PM Transcripts

Transcripts from the Prime Ministers of Australia

Keating, Paul

Period of Service: 20/12/1991 - 11/03/1996
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00008849.pdf 13 Page(s)
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  • Keating, Paul John

Ladies and Gentlemen
The change in our circumstances over the last decade, even
over the last three years, has been profound so profound
it is likely that we have yet to completely absorb its
meaning. We remain beset by all sorts of problems yet the promise is
undeniable. We have never had such opportunities and in
the last decade we have put ourselves in a position where we
have every reason to believe that we can grasp them.
For all the failures -of the last decade we were bold enough
and conscientious enough to do those things which have given
ourselves a chance in the world.
For all that remains to be done the vision of Australia as a
successful trading nation integrated with the world and the
region is now taking shape.
For all the obstacles we still have to overcome, it is
possible that we are now within reach of a new era of
Australian prosperity of self-sustaining growth, of
saving, invest ment, rising productivity, rising incomes,
rising saving, and more growth.
We have eliminated inflation as a problem in the Australian
economy and we have a government, a trade union movement,
a community committed to preventing it ever coming back.
We have upgraded the skills of the workforce, and we have
put into' place plans to continue upgrading it.

We have a much more competitive regulatory environment -and
we will do more.
We have cut industrial disputes to less than half their
level ten years ago, and workplace bargains now cover one
third of employees under federal awards.
Above all, we have begun to internationalise the economy and
change the pattern of production.
We have set ourselves on an irreversible path of winding
down the tariff protection which for so long fettered the
Australian economy. A practical, sensible and measured
program. We have shifted the trade deficit from over 3 per cent of
GDP 10 years ago, to a small surplus in the last financial
year. We have increased exports as a share of GDP from 13 per cent
to over 20 per cent.
The significance of the structura-lchanoe is underlined by
the fact that manufacturing exports are today consistently
equal to or greater than rural exports. Service exports are
now one fifth of our total exports.
We are exporting a higher and higher proportion of product
to the booming markets of East Asia. A higher and higher
proportion of it consists of manufactures. And thatexported
product is more and more coming from relatively
small, highly adaptable firms which depend upon exports for
their survival and growth.
These are big changes substantial, real, and irreversible
changes. There were also shortcomings in the eighties: they left us
with a million people unemployed.
In the course of the election campaign and on the night that
the votes were counted, I said that reducing unemployment
would be the first priority of a second Keating government.
It will be.
Unemployment is principally a result of the recession.
It is an undeniable fact that unemployment is not going to
fall dramatically in the next few years, and equally

undeniable is the fact that longerm unemployment will
There are now more than 300,000 people who have been
unemployed for 12 months or more. As unemployment falls
over the next few years the number of long-term unemployed
will increase as employers often prefer to take up new
entrants to the labour market or those with only short
periods of unemployment.
But I can tell you now we will not be accepting long-term
unemployment as an insoluble problem, or as an inevitable
fact of life in the new economic order.
Over the past two years, we have greatly increased
assistance for the long-term unemployed and improved the
effectiveness of our labour market programs.
In my speech on election night, I renewed the Government's
commitment to helping those who are unemployed. In
particular, we are determined to reduce long-term
unemployment and assist people who are in this position. If
new policies and practices have to be developed we will
develop them.
The Employment, Education and Training Minister, Kim Beazley
is now examining the full range of programs for the longterm
unemployed to see where improvements can be made.
One thing I think we should now be asking ourselves if the
practice of wholesale retrenchment is really a synonym for
efficiency. We should ask if the human consequences and the social
consequences are not too great. If the economic burden on
the nation does not outweigh the benefits to productivity.
If the uncertainty and resentment retrenchments create does
not in fact reuc efficiency. And if the initial
improvement to the bottom line of balance sheets is not in
many cases more than offset by the resulting inability of
firms to gear up to meet opportunities as demand expands.
I think governments and business alike should be asking
these questions.
As I said during the election campaign: we got a lot right
in the eighties, but we also got a few things wrong.

