PRIME MINISTER
EMBARGOED UNTIL DELIVERY
PRIME MINISTER'S OPENING REMARKS
1990 PREMIERS CONFERENCE
CANBERRA 28 JUNE 1990
Premiers and Chief Ministers, I extend a warm welcome to you
all. There are certainly a number of new faces around the
table since we last met: Wayne Goss, Michael Field, Trevor
Kaine and, of course, Australia's first woman premier, Carmen
Lawrence. The older hands are welcome back too; I am pleased
to see John Bannon, John Cain, Nick Greiner and Marshall
Perron joining us once again.
On this year's agenda I see two major issues: the need for
continuing fiscal restraint by all levels of government and
the need for Commonwealth-State co-operation on micro-economic
reform. These issues are critical, and not unrelated.
The end product of micro-economic reform is greater
efficiency: the provision of better services at lower cost.
That is a desirable end in itself both for us as service
providers and for the members of the community for whom the
services are provided. But pursued in tandem with fiscal
restraint, micro-economic reform is also essential if we are
to make progress in improving Australia's long-term economic
outlook. So this Premiers' Conference is again focussing on the
essential fundamental national tasks and that is as it
should be.
Let me now address these two elements separately.
You are all aware of the Commonwealth's views about and
commitment to fiscal restraint. The serious economic problems
confronting Australia require a continuing indeed a renewed
fiscal effort from all levels of government.
My Government has been taking steps on all policy fronts to
tackle our major immediate economic concerns, namely inflation
and the balance of payments. An integral part of our policy
approach has been to push the Commonwealth budget into
surplus. We have done this to give the domestic private
sector greater scope to fund the recent strong investment
surge, and so reduce the demand for foreign savings. This
will help the balance of payments in the short-term and in the
long-term, the benefits of that investment will filter through
in the form of more import substitution and production for
export.
2./
However, the impact of this strategy on total public sector
savings was frustrated in 1989-90 by an increase in borrowings
by the States. The statistician estimates that the
Commonwealth sector's net financial surplus in 1989-90 will be
$ 5.6 billion. In contrast, it is estimated the States will be
in deficit to the extent of $ 3.6 billion.
Given present economic circumstances, I believe the
Commonwealth offer before you is a fair and reasonable one.
It proposes that, while general purpose payments decline, net
payments to the States increase in real terms, and that global
borrowing limits be maintained, at least in nominal terms.
As managers of nearly half of the total public sector outlays
in Australia, you understand the impact your actions and
decisions have upon the economy. The crucial role you play in
the economy is also very evident when we consider the need for
concerted action on micro-economic reform. Inefficiency has
been rife at all levels of government in post war Australia.
We have a sorry record of ill-considered interference to look
back on: over-regulation, heavily subsidised Government
business operations, price and marketing controls. We could
all add many items to this list.
My Government firmly believes that there is much to be done to
improve the efficiency of our economy; to improve the
competitiveness of our industry; to improve the way in which
Government delivers services to the public.
To that end, my Government embarked on a substantial program
of micro-reform in our last term and we're committed to
further progress now. Some of you have also taken initiatives
in this regard.
There is much more that remains to be done. We must get
better returns out of scarce public resources.
Inefficient production in the public sector can impose major
cost penalties on the private sector. Charges for
electricity, rail transport, shipping and port services,
communications, and so forth, feed into the cost structure of
local industries. Our export industries are particularly
disadvantaged by such cost penalties, since they have to sell
into competitive world markets.
By improving efficiency in the public sector we can therefore
free up resources for productive use elsewhere in the economy,
and remove implicit cost penalties that we currently impose
through regulation or excessive charges on the private sector,
especially export industries. This is a contribution that we,
as Governments, must make to a more efficient, more
productive, more competitive Australian economy.
3.
In asking for your co-operation on micro-economic reform, I am
asking you to join us on a difficult task. It involves
changing your fundamental outlook on what Government can and
should do. It involves tackling entrenched interests, and
pricing services according to realistic economic criteria.
Most importantly, it involves assessing the total impact of
decisions on the community as a whole: not only on the groups
or industries directly involved.
Later in the day I will be seeking your agreement to joining
us in a special Premiers' Conference to be held later this
year, and I will be writing to you suggesting a mechanism to
co-ordinate work in preparation for such a conference. I make
it very clear that I am not proposing Commonwealth hand-outs
to increase capital infrastructure expenditure, because to
inject money without taking steps to reform basic structural
defects would be a waste of public resources. But I do
believe we can, through co-operation and further discussion,
significantly improve the use we make of the resources
available to us.
Having outlined these immediate issues facing us, I want to
make very clear that I and my colleagues in the Commonwealth
Government fully recognise that there are other aspects of
Federalism other issues in the management of
Commonwealth/ State relations which are of great importance.
The economic and social health of our nation is in no small
part dependent upon the most efficient possible management of
relations between our Governments relations beyond the scope
of our fiscal ties and our micro-economic co-operation, as
fundamental as they are. We are all participants in a Federal
system of great breadth that has substantial impact in
virtually every area of daily life. We all have an obligation
to make that system work as well as we possibly can.
This is no longer merely an imperative in terms of trying to
ensure the most efficient delivery of the services provided by
government programs to Australians who need them, but an
imperative in terms of our aspiration for an Australia in the
best possible shape to face the 21st Century. I have no doubt
that that is an aspiration shared by all of us around this
table. I am concerned that we should manage our relationship across
the wider range of Federal issues more effectively and
co-operatively than in the past not solely longstanding and
important issues of Commonwealth-State relations such as the
allocation of functions, but newer issues facing governments
at all levels, of which the protection of the environment is
perhaps the clearest and most important example. Indeed I
would like to believe that there is scope in 1990 only a
decade or so away from the centennial of the Australian
Federation not merely to correct this or that particular
defect in the relations between our Governments but to begin a
process leading to a genuine partnership, a modern
partnership.
4. 9
I have been giving careful, quiet consideration and reflection
for some time now to the need for such a partnership and how
we might make progress towards it. It is clear from comments
a number of you have made, and from discussions I have had
with several of you that you have been thinking to some extent
along parallel lines. This is very healthy and I welcome it.
So I say to you that these wider matters have not been
forgotten or neglected, despite our necessary but narrower
focus on fiscal restraint today, and that I shall be
elaborating upon them in a major speech I shall be giving in
the near future.
I'll now ask the Treasurer to speak in greater detail about
the economic outlook to help us get a clearer picture of the
situation within which we must consider our agenda today.