Subjects: economy, industrial relation's reforms,
taxation reform, trade liberalisation, Supermarket to Asia
E&OE................................................................................................
Well thank you very much Mr Chairman, ladies and gentlemen. I'm
very happy to be here this morning to talk to you about a number of
things, most particularly of course to congratulate the industry on
the progress made over the last year, to remark upon its enormous
contribution to the Australian economy, and also to thank it very
warmly for the constructive forward looking attitude it's adopted
towards reform causes in this country over the last few years, and
not the least taxation reform, a subject to which I will return in
a few moments.
This gathering takes place at a time when on any measure the Australian
economy is performing exceptionally well. Without, I hope, displaying
any complacency or hubris it is fair to say that right at the moment
we have the best economic conditions for about 30 years. We are seen
as a strong economy in our region. We are seen as an economy that
has developed strong effective and transparent financial institutions
which have stood us in good stead in the wake of the Asian economic
downturn. We have been able to look that downturn in the face and
stare it down. We do have our lowest inflation and interest rate levels
since the late 1960s.
There is a sense in which the Australian economy has got it together
like no other period that I've lived through in the period that
I've been in public life. And that has not been through any accident.
It has been the result of reforms undertaken in earlier years. And
it's a very important message we keep in mind right at the moment.
Today's economic strength is the product of yesterday's
economic reform. Tomorrow's economic strength will be ours if
we undertake reforms today. The idea that you can ever rest on your
oars, the idea that you can ever say well, "she'll be right
mate, it's good enough now, we don't need to do anymore"
- that is a very foolish notion.
And just as three years ago when I became Prime Minister there was
a sense in this community, in Australia, that when you looked at the
Asian-Pacific region it was almost a rich man's club and Australia
was almost knocking on the door seeking admission. I had businessmen
saying to me – you know, you should model the Australian economy
on some of the economies in Asia. You should intervene more the way
they do. I even had some people seriously advocate the Malaysian model
of business intervention as the way to go. And that was quite a strong
mood in sections of the Australian business community a couple of
years ago. I used to get a lot of lectures about it. You don't
do enough. You ought to copy what's happening in the region.
I don't think anybody would give me that advice now. And the
reason why they wouldn't give that advice now is that we were
prepared to undertake some reforms and we got our position very strong.
We got that budget back into balance; we made a lot of other changes;
we updated our financial sector reforms; we made big changes to industrial
relations. In fact the changes made to industrial relations were much
greater than they were ever given credit for by many of our opponents
in the Opposition or in the media. And those changes to industrial
relations have laid the foundation for higher levels of productivity
in Australia at the moment. Australian workers are better off now
than they've been for 20 years. And they're better off for
two reasons. Their interest rates are lower. That means their mortgage
bills are $320 a month less than what they were three years ago. $320
a month on average and that's a huge cut in anybody's housing
mortgage bill. And their real wages have gone up.
That's the basis of the consumer prosperity in this country at
the moment. That is why consumer sales are strong, because Australian
workers have got money in their pockets because of those two developments.
Now that hasn't happened by accident. But it won't continue
forever if we don't make other economic reforms. If we just say
well, we've done enough, it will continue. It won't continue
because Asia will resurge. The competitors will return. They'll
pull themselves up off the mat and they'll start fighting again
and we'll have to be in there bigger and better and more effective
than them in the future.
Economic performance is not a retrospection. Economic performance
is about beating the fellow in the same race as you at any given time.
And that is the lesson that Australia has to always understand. And
that's why we committed ourselves to industrial relations reform,
to economic reform. It is why we've committed ourselves to the
cause of taxation reform. And I was reflecting this morning on the
five principles that the Government set itself back in August of 1997,
almost two years ago, when we began in earnest the journey towards
giving Australia a 21st century taxation system.
We said a number of things. First and foremost we said that there
would be no overall rise in the burden of taxation under our proposal.
And there has not been. The second thing we said was that there should
be major personal income tax cuts, particularly for Australians with
the responsibilities of raising children. And our package delivers
that. A core element of our package was the promise made to middle
Australia, middle Australia bringing up children. The backbone of
our society. The people who are part of the aspirational element of
the Australian community that is so important to our well being. And
these are people earning $30,000, $40,000, $50,000 a year. They're
not wealthy. That's not wealthy. That's just a modest degree
of success with the hope of doing better. And that's very much
part of the Australian psyche. And they deserve recognition and they
deserve reward and that's why one of the key elements of our
package was that you could say that 80% of Australian taxpayers would
be on a top marginal rate of no more than 30 cents in the dollar.
