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Transcripts from the Prime Ministers of Australia

Transcript 12306

Address to Business Community Luncheon Doltone House, Sydney

Photo of Howard, John

Howard, John

Period of Service: 11/03/1996 to 03/12/2007

More information about Howard, John on The National Archive website.

Release Date: 14/08/2001

Release Type: Speech

Transcript ID: 12306

Subjects: Indonesia; Tax Reform; Rollback; Economic Management


To Bruce and Danna and to Malcolm Kerr and all of you it is great to be back in the Electorate of Cook in a joint function in honour of both Bruce and Danna. And it';s great to be back here at this magnificent Doltone House. I think I';ve been to a number of functions in the past.

Can I start by saying that it';s always a pleasure to be associated with two of my colleagues who really have worked their heart and souls out to represent their electorates in a very effective way. We are now living in a political climate in which you can never take anything for granted. The Australian people are now a little less rusted-on in their political allegiances than used to be the case. People don';t automatically vote for the Liberal candidate if they';re Liberally inclined without having a look at the candidate to see what he or she is like and deciding whether that person would make a good representative. And the same I';m sure applies on the other side of politics.

But I';m very proud indeed that the Sutherland Shire is so brilliantly represented in federal parliament by Danna and by Bruce. What Danna has done to the electorate of Hughes since winning it with what was an absolutely delectable swing, way back in March of 1996 and the way in which Bruce has consolidated and built his support in the electorate of Cook. Both of those things are very heart warming to a party leader as inevitably we enter a period that can loosely be called the beginning of an election campaign.

The election of course will be towards the end of the year, that is give or take a few weeks or a month, or whatever! I';ve been saying now for 6 months that the election would be toward the end of the year. And as each day goes by people are more disposed to believe me in relation to that particular commitment.

But you will forgive me because this is a gathering, unashamedly to support and contribute to the resources that will be needed by Bruce and Danna to campaign in the election. You';ll forgive me if I do address a few very partisan remarks as to why not only should you support them but you should do everything you humanly can and a bit more if you feel inclined to help the Coalition in its effort to be re-elected.

But before I touch on that can I just briefly say that as you know I returned this morning from a very brief but very important visit to Indonesia. I was the first foreign leader to meet and discuss bilateral issues with the new Indonesian President Megawati Soekarnoputri. It was a very important meeting for relations between our two countries, but I can say that those relations are now on a very realistic but very positive level. I';ve used the expression positive realism to describe our relations with Indonesia, Indonesia is an important country to us, it';s our nearest neighbour, it';s the fourth most populous nation in the world, it is the largest Muslim nation in the world, it has a population of 220 million people. And it';s very important that we have the right balance in our relationship. I think in the past we didn';t, I think we, in earlier years as the country and through certain governments we invested too many expectations in the relationship. And as you know whether it';s the relationship between people or a relationship between nations or groups in society if you invest too many expectations in a relationship you are doomed to strike trouble and to be disappointed.

We took a stand you know in relation to East Timor which was the right stand and a stand that as won Australia great respect and great credit around the world. That is something that we now move on from. We don';t walk away from it, we don';t retreat from it, we don';t in any way apologise for it. But we move on and we look to focusing on those things that we can find common ground with Indonesia on. And I was very encouraged with the attitude of the ministers I met, their determination to rebuild the Indonesia economy, their desire to focus on the positive aspects of our relationship as two very different countries but thrown together forever by destiny in this part of the world. And I came away feeling that we have been able to establish an understanding that for the future we would focus in a realistic fashion, we wouldn';t build a relationship into something it couldn';t became but we would try and focus on those things that we had in common. And I had a very encouraging business luncheon about this time yesterday in Jakarta attended by a large number of leading businessmen from both the Indonesian side and the Australian side and there was a sense of almost excitement and certainly a great sense of enthusiasm and anticipation about what the new administration and the new Ministers chosen by the President could bring to the future not only of Indonesia but also the future of relations between our two societies.

