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Liberal Party corporate portfolio lunch, Sydney, 15 September 1999: speech.

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The Hon. Joe Hockey, MP 

Minister for Financial Services and Regulation

Speech at the Liberal Party Corporate Portfolio Lunch


15 September 1999


Thank you Michael,

Ladies and Gentlemen,

A little over 3 years ago I entered Parliament house to deli ver my maiden speech.

In fact it was 3 years and 5 days ago today, to be precise.

On that day in 1996, I spoke of what it means to be a member of the Liberal Party. I spoke of the values that we hold dear:

The inalienable rights of the individual and our belief in parliamentary democracy.

And especially the shared commitment to improve our society through reform.

Reform conceived with clear purpose, and of sound principle.

Reform that involved taking the tough decisions, regardless of the political cycle.

Reform that would build on the best practices of the past and meet the challenges of the future.

And as we watch the information revolution unfold around us, how appropriate it is that the Howard Government, the reforming Government, is steering our nation through this change.

It is modern liberalism, and its commitment to reform, that is the only philosophy that could deal with the economic information revolution of the late 20 th century.

This information revolution, fuelled by technology, has had major consequences for all of us here today.

Traditional business models have been turned on their head. New products and markets all over the world are now accessible with the click of a mouse.

But most importantly for Australia, our geographical isolation, which has been for so long the yoke around our neck, has been broken. For 211 years distance has been Australia’s greatest commercial disadvantage. As each day passes it matters less and less.

Not only can we access new global products and new global markets, they can now reach us. This offers a whole new wave of potential customers that we can market to, unhindered by the tyranny of distance.

The Coalition Government understands this.

We are building a nation that can capitalise on this.

Our government has established a future framework based on four economic reforms. They are industrial relations reform, regulatory reform, taxation reform and of course building a robust economy.

Firstly, our Industrial Relations reforms have recognised the need for workforce flexibilty.

Labour is becoming more portable and the concept of staying at one company for an entire career is fast disappearing.

In this room are representatives of some of Australia’s biggest employers. And this afternoon at the close of business many of you will watch, as you do every weekday, your most valuable asset walk out the door.

Your employees.

Whether these people come back tomorrow morning will depend on a number of factors. Most importantly it will depend on their relationship with you.

As a Government we recognise this. We recognise that the single most important factor in industrial relations is the contract between employers and employees.

This contract must be struck within in a framework that maximises flexibility and minimises conflict.

A framework that magnifies the common interests that you have with your employees.

The Government has structured its Industrial relations reform with this in mind

We have repealed the Unfair dismissal laws and replaced them with a new "fair go all round" law. This change has seen the number of unfair dismissal complaints fall by an average of 46% over 2 years, against the 1996 level.

Not only that but we can see a balance in decisions coming out of the new resolution structure. From 1997 to 1998 the overall balance of unfair dismissal cases went 53% to employers and 47% to employees.

Fostering this sort of inclusive relationship with staff also minimises disruptions due to industrial action. We have made stronger sanctions available for employers to counter irresponsible industrial action. We have made strike pay unlawful and instigated legislation to curtail "wildcat" strikes.

We have seen tangible results from these initiatives.

After one full year of our reforms, we have experienced the lowest number of industrial disputes since 1939. The level of disputes is one sixth what it was 20 years ago

In addition the number of working days lost per 1000 employees is the lowest since 1913.

And our commitment to a second wave of much needed reform is unwavering.

And when talking of reform I think we can all agree that this term of office will be most reme mbered for Taxation reform.

In 1996 we inherited a disjointed and inefficient taxation system that required urgent repair.

Over the last 2 years the Government has undertaken the most thorough review of taxation since Federation.

We are ready to implement the first stage of a set of coherent and inclusive taxation reforms that will streamline revenue collection, improve our international competitiveness and stimulate economic growth.

The spearhead of these reforms is a broad-based goods and services tax that will deliver some key benefits not only to consumers but also to business.

Apart from the fact that 80% of Australians will pay no more than 30c in the Dollar it will

  • - restructure Commonwealth State relations
  • - ease tax burden on exports
  • - smash po verty trap
  • - allow abolition of FID, Debits etc

The second stage of our reform program is the review of business taxation.

A little over a year ago we commissioned John Ralph, Bob Joss and Rick Allert to examine the entity taxation framework outlined in A New Tax System. Specifically we wanted them to consider the scope for more a commercially focussed taxation treatment of business investments.

It was a Herculean task, incorporating over 376 submissions and a year of effort from the best tax experts in the country.

Cabinet recently received this report and we have been considering it long and hard. It is a breathtakingly broad and complex document that stands over 2 1/2 feet tall.

Today I can exclusively reveal to you that we expect to make an announcement in the near future.

What I can say about the report is that its conclusions are consistent with our aim of having one of the worlds most competitive tax systems. And we need a tax system that can not only cope with the industrial restructuring of Australia over the last 25years but we need a system that can cope with the global challenges of today and technology of tomorrow.

Hand in glove with tax and IR reform is general regulatory reform that affects business.

In this area we have been working with a simple, but powerful, philosophy in mind.

The best regulator is competition.

Competition drives business to deliver to consumers efficiently. If the Internet has taught us anything it has taught us this.

So too, we recognise that a paternalistic interventionist government stifles competition.

Our role is to invigorate not invigilate, and this philosophy is entrenched in our approach to legislation.

National Competition Policy is one example of this. It was a Labor generated concept that we have embraced and enhanced. It has laid down principles and processes for reviewing legislation that restricts competition. The guiding principle is that legislation should not restrict competition unless

The benefits of the restriction to the community as a whole outweigh the costs; and

The objectives of the legislation can only be achieved by restricting competition.

