Subjects: strength of the Australian economy; Aus
E&OE ....................................................................................
Before I deliver my remarks, I would like to take this
opportunity as I sometimes do when abroad to formally confer the award,
of an honorary award in the Order of Australia and I would like to invite
Gurion Meltzer to come forward to participate in this very small but very
important ceremony.
On behalf of the Governor General of the Commonwealth
of Australia and at his request, it is now my privilege and pleasure to
present with his insignia, one whom Australia has been very pleased to
honour. Gurion Meltzer, I appoint you as an honorary officer in the general
division of the Order of Australia for very long and meritorious service
to Australian-Israeli relations. Congratulations.
Dr Meltzer...
Well can I say, ladies and gentleman, to all of you and
to all of the very distinguished guests how delighted Janette and I are
to be amongst you and to have the opportunity of addressing a few remarks
about not only the strength of the Australian economy and how we see the
world economically but also the importance of economic and commercial
relations between our two communities.
Israel and Australia have a multi-faceted relationship.
It is a relationship that has a lot of history. It is a relationship that
is based upon common values. It's a relationship that is constantly
nourished and supported and renewed by the free flow of people between
our two societies and I was reminded at the University this morning as
I moved around and met the people who were there just how many Australians
there are studying in Israel, just how many Australian business men and
women spend considerable periods of time in your country and just how
long and close are the bonds that bring us together.
But I speak particularly today of the economic environment
in which both of our communities operate. The world at present is enjoying
one of the most sustained periods of economic growth of industrialised
nations that we have seen in 50 or 60 years.
The strongest economy in the world, the United States,
is enjoying an unprecedented level of economic growth and prosperity.
There are welcome signs that the major economies of Europe are recovering.
There are signs that the weakness evident in the Japanese economy in recent
years is coming to an end and while we're not going to see a resumption
of American style growth in Japan, there are signs that the recessionary
tendencies of the Japanese economy are now behind us.
The other good news on the world front is that the economies
worst hit by the Asian downtown in some cases are now beginning to enjoy
recovery. Our own country is experiencing its strongest period of economic
growth since the late 1960's and in many respects that economic growth
now in Australia is more sustainable and more broadly based than what
it was in the late 1960's because we no longer operate behind such
high protective walls, our economy is more open, it's more competitive
and we are beginning to enjoy the benefits of a series of economic reforms
undertaken by governments of both political persuasions over a number
of years.
So the economic settings in which we operate at the present
time around the world as far as industrialised countries are concerned
and that of course includes both Australia and Israel are about as propitious
and encouraging as they have been for decades.
The common catch cry of the world, and it's true,
is that we live in a globalised economy and that globalisation takes many
forms. I was reminded of one of the forms of that globalisation some weeks
ago when I went on a tour around country areas of Australia, when I visited
a place called Bourke and, as the Australians in the audience will know
and many Israelis in the audience will know, there's no expression
quite as Australian as to say that you've been to the 'back
of Bourke'. And when I went to the back of Bourke, what did I learn?
I learnt a great deal about Israeli irrigation techniques. Because one
of the burgeoning industries back of Bourke now is of course the cotton
industry and we have seen what used to be a community depending very heavily
on wool and other basic commodities or traditional commodities, we've
seen that community now turn its hand to the development of a cotton industry
and a very prosperous cotton industry.
And of course it's drawn very heavily on the expertise
of Israelis so far as irrigation is concerned. Now that's perhaps
not the most immediate example you think of when you talk about a globalised
economy. You tend to think of those people who look at screens all day
and all night and watch the movement of numbers as seamlessly currencies
change and resources flow across nations in this borderless, seamless
economic environment in which we operate. But in so many ways now, we
are all citizens of the one economic world and there is no turning back.
Any idea that any of us might have that you can go back to some kind of
comfortable, more cloistered domestic economic environment is totally
unreal. The nature of the world in which we live now means that all countries
can no longer do other than simply compete and compete and compete again
in order to stay in front of or at least equal with their economic rivals.
It's of no comfort to say to yourself we're doing better than
we were doing 10 years ago or 20 years ago. That's irrelevant. The
only thing that really matters now is whether you are doing better as
against those that seek the same markets as you seek in these early years
of the 21st Century.
