Subjects: Industrial relations reform; welfare reform; Defence White Paper; tax reform
E&OE..................
Thank you very much John; to my ministerial and parliamentary colleagues. It is of course approaching the active end or the heavy business end, I might say, of the festive season and therefore on an occasion like this I am tempted, and I will succumb to the temptation, of saying a few things about what has happened over the last year, of what the Government has sought to do and also project forward with some of the plans that we have for further reforms and changes to the Australian economy and further things to do in what is one of our most fundamental responsibilities as the government of Australia, and that is to continue to produce very strong economic management.
I thank the chamber for the very strong professional relationship it has established with the Government. You have a very professional outfit. You represent your members well, you agree with the government on some things and you disagree with the government on others. And that is how it ought to be with an organisation representing such a diversity of business groups and businesses around Australia, and a government whilst it is proud to say it belongs to no single constituency in the country and is not owned by any interest group nor dominated by any interest group, is nonetheless a government that generally espouses in a very consistent way the principles of private enterprise. It has a strong belief in capital accumulation, on proper and fair terms, and it has a very strong belief that market solutions are normally the best solutions, although it does recognise from time to time that there is a proper and strategic role for government involvement and government intervention where the market is not delivering the right outcome.
And as I look back over the last twelve months, it has been a year of extraordinary change and extraordinary achievement. One of the things I resolved when I became Prime Minister, and I know it was a resolve shared by all of my colleagues, was that we were going to be an active government. We were going to be a government that was not afraid to take decisions and a government that would rather be remembered as having perhaps on occasions taken decisions that were unpopular and difficult and suffered some adversity in the process, than a government that would be remembered as one that essentially didn't take the full opportunity presented by its mandate. And as you know we campaigned very hard before our election on economic reform. And I suppose of all the areas of economic reform that I have been personally identified with over the years, and one that I shared very strongly with the members of ACCI, was of course the cause of industrial relations reform. And if you look back at what has happened to the Australian economy over the last four-and-a-half years, you can see the fruits of the implementation of the Government's policies of industrial relations reform.
There are many things you can say about the economic performance of Australia. You can talk about the sustained and very high growth rates; you can talk about the lower interest rates than we inherited; you can talk about the very low rates of inflation; you can talk about the fairly consistent patterns of business investment. But one of the most exciting things to me about what has happened over the last four-and-a-half years is that we have presided over what in the end is as good a mark of good economic credentials as any, and that is we have presided over increases in real incomes of Australian workers which have been based on higher productivity. And the gain in labour productivity in Australia of something like 3.4% a year since 1996 according to the United States' Federal Reserve's recent analysis, even more meritorious than that of the United States, has been the thing that more than anything else has underpinned our capacity as a community to deliver what in the end we all want to deliver and that is higher real wages for our employees. Because in the long run if you want to run a business successfully for a sustained period of time you do need to have well remunerated and contented employees. And if you've got the capacity with a high productivity economy to deliver real income gains without inspiring or bringing about a resurgence of inflation than that truly is something that you can reflect upon with a certain amount of satisfaction.
And key to the lift in productivity has been the industrial relations reform record of this Government. And he's here tonight and I want to thank Peter Reith for the work that he's done in relation to industrial relations' reform. A couple of years ago the most difficult element of that industrial relations reform programme was embraced and that was reform of the Australian waterfront. It was a reform package that attracted enormous criticism and relentless scrutiny and it involved an immense amount of personal and political courage on the part of the Minister and it was a reform that is now paying very handsome dividends in terms of higher productivity levels expressed in particular in higher average crane rates on the Australian waterfront. The Australian waterfront has changed forever for the better as a result of that reform programme. And I do remark that in all the years I've talked to business about the need for industrial relations reform, the constant entreaty from business was that we do something about the chronic state of productivity on the Australian waterfront. And I am very proud to say, difficult though the process was, that we have achieved significant things on that front.
And if I could be permitted, however fleetingly to draw a political comparison about a policy area, the one I would point to as posing the most threat in terms of a change of government would be the area of industrial relations. Because make no mistake the present Federal Opposition and therefore a future Federal Labor Government would turn back the clock on industrial relations' reform. They make no bones about it and it's very important that that be borne in mind as assessments are made by the Australian business community over the next year.
