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Transcript of address to Australian Chamber of Commerce and Industry dinner:\nSydney Convention and Exhibition Centre: 20 July 2006\n

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20 July 2006




Thank you very much Fran, that’s very nice and your job prospects are very good. To Fran, Peter O’Brien, Kevin McDonald, my colleague Peter Debnam, the Leader of the New South Wales Opposition, to Barry O’Farrell, the Deputy Leader, Andrew Fraser the spokesman on small business, many good friends in the small business community of Sydney and Australia, ladies and gentlemen.

I am delighted to be here tonight, I want to say a few things about the topic of the day and I am talking here in the context of small business and that is the Workchoices reforms. But before turning to that I would want to respond to Fran’s invitation to launch and officially comment upon a report that she has compiled, her Department

has compiled, it is called ‘Encouraging Enterprise’ and it brings together in a very readable form many of the things that have happened to small business not only over the last few years but over the last 10 or 20 years. It is a reminder of how conditions for small business in this country have improved, the report for example tells us that a world survey by the World Bank says that Australia is the second easiest country in the world in which to start a business, in other words, the regulatory and bureaucratic barriers are lower in this country than in any other country bar one. It is also the third easiest in the world in which to obtain finance. Now I think the response of all of you would be, ‘why aren’t we the best in the world in which to start a business?’ and ‘why are we the best in the world to obtain finance?’ In the spirit of the competition of which Grant and Kevin spoke that has to be an objective of the Government.

The last Budget contained a lot of very important further changes for small business. Taxes to small business were cut by some $440 million and we simplified the tax affairs of more than a million businesses. The simplified tax system turnover was lifted from a million to two million. The incorporation fee on new businesses has been 1

cut in half and I can list a great deal more individual changes that have been made and many small business men and women will benefit enormously from the superannuation changes that were foreshadowed in the Budget and come into operation on the 1st of July next year. They are truly historic changes to superannuation, the ending of taxes on superannuation benefits for people over the age of 60.

Despite all of those things and they are all very important, nothing can match the benefit for small business than the economic form and the economic climate in which business operates and in the end it is all about the health of the economy. To borrow that famous campaign injunction of Bill Clinton, we should it on the wall, not saying ‘it’s the economy stupid’, but rather ‘it is the impact on the economy stupid’ and that is what I want to come to in a moment in relation to industrial relations. But the general health of the economy as has been pointed out is quite remarkable. We are now in the 15th year of unbroken economic expansion. It’s in reality something of an experiment; we haven’t previously had 15 years in our history since Federation of unbroken economic growth. We had some good periods in the 1950s and into the 60s, but that was broken by the credit squeeze of 1961 and that began and then we resumed the steady period growth, but by the early 1970s inflation was starting to become a problem and then of course the whole world changed very dramatically in the early years of the 1970s. So it is a very remarkable period in which we are living. I have never been unwilling to give the former Labor Government some credit for some of the decisions it took. Its deregulation of the financial system and the removal of high levels of tariffs, they were decisions incidentally that we in opposition supported. And, of course, the willingness of an earlier Labor Government to put good policy ahead of opportunism makes it all the more perplexing the attitude of the current Opposition to many of the reforms of the Government that has been in power for the last 10 years.

But going back to that injunction on the wall, the question I have got to ask you and all of us have got to ask as we debate the historic changes to our workplace relations system that came into operation on the 27th of March this year. The real test of the quality of those laws is not some debate about an individual clause, or some debate about an individual procedure. The real test is the impact they have on the Australian economy. Will they make the economy better and stronger in the future, or will they make the Australian economy weaker in the future? Because in the end it is the strength of the economy that determines whether companies make profits and if companies don’t make profits they can’t employ as many people as they would like. You can have all the regulation in the world, you can have all the protection for employees in the world guaranteed by legislation, but if the economy falls over people lose their jobs, firms don’t make money and retrenchments occur. We had a very heavily regulated labour market in Australia in the early 1990s and that did not stop us having one million people out of work, it did not stop the unemployment rate going to almost 11 per cent, it did not stop the sense of anguish and despair that many small businesses felt all around Australia and very particularly in parts of Victoria, and South Australia, and Tasmania which were so heavily hit by the recession of those years and it all brings us back to the point, it is the impact on the economy of an industrial relations policy that determines whether it is a success or a failure because it is a strong economy that employs people and it is a strong economy that is the guarantor of high real wages and low unemployment. And there is no statistic that I 2

am prouder of than the fact that over the last 10 years real wages in this country have gone up by 16.8 per cent. Under the previous government, in 13 years they went up by 1.3 per cent. In other words, the workers have done better out of the Liberal Party

than they can ever dream of doing out of the Labor Party. That is a statistic that I am very proud of.

I am also very proud of the Workchoices legislation. I see it in a very positive light and I ask those in the community who support the Workchoices legislation to advocate and to prosecute the case of the benefits of these changes. No section of the community will benefit more than the small business community. The abolition of the unfair dismissal laws for firms employing fewer than 100 people represents the culmination of a legitimate campaign by small businesses around Australia since the introduction of the old unfair dismissal laws in 1994. I can remember over the years between 1994 and 2006 going to countless gatherings of men and women involved in small business and whenever I committed the Coalition to the abolition of those unfair dismissal laws for business the response was unambiguous and emphatic. Small business wanted those laws to go. They wanted those laws to go, not to make it easier to get rid of good staff, but to make it easier to employ more good staff. And that fundamentally is the reason why we have changed those laws.

