Well thank you very much, Paul. In case any of you don't know, he's the Liberal Party candidate for Ryde in the State election. And after that introduction I've learnt that not only do Greeks bear gifts but they steal lines. I'm going to build my speech around the restoration of our AAA rating. So I'll still do a little bit of that but, first of all, to Edwin Matuik, the Chairman of the Ryde business forum; my parliamentary colleague, Andrew Tink, the member for Epping; Greg Pearce MLC, who's been the Duty Upper House member for the area; Anthony Roberts, who's the Liberal Party candidate for Lane Cove, Paul Nicolaou and ladies and gentlemen.
It is, for me, always a pleasure to come back to this forum. I've addressed it on a number of occasions in the time that I've been Prime Minister and it's an important part of my responsibilities as Prime Minister to look after the people who send me to Parliament, that is the people of the electorate of Bennelong, which of course includes the city of Ryde and I acknowledge the presence of Councillor, Edna Wilde, the Mayor of the city of Ryde. And, of course, it's part of Australia that boasts a very vibrant and diverse business community. People are legitimately entitled to call North Ryde the Silicon Valley of Australia. It's a part of Australia that boasts a very large number of pharmaceutical manufacturing companies. It's a part of Sydney and Australia what has become home to a variety of communications and IT companies. It's also a part of Australia that has a very vibrant university and a very strong educational sector. And many of these influences and many of these activities come together in a quite remarkable way. It's also an electorate of great ethnic diversity. The most widely spoken language, I guess, in the electorate of Bennelong after English would be the various dialects of Chinese. It has a very large Korean community and, of course, a very well established, Greek, Italian and many other communities all coming together in a very positive and united Australian blend.
We're celebrating something very important today and that is the rain. It's a measure of the despair that many of us have felt about the impact of the drought on this country and its economy and on the people of Australia, particularly the people of the land, that we should think something as basic as that is so very important. But there are a number of things that represent clouds on the horizon, no pun being intended, in relation to the economic strength of Australia and the drought has been one of them. It's too early to say that it's been broken but if, in fact, these rains continue and we do see the end of the drought it will be something of immense relief not only to our farmers but to the nation generally because nobody should underestimate the human cost of it, nobody should underestimate the economic cost of it and nobody, of course, should underestimate the sense of injustice and frustration that farmers in our country will feel that they have so few good seasons. And they had a couple after years of bad seasons, they suffered the corruption of world prices, largely due to the bad trading practices of the European Union and the United States and Japan - and I'll come in a moment to some of the differences that we have with different parts of the world when it comes to trade. But the breaking of the drought, if it occurs, will be of enormous benefit to this country.
Our economy is fundamentally stronger than it has been at any time, in my view, since the late 1960s. And there is an argument that it's even stronger than it was in the late 1960s because it is less protected and less propped up by restrictive, regulatory, protectionist policies. In the late 1960s we didn't have a floating exchange rate. In the late 1960s we had very high tariff barriers under which a lot of inefficiency flourished in this country. In the late 1960s we had a very highly regulated labour market. In the late 1960s we had still, I think, a very primitive view of the merits of foreign investment.
Now, a lot of things have changed in this country in the 35 years that have gone by since that period. And why I would argue that the Australian economy now is perhaps fundamentally even stronger than what it was in the late 1960s is that we are better able to survive in a hostile world than was the case then. We don't need as many supports as we needed then and we demonstrated that in 1997 when the Asian economic crisis engulfed our region. Everybody thought that the Australian economy would go under with the economies of Indonesia and Korea and Thailand and Malaysia. That didn't happen. And one of the reasons it didn't happen was that we had basically changed the way in which we ran our economy so that we were able to survive in a more hostile environment more successfully. We lost a lot of markets in Asia in 1997 and instead of losing them forever, we were able to divert those markets to Europe and to North America. And we were able to, through a flexible exchange rate, we were able to win markets in America and Europe that we had lost in Asia. And because of the other reforms that we had undertaken, we were able to ride out that crisis and it barely dented the growth that had returned to the Australian economy. And if you look back over the past six or seven years, there is an impressive record of gathering economic strengths, and in a symbolic way it culminated in the decision of the rating agency last week to restore our AAA credit rating.
We lost that AAA credit rating in 1986, at the time when the then treasurer Mr Keating warned of the possibility of Australia becoming a banana republic because of our very weak balance of payments situation. You don't recover a credit rating like that by accident. It's not like being sent off for 10 minutes, and then allowed back onto the field after the time has expired. If you lose a credit rating like that and you don't change your economy, you never get it back.