It is not right that the unemployed should alone pay for
these mistakes; any more than it is right that governments
should withdraw from the consequences of their actions.
The fact is we cannot separate economic ends from social
ones. It is expected of governments that they should seize
national opportunities, such as those which now present
themselves. They should seize them because the national
interest is at stake, the well being of the nation and the
people. The same is true of our social responsibilities, especially
our responsibilities to the unemployed.
I take the March 13 result as a mandate for an Australian
social democratic agenda for strong economic policy
married to programs which produce not just social justice
but social cohesion and strength.
In no way should that put the Government and business at
odds. The success of economic policy depends on the success
of business. The opportunities will have to be seized by
business. The national interest depends on business and
to a very considerable extent I mean small and medium sized
business. I am saying that we have mutual interests and mutual
responsibilities in the economy and society. I am saying
that we should work together for economic an oca ends. I
am saying that our vision should be broad, inclusive,
nationa. We should share it.
The prospect of a new era of Australian prosperity derives
from our having the preconditions of low inflation and a
restructured economy: yet we feel it is also within reach
because there is a new sense of national energy and national
Business leaders should not be surprised that tangible
benefits spring from such intangible things as shared goals,
energy and purpose they have their parallels in every
decent management text book.
Ladies and gentlemen, the eighties were a time of real
achievement, but they were also a time of slow productivity
growth, slow income growth, and of national saving
inadequate to the investment task we faced.
The trick in the coming decade will be to keep all our gains
on inflation, on competitiveness, and on exports.

To keep all these, and at the same time to increase our
investment so that productivity rises faster, and incomes
rise faster, and generate the savings out of which further
investment and further growth is sustained.
It can be done.
There Ja a new confidence abroad.
Already we can see that the expansion currently underway is
quality expansion.
Growth has now been posted for five consecutive quarters.
The current growth rate of 2. 5 per cent is slower than we
need to make real inroads into the numbers of unemployed,
but we need to bear in mind the context of a slow world
economy, where two of the three major world economies are
still in recession.
More importantly the recovery that we have seen over the
past five quarters displays precisely those characteristics
that are required if Australia is to achieve higher and
sustainable growth throughout the 1990s.
Our current inflation rate of 0.3 per cent is the lowest in
the industrialised world.
Net profits in the December quarter 1992 were 75 per cent
above the levels of a year ago.
Productivity in the market sector has grown by 2 per cent
over each of the past two years.
And by tying wages growth increasingly to productivity, unit
labour costs will remain competitive. We have already seen
real unit labour costs fall 0.5 per cent over the last year.
In the last three years only one country out of 23 surveyed
by the OECD saw its trade competitiveness improve more than
Australia's. The performance of our manufactured exports provides an idea
of how effective these trends can be. While world economic
growth has been slowing, Australia's manufactured exports
have continued to grow. In the current financial year, they
are nearly 20 per cent higher than in the corresponding
period for the previous financial year.
The characteristics of our growth provide encouraging signs
for the future. When the world recovery begins in earnest,

Australian firms, operating in a low-inflationary, highproductivity,
competitive environment, will be well placed
to reap the benefits and create in Australia growth of a
kind which will mean long-term employment opportunities.
Success in the coming decade certainly depends on things we
must do in Canberra.
It depends crucially on Australian workers, who must
continue to adapt and change and win for themselves the
increasing incomes that are within their grasp. Under the
workplace bargaining system we have adopted and which we
will entrench this year, employees themselves are for the
first time in our history able to create the circumstances
of their own prosperity.
But its up to business leaders to now seize the
opportunities to take advantage of the new structure for
business which is now being laid down.
Ladies and Gentlemen,
Investment is the key to economic growth.
The continuing opening of Australian industry to
international competition ensures that firms can no longer
afford to ignore advances in technical capabilities and the
competitive advantages associated with them.
We need to invest not just for replacement purposes, but
also for strategic purposes.
This requires our investing in our people, in ideas and in
physical capital.
It starts with a highly skilled and responsive workforce.
This has been the foundation for our successes in developing
new export markets, and it will continue to be.
The demand for a highly skilled workforce provides enormous
challenges for our entire education system, challenges that
are being met: first through our reforms to secondary and
university education, now through a major transformation in
vocational training.
Australia's record of investment in ideas has been mediocre,
but we have begun to develop an increasingly innovative

