment, that foreign
investment will go somewhere else. Overseas companies and countries
don't invest Australia out of nostalgia. They invest in Australia
because Australia gives them a good return. And if we don't give
them a good return, or if we don't make them welcome, they'll
take their investment somewhere else. And instead of their investment
employing thousands Australians, it will employ thousands of Malaysians
or thousands of Americans, or thousands of Englishmen or thousands
of Germans or thousands of Italians.
That is the nature of a global economy. And that is why it's
so necessary at a time like this for governments to do things that
strengthen us and we have been able to do that because over the last
little while we've reduced that deficit mightily. We are now
in surplus for the first time in over ten years. And we can look forward,
if all our friends can just realise, to an essentially debt free start
for the 21st century. And that's a very important achievement.
We do have the lowest interest rates for 30 years for both housing
and small business and that means a lot particularly to people here
in the real estate business. It means a lot to men and women in small
business. Because although I know you'd like the interest rates
to be lower, they are significantly lower now than what they were
three, four, five years ago.
That's very important to the outlook and the operations of those
businesses. We have low inflation rates, in fact, Australia has got
about the lowest inflation rate in the Western world. And we have
made a lot of very important changes to industrial relations as Phillip
mentioned. The important changes we have made to provide a better
balance between some of the large corporations and some of the small
business sector.
Small business is something that is very close not only to my own
heart as a person because I grew up in a small business environment
and I learnt at a very early age that there was nothing more worthwhile
in life than starting your own business with absolutely nothing and
making a go of it, and it is something that I have believed in very
strongly all of my life. But my Government is also very committed
to the role of small business as a generator of employment. We've
had a lot of debate at the moment about the fact that our Native Title
Bill is tied up in the Senate because the Opposition parties won't
vote for it. It's not the only Bill, can I say that is tied up
in the Senate.
There is also a Bill dealing with unfair dismissals which will make
the law even better for small business than the changes than we made
after we were elected and that's also being held up in the Senate
and it's also one of the pieces of legislation that if there
were a joint sitting with the two houses of Parliament after a double
dissolution, if one were to occur, that would be presented for passage.
So we have done a lot to make changes and I know there is quite a
bit of debate in the Australian community at the present time about
the impact of economic change on our community. Some of those impacts
are significant to sections of the Australian community. Change is
never easy and change needs explaining, change needs justification
and change should only ever be embraced if it's going to produce
a better result than the one that it addresses. But there really is
very little option for this country, in fact there is no option in
that it must continue to make desirable changes and one of those desirable
changes is to reform our taxation system.
Now that has been around for a very long time and deep down, most
people in public life on both sides of politics know that sooner or
later we have to reform our taxation system. There are some things
you never do because they make the country worse. There are some things
you never do because even if you do them, they don't make the
country any better. There are other things that you know that when
you have finally done them and you've summoned the courage to
do them, they will produce a better country and a better economy..
And a better taxation system is one of those things. We do have a
very old-fashioned taxation system. There aren't many countries
in the world that have the same wholesale taxation system that Australia
has. There are a few countries but they aren't really at the
top of the ladder as far as competitiveness and economic performance
are concerned.
And it is a very funny old system, it says that if you are wealthy
enough to buy a Lear jet, you don't pay any wholesale sales tax
but if you are like the rest of us and you've got a family car
you pay 22 per cent. It's a system that says that if you buy
flavoured milk you pay sales tax and if you buy ordinary milk you
don't. It imposes very high sales taxes on biscuits and orange
juice concentrate but it doesn't impose any sales tax on caviar.
It's based upon the assumption now quite erroneous that most
of the economic activity in Australia is manufacturing. Yet in reality
manufacturing is a smaller section of the economic activity than used
to be the case when it was imposed.
We had a report this morning from the Institute of Chartered Accountants
that said that incredibly enough, a family of two adults of mum and
dad and two children with only one income earner, that was earning
$20,000 a year was, in fact, $9 a week better off after tax than say
a family earning $30,000 a year. Now, that has to be wrong, it's
crazy and it's an illustration of the sort of anachronisms and
the weaknesses and the flaws that have developed in our taxation system
over the years. And that's why we want to address it. We are
not wanting to address it because of revolution but changing the Australian
taxation system is the next logical thing to do to make the Australian
economy better and stronger, to give it more security, stability and
safety.