And I think that's a pretty good goal to offer to middle Australia.
Not wealthy Australia, middle Australia, which is most of us, which
is the backbone of our community.
We also committed ourselves to fundamental reform of the Commonwealth-State
financial understanding which has been a farce for 50 years. The annual
Premiers' conference in this city is one of the great farces
of Australian politics. Right on message the Premiers arrive, Labor
and Liberal alike. And they say the dirty rotten Federal Government
won't give us enough money. And if they don't get what they
want they go out the door and say we'll have to sack nurses and
teachers and police because the Federal Government won't give
us enough money. Well this Federal Government wants to give them more.
But the people who are supposed to represent them in the Senate at
the moment are sort of, we're not quite sure whether they're
going to let us give the State more. We're working on it, but
we're not quite sure they're going to do that.
But a key of this plan, a key of this plan is to allow a new charter
of Commonwealth–State financial relations. And for the first
time in 50 years we have offered an end to the farce. We have offered
a system that will allow State revenues to grow in a way they can't
grow under the present formula. Because under our plan the States
will get every last dollar of the GST revenue, and that over time
will grow faster than would the funds going to the States under the
current funding arrangement. Now that is an offer that no other group
of States has ever been made. And that is why Labor and Liberal alike,
they queued up, although a couple of them had a couple of them had
a few party political disclaimers like my colleague Bob Carr who said,
you know Prime Minister, I don't believe in any of this but where
do I sign. And he signed up because it's a good deal for his
State. And Peter Beattie signed up, and Jeff Kennett signed up. They
all signed up because it's a very good deal for their State.
One of the things that really perplexes and amazes me about this whole
debate, it has from the very beginning and still does to this day,
is that some of the fiercest critics of our plan are people from the
welfare sector, are people from ACOSS. And what they will stubbornly
refuse to accept and understand is that if you guarantee a rise in
State revenues over time, you guarantee a rise in the money available
to pay for hospitals, and schools, and roads, and community services
at a State level. If this plan falls over the States will have less
money in the future to pay for welfare. Let me say that again, if
this plan falls over in future the States will have less money to
look after the poor.
And yet some of the strongest critics of this plan are people who
hold themselves out as the guardians of the poor. Well, on this issue
they are not serving the poor of Australia well. There's no other
way that we can guarantee a rising revenue base for welfare in this
country without fundamental taxation reform. And if the opportunity
is lost then the poor in the long run will suffer proportionately
more than many others in the community. And I believe that very strongly
and it's one of the reasons why we are so very strongly committed.
And you can't have it any other way. You can't, on the one
hand, say you are interested long-term in the position of the poor
and yet prevent a mechanism that will underwrite rising revenues for
them.
Now, we all believe in a compassionate society. We believe in a society
that offers people incentive through lower taxes if they work harder
and earn more. That's the aspirational side of it. And we all
believe in that. My Party believes in it. It believes in it passionately.
You can't have an Australian society unless you reward the achievers
and you encourage people to lift themselves from an income of $25,000
to $50,000 without going into a higher tax bracket. Imagine the impact
of that on the work aspirations of our young adult children. You say,
well, you can move ahead like that without going into a higher tax
bracket. That's the aspirational side of it. But there's
also a compassionate side of it. And that compassionate of it says
that there are some in the community who need help. And there are
also services in the community that are needed. We all need police
services. We need government schools. We need people to have choice.
If they want to send their kids to government schools which are funded
by the States, those States need revenue. And the problem is that
those revenue sources are shrinking and you've got to find an
alternative and the only alternative is taxation reform and a broad-based,
indirect tax. It's a very stark choice and I just hope that it
is a choice that is fully understood by the entire Australian community.
We also said, when I announced that taxation plan, that we believed
in providing compensation and assistance under the package for those
who needed help and, of course, we have very, very significantly provided
for that. And, of course, the final thing we committed ourselves and
of which I've dwelt for a few moments is that we committed ourselves
to the introduction of a broad-based, indirect tax - a GST, to replace
some or all of the existing indirect taxes. And that, of course, is
precisely what our plan has sought to do.
We fought an election on that plan. We won an election on that plan.