So I returned with a sense of optimism but always a realistic view of what can be achieved but also an understanding of the importance of not exaggerating expectations about what might be the character of our relationship years into the future.

Well ladies and gentlemen as I said a few moments ago at some time between now and the end of the year the Australian people will be asked to elected a government. They';ll have to decide in very simple terms as to whether they return the Coalition led by me and the Deputy Prime Minister John Anderson and Peter Costello as Treasurer. Or whether they elect a Labor Government lead by Kim Beazley with Simon Crean as the Treasurer. (Crowd interjects) That is a good start! One of the things that happens in politics is that you can go for a period of time and it can all sort of be a bit vague and a bit indeterminate as to what people are thinking but as you get closer to the event people have to make a choice. And at the end of this year when the election is held there can only be one of those two choices emerge as a result. Now we';ve been the government for the last five and half years and I would the last person to pretend that we haven';t made our share of mistakes. I';d be the last person to pretend that there hasn';t been some things that we might have done differently, some things we might have done better, or some things that we might have responded earlier to.

But if you look at the sweep of what has happened over that last five year period some of the things that Bruce mentioned in his introduction really highlighted the difference that has occurred, particularly on the economic front so far as our country is concerned. We have been a government I think that has been distinguished be two or three things. The first thing is that we have been an active government, one of the things I promised myself when I became Prime Minister was that I wasn';t going to waste the opportunity that the Australian people had given me, the great honour and the great privilege of being Prime Minister. I wasn';t going to sit in that office and drive around in that white car and simply enjoying being Prime Minister and being in office was what it was all about. I was absolutely determined to try and make a differences, and to try and make a difference in a number of key areas. Certainly the Australian economy is a much stronger economy and is much more respected and much more envied around the world now than what it was five and a half years ago. I was saying over lunch to a couple of my companions, lunch companions that in the last few years I find as I go around the world two things that have really lifted the esteem of the rest of the world towards Australia. It was always very high, the two things that have really lifted it. The leadership role we displayed over East Timor and the other thing was the extraordinary success of the Olympic Games.

Can I say to you that I also find as I move around the world and particularly with the evidence that';s emerged over the last few months that there is great respect for the quality of economic management that this government has bought to Australia over the last five and half years. It is not political propaganda for me to say that our growth prospects at the moment, and this is not according to me or Peter Costello, it';s according to such authoritative commentators as the London Economist or the OECD, our growth prospects are better than those of the United States, those of just about every European country and just about every nation in the Asian Pacific region. It give me no joy to say it but many of our Asian neighbours at the moment are going through successive quarters of negative economic growth and the United States which I believe is still the great engine of the world economy and has such a flexible economic structure that it will rebound very rapidly. The United States is going through some challenging periods as far as economic growth is concerned.

On the score of economic management we do have a very strong economy. We did go through for a bad December quarter, the overwhelming reason why we went negative last December was that the transitional impact of the GST on the housing industry was much great than many people thought it might be, including the Government';s advisers. Now we did something about that, when we got those figures in March of this year it took me about 24 hours to decide that something had to be done. And what we did was to double to home savings grant for new home buyers. And that exercise in the experience and the response of people in the home building industry of that policy change is a demonstration that whatever else may have changed in the theory of economic management a little bit of selective stimulus in the right area as far as the economy is concerned has still producing a dividend and the combination of that plus the further lowering of housing interest rates has meant that we are seeing a very strong and broadly based recovery occurring in the home building industry which is so important in this country. It';s not only important emotionally and psychologically but it';s also important because of the flow on effects of whitegoods and all the other things that are associated with the home building industry.

But we did go through that glitch but all the evidence is and certainly in the March quarter we came back very strongly and the Reserve Bank, if you don';t believe me, said that all the evidence was that the economy was growing very strongly in the June quarter as well.

