Thank you very much Stephen, Ivan Deveson, David Edwards, ladies and gentlemen.
I must say, I am certainly very conscious of and much respectful towards the firm of Allens Arthur Robinson and I have connections with it that might even surprise... my understanding is that before it was bought by the Commonwealth, Kirribilli House in fact belonged to the Allen family. So I'm really delighted at the sponsorship and to have this opportunity of saying a few things about some of the challenges that face our country in the years ahead.
CEDA provides a great opportunity for these sorts of things, you take them more seriously and in a more systematic fashion than some other organisations. Good government requires many things, but probably one of the most important things that good government requires is that those in government have a clear step of national of goals. In the time that I've been Prime Minister I've had three broad national goals. The first of those, quite properly, is that of national security. The second is that of economic strength and the third is social stability. And in November of 2002, I had the opportunity of addressing CEDA in Sydney and laid out a number of strategic priorities for the Government and in company with this address I'm releasing something of a, on the website, something of a progress report on each of those strategic priorities. And on one very critical issue facing this country, that of demographic change, in Sydney this morning the Treasurer released an update on his Inter-generational Report that was released with the 2002 Budget. And he's also made some important announcements relating to superannuation arrangements which are designed in a very measured and positive way to encourage a very important goal and that is for greater workforce participation, particularly but not only amongst people of more mature years.
This country has a very low level of workforce participation of people between the age of 55 and 64. There are a lot of reasons for it, some of them relate to the operation of our superannuation arrangements and Peter has addressed these in a very important way with his statement. But the central message that I want to bring today is one of genuine optimism about this country's long-term future, tempered by one very important note of caution. With our economy more competitive and stronger than it has been for decades, we as a nation are better placed, I believe, than at anytime since World War II to embrace a new era of national achievement and one that is not only going to see this country very strong and secure, but also give to individual Australians and their families the opportunity of making the choices only they can sensibly make for themselves and their families, but also to enjoy continued material wellbeing and social cohesion.
My one note of caution is that this bright economic outlook can't be taken for granted. I detect in the community a sense developing that continued economic prosperity is a given, it's not. It's only going to maintained by consistent and discipline and sensible policies. And too much of the current debate in Australia, in my view, takes it as a given that it will continue irrespective of the policies that might be applied by governments.
A new era of national achievement depends very critically not only on continued hard work, but also by sensible decision making and that, of course, means sensible decision making at a government level, particularly but not only at the national level. Contrary to some views in the community, I believe that most successful governments do operate from a coherent set of philosophical principles. The Government that I've led over the last eight years has pursued what I frequently call a distinctly Australian brand of liberalism. It contains some elements of classical liberalism, but our party has also been the trustee of the mainstream conservative position in Australian politics and our priorities reflect a broad perspective that combines liberalisation in economic policy with what I call modern conservatism in social policy.
Our governing ethos is grounded in the priorities and values and aspirations of the mainstream of the Australian people. Our belief in self-reliance and individual responsibility means that we favour private initiative, competition and choice over government direction of resources and society. Our belief in national unity and social cohesion means that we embrace that deeply held Australian sense of fairness through a commitment to mutual obligation and support for those most in need. Our belief in a private sphere separate and autonomous from the government means our bias is towards helping Australians achieve their own goals rather than prescribing collective ends through bureaucratic means.
From the time that this Government was elected almost eight years ago, we began to put in place the building blocks that have and I hope will continue to deliver Australia's prosperity and security. We firstly restored Australia's public finances. We did face very large national debt and we faced successive deficits inherited in earlier years. We've now repaid about two thirds of the $96 billion of debt that we inherited and Australia's national debt is just under four per cent of GDP compared with an industrial world average of 50 per cent. Our disciplined fiscal policy has contributed in a big way to driving interest rates down, encouraging investment and it has also allowed us to focus on the longer term horizon.
Our second great building block, and one of which I am particularly proud, and something that has come back into contemporary political debate in a big way, is that of industrial relations reform. We have led the way in simplifying the award system and our framework for agreements at the workplace level has provided greater flexibility for both employees and employers. And this greater labour market flexibility has flowed through to greater productivity. And the really good news for Australian workers over recent years is that because of higher productivity, they have been able to enjoy higher real wages whilst observing a fall in unemployment. A phenomenon that constantly escaped governments during the 1970s and 1980s. And we now, of course, have an economy where fewer than one in five private sector workers belongs to a trade union.