And that's the reason why the government I lead
has set about in the four years it's been in government undertaking
some major economic reforms. There have been some economic reforms carried
out in Australia in the past which have helped to open up and strengthen
our economy and I have never been unwilling either at home or abroad to
give credit to the former government for some of the decisions it took
particularly the freeing of the exchange rate and the deregulation of
our financial system.
And those reforms made possible in part by the co-operation
that government enjoyed from the then opposition. And other changes have
added to the momentum for strengthening and change of the Australian economy
over recent years. And one of the other features that I find interesting
about the global economic environment in which we now live is the far
greater convergence between the political attitudes towards running an
economy across the political spectrum. One goes around the world and talks
to a Prime Minister or a President who is formerly of the centre right
or formerly of the centre left and you talk about economic issues and
economic challenges. The answers you get on many of the questions you
raise are not all that different and it indicates that the realities of
the modern world are such that the solutions that commend themselves are
solutions that commend themselves to people who might in a formal sense
have different political philosophies.
But we have set about making our economy more competitive.
Leon was kind enough to recite some of the changes for which we have been
responsible. And can I interpolate here by acknowledging one of the achievements
to which Leon and his colleagues in the Australian Israeli Chamber of
Commerce in Australia have been responsible and that is that they were
responsible for organising the largest ever sit down lunch that I have
addressed in Australia. There were 1400 of you at the Crown Casino in
Melbourne and then I think you had television hook-ups all around Australia
and I was reliably informed by Leon that the total number of people viewing
that lunch was in the order of 3500 and it really does take the prize
for being the largest sit down lunch that I have ever addressed in my
time as Prime Minister.
Leon was kind enough to mention some of the reforms that
we have undertaken and far and away the most important of those is the
introduction of a new taxation system on the 1st of July this
year to which I'll come to in a moment. But I wouldn't want
you to think that I regard that as in any sense the only major economic
change. He talked about the importance of industrial relations reform.
We inherited an industrial relations system when we came
to government that was too heavily dominated by formal award structures.
We inherited an industrial relations system where too much of a monopoly
of bargaining power was given to trade unions and too little room was
left for direct negotiation between individual employers and employees.
We have changed that. We have not taken away people's
right to join or not to join a labour organisation, but we have promoted
the idea that if people want to make direct bargains with their employers
they should, without the intervention of a union, they should have the
right to do so. And one of the reasons why productivity in our country
has risen and why workers in Australia are better off in real terms than
they were a few years ago is that the industrial relations system is far
more conducive to higher productivity.
We've also committed ourselves to the privatisation
of those government business enterprises that should no longer be in government
ownership. We are about half way there with Telstra, our major telecommunications
provider. We face domestic political opposition but we intend to pursue
our policy of selling the remaining 50.1 per cent in that telecommunications
carrier. We see no virtue at all in a government owning 50.1 per cent
and investing something in the order of $50 billion Australian dollars
of public money in a telecommunications company, believing that those
resources could be better invested either through debt retirement or elsewhere
for the benefit of the Australian community.
But it is of course in the area of tax reform that most
publicity about our economic reform program has been generated and the
changes are mammoth. They touch every section of Australian economic development
and activity. We will after the 1st of July move from a corporate
tax rate of 36 cents in the dollar in two stages to 30 cents in the dollar.
We will virtually halve the capital gains tax. We will abolish provisional
taxation which is of great benefit, the abolition, of great benefit, to
retired people. We will sweep away existing indirect taxes and replace
those indirect taxes with a single rate value added or goods and services
tax of 10 per cent and that will be accompanied by major reductions in
personal income tax that will mean that something in the order of 80 per
cent of Australian tax payers will be on a top marginal rate of no more
than 30 cents in the dollar.
Importantly in a federation we will introduce a system
whereby the total proceeds of the goods and services tax will go to the
six States of Australia and the two Territories of Australia which will
enable them to more adequately fund on an ongoing basis those essential
bread and butter services such as public hospitals, government schools,
police services and roads, which are the direct responsibility in our
arrangement of state governments.
That is important in the Australian political context
because debate and argument between Federal and State Governments has
been a long running political and economic source of discontent and debate
for many years.