But we did change our economy, and one of the things that symbolises, more than anything else, the reason why we got our credit rating back is that our total Federal Government debt as a proportion of our annual wealth generation - the economists call it GDP, I think it's more readily understood if it's described as an annual wealth generation, the total amount of wealth we produce each year - our Government debt is only three per cent of our total annual wealth generation. In Japan it's 76 per cent, in the United States it's 49 per cent and the average of the OECD, which are the industrialised countries of the world, it's 47 per cent. So by any comparison that is a remarkable achievement and it's one of the reasons why we have very low interest rates, but it's also one of the reasons why, in a long-term sense, the nation that we will bequeath to our children and grandchildren, will be relatively freer of debt than the nation that some of the current generations have inherited.
Now, some of the things that we have done in order to arrive at that position have not been popular, and they have not been easy. But in the long run, if you don't address the difficult issues that confront you right now, in the long run they become more difficult and addressing them is only accomplished at an infinitely greater cost. Now, nations that put off immediate economic challenges because they shy away and recoil from and come back from the short-term pain and difficulty, don't enjoy the experience of those problems disappearing as time goes by. They never disappear. They in fact magnify and the cost of addressing them further down the track is that much harder and that much more painful. And there is a parallel in a non-economic area that I will come to in a moment, but if you look at the story of the Australian economy, particularly over the last seven years, it's the story of a willingness to address in the short term, in the immediate term, the challenges, knowing that if you don't do them now, they will still have to be addressed in the future, it will be that much harder, and the adjustment burden will be that much more painful for the people of this country.
As you know, I have just returned from a very brief visit to three countries that are very important to us in different ways, and the fact that I chose to go to Washington, London and Jakarta, in a sense is a metaphor for the triangular character of the relationships that Australia has in the world. We're quite unique as a nation. We are a western society in the Asian Pacific region with very profound historical and cultural links with Europe, but also an enduring and increasingly important relationship with the United States, and there is no nation in the world quite like that.
And it's something that must define the way we deal with the countries of those regions, and the way in which we conduct our foreign policy and our security projection. You must never see Australia as exclusively being identified with one part of the world. You must always see it as being in that very special, almost unique, occupancy of an intersection of geography and culture and history. And that explains the nature of the Australian economy. It will always be important for this country to place an enormous emphasis on our economic and our political and our human relations with the countries of Asia.
I claim it as one of the real economic achievements of my Government, the economic relationship that we have built with China. We've had a strong economic relationship with Japan and Korea for many years, but over the last five years our exports to China have doubled. And last year we were able to win, through a remarkable combination of effort from the business community, the Federal Government, the State Government of Western Australia - both sides of politics in that state - and many others, were able to win a long-term, a 25 year natural gas contract with Guangdong Province in China, winning it against very fierce competition, and win it because we were seen in the end as being the most stable, reliable, dependable supplier of that natural gas. And the significance of that to the long term economic relationship between our two countries is very important. That country of course contributes enormously to the character of the region. It also is a growing power in a country with which we must build very, very strong relationships.
But we're also a nation that has a very close relationship with the United States, and that of course has been the subject of a lot of comment, some criticism, and I think deep down, overwhelmingly, something that is supported and approved by the majority of the Australian people. The United States is the most powerful country mankind has seen. It's got its flaws. We disagree with it on a number of things. I don't think the trading policies of the United States, particularly their subsidies for agriculture, are of any assistance to Australia. They are against Australia's interests. And one of the reasons why I am enthusiastic about trying to negotiate a Free Trade Agreement with the United States, if it can be achieved, is that we may be able to remove some of those barriers. If we can achieve a Free Trade Agreement with the United States, we will, I believe, lay the foundation, not only for a stronger bilateral relationship between our two countries, between Australia and the strongest economy in the world, and a growing economy, and an economy of great diversity which is valuable both to our export industries and also our import industries, but we will also, I believe, be able to achieve markets and opportunities for many of Australia's producers. But the road to a Free Trade Agreement with the Americans will not be easy.
But the security character of that relationship has always been important to this country, and those who remember the critical assistance given to Australia during World War II will never forget the importance of the United States of America to the history and to the survival of this country. That doesn't mean to say that you follow the American point of view right or wrong, but it does mean that when you are looking at the national security interests of this country, you always take into account the importance of that relationship and the fact that relationships and alliances are two-way streets, and when an alliance exists between a large country and a smaller one, it should never be assumed that it's always the large one that has to give.