Ladies and Gentlemen the last twelve months of course has been very much dominated by taxation reform. Taxation reform is something that this country has needed for a generation. It was being talked about when I came into Parliament in 1974. I well remember the Whitlam Government tabling the report of the Asprey Committee which recommended the introduction of a broad-based indirect tax and it recommended the abolition of the wholesale sales tax and a number of other changes. And that was twenty-five years ago. And at various stages over that quarter of a century, governments revisited the issue of taxation reform only to walk away from it. An Opposition tried it and failed in the attempt in 1993. We went to the last election with a programme of taxation reform. We won that election and we set about implementing the programme that we had been elected on. We didn't get everything through the Parliament because we don't control the Senate. But we got through the great bulk of what we'd taken to the Australian people. There were plenty of prophecies of doom before the 1st of July and there were many people who politically were hoping it would all fall in a heap. But of course it didn't fall in a heap and one of the reasons that it didn't fall in a heap is that we had magnificent co-operation from the business community. And I take this opportunity in addressing a body that represents I think probably the biggest cross-section of Australian businesses at a national level of thanking the business community of Australia for the way in which whatever their own individual circumstances were they put the national interest in front of their own personal interest. And on this issue your organisation was outstanding in the understanding and co-operation that it extended to the Government in the months that led up to the introduction of the new taxation system. This was an occasion when Australian businesses rose to the national interest. They rose to the occasion. They said for years we have argued for taxation reform and whatever may be the impact on our individual circumstances, we're going to put those aside and we're going to embrace taxation reform and give it a fair go.
Now I know that when you bring in something different like this it's always hard, the adjustment process. And I know getting used to the new system is difficult, we understand that. And we are prepared to listen to people's concerns about the administration of the transition. I made some comments the other day about one of the forms that is in the news lately and I know that there is a very sympathetic understanding of the adjustment process. I also know that when you change over to a new system it's an enormous challenge to the administration. And since the Commissioner is here tonight I would like to record my thanks to you the Commissioner of Taxation on behalf of the Government for the way in which you and your officers have handled the very, very difficult transitional process. It's not easy, nobody's perfect, we all need a little bit of fine-tuning in relation to something of that kind. But there's been a great willingness on the part of the tax administration as there has been on the part of the business community to get behind a reform that is fundamentally beneficial. And I also acknowledge the contribution of the Australian Competition and Consumer Commission whose Chairman Alan Fels is also with us tonight.
It has been a mammoth task, but it's been a mammoth task very much in the national interest. You don't get many opportunities in public life to be involved in a change of this kind. And we were determined having at long last got the opportunity to implement this major change, we were determined to see it through. And I have no doubt that it will be greatly to the credit, greatly to the benefit rather of the Australian economy in the years ahead that we have made this change. Because in a globalised economy you no longer have the option of sitting on your hands, of resting on past achievements, of thinking that somehow or other the world will pass you by and you will still be able to retain your standards of living come what may. That is no longer an option for Australia and there will always be a need for further reform. And we haven't lost our commitment to economic reform. We understand the challenges facing the Australian economy. The fundamental condition of the Australian economy is very strong. But I acknowledge the points made by Doctor Cannery in his introduction about some of the recent challenges to the business climate in Australia to which he made reference. And I appreciate that the dialogue that exists between the Government and the Chamber makes it possible for us to discuss those things with you and with your members.
We're coming to the end of what has been a very busy year, but we're going to end the year in a very busy fashion. You are aware that a couple of weeks ago the Treasurer released the mid-year economic and financial overview. It disclosed that the projected Budget surplus was going to be $4.3 billion on a cash basis rather than $2.8 billion. And I announced that because we're in a stronger budget position we would make a significant additional investment in local road maintenance and construction around Australia. Road construction and maintenance is very important in a country as big as Australia. The need to maintain our roads in good condition and the benefits that accrue from that for all Australian producers I know will be readily understood by an audience of this kind. It does in our view represent a very important long term investment in the future of some basic infrastructure in our country. Your President referred also to the initiative we'd taken in relation to salinity and water quality. An initiative which I am very happy to say won the unanimous backing of all of the State Premiers and Chief Ministers at the recent COAG meeting here in Canberra. And together we can begin the process of arresting years of decline in our soil quality and tackle a situation which I suppose is best epitomised by the realisation that if we don't do something about it in twenty years time on two out of five days the drinking water of the city of Adelaide will not be fit for human consumption.