Now I know it is unrealistic of me to address a gathering like this, indeed any gathering in Australia without saying something about taxation reform. And I know when I mention taxation reform that there';ll be some mixed reactions. There have been some problems with the implementation, some aspects of the GST, I recognise that and what we';ve tried to do is be responsive to people';s concerns. But can I just remind you what tax reform was all about in the first place. Tax reform was all about giving Australia a taxation system that would be adequate for the 21st century. One of the realities of this country is that we are like all other western societies an ageing population. We';re not ageing as rapidly as the Japanese population, we';re not aging as rapidly as some European societies but we are none the less an aging population. And one of the things that I';ve felt for a long time was that we needed to have a revenue base in this country that provided a revenue growth that would help us fund the services we increasingly needed for an aging population and also a revenue structure in this country that did not impose too greater burden by ever higher income tax on those people who remain part of the working population. And that was one of the very strong structural, if you like, philosophical reasons why I favoured the introduction of a broad based indirect tax. Because the problem was that the old indirect tax base we had was a wasting base. It was a tax that hit goods and not services, although the services sector of the economy was growing far more rapidly than the goods sector, and it was also a wholesale tax that was disproportionably loaded into one area of goods and that is motor vehicles. And by every criterion it was a indirect tax that was becoming less and less relevant. I mean to give you an illustration in, broadly speaking, in 1975 the wholesale sales tax base represented something like 25% of our GDP by 1995 it had declined to something like 17 or 18% and that trend was going to go, continue. So we faced a very simple situation in this country that if we didn';t get rid of the old indirect tax base and get ourselves a new one, in order to get the additional revenue we would need to fund the services for an ageing population we';d have to have further increased income tax or otherwise gone unacceptably into debt, we had really no other alternative.

And those people who argue we shouldn';t have brought in a GST are really arguing over time we should have had much higher income tax. Because otherwise you simply would not have had the revenue base to provide the services. And the great virtue of the GST is that all of the proceeds of that revenue are given to the States and the States over time will have more resources to fund the services that are needed for our population. Public hospitals, public schools, roads, police and all of the other things that are important bread and butter services that are provided.

So that my friends was the fundamental, long term, what';s good for Australia reason why we decided to introduce a broad based indirect tax. Now in the process we were able to get rid of a number of unacceptable state taxes and more of them will disappear in the years ahead. The Financial Institutions Duty went on the first of July. We were able to reduce Company Tax from 36% to 30%. We were able to effectively half Capital Gains Tax for individuals. We were able to take about $3.5 billion of embedded indirect taxes off exports. I mean one of the reasons exports are going gang-busters at the moment is that we have a super competitive exchange rate, I acknowledge that, if you';re a farmer of a miner, or a manufacturing exporter, the super competitive exchange rate is very good, .(audience applause). thankyou, very good indeed. Now it';s a matter for the market, I can see that, I can see some farmer and miners down there who are clapping that, that';s very good. It';s good to have everybody represented at a lunch like this. But that is one of the reasons why we are doing well in exports, another reason why we';re doing well in exports is that we have taken $3.5 billion of embedded taxes out of the cost of our exports because you don';t pay GST on exports.

And can I also say another reason why we';re doing very well on exports is that Peter Reith had the courage in 1998 to take on reform of the Australian waterfront. I mean he got knocked around from pillar to post, he got criticised by the media, he was railed against by the unions and the Labor Party but this is something that this country had wanted attended to for a generation. And at the time we started on that people said the goal of having a 25, what is it, 25 a crane rate of 25 an hour was unachievable. We were than about 19 or 20, it is now 27.5, which has been an extraordinary turnaround. And you can now, you now have a guarantee that if you take an export order you can get it out of the country on time. And I was talking to a couple of beef producers in Queensland last week and they were pretty happy because beef prices aren';t too bad. And they were saying it';s good, he said that the prices are good, we';re getting expanding markets he said, and you know it all gets out on time because you';ve fixed up the waterfront. And I thought that was a nice little metaphor for a number of different things that have been achieved.