One of the other great building blocks put in place, of course, was taxation reform. The New Tax System introduced in July of 2000 not only provided the largest personal income tax cuts in our history, but replaced many inefficient indirect taxes with a broadly based Goods and Services Tax. And something that was quite fundamental to that reform was that all of the proceeds of the Goods and Services Tax goes to the state governments of Australia to better fund the provision of public hospitals, government schools, police, transport and roads.
Another building block for the future has been the Government's sensible approach to trade liberalisation. We have continued to open up the Australian economy. Our Free Trade Agreement with the United States, and those already concluded with Singapore and Thailand, have further advanced Australia's involvement with the international economy. And can I say on the subject of the Free Trade Agreement that I particularly welcome the presence here of Stephen Deady who was the lead trade negotiator at the adviser level during the trade negotiations in Washington and I want to thank him and to thank all of the others in his team who played such a magnificent job advancing the Australian national interest.
On the subject of opening up the Australian economy, a number in this room will be aware that on past occasions I've always given credit to the former government for two things that it did, the floating of the Australian dollar and tariff reform. Those two changes were very important elements of opening up the Australian economy. And they received the very strong support at the time of the then opposition. And it's against this backdrop that I have to say I find it perplexing, extraordinary indeed that the current Opposition is threatening to vote against the Free Trade Agreement with the United States. And this Free Trade Agreement is a once in a generation opportunity to link Australia into the most powerful economy the world has ever seen - to use the language of the young - it's a no-brainer that we should become part of the future as far as our association with the United States is concerned. I mean, let me for a Victorian audience in particular highlight the benefits of the FTA to the automotive industry. It would remove all United States tariffs on automotive products, including the 25 per cent tariff on that great Australian icon, the ute. And the potential gains in areas of government procurement, goods and services, are enormous. Australian firms under the Agreement will in future be able to bid on United States Federal Government contracts that are worth about $200 billion a year - that's an opportunity now denied to us. And to put this in perspective, that procurement market alone is bigger than the total size of the Victorian economy.
So I do enter a very passionate plea in the national interest for the support when it comes to legislation in the Senate of all parties for the Free Trade Agreement. It's one thing to oppose something that is against your philosophy, it is another thing to oppose something simply because the other bloke has put it up. Our record of eight years of continuous economic growth does mean that if you look back for a moment, Australia is a more competitive and prosperous country as well as, I believe, a fairer one.
Let me illustrate - the average Australian's standard of living has risen if you measure that by real GDP capita by 19 per cent over the last seven years. For the first time in 35 years, that's since 1968, we have simultaneously unemployment below six per cent and inflation below three per cent. Real wages of which I spoke earlier and that is the weekly human dividend, if I can put it that way, of productivity growth and good policy, they've gone up by 13 per cent since 1996, by comparison the rise was two per cent... 2.4 per cent during the previous 13 years. We've got 1.3 million new jobs. The average mortgage costs $500 a month less than it did almost eight years ago. Tax cuts in 2000-03 together mean that somebody on male average weekly earnings is today about $2,500 better off in income tax terms. And through our bitterly opposed but historic reforms to the Australian waterfront, led by the then industrial relations minister Peter Reith, productivity on the Australian waterfront - a notorious illustration of our failure to become truly competitive in a modern sense has risen by 75 per cent. The average crane movements per hour in December 1995 were 15.9, they are now 27.8. Our strength and fiscal position has meant that we've not neglected areas of proper social provision, real spending on healthcare's gone up 50 per cent and Federal Government funding for schools has gone up by 63 per cent. We've lifted aged care funding by 50 per cent. We've created 200,000 extra childcare places. And whereas when we came to government there were only 141,000 people in apprenticeships, that figure is now 407,000.
I mention these things because sometimes, after a period of years, the recollection is dimmed and we do need occasionally to have a scorecard of what good economic management has delivered to people because economic management... good economic management is not an end in itself unless it has a human dividend, unless it generates more jobs, or lifts people's incomes or makes their home mortgage more affordable then it really doesn't amount to very much. And we have been able to do these things through a period of some difficulty - an Asian financial crisis, international terrorism, a US recession and a crippling drought. But there is, as I said earlier, a presumption that economic growth will just go on, no matter what governments do. That to me does smack of dangerous complacency. Where we are today does reflect disciplined economic management and we certainly can't afford to go back to reregulated labour markets and more restrictive attitudes to international trade. And anything that smacks of an anti-business agenda will threaten the foundations of a safer, more prosperous and more socially cohesive society. Strategic analysts sometimes say that security is like oxygen, you don't notice it until it begins to be lost.