Now I could put it off, I could say: Oh well look, we won't go
to the next election with a taxation reform policy. If I get re-elected
I'll have a meeting, I'll call everybody together and I'll
have a meeting to talk about it. Now does anybody really imagine that
out of that meeting you'll get a consensus to borrow the words
of one of my predecessors? Does anybody really imagine that if you
got the Liberal Party and the National Party and the Labor Party and
anybody else who wanted to come along at a political level, and you
got the business community, small and large in the middle, you've
got the welfare sector, you've got the trade unions, you've
got them all together, does anybody really imagine that you are going
to get a consensus about the detail of it? You'd have a lot of
debate, you'd have a lot of set piece speeches.(inaudible) at
the taxation summit in 1985 but at the end of the day there would
be no clear consensus and what people would say: oh well, the Government's
got to decide what to do. And that's a bit proper, actually because
the governments do have to decide what to do because that's what
they are elected to do. Governments are elected to make decisions
. They should have meetings and they should consult and heaven knows,
Australia's politicians have been consulting the Australian community
about taxation reform now for the whole time I've been in politics.
I was elected to Parliament in 1974 and that was one year after Billy
Snedden, the late Billy Snedden, as Federal Treasurer in the McMahon
Government had commissioned the (inaudible) committee. It was a committee
of inquiry into Australia's taxation system chaired by a New
South Wales judge who was a taxation expert, or had been a taxation
expert when he practiced at the bar. And they brought down a report
in 1975, a year after I became a Member of Parliament, recommending
fundamental reforms of Australia's taxation system. And believe
it or not, do you know what they recommend? They recommended the introduction
of a broad based indirect tax. You might now call it a GST or a value
added tax or whatever you'd like to call it. They recommended
its introduction in place of a whole lot of existing indirect taxes
and it actually says the wholesale sales tax was inefficient and out
of date and anachronistic and it drew attention to the deleterious
effects of marginal taxation rates on low income earners, like the
example that I quoted.
Isn't it incredible. That was in 1975. It is now 1998, 23 years
later and the system is even more in need of change. So I could, I
could sort of do the, I think, rather weak thing and that is, give
the idea away and say we are going to have a meeting and if I did
that and we happened to get re-elected and we have a meeting, that
won't achieve anything. It'll be back on my desk and I have
to decide whether we are going to put a plan to the Australian people
or I am going to forget about it forever.
My opponent, Mr Beazley, says the present system is terrific and doesn't
need any change so if he gets elected you won't get any change
there. And the other party on the horizon now, the One Nation party,
agrees with Mr Beazley. It also says the present system is terrific,
so you won't get any change out of that lot either. So if you
really want to have a change to the taxation system the one great
opportunity is to really present it now and that's what we intend
to do before the election. And people will have an opportunity of
looking at it. But sooner or later, with these difficult things you
either have to say to the Australian people: it's too hard, count
me out, I can't do it. Or you've got to bite the bullet
and have a go, and I think the Australian people want the Government
they elect to have a go. If they don't like it, well they'll
vote against it and that's the democratic process.
But I think they will like it. I think they will respond to a plan
that addresses the weaknesses of the present system. And one of the
great virtues of the taxation reform we have in mind is that it will
help our exports and we need to do that because in a difficult world
environment, exporting is very important. And you can have taxation
change that protects the poor, you certainly can. And we have consulted
very extensively with the Australian Council of Social Services in
putting together our plan and I hear what was said earlier about the
need for any change not to involve a significant burden on the small
business sector. But there are significant benefits for the simple
system. One of the great benefits of the simpler system, an effective,
broad based indirect tax in place of the existing taxes, can I just
make that point, people regularly talk about introducing a GST. We
are not going to introduce a GST. We are considering introducing something
called that in place of existing taxes but there is no way we are
going to put a new tax on top of the existing taxes. We are not that
stupid. We have no intention of doing that.
But what we are considering doing and what will obviously be part
of the plan is to bring in a broad based, indirect tax or GST in place
of existing taxes. And also to make, of course, significant changes
to personal income tax levels. So it's a total package, not a
GST on its own, it's not personal income tax cuts on its own.
It's a total reform of the system. And we are doing it because
we think it will be good for Australia, that's the reason why
we are doing it. And I believe that the Australian people will support
reform if it satisfies two conditions.
One of those conditions is that it should be good for the country,
that's the first thing. And secondly, is that it ought to be
fair. Australians are great believers in fairness and I don't
think the present system is fair and my suspicion is a lot of Australians
don't think it's fair any longer, so they want that changed.
So we are committed to reform in that area, not because of any ideological
zeal, not because we have any zealous commitments to what is contemptuously
called economic rationalism. We are committed to taxation reform because
we think it will be good for our country. And that's what governments
are elected to do.