So back to tax reform, it';s achieved all of those things. Now there have been some transitional troubles, I know that. There was some trouble with the BAS and we';ve tried to be responsive to that and I';m unashamedly of the view that when to introduce a massive reform of that kind you are going to be required to do a little bit of finetuning along the way and I certainly make no apologies for having done that and the Government remains ready where it';s appropriate to fine tune the administration of the new taxation system. But having as a community gone through the difficulty of changing the tax system, and no big reform can be achieved with ease, otherwise they all would have been done a hundred years ago. I mean that is the reality, every big economic reform, whether it';s carried out here or whether it';s carried out in another country has involved a certain degree of struggle and a certain level of difficulty and taxation reform is part of that, industrial relations reform of which waterfront reform was a very important part was also part of it. But having gone through the process of changing the tax system, I think the Australian community wants like the proverbial hole in the head the idea of going back on it and the idea of trying to role it back and the idea of revisiting it.

I mean I';ve had a very simple view about tax reform, that if you are against it as the Labor Party says it is, and if you think it';s visited so many maladies on the Australian economy and Australian society and the Australian community, you ought to have the political courage to commit yourself to its total repeal. And not go through this absolute charade of saying it';s absolutely terrible and we';ll oppose it every inch of the way, but P.S if we win the election of course we';ll keep it. Which is basically what their philosophy is. Their philosophy is to let us do the heavy lifting of necessary economic reform, hope we do it, hope we have inflicted on us a whole lot of political damage and political pain in the process and they';ll ride in on the back of the public discontent with the change.

Now that';s the challenge that we';ve had over the last three years, and I knew it was going to be difficult, and I realised it might be a near run thing, and it could be. I think the next election is going to be very close, anybody here who thinks we';re a shoe-in is kidding themselves, but anybody who thinks we';re out of the game is also kidding themselves. We are absolutely back in the game. We had a by-election down in Victoria a few weeks ago and I. we won, that';s right. And can I tell you that he, that';s my political opponent, he knows that I know he realises he should have won it. And it';s true, I';ve been in this game for 27 years and if an Opposition were on an unstoppable surf - which is a good sort of word to use in area like this, surf into victory, if they were unstoppable surf they';d have gone right over us in that by-election, and they didn';t. And the reason is that we';re now getting close to the moment of choice. And what people are saying to themselves is well we may not agree with everything Howard';s done, we may think they could have done this a little differently or that a little differently but gee he';s had a go, they';ve done things that nobody was prepared to touch for years, they';ve worked to deliver us with a very strong economy, they';ve lifted the international reputation of Australia around the world even higher and what after all does the Opposition really stand for, (interjection) - nothing - that is right, a very astute interjection, if I may say so, a very astute interjection.

But Ladies and Gentlemen that is what I believe is happening as we get closer to the event. People are starting to think, well we';ve now got to make a serious choice, we may have some complaints but they';ve had a go, the economies running better, we';ve got 800,000 more people in jobs, interest rates have never been lower, they';ve fixed up the waterfront, they';ve brought in this new tax system, we';ve got higher productivity, real wages have actually gone up under the Liberals, they went down under Labor. So you add all of those things together and they look at the other side and they see a very opportunistic Opposition.