The world expects a lot of the United States when it needs the United States' help. The world often takes for granted the United States' willingness to come to the assistance of others and to make a contribution. There is, of course, an enormous amount of debate in our country, as there should be, concerning the challenge that Iraq represents most particularly to the immediate and longer term future of the United Nations. Of all of the issues at stake in relation to Iraq, none is more important than the acid test it represents for the United Nations. If the Security Council of the United Nations walks away from its responsibilities in relation to Iraq, it will fatally cripple its own credibility. You cannot pass 18 resolutions, you cannot stamp your foot 18 times metaphorically speaking, and expect the person of whom you're stamping your foot to take notice of you, if you don't do anything else.
Many people are understandably concerned about the belligerence of North Korea. I'm concerned about it. You all should be. But can I pose a rhetorical question. If the Security Council cannot discipline Iraq, what hope does it have of disciplining North Korea. It has no hope of disciplining North Korea. People say you should deal with North Korea first. I say you should see North Korea and Iraq as part of the one challenge and that is the challenge to the authority of the Security Council. The Security Council was set up...the United Nations was set up after World War II in the wake of the terrible loss of life and the terrible devastation of that war and knowing full well how the League of Nations had failed in the 1930s. And the job of enforcing the collective will of countries, of guaranteeing the peace, of delivering collective security was given to the Security Council. And that 15 member body now carries with it the responsibility of whether history will judge it as having failed the test or having done something about it. Nobody wants military conflict. I don't. I hate it. Every person of ordinary natural human instincts abhors military conflicts. But we face a very difficult challenge. We live in a different world now. We're all brought up to think of war in the sense of armies rolling across borders. That is no longer how we define it. We no longer exclusively define it like that. We live in this age now where if countries like Iraq are able to retain chemical and biological weapons, and if they're able in time to develop a nuclear capacity and they're not stopped, they're not restrained, and they're not prevented by the international order from having them other countries will do the same thing. And then you have the ultimate nightmare, the marriage, the fatal marriage if I could call it of those sorts of weapons in the hands of rogue states and international terrorists. That is the fear that has influenced my view, it is the concern that the British Prime Minister Tony Blair has, it's the concern that President Bush has, it's the concern that many leaders of many countries in Europe have, it's the concern that the leadership of a number of countries in Asia have.
People say to me if a military conflict breaks out there will be casualties. Sadly that will be the case. But people who are concerned about that must put against that concern the one-and-a-half million lives that have been taken under the current Iraqi regime. They must put against it the possibility that if we don't do something about this problem down the track, perhaps not too long, the nightmare scenario of which I spoke will be realised and the loss of life in that could be positively horrific. This is a traumatically difficult issue for the world and I can understand the natural human desire of people to turn away from it. I'd love to be able to do that. I wish I didn't have to talk about it. I wish I could talk to you exclusively about the economy, about sport, about a whole range of things. I'd love to be able to do that but I can't. And I know there are a lot of people who disagree with me. I respect their views, I understand that. We're a democracy. You can demonstrate in the streets of Australia without suffering any penalty and long may that be the case. That's our birthright. You can't demonstrate in the streets of a lot of other countries. And I thought a great metaphor for in a sense the competing influences in the Middle East was in the recent Israeli election the Prime Minister of Israel was giving an election broadcast and suddenly they pulled the plug on him and his broadcast went off the air. He was taken off the air by the electoral commission because the electoral commission said he was breaching the electoral law. I don't think the President of Iraq would have been taken off the air in Baghdad as he cruised to a 100% victory in his re-election. And it sort of in a sense was a reminder of what some of these things are about and it's a reminder of the fact that we do face an issue that is grounded in the sort of values that our society has. Now we remain very strongly committed to doing everything we can to see the passage through the United Nations Security Council of another resolution. It is not legally necessary. There is plenty of authority in international law for action to be taken under the resolutions that have already been passed. The reason why I think another resolution would be necessary and indeed is desirable is two-fold. I actually believe that the one real hope of achieving a peaceful solution is for the whole world to say the same thing to Iraq. Just imagine if there were a fifteen-nil passage of a strong second resolution. If anything is likely to communicate the combined and solemn view of the world to Iraq it would be that. That's the first reason why I would like to see another resolution. The second reason why I would like to see another resolution is if the use of force did become necessary, as much and all as we would like to avoid it, then if you had another resolution you would have more countries involved and there would be a greater contribution by other nations.
