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Premier's lunch, Hyatt Hotel, Adelaide, 13 August 1999: transcript of address [Visit to Japan/USA; the Australian economy; taxation reform; youth unemployment; Asprey Report; Ralph Report; national gun control laws; drug abuse; building a social coalition; establishment of the Santos School of Petroleum and Engineering at the University of Adelaide; corporate philanthropy; Davis Cup]\n

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13 August 1999






SUBJECTS: Visit to Japan/USA, the Australian economy, taxation reform, youth unemployment, Asprey Report, Ralph Report, national gun control laws, drug abuse, building a social coalition, establishment of the Santos School of Petroleum and Engineering at the University of Adelaide, corporate philanthropy, Davis Cup.

Thank you very much, John and to your wife, Julie, to my many Ministerial and other Parliamentary colleagues, to you, Cory, the President of the South Australian Division, ladies and gentlemen.

It’s a great delight, as always, to be back here in Adelaide, to have the opportunity of giving a little bit of a stock taking to the business community of Adelaide about how the Federal Government is going and where we see the Australian economy at the present time. And can I endorse very enthusiastically the sense of optimism transmitted to you by the Premier. The visit that I paid overseas very recently to Japan and the United States was but the latest in a number of visits I’ve paid overseas in the various capacities I’ve held or used to hold in the political structure of Australia. And I’ve been going around the place, particularly to the United States and Japan now for a number of years. And I have to say that the best thing about the most recent visit was not so much specific outcomes or specific issues discussed because they were, although important, they were not the principle focus of the visit, and not certainly the best thing about the visit, but the best thing of all was the great sense of confidence in which, or with which, Australia is now viewed around the world. And over the twenty year period or more that I’ve been visiting the city of New York, as a Treasurer, a Minister, a Shadow Minister, an Opposition Leader and the first occasion as Prime Minister in 1997, I don’t think I have found a greater sense of positive feeling towards Australia and the achievements of the Australian economy than I did on this particular occasion.

And what that really underlines, ladies and gentlemen, is that the greatest dividend of all out of the economic achievements and the economic strengths of Australia at the present time is a sense of self belief and a sense of national achievement and national dignity and national capacity which I believe the economic achievements and the economic recovery of the past few years has given Australia.

I’ve said on a number of occasions in the past that when I became Prime Minister in March of 1996, I felt as if I had become the Prime Minister of a country, great though it was, was something of an anxious outsider knocking on the rich mans club of the Asian-Pacific region seeking admission.

But over the last three and a quarter years, a lot has changed. The most significant thing is that we have been able to successfully stare down the worst recession that region has seen since World War II. And we have stared it down to an extent and in a way that a year ago if I had addressed a gathering like this, and I probably did address a gathering like this about a year ago, probably almost to the day because I normally address gatherings like this when I come to the State Conference of the Liberal Party here in South Australia. I probably would have said here something to you something along the lines of "Well, things have gone pretty well. We’ve got the Budget back into balance. We’ve implemented a number of industrial relations reforms. We’ve seen a little bit of a reduction in unemployment but we would like to see more and we’re about to release the 800 pound gorilla - that is tax reform".

And indeed we did. In fact, I think today is the first anniversary of the release of the 800 pound gorilla. The first anniversary of the release of taxation reform, I think Rob Gerard hosted a dinner for me in Canberra in his then capacity with the ACCI, he has so many capacities I think it was the ACCI. But a year on the landscape is very different. I would have said to you a year ago "Well, we have done pretty well, I think we can work our way through the Asian economic downturn but it’s going to inflict a lot of damage and economic growth is going to slow down".

A year on, of course, I can report to you that we have in fact succeeded beyond my wildest expectations. I have to be honest with you, I didn’t predict a year ago that we would do so well. And we have done well for a number of reasons. The most important o f which we are at long last getting the benefit of a series of economic reforms that have been embraced in this country over a number of years. And they include some reforms undertaken by the former government. And I’ve always been willing to give the former government credit in one or two areas where I believe the reforms it undertook, particularly in relation to changes to the financial system have been of great long term benefit to this country.

But over the last few years of course under our administration we’ve been able to turn a $10.5 billion deficit into a healthy surplus, we’ve been able to bring about major changes to the industrial relations system that have lifted labour productivity in this country quite significantly, we’ve delivered the lowest interest rates in thirty years, the lowest level of inflation in more than three decades. And in a sense, most heart warming of all, the news we got yesterday that nationally, Australia has the lowest unemployment rate for more than ten years. And that in the three and a quarter years that we have been in office, we have been able to reduce the level of youth unemployment in Australia by 5.8 percentage points. It is now the lowest recorded since statistics began to be separately taken in relation to youth unemployment.