The Opposition has had only one policy since the last election, and that is to hope and pray everyday that we fell in a heap because of tax reform. I mean that basically, you know to put it bluntly in language that I think we all appreciate, that basically is what the Opposition has been all about over the last three years. Now, it will be up to you and 19 million of your fellow Australians to decide whether that is an appropriate path way to Government in this country. And as always with elections I will accept the verdict of the Australian people, they always get it right. I didn';t agree with Bob Hawke on a lot of things but I think it';s fair to say that, and I certainly have warmed to his philosophy on this over the last couple of elections, that Australian people do get election results right. And, so in the end they will have to make that judgement and I would hope and I would work to pursuade the Australian people to accept the view that a Government that has been willing to tackle the difficult reform issues, a Government that, although having made it';s share of mistakes has been responsive to community concern. A Government that has been, I think willing to govern for the mainstream and not the noisy minorities, which is a very very important characteristic of the philosophy that we give to Government. I mean we had a slogan in 1996 that said 'For all of us'; and that literally means for all of us. We are as a political party, the Liberal Party is owned by nobody. It';s not a business party, although we';re very sympathetic to business and we try and create good economic conditions but in the end we';re not owned by the business community. We';re not owned by the trade union movement, we';re not owned by any individual religious or cultural group within the Australian community, we represent everybody. We reflect the diversity of the Australian population and very proudly and very importantly and we are a party that therefore does represent better than any other political party the mainstream of the Australian community.

So when we get, inevitably to that moment, that day of decision, later this year, it is important that we focus on that choice. We have tried to make Australia a better and a stronger and a more respected nation. And I certainly believe we have achieved our goals in that area. We are faced by an Opposition that has not had the courage to articulate a clear alternative. One minute it';s rollback, the next minute it';s more spending on health and education without specifying it. Then Mr Beazley said he was going to state his entire political career on the document that is now colloquially referred in the trade as 'noodle nation'; rather than 'knowledge nation';, he was going to focus his entire political career on that and yet after five and a half years I don';t have any clear idea of what the Labor alternative in that area is. Now we do need to invest more money in science and innovation and we have. As many people connected with the medical profession in this audience would know that this Government has doubled the amount of public support for health and medical research in Australia. Last January I made an announcement that doubled the Federal Government funding going to Australian research grants, that';s in the non medical area. We are increasing university places going to people in science and mathematics, we are putting more resources into research and development. We have actually made those announcements and we are implementing that programme, but to date we don';t have an alternative after five and a half years from the Labor Party Opposition.

In our system of government it is not only the Government that has a responsibility to argue a case for election it is also the Opposition. It';s no longer sufficient, merely to attack the Government and hope that the inevitable difficulty some people find with change and the resentment it produces will be enough to deliver the Opposition support.

I';m very proud of what the Government has been able to do over the last five and a half years. I';ve had a very good Ministerial team behind me and I';ve had tremendous loyalty from my colleagues in the parliamentary party such as Bruce and Danna. It';s never easy in Government, it';s always a little bit more difficult to in a political party that has a culture of respecting individual views, and not imposing a rigid caucus discipline but I wouldn';t want it otherwise, because the Liberal Party is a party of individuals and there is always room within the ambit of a cohesive government for individuals to express in a proper and articulate fashion their strong and passionately held views on particular issues. And we';ve tried to do that and to accommodate that within the ambit of a cohesive and very united government.

So Ladies and Gentlemen can I conclude by saying that I do appreciate the expression of support that this luncheon represents to both Bruce and Danna. This part of Sydney I do know very well, it has enjoyed a great economic revival, it has very clear and partisan sporting passions and I respect those and I congratulate this part of Sydney, I congratulate the Southern Shire on the enormous contribution it makes in its own very distinctive way to the culture to the great city of Sydney. I ask all of you to do everything you can and a bit more to help Bruce and Danna and through them to help our marginal seat colleagues. We don';t have a big majority, many of our colleagues hold their seats by tiny margins. I was in Townsville last Thursday and last Friday, helping Peter Lindsay who I think holds the seat of Herbert by about 150 votes, now that';s a pretty thin margin, 150. And we need through our, perhaps, more strongly held seats to provide assistance to those who are on slimmer margins. But it is a great cause, we have a great story to tell. We are very proud of what we';ve done and as the weeks go by and we sharpen the choice I get more confident of what the ultimate result will be.


Transcript 12306