So ladies and gentlemen, I know this is a business forum and I had said something about the economy but I think there would have been something unreal about my talking to you today without saying something about this challenging issue. It's certainly the most difficult issue that we have faced as a government in the time that we have been in office. I understand the flows and differences of public opinion. In the end governments are charged with the responsibility of doing what they believe is right according to their assessment of the national interest. I respect the fact that others have a different view. We agree to disagree and I will continue to argue on every platform, in every forum that I'm given around Australia the reasons why the Government has taken the action we have.
We are not in this because of a blind commitment to the American alliance. I respect the American alliance. It's very important. But we are predominantly doing what we are doing because it is in the national interest of Australia to deny chemical and biological weapons to nations like Iraq because not only will they use them irresponsibly but if they are allowed to retain them other rogue states will get hold of them and ultimately you will have that nightmare of them falling into the hands of terrorists. Now that is the new dispensation, that is the new challenge, the new order that we live under now and we have to respond to it differently. It's not easy. It's challenging and it's complicating but it is compelling and that is the reason why I feel so very very strongly about this issue and that is the message that in a sense was reinforced to me in the time that I spent overseas, and in many respects one of the most valuable parts of my visit was to Indonesia. And it's important in our tolerant open society to emphasise something in that context. Indonesia clearly will have a somewhat different view of this issue than does Australia. But one thing is not different in Indonesia's view and it's important because Indonesia is the largest Islamic country in the world and that is the Indonesian government does not see the stance we are taking as being anti-Islam and nobody should. The Islamic people of the world abhor violence, and hatred as much as do the Christian and Jewish and other people of the world. We have no quarrel with Islam. We have a quarrel with a country that happens to be Islamic and that is Iraq. But can I remind you that in 1999 when the United States finally gathered some of the nations of Western Europe to do something about the ethnic cleansing of the Muslims of Kosovo they took action against the Orthodox Serbians led by Milosevic. I think it's important to remind people who are too prone to paint out what we are doing as anti-Islamic that in 1999 the western nations took up the cause quite rightly for the Muslims of Kosovo against what was happening to them at the hands of the Serbians. And I think it is very important that at a time like this we say to all Australians of Islamic background that you are a welcome part of our community, that we are a tolerant nation, and we extend to them the hand of Australian friendship and the hand of Australian welcome and it's very important that be done.
So ladies and gentlemen I'm sorry to have sounded a little solemn and a little intense but it is a solemn and it's an intense issue and to pretend otherwise is to ignore the realities of the world in which we live. The good news is that it's raining. The other really good news is that we do have an economy and a capacity to deal with adversity far greater than used to be the case a few years ago. And can I finish by saying this - that when the economy goes well the government sometimes gets the credit for it, when the economy goes badly the government gets all of the blame for it, I understand that. But can I say that one of the reasons why the Australian economy has done so well over the last seven years has been the remarkable capacity of the Australian business community to adjust to the need for change. Australians have many great attributes. One of the greatest attributes Australians have is their adaptability. Because we are a classless community we adapt and we adapt very rapidly. And I want to say to the business people of Ryde as I say to the business people of Australia thank you for the adaptive contribution that all of you have made to the remarkable performance of the Australian economy over the last seven years.
QUESTIONS & ANSWERS
QUESTION:
Prime Minister, Graham McMaster, I'm the Chief Executive of BOR Australia here in North Ryde and my question is related to trade reform and more specifically the agricultural sector. It links that visionary statement of yours some two years ago on 'Backing Australia's Ability' and an action plan for innovation for this country. It appears that as far as it may be raining for farmers today but unfortunately we're stuck with what some consider to be outdated agricultural marketing structures and I'd invite your comment, perhaps more specifically with respect to the free trade agreement or the proposed free trade agreements with the US, and is it possible that these just might free up the Australian farmers to be able to innovate and allow innovation to flourish?