And, of course, in the last few years we've had to grapple in a very big way with issues of national security and counter terrorism that eight years ago we might not have thought to the same intensity would be required. And in that context, the government and I'm sure the entire nation is very proud of the contribution that the Australian Defence Forces have made in so many theatres. In Bougainville, Afghanistan, Iraq and the Solomon Islands. Let me say quite upfront, unfashionable though it may be in some of the broadsheets, that I remain unrepentant about the decision the Government took in relation to the operation in Iraq. I make no apology for what we did as part of that coalition and for all its current travails, Iraq because of the removal of Saddam Hussein has a much brighter future. And those who decry the strategic purpose of the United States should ask themselves at least one question. Do they believe for a moment that Libya would have decided to scrap its WMD capabilities without American resolve to ensure that these weapons did not fall into the wrong hands?
Can I also take the opportunity without prejudging in any way, the findings of the parliamentary committee which will report next week. And I take the opportunity to express my strong support for the vital role played by Australia's intelligence agencies, particularly in this era of widespread unpredictability. I just want to say that those who would seek to denigrate or reduce the role of our intelligence agencies need to reflect on the inevitable consequences if their views gathered great currency. Intelligence is not a precise science, it never can be. It always involves judgements, as I've said previously, if you wait for proof sufficient to satisfy an Old Bailey jury you end up with another Pearl Harbour. And when I spoke to CEDA in November of last year of 2002, it was of course barely a month after the Bali atrocity, and a lot has been done in the time that has gone by since then to further fund our defence and our intelligence services. And the Government is working in partnership with the business community to strengthen security arrangements, especially in areas such as transport security and critical infrastructure. But there is more that we can do together and in that spirit I've asked the Attorney General to convene a Ministerial Forum with business leaders to further strengthen that partnership and that meeting will review our domestic capabilities and be an important step towards mitigating the dangers posed to the economy by terrorism. We're also working very closely with our friends in the region to address problems before they become full-blown crises. And I sight in particular the Regional Assistance Mission that's been so successful in the Solomon Islands and also the very heavy investment that we have made in strengthening the police and public service infrastructure of Papua New Guinea.
We have been able to make increased commitments to security and to defence because we have a healthy economy. But to sustain domestic prosperity we can't stop the process of reform. A major focus in recent times has been reform of Australia's domestic energy markets. Last December the Commonwealth, the States and the Territories reached agreement on a national energy market reform plan and the reforms will see the establishment of a single national energy regulator, major improvements in arrangements for electricity transmission, the development of a national approach to energy access, enhanced user participation and an agreed national framework for distribution and retailing. We've always maintained a balanced approach to energy use, resource development and environmental protection. One that emphasises effective environmental action over pure symbolism and this is important and this contrast is important in the area of climate change. Australia, despite the criticism it has copped, is a world leader when it comes to effective action on greenhouse gases and we are on track to meet an agreed international target for emissions. But we continue to take the view that it is not in the Australian national interest to ratify the Kyoto protocol for a resource intensive country like ours, it would be a crippling blow to Australian jobs, investment and growth to sign up to a mechanism which does not by itself reduce emissions and does not involve major global emitters or other resource suppliers.
If I could turn to two very important areas of domestic policy - higher education and schools. Let me say that in recent months there has been no better example of the Government's willingness to tackle a difficult reform issue than the area of higher education reform. This nation needs to put more money into its universities, but we can not afford for all of that money to come from the general government sector. We have to find ways of leveraging a contribution from both private individuals, supported by the government to ensure that additional investment is made in our universities. And that is why more than a year ago Brendan Nelson unveiled plans to do exactly that. But I'm pleased to say that after a very long and difficult process, the Government's higher education package did get through Parliament - albeit with no support from the Opposition. And under that policy there will be a more sustainable and flexible university funding system backed by about $2.6 billion in additional public funding for universities over the next five years and $11 billion over the next ten years.
