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Australia: the supermarket to Asia and beyond: address to the National Farmers' Federation Annual Conference, Canberra,



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Australia: the supermarket to Asia and beyond: address to the National Farmers' Federation Annual Conference, Canberra, 21 November 1995

Introduction:

Thank you for inviting me to open the NFF's Annual Conference.

The conference is a timely opportunity to examine a range of issues which are central to Australia's economic and social future.

The breadth of the agenda is testimony to the broad canvas of NFF members' interests nowadays.

I speak to you today as the leader of the Liberal Party and also the leader of the Coalition between the Liberal Party and the National Party. Both Parties have deep roots in rural and regional Australia. Between us we hold 32 out of 51 rural and regional seats.

Today I want to focus on the future of rural and regional Australia, and part of the Coalition's agenda for practical reforms, which will ensure that country areas and country people benefit from new opportunities which have emerged in recent times.

I will also announce a major communications initiative which will be of significant benefit to people in rural and regional areas of Australia.

Rural and Regional Australia - Prospects:

I believe passionately in the future of regional and rural Australia and I am committed to policies which will lift some of the burdens which are crippling the bush.

There is no doubt that under Labor's policies the family farm has become an endangered species.

In Labor's first decade in office, 10,000 family farms ceased to exist and farm families have been walking off the land at the rate of almost 20 a week.

The number of unpaid family workers helping on properties has increased by 50 per cent from l 7,000 to 24,000. Farm foreclosures are rising and the social infrastructure in rural areas is crumbling.

I do not underestimate the challenge which lies ahead of us in rebuilding rural and regional Australia - not only in a physical sense but also in restoring a sense of confidence.

But I firmly reject the view that the future belongs only to exports of manufactures and services, important though they are.

My optimism about country areas is firmly grounded in Australia's incontestable comparative advantage in the rural sector, our economic prospects in the Asia-Pacific region and the character of farm families.

My hope and my intention is to stem the drift to the cities by revitalising our regions.

More people should be able to take advantage of the kind of life regional Australia offers without being denied access to the various facilities which we take for granted as part of modern, high technology living.

A prerequisite is that farm activities move further up the value chain.

We must accelerate the trend to value-adding, product development and differentiation.

Domestic processing must become the norm rather than the exception.

All farmers need to adopt an entrepreneurial, customer-oriented perspective to their activities.

The wellsprings of innovation, in the broadest sense of the term, are in the responsiveness of producers to changing tastes, technologies and economic opportunities.

Producers must be more closely linked to the final consumer and take a more holistic view of the production chain.

The ability to balance scientific, economic and environmental considerations is now paramount if we are to create a model of sustainable rural development.

Producers now need to think more about turning perceived constraints into opportunities.

Rather than viewing climatic conditions solely on the basis of drought, flood, hail and rain at the wrong time, we must also build on positive approaches such as the clean food marketing program which are based upon Australia's relatively unspoilt environment.

In recent years the prospects for increased exports of Australian agricultural and processed food exports to the Asian region have received increasing attention.

The term "Agrifood" has been coined to describe this sector - Australia's Agrifood industry comprising growers, farmers, processors, manufacturers, distributors and retailers.

A number of reports have identified the potential of markets in Asia and it is these markets which will be my principal concern today.

However my remarks about the potential growth in fresh and processed food exports could apply equally to other new world economic growth centres, including India and the Middle East, Central and Eastern Europe as well as more traditional markets of Western Europe and North America.

Australia: The Supermarket of Asia and Beyond

The theme I want to stress here today is that, for reasons of natural and comparative advantage, Australia is well placed to be a significant supplier of goods to Asia, and beyond that to the world.

People say to me that Australia ought to be the bread basket of Asia or the food basket of Asia. But I would like to say to you today that together we can aim much higher.

I want to see an Australia which is more than the bread basket of Asia. It is more than the food basket of Asia. I want to see an Australia which is the supermarket of Asia.

That's part of the solution to getting confidence back into regional Australia. That's part of the solution to providing young people in the country with jobs. And that's part of the solution to ensuring the long term future of family farms.

It's a goal which can be achieved through sustainable use of our land - a subject to which I will return.

And because the Labor Party will not tackle the real transport and waterfront bottlenecks that hinder that vision, the fact is that the only way to deliver these great future markets for Australia is to change the government.