This review process also covers legislation that imposes costs on business. Around one hundred pieces of legislation will be reviewed, and where appropr iate, re written by December 31, 2000.

This approach to competition policy has generated real benefits for business and consumers across a number of sectors.

The Telecommunications industry currently has 30 licensed carriers compared to 3 carriers when it was opened to competition in July 1997.

As a result, the cost of a 10-minute call to the US is 1/5 that of pre-competition levels, now costing around the same as a loaf of bread.

The industry is growing strongly. Revenue has risen from $14.1 billion in 1994 to an estimated $24.7 billion in 1999, an average annual growth rate of 11 per cent.

Competition has affected another business-input natural gas. It has delivered cheaper product since the National Third Party Access Regime for Natural Gas Pipelines was introduced in November 1997.

In fact NSW gas distribution tariffs will have fallen by 60% by next year.

The Commonwealth Government has also been a key participant in the development of the National Electricity Market, which commenced full operations in December 1998.

Since then elect ricity bills have fallen by up to 60% for NSW businesses covered by this market.

Our success in fostering such a competitive environment has been recognised by leading authorities all over the world.

Recently "The Economist" reported that the latest IMD Competitiveness yearbook ranked Australia’s laws as the best in the world at preventing unfair competition. This was a comprehensive study that ranked competitiveness according to 259 criteria.

As a result, Australia is ranked 12 th on the World competitiveness scorecard, an improvement of 9 positions since 1996 when we ranked 21 st . This reflects the fact that in last 5 years Australia’s rate of productivity growth has doubled, compared with the previous 5 years.

We have applied the same liberal zeal to the regulatory reform of the financial services sector. The Wallis report pioneered our programme that has seen the establishment of APRA, which supervises all deposit taking institutions, not just banks.

APRA has facilitated industry developments that includ e non-banks moving into deposit taking operations. For the consumer however, it doesn’t matter whether you put your money with an insurance company or a telco. You can be assured that your deposit will fall under the regulatory umbrella of APRA. This sort of consumer confidence is a vital element of financial stability.

Similarly ASIC, plays a vital role in ensuring consumer protection within the financial sector. It has responsibility for conduct, disclosure and dispute resolution for financial service providers and financial markets, removing the previous regulatory overlap.

The Corporate Law Economic Reform Program, or Clerp, was born out of the Wallis enquiry. It will reform many of our outdated and overlapping corporate laws with a specific emphasis on such initiatives as:

The simplification of the process of fundraising for small business, especially regarding prospectus requirements.

The harmonisation of Australian accounting Standards in line with international practice, making our accounts more comparable, and transferable across jurisdictions.

The streamlining of the licensing of financial providers as well as set the minimum disclosure levels for all financial products.

These reforms will be a key tool in promoting innovation. They will promote business especially to new markets. They will protect and reassure consumers. And they will maintain the integrity of the Australian market for financial services.

Australia has built a world-class financial sector regulatory regime. It provides security and integrity, two ingredients vital to investor confidence, whilst promoting competition.

The International Monetary Fund has hailed recent changes, such as the Wallis reforms, as ‘pathbreaking reforms which put Australia at the forefront of international practice’.

Our regulatory approach has become the blueprint for governments not only in our region but in Europe as well. Howard Davis, the chief UK regulator, used the Wallis report as the blueprint for the recent UK financial system reforms.

And its these regulatory improvements have driven macroeconomic success. This is the fourth key area of reform.

Ladies and Gentlemen, our economy continues to be the envy of the world. As noted MIT economist, Paul Krugman said recently to a group of New York investors, "There aren’t enough Australian Economies in the world." And you just need to look at the statistics to understand why:

We have the fastest growing economy in the developed world. We have had nine quarters of growth exceeding four per cent. This is stronger than the US, UK, France Germany, Italy, the OECD and the G7. Our current growth rate is stronger than any country is the developed world

I must emphasise that all of this occurred while 7 of our top 10 trading partners were in recession or depression. And the entire region was in the midst of the worst financial crisis in its history.

This very strong growth has resulted in significant improvements in the labour market, while inflation has remained at record low levels.

Employment grew by 2.3 per cent over the year to August and since March 1996, nearly 500,000 jobs have been created.

T he unemployment rate has been below 8.0 percent for almost a year. It is currently 7.2%.

Inflation remains low, with a Consumer Price Index (CPI) of just 1.1 per cent through the year to the June quarter. As a result of low inflation outcomes and falling inflationary expectations, the Reserve Bank has been able to reduce and maintain official interest rates around their lowest levels since January 1980.

Finally and perhaps most importantly the massive budget deficit we inherited of $10.3 billion was returned to surplus ahead of schedule and is expected to remain in surplus.

This has delivered fiscal strength, it has helped us repay debt and it has given Australians budgetary flexibility that allows us to meet head on the unexpected challenges of a volatile world.

Ladies and Gentlemen I have covered a lot of ground today. And I think that is good sign. The reforms I have discussed have delivered real results to our constituents. We can be justly proud. But let us remind ourselves that there is much still to do and we must not relent from our task of reform.

We must remember that as true Liberals, we have a responsibility to reform.

Two things in life will keep our country on the straight and narrow- they are to observe pain and to feel pain.

As a true Menzian Liberal Party Government we are committed to building the Lucky country again however for this generation it will come from the production of our hands and minds rather than the production of our lands.

Only modern liberalism can meet this challenge.

And as each day passes you feel the benefits of a modern liberal approach.

May the challenge long continue.

Thank You.




jy  1999-09-16  12:01