And in the end, ladies and gentlemen, giving hope to young people to get jobs is about the most important mission that any government at a state or federal level of either political complexion can have in this country.

So we’ve achieved a great deal over that period of time. And most recently, of course, negotiating fundamental reform of the tax system through the Australian Parliament has been probably the most important achievement of all. You are all aware that we took the tax reform plan to the last election. You are all aware of some of the risks that were inherent in that, but in the end you do have an obligation to campaign for reform when you hold a great public office. And that if you are not prepared to argue for things that improve the well being of the country, people are entitled to question fundamentally whether there is much point in your remaining in office. People are not elected Prime Minister or Premier or indeed to senior ministerial positions just for the satisfaction of having got there. And the whole purpose of being in government is to bring about reforms where they are necessary. And this country has needed taxation reform for a quarter of a century.

About the first report I heard of when I came into Parliament was the Asprey Report. The Asprey Report was written under the chairmanship of the late Ken Asprey, who was a judge at the Court of Appeal in New South Wales, and it was commissioned by Billy Snedden when he was Treasurer and it was delivered to the Whitlam Government in 1975, not a good year for that particular government, but it was delivered to them and believe it or not, you know what it recommended? It recommended the introduction the introduction of a broad based indirect tax, and it recommended that it replace the wholesale sales tax, and it recommended some reductions in personal income tax as part of the package. And here we are at long last 25 years later, we have finally got that through.

Now it wasn’t in the exact same form that we put to the Australian people, and I was sorry about that. And I know there are some people in this room that were sorry about that. And the original model would have been better. But I couldn’t get that through. The only way I was ever going to get that through the Parliament was to get the support of Senator Harradine. And he said "No". Or "I cannot" to be precise. And he couldn’t and he didn’t. So, I then opened negotiations with the Australian Democrats. And I found those negotiations straight forward and honourable. I don’t agree with the Australian Democrats on a lot of things and they don’t agree with me on a lot of things. But I found Senator Lees a thoroughly decent person with whom to deal and a person of honour and a person of her word. And you can deal with anybody who brings to negotiations that kind of good faith. And we got an outcome, less than perfect, but an outcome that was 85 - 90 per cent of what we wanted. And of course we are going to implement that.

There are going to be inevitably as you implement tax reform, there is going to be detail, there is going to be complexity. But I assure you that we are going to commit the resources to make certain that the Australian public fully understands what we are doing and the Australian public is fully informed about what we are doing, the business community is fully informed, about the advantages of the goods and services tax. And the advantages of this change for the business community, leaving aside for a moment business tax to which I will return, leaving that aside for a moment I can assure you that there are enormous benefits that will flow in terms of reduced export costs, reduced business costs, reduced fuel costs and other advantages from the fundamental reform that we are proposing. And that will, of course, come in substantially into effect on the first of July next year. And the benefits for South Australia, given the strong manufacturing industry base for this base are probably greater than for a number of other states. And you’ve already begun to see some of the changes which are involved with already the reduction in the higher rates of wholesale sales tax down to the more standard rate of 22 per cent as a precursor to the total abolition of wholesale sales tax on the first of July in the year 2000.

As well as what was contained in the taxation reform plan taken to the Australian people, we invited John Ralph, supported by Rick Allett and Bob Joss, two other very prominent Australian businessmen, to report to us on reforms to the business taxation system. The Treasurer and I received that report from Mr Ralph a little over a week ago. And I want to record the profound gratitude of the government, not only to John, but also to Rick and to Bob and to all of the other people who worked on that report.

I’m not in a position to make it public just yet. I’m not in a position yet to say exactly how we’re going to handle the process of decision making and subsequent release of either or decisions and the content of the report. I want to say, however, it is about the most comprehensive and detailed examination of any aspect of the working of our economy that I have seen. It’s a very well written report. It does contain some wide sweeping and wide ranging recommendations.