By the year 2025 the world will need double the amount of food it consumes today.

It is estimated we will need 300 million tonnes more wheat, 260 million tonnes more corn, 210 million tonnes more rice and 16 million tonnes more fish.

Australia can be an important supplier of that increased demand, particularly in the Asian region, where disposable incomes are rising and demand for food and fibre products is growing.

The ASEAN economies have been among the fastest growing in the world over the past decade, with average annual growth rates of around 7%.

South East Asia has emerged as a significant importer of many food and agricultural products, including wheat, beef, livestock feed, dairy products, malt, vegetables, fruit, cotton and wool.

As well there is considerable scope for sugar, fish, beverages and plantation timber products.

Asian markets are huge and growing, driven by population growth and higher disposable incomes, which translate into greater per capita food consumption.

And the people they supply are also starting to eat different sorts of food. They are consuming more protein and fat, cereal and cereal based products, processed foods, snack and "fast" foods, fresh fruit and vegetables, as well as health foods.

There is an increasing trend towards urbanisation as population shifts away from rural areas to employment opportunities and higher wages in the cities.

Retail and distribution networks are modernising, with supermarkets and convenience stores increasing their market share.

Australia is well placed to capitalise on these changes.

We have abundant, high quality and low-cost raw materials, access to advanced technology, manufacturing expertise, management and marketing skills and our geographic proximity to Asia. We have a comparatively clean environment and we have the most efficient primary producers in the world.

We are also well placed to be a bridgehead for Western investment into Asia.

At present the total value of Australian agricultural exports is nearly $20 billion.

Of this, the Australian food processing industry currently comprises over $9 billion, or nearly one half, of total agricultural exports.

While some progress is being made in dismantling tariff and non-tariff barriers to imports of Australian foods, much more remains to be done.

Australia's share of the booming Asian food market is much lower than it ought to be.

Currently Australia has only about 6% of the annual Asian food import market, which is worth more than $70 billion a year.

In the case of the ASEAN nations, Australia's share of their processed food imports actually fell between 1986 and 1993, from 10.5% to 9.4%.

It is estimated that the Australian fresh processed produce sector could yield a turnover of $200 million per annum within the next six years, with major potential to export fresh vegetables to Asia, the US and the UK.

To ensure that Australia becomes the supermarket of Asia, I commit the Coalition to a three pronged strategy.

One - a reduction in the cost of doing business.

Two - improved access to Asian markets.

Three - upgrading our regional transport and communications infrastructure.

That strategy will mean we can reach markets at a competitive price, and that in turn means greater returns for our producers and greater long-term viability for our regional and rural areas.

I want to see an Australia with a new and focused export culture. I want to see an Australia where people who open new export markets and beat the rest of the world are as revered as our sportsmen and women who take on and beat the world's best.

Microeconomic Reform

I know I do not need to convince you about the importance of removing impediments to competition throughout the economy.

The rural sector has always been at the sharp end of this debate, reflecting your experience as exporters, who face intense competitive pressures in crowded international markets, fluctuating terms of trade and a variety of overseas government practices which have corrupted some agricultural markets.

You have had to compete with one arm tied behind your back because of excessive costs beyond the farm gates - high input costs, excessive taxes and charges and inefficiencies in associated industry sectors - which devour productivity and export increases.

For example, productivity in the beef industry increased by 17 per cent between 1985 and 1993, exports rose 72 per cent but meat processing costs in Australia are almost three times higher than our nearest competitor, the US.

And this is the problem. Many of you will remember the Sizzler row over whether or not they would use Australian or US beef. When the Australian beef left our farm gate it was 60 per cent cheaper than the American product. But with all the add-on costs, by the time it reached Sizzler, the Australian beef was 40 cents per kilo dearer than the American import. No wonder that the cattle industry is up in arms about things which happen to their product once it leaves the farm gate.

No wonder that sections of the rural sector have been at the forefront of the debate on reducing industry protection and other measures which inflate the costs of doing business in Australia.

Let me reaffirm that the Coalition is committed to steady and predictable reductions in tariff levels.

We recognise the cost burden of protection on our efficient export industries which cannot pass these costs on to their customers.

But unlike Labor, these reductions in protection will proceed in concert with a comprehensive program of microeconomic reforms.

Such a program will not only bring benefits in itself but facilitate adjustment in sectors which might otherwise perceive themselves at a disadvantage with lower levels of protection.