It's worth making the point to cut through some of the reporting that occurs in relation to the cost of university degrees. It's been calculated that when all of the reforms are up and running and allowing for the decisions of individual universities to increase their HECS charges up to the permissible amount of 25 per cent, 72 per cent of the average cost of educating a person with his or her degree will still continue be borne by the taxpayers or from some other private sources. And only 28 per cent will be borne through the HECS system by the individual student. And bear in mind that repayment of HECS will not begin until somebody earns at least $35,000 a year. We're providing additional resources to introduce workplace reforms within the universities and also very generous transitional funding to ensure that no institution is disadvantaged under the new funding arrangement.
I can not help but draw a contrast between the struggles of my British colleague, Tony Blair, whose politics are different from mine, but whose experiences on some issues are very similar, dragging his party towards a modern approach to the funding of higher education and contrasting that with the Australian Labor Party that's done everything to frustrate our reforms. But in the interests of evenhanded treatment, let me inform you that disappointingly the Conservative Party in the United Kingdom opposed Tony Blair's reforms.
The Government's approach to schools, education, has two basic goals. One is to set national benchmarks relating to things such as literacy and numeracy. And the other very important goal is to facilitate choice by supporting the right of parents to decide where their children are going to be educated. Let me say with some feeling that our commitment to choice is not about favouring one system over the other. Government schools in this country, as their name suggests, are owned and run by state governments, which in turn derives close to 50 per cent of all of their funding from the Commonwealth. And the key point is that while Government schools educate 68 per cent of our children, Government schools receive 76 per cent of total government funding and that really is the only figure that counts in this funding argument. It's no good separating our direct Commonwealth funding to government schools, that's always only ever been a top-up. The thing that really matters is the aggregate of all government funding. And on that basis, those who suggest that government schools have been disadvantaged don't understand the facts or don't wish to. But I think many of them really still have the agenda of closing off government assistance to independent schools.
And the other point worth making is that the great growth in independent schools over the last eight to ten years has not been in those schools that are the popular targets of the envy breed of Australian politics, the better known GPS schools as we call them in Sydney, or private schools as they're called in different parts of the country, but rather the low fee independent schools that are burgeoned under the Government's new schools policy. I had the opportunity to visit such a school in western Sydney, in Penrith last Friday. The Penrith Anglican School. It opened for the first time in 1998 and in five and had half years it's gone from a zero enrolment to 950 with a waiting list of several hundred. The fees at that school are between $3,500 and $4,500 year. They are the schools that have grown, they are the schools that are the beneficiaries of our policies, and they are the schools that represent an expression of choice at some sacrifice by parents who send their children to those schools.
Excellence in science and innovation is also critical if Australia is to maintain its high productivity growth and later this year we'll announce a new science and innovation package with further measures to boost our capacity to turn great ideas into Australian jobs and income. And many of you would be aware that in January the Deputy Prime Minister announced additional funding of $2 billion for transport infrastructure, including an extension for another four years of the very successful Roads to Recovery and a strong national transport system is not only economically important, but in very isolated communities can literally be the difference between life and death.
Rural and regional Australia will, of course, be a major winner out of the Free Trade Agreement with the United States. Two thirds of all agricultural tariffs will be eliminated immediately and products, such as, beef, dairy, lamb, seafood, wine, peanuts and oranges will gain even better access.
If I reflect upon the condition of rural and regional Australia, particularly its reliance on small business it seems to me that the greatest threat to the vitality of those small businesses does lie in the re-regulation of Australia's labour market. And the agenda of the Opposition to re-regulate industrial relations to roll back the hard won gains in workplace flexibility would have a particularly deleterious effect on small business and they would destroy not only jobs, but also competitiveness.
The Opposition proposal to abolish workplace agreements, their simplistic approach to casual workers' entitlements made in the name of giving people security will actually increase Labor costs and reduce job opportunities and the latest proposal to compel firms that receive Government contracts to disclose the identity of subcontractors will open those firms up to union bullying and the more recent proposal to compel firms to provide the option of part time work irrespective of the firm's circumstances is particularly dangerous.
That might be workable, although costly for large corporations. But totally unworkable for small firms and the result will be fewer jobs and not greater job security. We have in this country come a very long way as a result of a more flexible industrial relations system and there really must be no turning back of the clock in this area. More than anything else it is responsible for the greater productivity we have and the prospect of that being turned back will be a very serious threat to our future economic strength.
I mentioned at the beginning of my speech how important social stability was, not only as a national goal, but for the sense of wellbeing of the Australian community. And it doesn't need me, or indeed anybody, to tell you that the bedrock of Australian society remains the stability and the strength of Australian families. And a strong family life is without question the greatest source of emotional stability, individual education and social development. It's not the role of governments to tell families how to organise their lives or to second-guess parents on what is best for their children's future. Our role, the Government's role, is to help Australians facilitate their own goals and make their own choices, while recognising that some families need a bit more help than others.