Sometimes you've got to weather the storm of criticism and sometimes
you've got to deal with people like One Nation who come onto
the horizon and say, oh look, don't take any notice of that,
there are simple solutions. I mean their National Director a couple
of days ago was saying the solution to a cheap bank loan was to print
money.
Print money.
He said you can have a two per cent loan from a bank. I made the observation
that well, it's nice to be a borrower at two per cent but who
is going to lend to the bank at one and a half per cent so it can
afford to lend at two per cent because I thought banks operated on
the principle, and I am obviously wrong, that you borrow from "x"
and you lend to "y" and you pay "x" a little less
than you charge "y" and that's called your profit.
Well that's how I thought the system worked but I am obviously
wrong. What you do is print money.
That's how you do it, you print money and I mean, that would
do wonders for the savings of our retired community because if you
start printing money you'll send inflation through the roof.
You start printing money and you'll undermine the whole basis
of and our economy, I think, it's very interesting now that there's
a bit more focus on these alternative propositions, that they are
now starting to get a bit of air play and people are starting to have
a look at it. I mean, once you get people elected to Parliament, well,
you are entitled to have your policies looked at like everybody else.
Everything I say gets examined, gee does it ever. Everything I say
gets examined. A lot of it gets misrepresented too but that's
another matter and I won't weary you with that and I don't
see why other people on the Australian political scene should be denied
the privilege of having their statements examined in great detail
and as they are examined in great detail I think people will start
to see the folly of them.
Ladies and gentlemen, we have made a number of very, very major improvements
over the last two and a quarter years in the operation of our economy
and it has given us an inner strength which has enabled us to weather
the worst of the Asian economic storm. We aren't untouched by
that storm and we won't remain untouched by it. But if we had
not done what we had done over the last two and a quarter years, we
would have been absolutely ravaged by that economic storm and it would
have inflicted a great deal more damage on the Australian economy,
than has been the case over the last six months in particular. And
it is very necessary therefore that it continue where change, further
change and further reform is essential. It is very important that
we continue on that journey.
It is very important that we communicate the need for that change
in reform and have an understanding of its impact on all sections
of the Australian community. And we need energetic, in touch local
representatives and Phillip is certainly one of those. And can I say
that he has been an extraordinarily energetic representative for the
electorate of Deakin in the Federal Parliament. He comes of this area,
he has experienced how small business operates in this area. His family
involvement is in this area. And he represents a style of local politician
that he is very effective. He is quietly persistent. He's a person
who collars Ministers with an almost voracious appetite in the corridors
of Parliament to put a point of view on a proposition on behalf of
his constituents, and can I say he argued very strongly with a lot
of his other Victorian Federal colleagues for changes in the laws,
achieving a fairer balance between the operations of small and large
businesses within our community. And he's argued very strongly
for the interests of this part of Melbourne to be properly cared for,
whatever decisions have been taken by the Federal Government.
Ladies and gentlemen, he's a first class representative and that,
of course, is one of a number of reasons why I am absolutely delighted
to be here today. Can I say that the strength of Australia's
communities and their willingness to work together, the great spirit
of voluntarism which is a defiant strength in the Australian personality
which is readily recognisable wherever you go in Australia - it is
one of the most uplifting things that I find as I go around our country,
and certainly very evident here today and I do appreciate the opportunity
of addressing such a cross section of people, and I want to acknowledge,
although this is very much a small business gathering, I do want to
acknowledge the presence in the audience of local clergymen, of people
who are involved in making community activities of looking after the
less fortunate.
I just took the opportunity before coming here and spending three
quarters of an hour at that marvellous Salvation Army retirement village,
Inala, a few miles away and it was a perfect demonstration of how
well our community organisations care for people. And it's an
enormous tribute to that great organisation, the Salvation Army.
Ladies and gentlemen, I thought some of the remarks made yesterday
at that conference were excessively pessimistic but, nonetheless,
our region is going through difficult times and if I could just make
a quiet, have a quiet political commercial, I don't think now
is really the time to put aside safety, stability and security in
a sea of economic turbulence to go back to policies that deliver deficit
and debt or alternatively, experiment with policies which are based
upon such dubious propositions as sitting up 24 hours of the day,
printing money in order to solve our economic difficulties. I think
the time really is to hang on to a respectable, stable, secure approach.
It has given Australia a great community of strength and stability
in a time of considerable economic difficulty.
Thank you.
[ENDS]