PRIME MINISTER:
Well, I certainly hope so and if it doesn't then you'll have to question the value of our entering into it. The biggest hurdle Australian farmers face at the moment, apart from the ravages of natural disaster and rain and drought and fire, the biggest challenge they face is the corruption of world markets. To give you a simple figure - the total value of subsidies to Australian farmers is 4% of the total wealth Australian farmers produce, the value of subsidies to American farmers is 22%, the value of subsidies to the farmers of the European Union is 35% and I'm sorry to say the value of the subsidies to Japanese farmers is much higher than that to European or American farmers. So on a scale we're not very happy with the Americans, we're really unhappy with the European Union and, I'm sorry to say, our friends in Japan - and Japan is a very important market and a very important country for Australia, their level of subsidy is also unacceptably high. Now, that is the issue that the world to us has got to address more than anything else. Now, there may be other structures that we embrace that can be reformed to advantage but you would be missing the main game if we didn't focus on that. And in all the discussions I've had with Americans about this, that is an issue that is central. Unless we can do something effective about that Australian farmers are going to continue to be very badly treated.
QUESTION:
Prime Minister, Richard Sainsbury from radio station 2MSV but also President of Chatswood Chamber of Commerce. Prime Minister, will you stay in your present position to see this crisis off?
PRIME MINISTER:
Well, I've been asked that question already today and...look, my position is that I have made it crystal clear that there's no way I'm going to do other than see the Australian people through this current Iraqi crisis no matter how long that takes. As to my longer term future, I haven't made any decision on that but I do want people to understand that I'm a very full-on person as far as my commitment to the job is concerned and while ever I have the privilege of occupying the position it will get a 150% effort from me. I'm not thinking about my future at the moment, I'm thinking very much about Australia's future. I don't really think debate about my future is particularly relevant. What is important is this country's future in so many different ways and that's my position.
QUESTION:
My name's Ken Barnes, I'm a solicitor. I read somewhere, Prime Minister, that the Canadians are talking about possibly making their contribution to the Iraq problem by deploying troops to Afghanistan. If this second resolution is not passed, the one you want, is it realistic to think about [inaudible] down the problems you'll have here to deploying troops to Afghanistan and so free-up other American troops to do the work in Baghdad? Is that a realistic possibility or is that something that just isn't on the drawing board?
PRIME MINISTER:
Well, let me put it this way - given the structure of the Australian Defence Force and given the fact that we have still very significant peacekeeping obligations in East Timor, which isn't likely to be diminished over the months ahead, perhaps even the next year or two, the sort of contribution that would be represented by the forces we have sent to the Gulf, if we do decide to commit them, is the kind of contribution that Australia would be able to make without reducing our capacity in other areas. And it's not...the deployment of a large number of people in a place like Afghanistan is not something that could be as readily accommodated given the other responsibilities we have, let me put it that way.
QUESTION:
Prime Minister, with the farmers with so much down time at the moment, what is the Government doing to occupy the farmers, to get value out of them, to help them improve themselves so that when the rain does really come that they can take advantage of that opportunity?
PRIME MINISTER:
Well, I'm not saying every farmer in Australia is efficient but efficiency is not a problem by world comparisons with Australian farmers, they are fundamentally very efficient and their problems are corruption of world markets. Obviously in some of the rural industries you still have a size problem and that's particularly the case in the sugar industry. And we've offered an adjustment package for the sugar industry which involves providing them with some financial assistance, those who should exit the industry. We're doing that already. The dairy industry package was very controversial but it's resulted in a growth in dairy exports, it has resulted in a lot of people leaving the industry but it's also resulted in a consolidation into more efficient units of those who remain. And over the years we have tried to help different primary industries adjust. Some of you may remember that in 1998 I went to a place in Queensland called Wondai and I had a fairly lively meeting with some people who were in the pork industry and I certainly was very unpopular with them. They wanted a lot of subsidies and so forth and we said no to that but we did try to help them get into exports. And I went back to a place near Wondai three-and-a-half years later and there were 600 people in the room and they gave me a very warm welcome and it's a demonstration of how you can turn things around.
I think our farmers are efficient. You've got to keep helping them restructure. Those who can no longer survive, you've got to try and help them to leave the industry with dignity. But the real problem, apart from the drought - and that's a huge problem - the real problem is the corruption of world markets. And the tragedy of this last drought has been that it followed a couple of really good years and it also came at a time when many of them were starting to enjoy the benefit of strong world prices because there were shortages in other parts of the world and if it could end early they might still get - that's the drought - they'll still get the advantage of that. But generally speaking Australian farmers are pretty efficient and that's what, of course, makes them as mad as hornets because they're efficient, they play by the rules, they do the right and they're shut out of markets by the huge trading blocks, particularly but not only the European Union.
[Ends]