E&OE...................
Well thank you very much Mr Finemore, ladies and
gentlemen.
It is a real pleasure not only to be amongst you
today but to realise I am the first Prime Minister of Australia to
have addressed a national trucking convention.
People have often spoken of the tyranny of distance that was
a famous and evocative phrase created by that great Australian historian
Geoffrey Blainey. And
if ever space and distance has defined the character of a nation then
the space and the distance between population centres has had a huge
impact on the character and the spirit of the Australian people.
And there is no industry in Australia which in a way is more
conscious of the vast distances and the vast space and the impact
of that on our national psyche than your own industry.
I want to thank you for the major contribution
you make to the economic strength and vitality of the Australian community.
You are an industry comprised in the main of people who are
fiercely committed to the free enterprise ethic.
You are fiercely committed to the ideals of hard work in the
hope of a decent return. And
in that sense and in that spirit you are part of the business free
enterprise background of the Australian nation.
Your contribution has been significant and your
contribution can be even greater if the Government can secure passage
through the Australian Parliament of its fundamental reform of the
Australian taxation system.
I will come to that proposal in just a moment but before doing
so I want to say one or two things briefly about the general economic
backdrop against which this convention takes place.
The Australian economy at the moment is performing
very strongly, more strongly than it has for probably 30 years.
We have very low inflation, much lower interest rates, a high
level of business investment, a lower rate of unemployment than the
case three years ago, a reputation around the world and particularly
in our region of a country that was able to stare down the worst of
the Asian economic downturn.
That has not happened by accident, it has happened through
a combination of the hard work of business Australia represented here
today, the contribution of the employees of Australia and also through
sensible on occasions stoic government policy in the face of fierce
criticism for taking some initially unpopular measures.
You remember some of the outcry three years ago
when we set about cutting the budget deficit of $10.5 billion that
we inherited. Just imagine
where we would now be if we were still in deficit.
Just imagine where our interest rates might now be if we still
had a deficit of $10.5 billion or more.
Just ask yourselves whether we would have been able to stare
down the Asian economic downturn if we had not set about putting our
books in order. And so
it has been in relation to so many policy areas.
We have changed fundamentally Australia's industrial relations
system. And the benefits of that are now being seen in the rising
productivity of Australian workers where it's possible for me as Prime
Minister to say without any fear of contradiction that Australian
employees are better off, truly better off, than they were 10 or 15
years ago. Because they
have enjoyed the double benefit of increases in real wages and also
significant reductions in housing interest rates which have a major
impact on the weekly disposable income of most Australian families.
$320 a month on average has come off the mortgage of Australian
households. And that
is the equivalent of a payrise of $100 a week for average wage and
salary earners. So they
have been real material benefits that have flowed from economic reform.
And today my colleague, Tony Abbott the Minister
for Employment Services, will give a report card on another reform
success that was achieved despite the ridicule and the derision of
our critics when the reform was introduced.
And that is the result one year after its introduction of the
privatised job market or job network which replaced the old Commonwealth
Employment Service.
And I am happy to say that the Job Network has
been 50 per cent more successful in placing unemployed Australians
in work than the old CES. And
that's been achieved in the face of fierce ridicule, derision and
criticism not only from our political opponents but from most of the
media of Australia in the early months of the operation of that scheme.
It was, in fact, a world first.
We were the first country to seriously try the notion of privatising
our labour exchange, our job market.
And of course there was some teething troubles and difficulties
at the beginning but we persevered and the benefits of that very important
reform are now being seen. And
I congratulate and praise my Minister, Tony Abbott, on the work that
he has done since being appointed to that job six months ago.
So there are rewards for reform.
There are always marks given in the long run if governments
are prepared to take a lead and commit themselves to fundamental reform.
And that, of course, brings me to the burning political
issue of the day and that is whether the verdict of the Australian
people in October of last year is going to be listened to and obeyed
by the Parliament of Australia.
Last October we went to the Australian people having released
a detailed plan to reform the Australian taxation system.
We didn't put out a generalised commitment for taxation reform,
we didn't try and skate on thin ice, we didn't try and say to the
Australian people, if you re-elect us we will do something about Australia's
indirect tax system, we'll try and reduce personal income tax, we'll
try and reform the business taxation system.
What we did last October was to explain in total detail what
we would do with the Australian taxation system if we won that election. We told people what the rates would be, we told people what
taxes would be abolished, we told people how income tax would be reduced,
we told people how family benefits would be lifted, we told your industry
of the great benefits of taxation reform.
We laid it out in detail and we went through the fire of an
election campaign with all the dangers during an election campaign
of an hysterical response on occasion to what in reality can only
be side issues.
But our plan remained intact.