Responsible social policy, and this has been an area of great Australian achievement, is also about maintaining a funding balance between the public and the private sector. Much and all as our health system is criticised from day to day, it is probably a better system than any that can be found in other parts of the world. One of the reasons for that is that we have a balance between the government and the private sector in making provision. Each reinforces the other. If you left it entirely to the private sector, which essentially was the philosophy until fairly recently in the United States, it becomes unaffordable and out of the reach of ordinary people. If you give it entirely to the government sector, many of the incentives that are needed are drained away. And with all its imperfections, we have a reasonable balance between the two at the present time and I hope that that continues. And this requirement is going to become even more acute as our population ages, and we need through both the contributions of the public sector and the private sector, to maintain such schemes that are essential to our economic and other futures, such as the Pharmaceutical Benefits Scheme and aged care, to be sustained.
As I mentioned earlier, we have promoted a wider debate on demographic change and I'm delighted that CEDA will be producing its findings on the Inter-generational Report next week. And the Treasurer today announced further initiatives broadening the availability of superannuation, providing more choices in financing retirement income, and making superannuation more adaptable to changing workplace arrangements.
Can I say finally that there is one other long-term challenge I think we do face as a country, and that is to make our Federation work better through a proper balance of rights and responsibilities. I must say that in recent years I have become concerned by the evidence that state governments on some occasions are very keen to exercise their rights in the Federation, but reluctant often to accept their responsibilities. Can I say from experience both as a treasurer and a prime minister, that for decades state premiers of both political persuasions demanded access to a growth tax to fund their responsibilities in areas of health, law and order, transport, and education. And with the introduction of the Goods and Services Tax - let me remind you again the entire proceeds of which, every last dollar of which, goes to the states - we acted in a quite historic way to meet this demand.
This financial year the states and territories will receive $575 million more than they would have received under the previous revenue sharing arrangements. By 2006, that figure will be $1.4 billion more and that figure will grow rapidly as the years go by. It's interesting that the day after he was re-elected a few weeks ago, the Queensland Premier Mr Beattie made a very interesting remark - this is the day afterwards. He said that courtesy of the GST, which he had opposed, he found enough money to fund a preparatory year for primary school education. In other words, he acknowledged in a very significant and politically sensitive area, that the states now have the growth revenue source they have demanded for decades.
Accordingly I think they should stop seeking even more money from the Commonwealth to pay for the services which, with proper management, can now be adequately funded through the resources at their own disposal. One way I think the states could exercise greater responsibility and accountability is to have more open and transparent budget accounts. At a Commonwealth level, we publish detailed forward estimates by function, including for health and education. The states do not. But it's time, I think, they followed the Commonwealth example.
Ladies and gentlemen, I have endeavoured today to share with you some of my thoughts about the state of the Australian economy and the Australian nation. A forum such as this allows for a rather more reflective environment. It is a bright future, it is an optimistic time. I think the Australian economy now is better and stronger than it has been at any time since World War II. It's better than it was in the 1950s and 60s because it's less protected. It's standing on its own feet. We don't have a fixed exchange rate, we don't have high tariffs, we don't have an overdependence on certain exports. We have a growing capacity in the service industries in relation to exports, we've diversified our manufacturing exports, we still continue to be greatly enriched from our agriculture and mining exports. And when one sees that wonderful wheat crop of 39 million tonnes, when one reflects upon the enormous dividends we will get from the development of our oil and gas reserves, we have an idea of the diversity and the strength of the Australian economy.
I'm an optimist about our future and not surprisingly, I don't take it for granted. We've got where we are today as a result I think of very sensible policy, and I've given proper credit where it's due to sensible changes introduced by former governments. We've also got where we are today because Australians have changed and adapted. Because we are an egalitarian people, because we're not hidebound by two rigid an adherence to preconceived notions of behaviour, we can adapt to change. And I think the contribution that individual Australian workers have made to adapting to that change, in cooperation with their employers, is one of the principal reasons why we are in the position, the very strong position, that we are at the present time.
I thank you for the opportunity of addressing you. I congratulate CEDA again on the contribution that it makes to thoughtful economic and social debate in our country. Thank you.
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