Subjects: Economy; taxation system, tax plan, drugs,
E&OE...........................................................................................................
Well thank you very much Corey, and can I say how pleased I am to
be back in Adelaide to express my thanks to you as a group for your
continued support of the Liberal Party cause. It is true that on a
straight percentage basis, might I also say on a straight quality
basis too, that the representation in South Australia in terms of
seats is the best across Australia, and without doubt is the best
across Australia. 9 out of 12. If we'd achieved that all around
Australia we'd have probably had an even bigger majority than
we secured in 1996.
But on top of that we have of course in the Cabinet a very high and
very high quality level of representation from the State of South
Australia. And I was certainly reminded of that earlier this week
in Indonesia when I had at my side our Foreign Minister Alexander
Downer who I believe has done an absolutely outstanding job in that
portfolio over the past three years. And that of course is not to
denigrate in anyway the contribution of the other Ministers from your
State.
But I wanted, given the nature of the gathering, to say something
to you today of where I see the Australian economy, and where I see
the Government's reform programme for its second term. Reform
is something that will always be with us in the modern globalisation
economy. There are those who periodically write about reform fatigue.
There are those who periodically write about the fact that the community
will no longer accept ongoing economic reform. Whatever may be their
motivations for saying that the reality is that we have no alternative
but to go on reforming our economy, to go on making changes to ensure
that we remain as competitive as we can with the rest of the world.
We don't have any option in the modern world other than to be
part of the global economy. There's no way that we can, in the
words of that old song Stop the World Because We Want to Get
Off'. We can't go back to an old cloistered protective existence,
unless of course we are to give away the high living standard, and
the opportunities for our children that we all value so dearly So
the challenge for modern governments in Australia and elsewhere is
to take advantage of the opportunities that globalisation offer, to
make certain that we are competitive enough to get our share of what
globalisation offers, but at the same time to recognise that globalisation
for some people can carry social and economic costs, and to ensure
that those costs are cushioned, to ensure that those costs are explained
and understood, and that the advantages of globalisation for the rest
of the community far outweigh any costs for one section of the community.
And that is what we are doing. And I've always held the view
that you can win acceptance in the Australian community for economic
reform if you satisfy two conditions. The first of those is that you
must explain to the Australian community that the reform that you
are committed is in the best interests of the country. In other words,
it passes the national interest test. And the second condition that
you must meet is that it is fundamentally fair and seen to be fair
by the Australian community. And if you can pass those two tests than
I believe the Australian community will accept and embrace reform.
Now since we've been in office, which is now a little over three
years, we have brought about some very major reforms to the Australian
economy. The most important is of course the fiscal reform, turning
a deficit of $10.5 billion into a surplus. We've brought about
major reforms in the area of industrial relations, and the process
goes on in that area. It's never ending. And we've done
it in a way that has been fundamentally fair to the Australian community.
And that has been demonstrated today by the living wage case which
has delivered a fair increase to the low paid in the Australian community.
Now we were told by the unions and the Labor Party before 1996 that
that wouldn't happen. The reality is that wage and salary earners
in Australia now are better off than they have been for more than
ten years. Not only have they had real wage gains, but they've
also had another very precious gain and that is a fall in housing
interest rates. And the fall in housing interest rates has been worth
more than $320 a month to the average wage and salary earner. And
if you add that to the real wage increases that many have achieved,
and you add to that the safety net wage increases typified by today's
decision of the Industrial Relations Commission, you have an environment
of wage fairness, and justice.
Now that's a commitment I made in 1996 when I was Opposition
Leader, and I'm proud to say to you today at this business gathering
that we are a government that has delivered wage and salary justice
to the ordinary wage and salary earner in Australia. And that's
one of the reasons why we continue to enjoy the support of the large
number of average wage and salary earners in Australia. It's
one of the reasons why the Liberal Party won so many seats here in
South Australia at the last election. And it's part of our creed
that we continue to do that. Of course we are a party that's
committed to the interests of the business community as the wealth
generators of our society. We're also a party that is committed
to a fair go for the average wage and salary earner within our community.
And I'm very pleased to say that we have delivered on that and
delivered on it in a very significant way.