We won that election and we are now saying to the Senate of
Australia, it is your duty to obey the wishes of the Australian people.
Because the Australian people had an opportunity to scrutinise
that plan. And I want
the focus to be in the weeks ahead as that debate goes on in the Senate
and comes to a crescendo before the 30th of June.
I want the focus to be on the fundamental benefits in reform
of taxation change. Not
on emotional side issues that are the stuff of good headlines but
do nothing to improve the fundamental structure of fairness or equity
of the Australian taxation system. I want the focus to be on the fact that tax reform will reduce
the annual fuel bill of this vast nation of ours by $3.5 billion.
I want the focus to be on the fact that as a result of the
introduction of our taxation reform plan the price of fuel for business
will fall by seven cents a litre.
I want the focus to be on the fact that for your industry the
effective excise rate will be reduced from 43 cents a litre to 18
cents a litre. That indirect
taxation reform in Australia under our plan will reduce road transport
costs by 6.7 per cent resulting in cost savings of around $1.5 billion.
That the abolition of the wholesale sales tax and the introduction
of a goods and services tax will result in an initial 8.3 per cent
fall in vehicle prices. During
the transition to a GST the eligibility for tax credits will be phased
in over two years and once businesses are eligible for the full input
tax credits the price of vehicles will fall by 16.9 per cent on average.
There are unarguable benefits for your industry
in these reforms. These
reforms will make your industry more competitive. These reforms recognise
the size of Australia. These
reforms will help regional Australia like no other reforms any government
has proposed. These reforms
are sensitive to the cost pressures faced by people who live in rural
and distant areas of our country.
In other words, these reforms attack the fundamental difficulties
of the cost structure of regional and rural Australia.
At a time when we are concerned about the de-population of
the regions of Australia I cannot for the life of me understand that
any political party in Australia would oppose the introduction of
reforms and changes that will do more to revitalise the regions of
Australia than any taxation reform that has ever been proposed.
But the benefit of these reforms do not stop
in the areas that I have mentioned.
Under our taxation plan there will be a fundamental change
to the operation of the personal taxation system.
Under our plan 80 per cent - 80 per cent - of Australian wage
and salary earners will be on a top marginal rate of no more than
30 cents in the dollar. The
impact of that on incentive for middle Australia will be enormous.
Under our plan there will be significant increases in the tax
benefits available for people with children.
It is a tax reform plan that is more sensitive than any before
it for the undeniable cost that Australian families incur in raising
young children. It is
a tax reform plan that will remove many of the poverty traps in the
existing tax welfare system in our country.
Whereby if you get a wage increase, such as the living wage
safety net increase awarded yesterday by the Australian Industrial
Relations Commission, some of the benefit of that raise is gobbled
up through people going into a higher income bracket and, thereby,
losing some of the family allowances they were previously receiving.
Because under our plan the income limits in relation to those
additional family allowances are significantly increased.
And the combination of that plus reductions in marginal tax
rates will remove the theft of the benefits of living wage increases
which are involved and operate under the present system.
Reforms under our plan do not stop at that.
The benefits overall to our exporters - and as a nation we
need incessantly to remember that we need to export to survive - and
our plan will reduce exports costs by $4.5 billion.
Our plan, overall, will reduce business costs throughout Australia
by about $10.5 billion. But
the benefits, of course, do not stop there either.
Under our plan the States of Australia will receive the biggest
single beneficial reform to Commonwealth/State financial relations
since federation. Under
our plan, once the transition phase has been passed through the States
will receive significantly larger amounts than they would if the existing
Commonwealth/State financial relations continued.
And that is because under the plan every last dollar of the
proceeds of the GST will go to the Australian States.
And what that means is that they will have more resources to
spend on government schools, on police services, on hospitals and
on other important community services that are the ongoing responsibility
of the Australian States within our Federal arrangement.
I find it puzzling, I find it bizarre, indeed,
perplexing that our plan should be criticised by so many in the welfare
sector yet under our plan we are providing a guarantee of the revenue
base for the Australian States, the like of which they could receive
under no other arrangement, that will enable them to increase the
support they give to the less well off in the Australian community.
And I say to some of our critics in the welfare sector, do
you really believe that by knocking over the GST you are helping the
less well off in the Australian community.
Because every time you strike a blow against this reform you
are putting at peril the possibility that the Australian States can,
in fact, receive more and therefore have more to support the less
privileged in our community.
I'm pleased to say that the criticism from the welfare sector
is by no means uniform and there are many who are realising the value
of the changes that the Government is proposing.
So, ladies and gentlemen, this particular reform
plan is the most comprehensive change to the Australian taxation system
that has ever been proposed by any government.