The Government has provided direct grants and assistance
through the taxation system, especially the 150 per cent tax
concession, to encourage greater business contribution to
research and development. Direct assistance is also
provided to fund cooperative research centres to facilitate
greater collaboration between universities, research
institutions and industry.
The most pressing need today is to lift investment in
physical capital.
Many businesses and banks scaled back their operations as
they sought to strengthen balance sheets after the excesses
of the late 1980s. While addressing severe debt problems
was often necessary, the resultant fall in investment
spending cannot continue.
Business fixed investment increased solidly in the December
quarter, and I hope this is the start of a strong recovery
on investment.
The conditions are there for this to materialise low
inflation, good profits, industrial peace.
Moreover, we now have an extremely competitive tax regime
with the corporate tax rate at 33 per cent, accelerated
depreciation and incentives to invest through the
development allowance and the additional investment
allowance announced in " Investing in the Nation".
In addition, we are encouraging banks to get out there and
lend for worthwhile projects based on a close knowledge of
the firm's operations. The banks assure us they starting to
respond. As the recovery strengthens, we need as a nation to finance
expanding investment through domestic saving.
Saving is not a constraint on our economic recovery over the
next year or so.
And, indeed the recovery itself will lift national saving.
But increased national saving is a central goal for policy
in the 1990s.
That is why we introduced the superannuation guarantee
charge, and why we will increase its rate over the decade.
It is also why we are committed to bringing the deficit down
to 1 per cent of GDP by 1996-97.

You can be assured we will do it but you can also be
assured that we will not ignore other priorities as we do
We will also continue our program of micro economic reform.
We will build more competitive industries by strengthening
competition. The National Competition Policy Inquiry led by Professor
Hilmer will report shortly.
An immediate priority will be to improve the performance of
our trading enterprises. The reform of management
structures, pricing regimes and opening up these markets to
competition can achieve important gains for competitiveness.
The cooperation of the States is vital and we have
established processes through the Council of Australian
Governments to develop national approaches to reform. The
States have a lot at stake not only are they accountable
for the performance of their GBEs there is also scope for
reform to contribute towards the repair of their budgets.
one feature of the recession that has been of considerable
concern has been its impact on different regions. It is
inevitable that differences between regions will develop
from time to time, but the severity of this downturn in
parts of the country demands specific action by Government.
In Alan Griffiths, we now have a senior Minister in Cabinet
charged with regional development. As a result, the
regional dimension of all Government policies will come
under constant focus.
Existing programs will be reviewed, including to ensure
harmonisation with State programs.
More generally, any constraints on development in the
regions will be assessed with an aim of facilitating new
investment. There has been some speculation that this Government may
adopt a more interventionist approach to industry.
Let me say this.
Labor has always believed that Government has a pivotal part
to play in developing Australian industry, one where
sensible intervention is called for.

Hiding behind the tariff wall was not sensible.
Handouts to favoured industries with little future in a
competitive world economy were not sensible.
Rather, we will continue to encourage our industries to
respond to competitive forces.
We will continue to foster responsive workplaces.
We will continue to provide support where the market alone
does not perform adequately, in areas such as research and
development, in export finance, in services to small
business. We will continue to encourage investment through the tax
system, and to foster closer relations between banks and
business. We will continue to improve the nation's infrastructure and
to press for the efficient provision of services like
transport and power.
All this is the basis for Labor's industry policy..
Where fundamental change is needed, we will provide
adjustment assistance so that our industries and businesses
can adapt to new challenges, just as we have in the rural
sector and TCF industries.
Where bringing major players together helps industries at
large to seize opportunities we will do so, just as we have
in telecommunications and processed food.
Of course we do not face a level playing field in the world
economy. But the answer is not to prop up industries that can only
survive in a protected domestic market.
Rather, the answer is to use dexterity and awareness to
ensure that Australian industry can compete effectively in
the world.
And, as our export performance demonstrates, this strategy
works. Ladies and Gentlemen,

All these are important issues for the government, but there
is no economic reform more central than to complete the
construction of a system of industrial relations which will
enhance productivity, protect the weak, and distribute
fairly the rewards of cooperation in the workplace.
We have come a long way in a short time with industrial
relations. Since 1983 we have more than halved the days lost through
strike action.
We have dramatically cut real unit labour costs while
restoring the profit share.
Australia's union movement is committed to wage increases
consistent with maintaining our international
competitiveness. And we now have workplace or enterprise bargains
proliferating rapidly.
There has been substantial progress, but I think we need to
do a lot more.
Let me describe the model of industrial relations we are
working towards.
It is a model which places primary emphasis on bargaining at
the workplace level within a framework of minimum standards
provided by arbitral tribunals.
It is a model under which compulsorily arbitrated awards and
arbitrated wage increases would be there only as a safety
net. This safety net would not be intended to prescribe the
actual conditions of work of most employees, but only to
catch those unable to make workplace agreements with
employers. Over time the safety net would inevitably become simpler.
We would have fewer awards, with fewer clauses.
For most employees and most businesses, wages and conditions
of work would be determined by agreements worked out by the
employer, the employees and their union.
These agreements would predominantly be based on improving
the productive performance of enterprises, because both
employers and employees are coming to understand that only