So it does represent a major reform. It will transform
the taxation environment in which the Australian economy operates. Overall
we're watching an Australian economy at the present time that continues
to grow at over 4 per cent a year or thereabouts. There are some signs
in some areas of some slowing, but overall the projection is for continued
very strong growth.
Our budgets for the last two years have been in surplus
and it remains a commitment of the government to retain the budget surpluses.
We don't, of course, regard this achievement as being something to
be complacent about. Economic progress and economic growth is something
that governments should continue to strive to maintain and to improve.
Earlier speakers have mentioned the linkages between
the responsibilities of government and the responsibilities of business
in providing for a healthy economy. It is not the role of government to
pick winners or to play favourites in business activity. It is the role
of the government to provide a benign, if possible, economic climate,
to set the best set of corporate governance rules they can. To provide
a well regulated and stable banking system. To provide as competitive
an economic environment as they can and then leave it to individual companies
to make their commercial decision. And that of course has been the attitude
of my government and as I know been the credo of the Australian Israeli
Chamber of Commerce.
Israel and Australia have a significant trading and economic
relationship. It is not, of course, as extensive as our economic relationship
with countries such as Japan and Korea and the United States. The size
and disposition of our two economies militates against it being as close
and as extensive as that. But the opportunities for growth and improvement,
particularly in areas of information technology, in areas of research
and development, and in areas which bear upon the intellectual capital
of the two countries, the opportunities for advancement in that area are
very extensive.
We share a lot of things in common. We are both sophisticated
societies. We are societies that believe very firmly that companies are
entitled to operate in a clear, open, readily understood environment of
corporate regulation. And we are societies that believe very strongly
in the rule of law applying not only in relation to personal conduct,
but also in relation to business conduct. And the climate in which business
operates is of no lesser importance now than it was 20 or 30 years ago.
And one of the lessons that we must learn from the Asian economic downturn
is that when the view is taken that the need for clear rules of corporate
governance and a clear separation of the responsibilities of government
and the responsibilities of the private sector when the view is taken
that those requirements can be sidestepped or ignored that that is one
of the reasons why economies fall into decline and get into economic difficulty.
So one of the great things that our two societies have in common is a
belief that we should operate in the same kind of general economic and
regulatory environment.
The other great asset that Australia and Israel have,
of course, is the very frequent interchange between our leading business
identities and personalities. And the series of economic missions that
have come to Israel, some of them led by Ministers, others led by leading
businessmen, all of them have made a contribution and in the process I
believe that the opportunities for an expansion of economic exchanges
and trade and investment must over a period of time grow very significantly.
I can assure you that the reputation of this country
for expertise in information technology, the reputation of this country
of being a high performer and something of an example to follow in areas
of research and development that that reputation is widely noted and respected
within Australia. The sophistication and capacity of Israel and Israelis
in many areas of technology is also something which is very widely and
warmly understood.
Can I finish ladies and gentlemen in saying how important
I regard the contribution of the various chambers of commerce within our
society and within Israel. In both cases what the organisations do is
to bring together in an appropriate way the influence and the role of
government and the influence and the role of business communities. The
commitment of the chamber in Australia not only to developing very good
political and person to person relations between Israel and Australia
is well known and widely admired. And of course, the constant entreaties
they make, the constant submissions they put to the government on behalf
of improving economic relations between our two communities is also of
very great importance.
I have been very warmly received in Israel and whenever
political or business leaders of Israel visit Australia they are also
very warmly received. And that occurs because there is a very genuine
warmth between our two societies. It's a warmth which I said at the
beginning of my speech is rooted in history but it's also rooted
in some very important values that we share in common and some of the
contributions of that warmth I know is very much due to the activity of
the two chambers and that is why I'm delighted to have had this opportunity
of addressing you. But saying to all the business men and women of Israel
that I speak as Prime Minister of an economy and a country which is very
strong, which continues to grow, which has seen its unemployment rate
come down, which believes in an open economic environment, that strives
to be more competitive, is willing to undertake major economic change
and is prepared to take political risks in the process of doing that.
I think these attitudes and these views have some resonance
and some receptivity here in Israel and on that basis I believe that not
only our political and person to person relationship in the years to come
but also our economic relationship will indeed be very strong.
Thank you.
QUESTIONS & ANSWERS
QUESTION:
Prime Minister what are your plans for telecommunications
vis-a-vis distance education in rural areas of Australia?