And there's not a man or woman who understands politics in
this country or understands taxation, who understands the needs of
the Australian economy, that wouldn't in their silent, private moments
acknowledge that we have needed taxation reform for many years.
If we don't embrace taxation reform now the opportunity
will not come our way in our generation again.
This is the great opportunity this country has to embrace taxation
reform. I will have been
in Parliament 25 years in May of this year and we have been debating,
one way or another, the need for taxation reform for a quarter of
a century. Only a few
months after I entered Parliament there was a document called the
Asprey Report which was a detailed investigation of the Australian
taxation system commissioned by former Liberal Treasurer, the late
Billy Snedden which recommended the introduction of essentially what
the Government proposed to the Australian people last October and
that's a broad-based, indirect tax; recommended the introduction of
lower rates of personal income tax and drew attention to the weaknesses
of our existing wholesale tax system and the inequities it imposed.
Now, that was 25 years ago.
And we've debated it.
It's been proposed from both sides of politics.
I argued for it unsuccessfully as a member of the Fraser Government. Paul Keating proposed it at the tax summit with my support.
He was rolled by Bob Hawke and the unions.
And then in 1993 John Hewson campaigned for it from Opposition
and he was defeated by the most vicious and ferocious fear campaign
waged by the one-time believer, Paul Keating, in taxation reform.
And fast forwarding to 1998 we finally got the
verdict of the Australian people.
We took it to them, warts and all, and we ran all the risk
involved in it. And if
our political system means anything it means that when you take those
risks, you win that support, you put your political future on the
line in the national interest, you are entitled to have that plan
implemented. Not as some
kind of reward to the Prime Minister but because it's for the good
of Australia. It's because
the nation supported it. It's
because the nation decided that you have to embrace changes of that
kind in order to go forward economically.
I believe, ladies and gentlemen, that you
can always persuade the Australian people of the need for fundamental
reform if you satisfy two criteria.
Firstly, you must persuade them that it is good for Australia
because all of us, deep down, care about the collective future and
welfare of our nation. And
you must also persuade them that it is fundamentally fair to different
sections of the Australian community.
Now, that is the responsibility that we undertook before the
last election. And that
is why we laid it out in detail.
And that is why I ignored the warnings of some so-called strategists
and advisers who said you don't campaign on a new tax. Well, of course, it wasn't a new tax. It was an entirely new taxation system. But we ignored those warnings and we campaigned and we won
and we won because people ultimately saw that it was good for Australia
and they accepted that it was fair.
And they do believe that you have to change.
The art of good government is to hang on to those things that
continue to work and continue to serve us well but at the same time
display a willingness to get rid of those things that are no longer
helping the country and are holding back its progress.
And that has been the genius of this country for so many years,
that we've been able to do that and we must now face doing it in relation
to taxation reform. We
cannot go on forever putting it off and that is why I'm so committed.
And I want to ensure that I have no intention of backing away
from the plan that we put to the Australian people last October -
no intention at all. Of
course in this or that area we can fine-tune it but the essentials
and the comprehensive character of the change that I've outlined to
you today of which I'm sure so many of you are very familiar, that
they are not going to be touched because each is so dependent on the
other. It's not the sort of thing where you can have the one bit but
take away another. It
is an integrated whole and that is its great appeal and that is its
great benefit for the Australian people.
We have achieved a lot economically over the last
few years. We have come
through the worst downturn in the Asian economic experience without
being seriously dented. And
that has happened because in so many areas we have reformed and strengthened
our economy. But there's
only one thing that matters in the modern, globalised world economy
and that is not how you compare with how you were a few years ago,
or not some hypothetical comparison between where you are now or where
you might have been if something had occurred, what really matters
is how you compete and compare in present day circumstances with the
rest of the world. And
we have no option to stop reform in this country.
We have to go on changing to remain competitive and relevant.
And the great challenge for Australia is to consolidate the
strong economic positions we now have.
We can't afford to sit back and say, well, we don't really
need all of this extra reform, look how well we're doing.
Once we start doing that we'll lose the comparative advantage
we now have. The only
way that we can keep ahead of the game and retain that comparative
advantage is to continue further reform.
And that, ladies and gentlemen, means unavoidably, inevitably
and overwhelmingly embracing taxation reform.
And that is why it is the single most important thing on the
Government's economic and reform agenda at the present time.
And it will remain on that agenda until we succeed in implementing
it. Because we're not
going to walk away and I'm not going to give up or surrender on something
that I know in all of my being is important to the long-term economic
future and economic strength of the Australian nation.
There's no point in holding high office in this country if
you don't use the authority that that office gives you to bring about
reforms that you know in your heart and your understanding are important
to the future of the Australian community.