productivity improvements can guarantee sustainable real
wage increases.
We would continue to have an Accord with the trade union
movement, guaranteeing the safety net of the award system
and the steady accumulation of occupational superannuation,
with improvements to both the safety net and occupational
superannuation governed by a commitment to international
competitiveness. We would have an Industrial Relations Commission which
helped employers and employees reach enterprise bargains,
which kept the safety net in good repair, which advised the
Government and the parties of emerging difficulties and
possible improvements,-but which would rarely have to use
its compulsory arbitral powers. Instead, parties would be
expected to bargain in good faith.
We would have sufficient harmony between State and Federal
industrial relations systems to ensure that they all head in
the same direction and used the same general rules.
That is the goal we are working towards. So how f ar are we
from reaching it?
Whea enw enerprse brgans which cover one third of the
workforce under federal awards. Over eight hundred
agreements covering nearly three quarters of a million
employees. That is extremely encouraging, but its not enough not
nearly enough.
We want it to be close to one hundred per cent of employees
under federal awards.
And federal awards, of course, cover less than one third of
all employees.
In all of the six state systems only a small number of
employees are covered by enterprise agreements.
NSW, the biggest state, has only about 7,000.
Victoria has only about 80 agreements in total.
And of course there are lots of employees who for one reason
or another don't have a union to represent them.
We need to make the system more flexible and relevant to our
present and future needs.

We need to accelerate workplace or enterprise bargaining and
this is as much a responsibility of employers as it is of
unions and governments.
There are not enough enterprise bargains and the bargains
we do have are sometimes not sufficiently comprehensive.
We need to find a way of extending the coverage of
agreements from being add-ons to awards, as they sometimes
are today, to being full substitutes for awards.
As we change to a national system of workplace bargiqning
our laws and institutions will need to be mo dified to fit
the system we are creating.
For example we have laws which give the AIRC a role and
powers that are not well suited to the system we are trying
to create.
My own view is that the government should provide the
direction and leadership necessary to ensure that Australian
industrial relations operate to advance our national
The Government should do this and we will.
It is our responsibility to work out a way in which the IRC
has suitable powers to run the kind of system we need not
the kind of adversarial system we have had.
The shortcomings in our legal structure go well beyond the
role of the AIRC.
They are also quite plain in the lack of credible means of
enforcing agreements.
Where agreements or other awards apply there should be
clear, substantial and easily enforceable penalties for
breaches. An integrated, comprehensive and simple framework for making
and enforcing agreements.
These are shortcomings which I have asked the industrial
relations minister Laurie Brereton to look into and remedy.
Over the next three or four months he will be consulting as
extensively as he can with employers and employees and
their unions, with the states, with the AIRC, with academics
and experts to come up with the best solutions.

The solution will certainly include legislation implementing
our commitment to ILO conventions on minimum pay equal pay
and on redundancy.
I know Laurie Brereton will invite the liveliest debate and
I hope all interested parties will join it.
I expect that by the time we get to the Budget sitting of
Parliament he will have put together a package to renovate
the legal and institutional structure of Australia's
industrial relations and one that fits with the national
system of workplace bargaining we are already creating.
Ladies and gentlemen
Completing industrial relations reform is another link in
the chain of reform which began a decade ago. It is
important now that we accelerate the reform so that all the
other elements of flexibility in the economy can work in
greater harmony.
I am confident about success. As I said in the campaign, I
now dare to believe that the dream of decade or more ago is
about to be realised. That Australia will become a
creative, innovative, manufacturing nation in the front rank
of trading nations and the front rank of social democracies.
I now believe it will happen because there so many signs to
tell us what we have done is succeeding and that is the
best assurance that we will succeed in doing all that
remains to be done.