The recent BIE report on international benchmarking illustrates unequivocally how much further the structural improvement process has to go in Australia, particularly in respect of infrastructure service providers.

It exposes the hollowness of the Government's claims to have completed the microeconomic reform agenda.

It is further evidence of a Government suffering reform fatigue, which is willing to let Australia fall further behind international best practice.

The report examined costs and productivity in all the major infrastructure areas - the waterfront, telecommunications, gas supply, aviation, rail freight, coastal shipping, electricity and road freight.

In many of these areas Australia lags behind world's best practice by a considerable margin and in two, waterfront container handling and aviation, we have fallen further behind since the early 1990's.

Productivity on the waterfront is now 20-25 per cent behind comparable overseas ports. Our lowest-priced container port, Adelaide, is 65 per cent more expensive than world's best practice. BHP estimates that Melbourne is twice as expensive as any of the ports on its Gulf of Mexico run. It is cheaper to road freight from Melbourne to Brisbane and export from there. Our ports are also very unreliable and slow, with a high proportion of delays in excess of 40 hours. It costs $US28,000 a day to keep a ship tied up in Sydney. And the last thing we need is the latest damaging and totally unnecessarily waterfront dispute. Such disputes have become all too common under Labor, at considerable cost to innocent third parties and the national interest.

In the Australian rail freight system, labour productivity is 250 per cent below the most efficient US railways. This is not compensated for by higher capital productivity, which is 150 per cent below US levels. Australian National's rail freight charges, which are the lowest in Australia, are 35 per cent higher than the lowest US charges.

Business telecommunications charges in Australia are 44 per cent higher than world's best practice, the second largest price performance gap after the waterfront. Labour productivity in telecommunications remains less than half of world's best practice. According to the BIE, telecommunications prices should be falling even more quickly than they are.

Some commentators claim that we should not be concerned about meeting world's best practice, that it should be enough to keep up with some notional average of the international also-rans.

This is defeatism and I reject it.

You cannot be world class unless you aim to meet and beat the best that the world has to offer.

The new global business opportunities will be captured by those countries that deliver the best in terms of competitiveness, tax and regulatory environment, quality of infrastructure and so on.

Unless we benchmark ourselves against the best we will fall further and further behind.

In my second Headland Speech, I laid out an agenda for comprehensive microeconomic reform.

A new Productivity Commission will be set up to establish a list of microeconomic reform priorities for 1996 and beyond with particular reference to sectors which impact on Australia's international competitiveness.

Importantly the Commission will also have a brief to examine restrictive work practices and publicise their economic and social costs.

We will also continue the Hilmer process and provide an example to the States by accelerating competition reforms in areas of Commonwealth responsibility.

In particular we will pursue labour market reform as a high priority which is the essential missing link in achieving a sustainable improvement in Australia's international competitiveness.

The current CRA dispute is a clear example of why such reform remains a priority.

It is not a dispute about equal pay for equal work. It is about the right of employees to have better pay for better work.

Australia cannot afford to sit back and presume that competitors will yield hard-won markets to us without seeking to exploit every advantage at their disposal.

If we can design an industrial relations system that unleashes the productivity potential of Australians - and rewards them appropriately - we can meet and beat world's best practice in all fields.

But that cannot be achieved if we tie the hands of employers and employees and prevent them from doing what are win-win deals - wins for employers and employees and wins for Australia.

Labour market reform will yield substantial benefits in those areas of the rural sector which have been burdened by lower labour productivity than many of our competitors as well as low growth in output and consequently negative employment growth.

Workplace reform in the meat processing industry is currently stalled. Independent consultants (Booz Allen & Hamilton) have estimated that structural reform of the industry, principally in the area of industrial relations, would produce gains of up to $1 billion annually.

The Industry Commission found that those gains would flow to all participants in the industry - 50% to producers, 25% to processors and significantly 25% to workers.

We want to maximise the opportunities for employers, employees and unions to negotiate mutually beneficial wage and workplace arrangements.

We want to develop a more inclusive industrial culture which breaks down us-versus-them attitudes and focuses workplace reform on meeting world's best practice at all stages in the value chain.

I am convinced that the Hilmer reforms will deliver significant benefits to all Australians.

We will ensure that these benefits are passed on to customers through achieving competitive markets and monitoring prices in areas of natural monopoly.