Inevitably it has become a matter of understandable public knowledge that a number of issues are central to the proposals that have been examined by the report. Clearly there is a debate about whether we should have a lower rate of general taxation for companies paid for in part by the removal of some existing provisions, particularly accelerated depreciation. There are clearly going to be considerations of whether we should alter our capital gains tax structure. I’ve already said, and I repeat here today, that because we live in a global world economy where there are seamless flows of capital across boarders, increasingly followed by seamless flows of jobs, it’s essential that Australia ask the constant question, is it as attractive to invest in Australia as it is to attract in other countries, particularly the United States.

As a nation we have had a remarkable record for a people of only now 19 million we have had a remarkable record of discovering things. Over the years we have been extraordinary in our inventive capacity but we have often been very bad and very negligent in our capacity to convert those inventions to our commercial advantage. And when I addressed the Federal Council of the Liberal Party a few months ago I spoke of not so much building Australia into a clever country or a lucky country both of which we already are. But rather building Australia into a ‘can do’ country. A country that can readily convert its intellectual capacity and intellectual capital to great national commercial advantage.

And therefore one of the things that we have to look at when we examine our tax system is whether there are enough encouragements and incentives within the system for people to take risks and to invest in ventures. And that inevitably means we have got to look at the capital gains tax.

I mention those things, ladies and gentlemen, to recognise the reality that part of the debate in responding to Ralph, part of the debate is fundamentally about those sorts of considerations. We haven’t reached any final decisions yet. We hope to soon. We are in receipt of a lot of advice and that’s fair enough. People have different points of view to put and it’s part of the democratic process in a nation like Australia that people with commercial interests, legitimate commercial interests, and commercial concerns should be able to put their views and to put them very strongly.

I can predict now that the final decisions we take won’t satisfy everybody, they clearly won’t. We are very mindful of the importance of some of the existing tax provisions for particular sectors of Australian business. We are also mindful that when you are looking at the impact of tax reform on particular sectors and particular companies you have got to take into account just not one section but rather the aggregate impact of tax reform right across the board. And it’s fair to say that some sectors of industry have gained relatively more from the changes contained in the plan taken to the electorate last year than other sectors because the spreading of the broad, the base of the indirect tax in this country has brought about that result.

But above all, I want out of the business tax reform process I want this country to have a modern, competitive taxation system. One that makes it attractive for the world to invest in Australia as well as one that makes it attractive for Australians to invest in Australia and also importantly and increasingly for Australian companies to invest abroad. Because we should never see foreign investment in this country as being simply a one-way process. So they are the sorts of considerations that I want to bring to our consideration of taxation reform in the business area.

I have spoken, ladies and gentlemen, so far about essentially business and economic matters. But to, I guess, vary slightly a biblical injunction, governments don’t live by bread alone either. And governments are not just about taxation and bottom lines and industrial relations and privatisation and share ownership. Governments are also about the kind of society we want, the kind of society in which we live. And that’s why I am particularly proud of some of our greatest social initiatives.

Our determination at the very beginning of our term in office to achieve national gun control laws in this country which have meant that I hope, and I think most people hope, that we may in years to come be spared the horrific murder rates and crime rates that are so evident in the United States of America. And time will tell how effective that has been, those changes but already the evidence is that they have started to have a positive impact.

It is why the Government is so resolutely committed to a three-pronged attack on the drug menace of putting more money into law enforcement, more money into educating young people who against the dangers of drug abuse, indeed the dangers of taking certain drugs at all let alone abusing their consumption. And also putting additional resources into helping people who have got a drug problem kick the habit and change their lives for the better.

And the Federal Government has committed an additional $500 million over the last couple of years towards that campaign. And I can’t think of a social priority which is more important to me and is more important to the future well-being of this country. And it is something that touches everybody in one way or another. It’s not just something for a Prime Minister to talk about at a gathering of people representing social welfare organisation. It’s something a Prime Minister ought to talk about at a gathering like this as feelingly as he may talk about it at any other gathering.

And I have tried to do that, ladies and gentlemen, within the embrace of an approach to social policy which I have called building a social coalition. That’s based on a belief that in our kind of society you can’t do anything completely on your own. We now have a far more realistic view in Australia about what governments can do. We went through a crazy period along with a lot of other nations around the world 25 or 30 years ago believing that all you had to do was to expand the role of government, get the government to spend more money and everything would be solved.

The Whitlam Government tried that, the Johnson Administration tried that. I can think of a few State governments around Australia over the last 15 years who tried that. They started running businesses, they started getting into this or that commercial acti vity where they didn’t belong and it all fell in a heap. And no State knows that better than South Australia. And then there was perhaps a bit of an over-reaction and we got to the idea that the only thing that, in the eyes of some, the only thing that mattered was individual greed and individual gratification and that’s not the right response either. And I think as we come to the end of this century and this millennium we have probably got a more civil balance in our community about the respective roles.

