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Need to bite the tariff bullet in context of broader reform



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John Hewson M E D IA RELEASE Leader of the Opposition

27/91 8 February 1991

NEED TO BITE THE TARIFF BULLET IN CONTEXT OF BROADER REFORM

Australian industry policy stands at the crossroads.

The debate now going on in Canberra on phasing down tariffs which is reported in 'The Australian Financial Review' today is vital to the future of Australia.

It is essential that action to gradually phase down protective barriers to international competition is sustained.

But that effort must-go hand in hand with strong action to reduce domestic inflationary pressures, to pare back government, to reshape the tax system by the introduction of a goods and

services tax, to boost productivity across-the-board towards international standards, and to overcome unnecessary obstacles to efficiency , particularly in key support industries such as the waterfront, transport and communications, and power generation.

Studies being prepared for the Business Summit on "Our

Competitive Future" later this month suggest that such a

concerted program of broadly based reform could remove, or at least very substantially reduce, the extent of contraction in the motor vehicle sector following reductions in assistance.

And other industries, including other manufacturing activities, would have the potential to expand dramatically so that

opportunities would open up for workers displaced from the motor vehicle industry.

The industry package presented on March 12 must build on this analysis and show how the country's cake can be expanded by adopting international "best practice" efficiency standards in all our industries.

It is a task of all political leaders to demonstrate that

workers' futures are interrelated. One person's inefficiency or inability to compete (because of protection or featherbedding) is another person's job.

Only by setting ourselves the task of adopting "best practice" techniques, and accepting the change that goes with that

commitment, can we ensure Australia participates in the rapid process of technological change now occurring in our region - to do otherwise will condemn us to second rate, slow growing and often labour intensive industrial structures which will leave us at the bottom of the pile in regional development.

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Our union movement must be persuaded that their own future will be enhanced if they work with governments and business to build strong sustainable industries, Only then will the job security and welfare of their members be assured,

The bottom line is that we must all live and be able to compete in an international marketplace. There is no room for long-run protection or featherbedding. No special cases, no one who is not asked to pull their weight.

Change will be necessary and some jobs will be lost and replaced by others. Industry structures will have to be revised - 5

manufacturers making 13 models of motor vehicle is not

sustainable. As happens now, workers will have to be re-trained and sometimes move locations to take advantage of new

opportunities.

Governments' have a role to play in assisting this process of change. .

But they will not help the process of reducing inefficiency by introducing more inefficiency.

By, for example, pursuing efforts to pick winners or to subsidise or divert resources into activities in which we cannot hope to compete.

The current debate will be the litmus test of whether the present Government has the gumption to put in place the policies to make Australia a major economic and political power in our region by the year 2000.

If we fail this crucial test of rational policy then we will be set on course towards the scrapheap of Asia - a second rate and receding power with diminished capacity to look after its citizens or play ^a meaningful role in the new emerging

international order.

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