The reform of public utilities and non-traded goods and services will have a major impact on the cost structure of the rural sector.

Greater competition and choice will improve services and reduce prices for downstream users and final consumers.

I understand that some rural groups are concerned at the potential impact of Hilmer on country areas, particularly in terms of access to services.

A Coalition Government will monitor the impact of the Hilmer reforms on rural communities to ensure that they receive their fair share of the benefits.

We will ask the National Competition Council to investigate any special problems in the implementation of Hilmer in these areas and will we deal with those problems.

In relation to the wheat industry, I specifically reaffirm Coalition policy to retain the single desk export powers of the Australian Wheat Board while they continue to serve the best interests of both growers and the broader Australian community.

Easing the Small Business Burden

Reducing the cost of doing business also requires government to cut the burden of inappropriate regulation on small business. In particular, we will reduce the costs of complying with Labor's fringe benefits tax. We will reduce the burden of the capital gains tax. We are committed to getting rid of Labor's stupid unfair dismissal law. We will replace it with balanced laws that are fair to both sides.

We will improve the access of small and medium size businesses to capital. The Reserve Bank will examine the scope to relax current prudential guidelines so that banks can invest a small proportion of their total assets in equity. As many of you know, access to capital when setting up a new export business often can mean the difference between getting off the ground or not.

Importantly, our macroeconomic policy settings will be aimed at delivering low inflation and low interest rates. Under Labor, Australia's farm sector has become more vulnerable to the ravages of high interest rates. Since 1983, rural debt has increased from $7 billion to $17 billion - and the average debt for a broad acre farm has escalated from $65,000 to $145,000.

Bilateral Trade Effort

For agrifood companies that are already internationally competitive despite the home-grown obstacles, the greatest impediment to export growth is lack of market access.

The Coalition believes that a combination of multilateral and bilateral trade negotiations is the most effective way to approach the issue of market access.

The present Government has focused primarily on multilateral trade initiatives and failed to exploit the full potential of bilateral trade measures. Considerably more effort must be put into our bilateral trade relations.

A Coalition Government will increase high level bilateral representations to facilitate two-way trade. In particular, we will undertake a continuous program of Ministerial representations to our trading partners in Asia and elsewhere.

Despite the success of the Uruguay Round of GATT multilateral trade negotiations, market barriers continue to bedevil world trade.

Many of our processed food exporters suffer the dual impediment of tariff and non-tariff barriers, as well as competitors' access to subsidised inputs.

Tariffs which are frequently in the range of 20%-70% are used extensively throughout Asia to protect local food industries, often in conjunction with quantitative restrictions.

International trade in food products is also characterised by extensive regulation through, product, health, quarantine and labelling standards and onerous inspection processes.

With the exception of the most open markets like Singapore and Hong Kong, these impediments exist throughout Asian markets in which we operate.

A Coalition Government will monitor the barriers to Australian food and agricultural exports. We will pay particular attention to non-tariff barriers such as food standards, quotas, labelling laws, embargoes and sanitary requirements as well as closely watching dumping practices.

Of paramount importance, in our trade relations with Asian countries and elsewhere, as Australia further liberalises its trade, we will pursue commensurate market access.

APEC

APEC has the potential to provide the regional economy with enormous benefits.

We are proud that it was the work of Coalition Governments in Australia, together with Japan, which over many years nurtured the idea of regional economic cooperation and provided the foundations for APECs inception in 1989.

The Coalition remains committed to the development of APEC. We welcome the outcome of the Osaka Leaders' Meeting where last year's commitment to a vision of free trade for the region by 2010 for developed economies and 2020 for developing economies was reaffirmed.

At Osaka each country's "downpayments" were announced in preparation for the development of detailed action plans which will be presented at next year's APEC meeting in the Philippines. This provides a little more substance to APEC and we would urge all members to strive to make significant progress in time for the 1996 meeting.

We particularly welcome the fact that there are to be no sectoral exclusions to APEC's agenda. It is in Australia's best interests that efforts to liberalise regional trade be on a comprehensive basis.

As we argued in the lead-up to Osaka, there is no case for the exclusion of agriculture. Australia's agricultural sector is amongst the most efficient and least protected in the world and sets an excellent example of what can be achieved. We all hope that commitments given in Osaka are real and not just hollow words.