The Government does have a limited role but it’s a strategic role. The business community has a very important role. The great welfare organisations of Australia, like the City Missions and the Salvation Army and the St Vincent de Paul society, they have a very special role. Not just the role of compassion of looking after people but also the role of giving policy advice to governments. And philanthropic individuals have got a role. And it’s in that context that the Government has advanced greater cooperation between the Government and the business community in the area of philanthropy. And we have given a number of very significant taxation concessions over the last few months and over the last year to encourage that.

And it’s in that context, ladies and gentlemen, that I am particularly delighted here in Adelaide in the presence of the Managing Director of the company to announce the extraordinary generosity of Santos Ltd which is to enter a joint venture with the University of Adelaide to establish the Santos School of Petroleum and Engineering. And the Santos company will be making a provision of no less than $25 million to the establishment of this school.

Can I say to the company and to its Managing Director, Ross Adler, that this is precisely the kind of philanthropic venture that Australian companies should be encouraged to undertake. The sponsorship is intended to lay the financial foundation of the school for at least 20 years. And it is believed to be one of the largest financial contributions ever made to a university in Australia.

The school will provide high quality research and professional training in an area of strategic importance to Australia’s economic development. And it’s a long-term investment in Australia’s knowledge and skill base. And the Government itself wishes to demonstrate its support for this partnership and we are going to provide a $1 million grant over five years to fund a professorial Chair in petroleum engineering. And in recognition of that great gesture by the company the Commonwealth Government Chair, funded Chair, will be named the Ross Adler Chair in Petroleum Engineering at the University of Adelaide.

This particular gesture by the company is a great source of satisfaction to the Government. I know it will be a great source of pride and satisfaction to the University of Adelaide. It’s a marvellous benchmarker and role taker for the University of Adelaide, for Santos, for the city of Adelaide and for the State of South Australia. And it’s a great demonstration of the philanthropic spirit of this city and it speaks volumes for the sense of civic responsibility of the company and those who have founded the company.

This is a good example of the sort of social coalition of which I have spoken. But everybody has a responsibility in achieving outcomes. Each has a special role to play and a particular contribution to make. Our great responsibility as a national Government is to provide the fundamental underpinning and the fundamentally positive economic environment in which people can do things and to aspire to do even greater things. And as we come towards the end of this century we approach the end of the century and the next millennium with a great sense of hope and a great sense of optimism.

I find as I go around Australia a sense of national resolve and a sense of national pride and a sense of national, perhaps contentment is not the right word because contentment speaks too much of complacency and oversatisfaction, but a sense of great achievement that we have been able to do something with our economy and we have been able to do it in a civil and a fair way. We have not just delivered lower interest rates and lower tax we have also delivered lower unemployment. We have preserved the social security safety net, we have tackled fundamental social problems and we have also had, of course as Australians want in recent months, we have had some remarkable successes on the sporting field.

And I was reminded when John was talking with great pride about South Australian exports that at the end of our trip to North America Janette and I spent our last day in Boston and we saw a great South Australian export performing in Boston. We saw a treme ndous performance on the first day of the Davis Cup by Lleyton Hewitt. It was an absolutely remarkable performance and it was a great source of pride for me as Prime Minister to wish him well before the game and to congratulate him afterwards. And I have got to tell you that the duo of the Prime Minister of Australia and the Honourable Andrew Peacock, Australia’s Ambassador to Washington, cheering the Australians on surrounded by these very stony faced sullen and partisan Americans was quite a sight to behold. And all of that in 41 degree heat or 101 or 98 or something as the Americans still translate and as I remember from my younger days.

But, ladies and gentlemen, thank you very much for coming today. Thank you very much for the support that I know a lot of you give to our great political cause. I hope that our stewardship is seen as a proper discharge of the hopes that you have invested in us. We’ll continue to try. I’ll continue to work closely with your Premier who I admire and I congratulate for the success he has finally achieved through persisting with his plans to reduce the debt that he inherited here in the State of South Australia. And again I warmly thank Ross Adler and Santos Ltd for its great generosity and its great demonstration of what I mean when I speak of corporate philanthropy in Australia. Thanks a lot.




jy  1999-08-17  11:27