We've undertaken of course major privatisation polices in relation
to Telstra and other former government business organisations. But
of course by far the biggest reform that we have embraced as a government
was our commitment in September of last year to fundamental reform
of the Australian taxation system. The Australian taxation system
has needed root and branch reform for more than a quarter of a century.
In May of this year I'll celebrate 25 years in Federal Parliament,
and I remember only a few months after I was elected to Federal Parliament
there was a report on the Australian taxation system that bore the
name The Aspry Report', some of you may remember it, after
a former judge of the New South Wales Court of Appeal, Ken Aspry.
And surprise surprise 25 years ago it recommended the introduction
of a broad based indirect tax. And it said that that tax should have
essentially no exemptions. It said that the existing wholesale tax
system was ramshackle and broken down. It said that rates of personal
income tax were too high, that personal income tax took greater share
of revenue, and for a number reasons you needed the introduction of
a broad based indirect tax.
Now that was 24 to 25 years ago. And we have been debating that issue
ever since. And at long last that debate is coming to its conclusion.
It's coming to its pinnacle, its grand ending I hope. And by
the 30th of June we will have an answer from the Australian
Senate as to whether the Australian people are going to be listened
to. Because you will remember that last October we went to the Australian
people, not promising in general terms taxation reform. We didn't
say if you re-elect us we'll make the tax system fairer. I often
scratch my head and think in amazement that in 1979 when the British
Conservative Party, under Margaret Thatcher, won office from the Labor
Party under the former Prime Minister Jim Callaghan, and that's
almost exactly 20 years ago today, they had a taxation policy. And
the taxation policy essentially said: well will tax more of what you
spend and less of what you earn. There wasn't much more detail
to it than that. And I can remember asking a former British Chancellor
of the Exchequer what was in his tax policy, and he said: John, essentially
that is what we said. They didn't go into a whole lot of detail.
They got elected, they then proceeded to do it.
We by contrast, because of the nature of the Australian political
system, because we knew that we might face hostility in the Senate,
we knew that people would try and deny the mandate of the Australian
people, we went to the length of laying out in total detail what we
were going to do. We mentioned the rates, we mentioned the cuts in
personal income tax. We went into enormous detail. And we ran the
extraordinarily high political risk of going through a campaign and
somebody making some inconsequential nitpicking publicity hit against
us on the basis of something of comparative irrelevance. And we survived
all of that. We won the election and no government in the history
of Australia has received a mandate on such an explicit change to
a fundamental area of economic policy since federation.
And you cast your minds back. No government has done that. And we
were successful in winning that election and we have the right therefore
to say to those who hold the balance of power in the Senate, to the
Labor Party, and the Democrats and the Australian Greens, that they
ought to listen to the will of the Australian people. And you've
probably heard me say that before and you'll here me say it again
and again over the weeks ahead because we are coming to the crunch
time. We are coming to the moment of truth as to whether the political
system in this country really works effectively. Of whether you're
going to provide an incentive for governments and oppositions in the
future to actually go out and try and win support on the basis of
what they intend to do to the Australian public, and what they will
do, or whether in future we're just going to have election campaigns
entirely devoid of policy content and entirely composed of one-liners
invented by PR consultants based on focus group polling.
Now that essentially is what is the sort of political choice that
we in a way are going to face. Now I know there are people who don't
like aspects of the taxation plan. There are arguments about the fine
detail of it. And I've indicated time and time again that the
government is amenable to some kind of fine-tuning in certain areas.
That's always been our position. But we're not going to
alter the fundamental thrust of what we put to the Australian people.
We're not going to start exempting large areas from the goods
and services tax. We don't believe that the poor are helped by
exempting food. In fact on a straight quantitative assessment you
do more to help the rich by exempting food than you do to help the
poor. And we believe that the best mechanisms in relation to that
are of course the mechanisms of compensation.