And I’m fascinated as I look at the three months that have gone by since the new laws were introduced - they were introduced on the 27th of March - and I’m reminded that the National Secretary of the Australian Workers Union, Bill Shorten, said that the new laws were and I quote: ‘A green light for mass sackings,’ unquote. The Leader of the Opposition said that the laws would make it easy to dismiss 11 million Australians. Now it may be only three months since the laws have been introduced but the field evidence contradicts absolutely the predictions that have been made by Mr Shorten and Mr Beazley. In the three-and-a-half months that have gone by since the laws were introduced employment has actually risen in Australia by more than 100,000, some mass sackings, some green light. We now have unemployment at 4.9 per cent, which is a 30-year low. Now I’m not guaranteeing that it’s going to remain at exactly 4.9 per cent, it’ll bounce around a little. But fundamentally there is no evidence that we live in a labour market or we live under a set of laws that are going to bring about or encourage mass sackings.

All of you, as men and women involved in small business, know that we now live in an employees’ market like never before. As I go around Australia, what people say to me about employing staff, is they can’t get enough good people. They say there are shortages, not only in skilled people, but also with unskilled people, and no employer in his or her right mind, in those circumstances, would envisage letting go good staff. And the fundamental principle of those changes is that if you provide unreasonable penalties in relation to employment termination, you produce higher and not lower unemployment. And that has been the experience of Australia and it’s been the experience of countries around the world that have persevered with the sort of rigid labour market polices to which our opponents are committed.

Workchoices introduces a national uniform industrial relations system. It recognises that we are now a national economy and I best explain this by saying that when I first started practising law in Sydney in the early 1960s, if you had a client who had a business in New South Wales and he wanted to carry on business in Victoria, he had 3

to go through a process called registering his company in Victoria as a foreign company. Sounds strange, but that…I know it draws laughter from all the people who were too young to go through that experience but it’s true and I can remember doing

that on a number occasions. And the registration procedure that you went through was virtually identical to the registration procedure you had to go to if you were going to register the same company in the United Kingdom, to carry on business in the United

Kingdom as a foreign company. Law firms in those days were all city-based, you didn’t have national law firms, you didn’t have national accounting firms, the service sector of the Australian economy - which has grown the strongest over the last 30 to 40 years - was very city-centric. You worked for a Sydney law firm, a Sydney accounting firm, you didn’t work for a national one and that experience was replicated throughout the economy. I mention that semi-personal anecdote to make a point that we have become, in so many ways, a national economy, the likes of which we wouldn’t have dreamt of 30 or 40 years ago. And we need a national set of laws, of national uniformity to respond to those national circumstances.

But overwhelmingly the reason why we need these new laws is really the point that was touched on by Kevin McDonald in his introduction. And that is that the competition race in which we are involved is unending. Because we live in a globalised world economy we can never take for granted that our place in that economy is assured. We can never guarantee that the position we now have, we retain. It might have been possible in a different period when we lived behind a high

protective tariff wall, we had a fixed exchange rate and we had certain natural endowments and national advantages that other countries didn’t have. But all those things are gone. And overnight our comparative competitive position can be challenged and can be altered. And each government that gives up on the cause of reform is a government that has no plans for the future. And I know that in any big

reform there are challenges. But I believe in these workplace reforms because they will be good for the future of the Australian economy. And something that’s good for the future of the Australian economy means more jobs and higher wages for Australian employees. And that is the fundamental essence of our commitment to these new laws.

And I therefore regard the commitment of my political opponents at a federal level to rollback these laws, as a reversion to the politics of the 1960s and 1970s. To go back to a labour market, which would be dominated by the trade union movement, to go back to a labour market, which is based upon the principle that no man or women has enough gumption to negotiate a contract in his or her own interests if they want to do so, to go back to a labour market where you would throw out potentially up to one million Australian Workplace Agreements - because that’s the number we’re likely to have at the time of the next Federal election. Australian Workplace Agreements in industries such as the mining industry, which is so important to the wealth that we are generating, which is fuelling the strength of our economy at the present time, is to turn your back on Australia’s economic future. And there was a time when I thought we had a consensus in this country on the agreed goals of economic reform and the economic future of Australia. We certainly do not have any agreement in relation to Workchoices.

So I assert the positive benefits of this change. I don’t see the debate on Workchoices in the context of responding to criticisms made by our opponents, although we do that 4

on the merits and on the detail. I’m for these laws because they will improve the Australian economy. They will give small business the flexibility to take on more staff. They will give us a uniform national system. They’ll give to both employers and employees - subject to proper guarantees and protections - greater flexibility and simplicity in concluding their own workplace arrangements. And just as other countries that have freed their labour markets have enjoyed the benefits, so will Australia.

This country is prosperous, it’s been greatly endowed by providence with natural resources beyond the comprehension of most and if we can only convert our natural advantages to our benefit, if we have the right, if we have the right economic settings. And just as this Government is prepared to seriously examine an issue such as nuclear power, because a proper exploitation of our energy resources is important to our future, so it is prepared to embark upon further economic reform. Good success and good economic management in the future belongs to countries and to governments of countries which are prepared to push ahead with reform.

It’ll be easy for me to say, ‘well look how terrific the economy is. We’ve got low unemployment, we have got a terrific Budget surplus, we’ve just cut taxation, everybody thinks Australia’s a wonderful country, it is booming, I don’t need to do anymore. I can rest on my laurels, I can put aside any further difficult and challenging decisions.’ Once a Prime Minister or once any political leader, gets to that stage, he or she should give the game away, he or she should recognise that the zest for economic reform and economic change has gone. Well I want to tell you ladies and gentlemen that the Government I lead remains energetic, it remains committed, it remains enthusiastic about further reform to further strengthen the Australian economy. I know and you know that the prosperity we now have is the product of the economic reforms of earlier years. And you and I equally know that the prosperity of future generations will be the product of the reforms that this generation is courageous enough to carry out. And that’s why we’re committed to Workchoices. That’s why we believe it’ll be great for small business and that’s why I’m delighted to talk to you tonight.

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