PRIME MINISTER:
Well the telecommunications infrastructure in rural Australia
is what you would in a masterstroke of understatement in Australian politics
call a big issue. It gets a big run. Sometimes it gets a bigger run than
it deserves because some of the issues that are talked about are a little
exaggerated. But let me say that I think Australians living in remote
areas of our country, and we have quite a few of those, are entitled to
good communications and they are getting better communications. We have
invested a lot of the proceeds of the partial sale of Telstra into providing
better communications and I think that over the next year you're
going to see quite a significant improvement in the provision of those
communications.
One of Australia's most eminent historians coined
a phrase some years ago which is very evocative to most of us in Australia,
when he spoke of the tyranny of distance and what has happened, I believe,
with information technology and the modernisation of communications is
that in a way that wasn't previously possible we have a means at
our disposal to demolish or remove the tyranny of distance for many people
who live in the less populated areas of our country.
One of the remarkable things about Australia is that
although it is a big country, and it's well known around the world
for the bush, for rural and country areas, yet something like 85 per cent
of the population of Australia lives in major cities which are very light
in density and so forth than the major cities of Europe. It's one
of the paradoxes, the contradictions, it's part of the variety of
the country. Communications in the bush are very important. If I lived
in the bush I would want very good communications and as Prime Minister
for people who live in the country areas of Australia, I'm determined
that they will get it.
QUESTION:
How do you see Australia's telecommunications role
in Asia in the future?
PRIME MINISTER:
Well I would not see Australia's future role in
Asia in telecommunications separately from Australia's future economic
role in Asia generally speaking. The Asian Pacific region is obviously
the most important region in the world for Australia economically. And
the fact that I'm in Israel and I've been in Europe and that
I sought in the time that I've been Prime Minister to get a slightly
better balance in our relations with the different regions of the world
in no way alters the fact that I see Asia and the Asian Pacific region
as being far and away the most important market destination for Australian
goods and services but also the area where we have so much to offer given
our particular strengths. We have a lot to offer because of a very well
educated, sophisticated workforce. There are 800,000 Australian citizens
who speak Asian languages and that is an enormous asset in our dealing
with the Asian economic arena. We have seen a fall in economic activity
in Asia over the last few years but it is rebounding. Of our three best
customers undeniably the first is Japan. Our second best customer is either
the United States or Korea and there are other very significant markets.
So I make the general point that although Europe and America and the Middle
East are very important to Australia but no Australian Prime Minister
gainsays the particular and special importance of the Asian Pacific region.
I think the capacity of our telecommunication companies to effectively
compete in the Asian Pacific region would of course be enhanced if the
one owned 50.1 per cent by the government were fully owned by the private
sector and that's one of many reasons, including debt retirement
and a better use of that big public investment that I believe that privatisation
should proceed, but that is a matter for political debate and political
resolution within Australia.
But we have a highly sophisticated workforce. I also
recognise that a number of Asian countries have very highly sophisticated
and IT literate citizens, particularly countries such as India, but not
only India but Singapore and Hong Kong and China - all of them -
and we have an approach to business migration and a general approach to
investment that I think enables us to take full advantage. So I see us
having a very active economic future in the region and that very particularly
includes investment in the area of telecommunications.
QUESTION:
(inaudible)?
PRIME MINISTER:
Look we are, we are generally pragmatic about trade opportunities
and being pragmatic about trade opportunities we have thus far taken the
view that the best way to get a better trade deal for Australia is to
try and make the multi-lateral trade mechanisms and trade forums work
effectively and that's why we're pushing very, very hard for
a new world trade round that can particularly provide roughly comparable
treatment for the things that we export very efficiently, like agriculture,
compared with the way in which manufactured goods are treated by the trading
nations of the world. And we were very disappointed at the Seattle meeting,
we thought that was a very disappointing event indeed and we're pushing
very strongly.
So our preference has been rather than having a series
of free, bilateral, free trade arrangements, our preference for a very
good reason has been to try and improve the whole multilateral environment
and we will continue to do that.
We never rule anything out. You never do. You are utterly
pragmatic when it comes to these trading arrangements. Most nations are
and Australia is no exception but to date we've had a preference
for a multi-lateral approach.
[ends]