There are enormous benefits for rural Australia out of this taxation
plan. We're going to cut the national fuel bill by $3.5 billion
a year. We're going to reduce the cost for Australian exporters
by $4.5 billion a year. And of course we're going to make business
costs overall cheaper by about $10.5 billion a year because no tax
will be paid on business inputs. And there are major gains under this
plan for the Australian States. Over time the Australian States will
be significantly better off under the proposed GST than they would
be if the existing arrangements continue. They will have all of the
GST revenue. Every last dollar of the GST revenue will go to the Australian
States. And that's why they all signed up a week and a half ago
at the Premiers' Conference. It was the most harmonious, loving
Premiers' Conference that I have ever been to. I mean the Labor
Premiers loved it as much as the Liberal Premiers. Bob Carr said:
you know Prime Minister, my party doesn't support this, where
do I sign. Peter Beattie was no different. He was just as good. And
without exception they all signed up, and so they should have. Because
they were signing up to a deal that is much better for their State.
And as that revenue grows the States will have more money to provide
more services, for government schools, and for hospitals and for police,
and for roads - the basic functions of State governments - and so
they should. And we'll have a far more dignified, and we'll
have a far more orderly way of distributing the national economic
pie, the national revenue cake, than that sort of annual charade or
pantomime that passed as a Premiers' Conference over the years
where, you know, each Premier does a doorstop on the way in and one
on the way out, and then you have a joint press conference from the
Prime Minister and the Treasurer saying how, you know, we are sadly
misunderstood and we're really there to help all the States.
Now we did help them on this occasion and I think one of the greatest
assets to come out of the taxation reform plan is the new deal for
the States. And that is of enormous benefit and it will underpin the
revenue base that the States need to provide all of those services.
So a lot hangs on what the Senate does over the next few weeks. We
make no bones about it that we need obviously the support of people
who are not members of the Coalition parties. We need the support
of cross bench or independent Senators. But we need their support
on the basis, and we need an understanding from the Labor Party and
from the Australian Democrats that we took all of the political risks.
We put our bodies on the line politically, we won support, we won
support in the open, honest, orthodox, authentic way. And if the political
system is to retain its credibility and its integrity then we ought
to have the right to have the wishes of the Australian people implemented.
So we intend to press ahead with our taxation reform plan. And I'm
telling every audience I address in Australia, I addressed one in
Melbourne last night, I addressed a large one in Perth a week earlier,
every audience I address I make it perfectly clear, that we have no
intention of backing away from our commitment to taxation reform.
It is the largest piece of unfinished economic reform business that
this country faces. We've cleared a lot of hurdles. We've
broken through a lot of other barriers in the area of economic reform
and this is the big one that lies in front of us. And having gone
to the Australian people and got their support, I for one, and I know
I speak for all of my colleagues in saying it, we will persevere until
we win the support of the Australian Parliament to implement those
particular reforms.
But ladies and gentlemen, government is not just of course about economic
matters and one of the reasons I'm here in Adelaide is to address
probably the most challenging and gripping social issue of our time,
and that is the drug problem.. And I don't come here, and I don't
go anywhere in Australia pretending that I have all of the answers
to that. And I don't seek to politicise the issue. I'm as
happy to work with Bob Carr and Peter Beattie in tackling the drug
problem as I am with Jeff Kennett and John Olsen, because deep down
it is a social challenge that requires a bipartisan response. It's
a social challenge that also has to be kept in perspective.
The great bulk of our young people do say no to drugs and I applaud
them, but a portion of them don't and society has to tackle the
problem in three ways. It's not just a law and order problem, although
that's an important dimension of it. And you do need as we have provided
increased resources through our police and customs services. It is
also an education problem. We do need to have a clear understanding
of the dangers of drugs and communicate those dangers to our young,
particularly through our schools. And schools are entitled to lay
down rules, they are entitled to stipulate codes of behaviour and
nobody should complain if those rules are enforced and enforced rigorously.
We also have to provide, and I think this has been one of the areas
where we have perhaps fallen behind as a community in recent years,
we have to provide some assistance and help to those people who are
addicted and need support in order to break their addiction. And I
went to the Adelaide Central Mission this morning to announce the
details of one of the programs of the Mission that we are funding
out of our increased commitment to rehabilitation and treatment. And
after I'd made my presentation I had the opportunity of talking to
some of the people whose lives had been so devastated by drugs and
who were seeking the assistance of the mission. And two or three of
them in talking to me, their common theme was that as things stand
at present, somebody who's been addicted to drugs wants to try and
break the habit, it often takes too long a period of time between
them taking of that decision and when some help is available. And
that is not the fault of the welfare organisations. They all do in
my view, a magnificent job and they deserve our praise and our thanks.