So those two commitments, the salinity and water quality commitment, the commitment of additional funds of $1.6 billion distributed in a very fair and equitable fashion throughout the whole of Australia going directly to local government, those two decisions represent very important long term investments in the future infrastructure of this country.
Next week we will also be making a very important announcement which affects the future security of this country - we'll be releasing the long awaited Defence White Paper. That White Paper will represent the biggest revamp, the biggest, the most comprehensive reappraisal of our defence capacity in decades. It will involve the announcement of significant additional financial resources for the defence forces of this country. I have believed for many years and certainly for all of the time that I have been Prime Minister that this country does need to spend more on defence. I don't say that aggressively, this is not a belligerent country, it is a peace-loving country. It is a country that has never sought to impose its will by force on others. But it has always been a country that has been willing to assume its responsibilities and it is clear that the circumstances of our region now are less predictable than perhaps they were ten or twenty years ago. And our response will be appropriate, it will be measured, it will be clearly understood and seen by our neighbours in the region, as not an act of belligerence but rather the prudent response of a very responsible middle-power with very strong liberal, democratic traditions. And the Defence White Paper to be released next week will be a very important element in a very valuable and intensive public debate that is going on in this country about its defence preparedness.
I am also conscious as your President mentioned, of the many views that have been put to the Government by those who think there should be a greater emphasis on science, research and innovation. They are very important components of our economic strength. They are quite fundamental to our economic future. And I've shared with Doctor Cannery the pleasure of the Prime Minister's Science, Engineering and Innovation Council. As a person trained in the law and therefore having beyond passing chemistry and the leaving certificate back in the 1950s a fairly modest understanding of matters scientific, I've got to say to you that I've found the experience and the eye-opening propositions put to that Council one of the more enjoyable and rewarding parts of my prime ministership. And we will I hope in the New Year give a definitive response to the several reports that have come out of the Innovation Summit and have come out of other propositions that have been put to the Government.
We're also going to have from Senator Newman a directional statement in relation to the Government's response to the McClure Report into social welfare. I take the opportunity of saying again that we are a Government that is very strongly committed to the maintenance of the social security safety net. We do not want a welfare bill which is larger than it should be, but equally we do not want a society that neglects or poorly cares for the more vulnerable and the poorest elements of our community. It has always been the Australian way to strike a balance between prudent use of the taxpayers' dollars and the need to give adequate support for the more vulnerable in our community including those groups in our society who clearly suffer significant economic disadvantage.
Now ladies and gentlemen as I look back over the last year and more generally over the last four and a half years, I can say that the partnership we've had with your organisation has been a very important element of the communication between the Government and the business community of Australia and I hope that process continues. We have come a long way over the last few years. We've repaid $50 billion of government debt, we are now running a Budget which is balanced and the surplus is being used to either fund affordable additional commitments or to retire additional debt. And can I assure you John and your members that we have no intention of frittering away the hard-won economic gains of the last four and a half years. But that commitment does allow for the Government to make provision for important areas of expenditure that must be incurred in the national interest and one of them is facing us right at the very moment - it will be necessary for the Government to spend more money in order to assist those farmers of Australia who've been so badly devastated by the floods in northern New South Wales. Those kind of things are a collective national responsibility and it's always the role of government to step in and lend a helping hand on those occasions. But I can assure all of you that we know that the foundation of business profitability is low inflation, a strongly growing economy, a loosely regulated environment that allows business to take decisions which are in the interests of its own future and the interests of its employees. And we intend to maintain in the years ahead that balance of policies that has brought to Australia its longest continuous period of economic growth since the 1960s. A period of economic growth that frankly I didn't believe could be maintained some two to two and a half years ago when we were hit by the Asian economic downturn. But through a combination of the fruits of economic reform, the flexibility of our exchange rate a point that should not be lost sight of in the current debate about the Australian currency and the innovative skill and capacity of the Australian business community we were able to emerge from that period of downturn in Asia with our economy essentially unscathed.
I can assure that we won't lose touch with the concerns of the business community. We are alive and sensitive to how easily circumstances can change and how important it is to maintain the channels of communication between all of the members of the Government and you and all of the people that you represent. I congratulate ACCI on a very valuable and positive year in representing the interests of their members. I thank them for the lines of communication and exchanges that you've established with us and I wish all of you a very enjoyable Christmas and a very prosperous New Year in every sense of that expression.
Thank you.
[Ends]