And we are urging the Australian Parliament to support that plan because
we believe it is in the long-term interests of the country. And we
believe it is important that the country have the political and institutional
courage to embrace ongoing reform. Because we are where we are now
and we are strong as we are now because we reformed in earlier years.
And a similar gathering in five years time if we haven't embraced
tax reform, we'll look back and say, wasn't that a failure
of nerve and a betrayal of the national interest on our leaders that
they didn't embrace taxation reform when they had the opportunity
to do so. It won't easily come again this opportunity.
We've been at it as a community, debating tax reform, for almost
as long as I've been in Parliament. We've been going on
the current reform for almost two years and it's undergone the
most exhaustive debate, the most exhaustive examination and analysis.
And all the resources of the Federal Treasury have been poured into
it and it's been the subject of a debate from one end of the
country to the other. And sooner or later and I believe inevitably
of course sooner that we have to make a decision. And if the decision
is that we turn our back on reform the nation will be the poorer,
the loser, and that will become apparent fairly rapidly. And many
of those in whose name objections have been raised against this package
will suffer more as a consequence than they are allowed or led to
believe by many of the people who choose to speak on their behalf.
You may gather from those remarks that I'm rather committed to
the cause of taxation reform. I am because I think it is good for
Australia. And that is why the Government, from myself down, remains
very committed to taxation reform. But we are dealing with a system
that doesn't automatically let you through the checkout even
though you've completed the purchase.
But, ladies and gentlemen, can I just say one or two other things
unrelated to the issue of taxation reform. And that really goes very
much to your own industry and the contribution that it makes to the
Australian economy. The very great capacity that it has to grow over
the years ahead. The contribution that it's made to the image,
the clean green image, of this country. The contribution that it's
made to the positive and favourable impressions that people have of
the lifestyle of the Australian community.
I know that trade liberalisation is very important to many sections
of your industry. And one of the very first things that I did as Prime
Minister was establish the Supermarket to Asia Council, which I chair
on a regular basis. And that Supermarket to Asia Council was designed
to promote, in a holistic way, the favourable image of Australia as
a great source of food of all types and of all stages of preparation
to the nations of the Asian Pacific region recognising that despite
the interruption by the downturn in Asia there is an enormous purchasing
capacity in that region. And we're contributing another $14 million
in the 1999 budget which includes a new $9.2 million food and fibre
supply chain to help our food industry respond to new export opportunities.
And we have contributed almost $100 million in additional funding
since coming to government for quarantine to protect our clean green
reputation and to boost our food exports.
But part of the responsibility we have as a government is to continue
to press for trade liberalisation. It still remains monumentally unacceptable
to me as Prime Minister of Australia that agricultural exports remain
punished and discriminated against in major world markets. It is disturbing
in the extreme, for example, that there should be talk by the United
States' administration of imposing some kind of quota on the
import of Australian and New Zealand lamb in the United States. It
is a bit rich to get generic lectures from the American administration
about free trade and the glories thereof. And yet you could have such
a crude, old-fashioned, protective device as an import quota on Australian
and New Zealand lamb. It rivals the crude, protectionist effects of
the American Jones Act under which it's against American
law for ships whose keels have not been made in the United States
to ply the coast of the United States of America. And it's a
reminder that it's still a tough world out there for small countries
like Australia that have got to work together with other like-minded
countries in the Cairns group to expand the opportunities and to expand
the horizons for our exporters. But we continue to do that and Tim
Fischer as the Trade Minister is indefatigable in his efforts to expand
our trade opportunities and our trade horizons.
That's just another reminder that even though we're doing
fairly well at the moment economically you've got to keep fighting,
you've got to keep finding new ways of getting new markets. You
never rest. You never go to sleep on either reform or trying to find
a new market or trying to remove an existing inhibition or an existing
barrier because once you go to sleep on the watch somebody else sneaks
past you. And that has been our experience in the past. You find it
as the experience you have in your own economic and business circumstances.
But, ladies and gentlemen, overall conditions are strong. The general
business outlook in Australia is bright. Consumers are spending. Businessmen
and women are investing. People are taking risks, and that's
necessary. You have a government that is committed to reform. You
have a government that believes in the benefits of reform, not in
reform as an end in itself. You reform in order to deliver a stronger,
better economy and that has always been the goal and the objective
of our reform. But can I thank you for inviting me and can I declare
the meetings of this Council open.
Thank you.
[ends]