I think in the past perhaps we haven't, governments generally, not
just federal government's but state governments as well, we are all
in this together, have perhaps not put enough resources into the treatment
and the rehabilitation end of the problem. And that is why in our
"Tough on Drugs" strategy, which has now committed more
than $500 million additional over a period of four years, that that
includes a very significant component of extra support for treatment
and rehabilitation.
And I'll have the opportunity later this afternoon of talking in more
detail when I close the major conference on drugs strategy which has
been going on in Adelaide over the past few days. I mention that issue
ladies and gentlemen because these challenges can't be put in watertight
isolated compartments. The health of the economy is influenced by
the health of our society. The health of our society in turn is very
heavily influenced by the strength of our economy. The two are inextricably
linked and bound up. And increasingly as I find in my responsibilities
that we need more than ever before, we need an effective social coalition
in this country.
The Government can't do everything. It doesn't have the resources
to do everything nor does it have the wisdom to do everything. The
welfare sector, magnificent though it is, can't do everything either.
It certainly doesn't have the resources and it certainly in many areas,
although it has the human understanding and the expertise, there are
other areas of expertise that are needed.
Individuals who have difficult and broken lives need help to change
their lifestyle and they need help to change their attitudes. The
business community which many members contribute magnificently to
charitable and welfare causes can't do it all on its own either. And
therefore, I've talked a lot recently about building a better social
coalition. The Government, the welfare sector, the individual and
the business community, each playing it's own part, each making a
contribution according to its capacity. And this is not the soft cell
for the Government getting out of its financial responsibilities,
it's quite the contrary. There are ongoing financial responsibilities
in the social welfare sector which the Government, and only the Government,
on behalf of the tax payer can carry. And this is not in any way a
soft cell to say: well we're going to reduce our contribution and
we expect the welfare sector and the community to pick up more. No,
it's really an aim of mind to try and build a stronger and more effective
social coalition that harnesses the resources that the Government
has and the expertise it has with the resources that other sections
of the community have and the expertise that they have.
And all of that of course in the end does depend very much on the
strength of our economy. And although the economy is not the only
thing in life, and I've never argued that, and I've indicated that
today with my reference to other issues. But it's a very, very important
part of our capacity, unless we have a healthy economy there are a
lot of things we can't do. And we do have a healthy economy at the
present time and it hasn't happened by accident. We have been able
to stare down the worst of the Asian economic downturn. We have got
a stronger economy now than we've had for 30 years. We've got the
lowest inflation, the lowest interest rates for 30 years, the lowest
unemployment for almost 10 years, an enviable level of business investment,
a growing respect around the world, a growing interest in the economic
strength and attractiveness and stability of Australia and the Australian
economy.
Now those things have happened as a result of policy resolve. And
we did some very unpopular things in our first year in office and
we got a lot of criticism and we lost a bit of skin and a bit of paint
and I understand that. But if we hadn't have done that, just imagine
where the Australian economy would be now if we still had a $10 billion
deficit. Just imagine where we would be now if we still had interest
rates of four or five percent higher than what they are now. Just
imagine where we would have been if our inflation rate was much higher
now than what it is.
We would have then felt the full brunt of the Asian economic downturn.
The reason we were able to escape that brunt was that our fundamentals
were much stronger. And that's something that we can all feel particularly
proud of and it's something to which every Australian has made a contribution.
And to which as Prime Minister of our country I am extremely grateful.
So Corey, ladies and gentleman thank you very much for having me here
today, I think I can report to you that the Federal Liberal Government
is in good heart, in good voice. We think the policies that we've
implemented continue to be successful but we're not complacent. And
it's when you think you're going extremely well in politics that something
can suddenly go wrong. I've been around a long time and I've experienced
that phenomenon probably about 150 times and I've no doubt that I'll
experience it again as time goes by.
But the other thing I've learnt from almost 25 years in politics is
that if you are prepared to stand up and boldly state what you believe
in and you go out to the Australian public and you argue it strongly
and you defend your point of view, in the end you win the argument.
Now we did that with the GST. We won the political argument all we've
got to do now is get it through the Senate.
Thank you very much.
[ends]