Thank you very much Ian. To Kevin Andrews, the Minister for Employment and Workplace Relations and Dr. Sharman Stone the newly appointed Minister for Workforce Participation, ladies and gentlemen I particularly thank all of you for coming along this morning to be part of the Sydney launch of a series of breakfasts which are being held around our country over the weeks and months ahead designed to bring home in, I hope, a very constructive way to the employers and other interested people in our community the challenge we face in the whole area of obtaining an adequate supply of people to work for our businesses and our enterprises in the years ahead.
We tend to look at these things as we look at all aspects of life in terms of the good news and the bad news; let me start with the bad news. The bad news is that we are all getting older and that is undeniable. As a population Australia is ageing and we are living longer, we're living longer in a healthy fashion, and we are therefore facing a very significant demographic challenge. The good news is that most other countries, not all, but most other countries are in an even worse position than we are.
If you think Australia's demographic challenge is huge, have a look at the challenge facing Japan and Italy, to take two countries. I think it will be in a couple of years time that the birth and death rates in Japan, actually the lines will cross for the first time in that country's history and the fertility rate in Italy is, I think, somewhere at 1.2, or 1.21 which is amongst one of the lowest in Europe. On the other hand, of course the United States, because of a different mixture of age and composition of the population is in a slightly stronger position, where the fertility rate in that country is about 2.1. Ours is at 1.75, and I am pleased to report that as a result I am sure of some very generous Government initiatives over the past couple of years, there has been a small increase in the fertility rate within Australia and long may that continue to be the case; increasingly and progressively.
But the other good news is that we have in place a welfare social security structure that acts neither in the case of many of the European countries as an encumbrance to greater workplace and workforce flexibility. Or in the case of the United States where I believe there is an inadequate social security safety net, we in our occasional genius as a country over the years, and I don't just mean over the last 10 years I mean over a very long period of time, we have somehow or another found the balance. We have a social welfare system that does look after the genuinely needy, but it is a social welfare system that also increasingly, and this is part of the emphasis of recent Government policy, increasingly encourages people to choose workforce participation over welfare. But if you do need welfare support then it is a decent social security safety net.
Our situation is based on a number of quite favourable circumstances, but despite all of that we do face a huge challenge and the Government's response has been across a range of areas. You have heard this morning from Kevin Andrews about the Welfare-To-Work policies which begin to take effect this year, you have heard a great deal about the industrial relations changes which will add to the flexibility that we need within our workforce.
But the biggest change of all that is needed, and the process has begun, and once again we have demonstrated as a community a great adaptability and this is one of the great assets that Australia has, but the change has begun and Peter Hendy put his finger on it when he said we needed to bring about a cultural change within our community, not only within our businesses but also within our community and this is an area where the cultural change needs to come fairly rapidly. It is not so long ago that there was a premium placed within Governments of both political persuasions and I can remember it as a member of an earlier Coalition Government in the late 1970's and it was certainly the case of the Government that we replaced, that the premium was still on developing and implementing policies that encouraged and facilitated early retirement. It is only in the last 10 years or even less that we have begun to change that and we have begun to discover this great and growing potential resource of older and mature age workers.
The big challenge for Australia, this is where our figures compare very badly with other countries, is to do something about the workforce participation rate of the age cohort of between 55 and 64. Far too many of those people leave the workforce far too early. Now I don't have any objections at all of course to workforce participation beyond the age of 65, don't for a moment suggest that I am singling out the age cohort of 55 to 64, but statistically if you accept that there is still a tradition, if we really want to talk in these terms, of a retirement age of 65, we have a very low participation rate in that 10 year period. And if we can, at the very, very least, and Kevin Andrews talked about it when he mentioned the experience of a large financial institution offering everybody part-time work after the age of 55, we have to accelerate the process of that cultural change.
Now Governments can legislate, Governments can change the rules, whilst I don't believe obviously in any kind of age discrimination, any kind of discrimination in the workforce on any basis at all, legislation itself is not necessarily, and not always and often the wrong response. It is bringing about a cultural change within workplaces and it is a cultural change in which governments must participate, it is a cultural change where governments must demonstrate by example.
But we do have, as a starting point in responding to this challenge, we do have enormous advantages. I spoke of the fact that we have a balanced social security system and I also spoke of the fact that although our population has begun to age it is not aging as rapidly as the populations of many other countries. The other great advantage that this country has that because I believe it still retains an essentially classless egalitarian character; we have a great capacity to adapt.
I have never forgotten the conversation I had with the worldwide chief executive of one of the largest financial institutions in the world when he told me that the people he wanted to employ most were Australians. He was an American who had spent 20 years living in England. I said 'why is that' and he said 'because of all the employees in the world, Australians are the most adaptable'. I thought that was an important an impressive compliment to our country and it is something that will be an enormous aid to us to us as we go about this process. There needs to be adaptability on both sides. When I exhort firms to retain more older workers I also exhort the older workers to accept that as their employer retains them, they must accept perhaps a changed role within the organisation for which they work. They must increasingly accept the command structure perhaps, or a management structure, where the person to whom they report is a lot younger than he or she used to be. They must accept the greater incidence of course of part-time work. They must accept a rearranged remunerations structure. All of those things are their part of the bargain; are the contribution that they make to the changing workforce.
Of course Kevin and Peter have spoken very importantly of the need for change in relation to workforce participation by people with disabilities. This is an area where I believe our society has come in a quite magnificent way; a very considerable distance from what it was even 10 or 20 years ago. The realisation that there are many people in the community who can make a massive contribution to society and a massive contribution to firms as well as, of course, as to an enhancement to their own lives and their own enjoyment of life beyond earlier expectations. Part of the Welfare-To-Work process is a process that seeks to involve in a positive and a constructive way, people with varying forms of disabilities and the personal reward as well as the economic reward from change and improvement and participation in this area is very significant.
Now this is a challenge that involves the whole community and our response to it has got to be a response based on bringing out the best in people's human instincts. As we were chatting over the table a few moments ago, Mark Bethwaite said to me that he thought that the greatest contribution of successive changes to workplace relations laws over the years in Australia is that they have required and encouraged and brought about a situation where employers and employees communicate more directly with each other and that of course has been a very significant cultural change.
We once had Workplace Relations laws that were based upon a number of principles which are of course no longer with us. There was an assumption that most companies were; most people worked in very large establishments, that the majority of people in the workforce were men. There was a very rigid command structure; that people tended to take instruction as to how they worked in large groups. All of that, when you think back over the years, all of that as changed. I know from your own experiences that there would be a myriad of different workplaces represented here, some large, some small, some in manufacturing, some in services, a whole variety of different formations.
At its core that most important thing that you as employers do is communicate directly with the people who work for you. Unless you do that well you are not going to have a good business and you are not going to have happy employees and all the changes in the law under the sun are not going to amount to very much unless you understand the importance of that communication.
Ladies and gentlemen, Australia has come a very, very long way economically in the last 10 to 20 years. We are a strong country, we have great prosperity, we have low unemployment, we have high real wages, we have high productivity, we have an engaged, committed, innovative workforce. Despite all of that we do face this looming demographic challenge and it is a challenge that we need to respond to in a range of areas and these breakfasts are very much about engaging the workforces and the workplaces of Australia in meeting that challenge.
I conclude by particularly thanking my two ministers, Kevin Andrews and Sharman Stone for their commitment to this very, very important task. Finally and importantly, I thank all of you for coming along this morning. I encourage you to be part of this great national effort to ensure that the prosperity that we have is not only retained but built upon by the engagement of an ever wider number of Australians in workforce participation.
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