We support Australia's proposal at Osaka to set up an APEC working party on food security in the region which will develop strategies to meet the growing regional demand for food and potential food shortages. In government, we will further develop this proposal.

In the APEC context, the Coalition will continue to emphasise that regional trade liberalisation needs to be conducted on a non-discriminatory basis. A regional preferential trading arrangement must be unequivocally rejected by Australia and the countries of the Asia-Pacific.

As commentators have noted, what was achieved at Osaka is not watertight. It will require constant vigilance on the part of a Coalition Government.

APEC does have the potential to provide significant benefits to rural and regional Australia once concrete trade liberalisation measures are progressively agreed on and implemented.

Clean and Green

Environmental attributes are a major selling point with Australian food exports to Asia.

Our customers look for nutritional value and cleanliness in the production process when selecting high quality food.

Cleanliness of our physical environment is another key criterion. It is one of the top four considerations in determining a quality product.

The relative cleanliness of Australia's environment is a point of difference and one Australian firms should continue to build on when marketing products.

But we need to go further - we must transform a natural advantage into an ongoing comparative advantage.

The Coalition's Primary Industry and Environment policies place a special emphasis on rehabilitation of our environment, particularly our degraded farmlands and waterways.

We are wholeheartedly committed to accelerating the move towards the sustainable use of land and water resources by Australian farmers.

Revegetation of Cleared Land

As you are all well aware, excessive land clearing over time and insufficient emphasis on revegetation has resulted in rising water tables, increased salinity levels and soil erosion, to name some of its adverse effects.

This environmental damage must be remedied before it is too late.

The Coalition believes that the Commonwealth must provide national leadership in ensuring that significant areas of remnant vegetation are preserved and properly managed.

Furthermore we recognise that any initiative designed to end widespread land clearing which does not recognise the rights and responsibilities of the Commonwealth, the States and Territories and private land holders is doomed to failure.

A Coalition Government will work with the States in establishing guidelines for the provision of financial incentives to landholders who voluntarily preserve vegetation which may otherwise be available for land clearing.

But it is not simply enough to curtail land clearing. It is also necessary to implement a genuine and effective revegetation program.

It is often argued that fifteen percent of the cleared area of Australia needs to be rehabilitated, which in most areas will require significant revegetation.

Without concerted remedial action, that degradation will simply continue.

The Coalition is committed to a major, strategic and practical national revegetation program with specific timetables and deadlines.

The Landcare movement, which has revolutionised the attitude of Australian farmers to environmental sustainability, will play a significant role in the implementation of the Coalition's revegetation strategy.

Plantations and Farm Forestry

The Coalition recognises that an expanded plantation and farm forestry industry can deliver major environmental gains and can, in many cases, also provide an alternative timber supply source.

Plantations currently account for some 60% of all wood produced in Australia.

Yet the record of the Labor Government on plantation establishment has been abysmal. In spite of its considerable rhetoric, plantation establishment is at a 30 year low.

In the case of softwood, this year it is estimated that only 8,000 hectares of plantations will be established in Australia compared to more than 100,000 hectares in New Zealand.

The Coalition strongly supports the continued expansion of the plantation and farm forestry industry.

We acknowledge the importance of establishing plantations on land which has previously been cleared for agricultural or grazing purposes. Most importantly, we recognise that there must be greater emphasis upon adding maximum value to our timber resources prior to export.

Murray-Darling Basin

The Murray-Darling Basin is a natural resource of national significance. It comprises one- - seventh of the continent and produces one-third of the total output of our rural industries.

The state of the Murray-Darling Basin is one of the major environmental issues facing this nation. Some 500,000 hectares of the Murray-Darling Basin are now badly affected by dry land salinity.

Rising saline ground water has turned large areas of previously productive agricultural land into marshy wastelands.

In 1991, an algal bloom in the Darling extended for some 1,000 kilometres - one of the longest on record anywhere in the world.

The Coalition recognises that urgent and concerted action must be taken to rectify these problems.

If we fail to take such action, the Murray-Darling Commission, which has the task of overseeing the rehabilitation of the Basin, has estimated that at least 1.3 million hectares of prime irrigation farmland will be salinised or waterlogged by the year 2040.

Recently the Commission painted an even bleaker picture, suggesting that the impact of dry land salinity in the River Murray had been underestimated, and that if present land management practices continue, up to five million hectares in NSW alone could be at risk.

Regardless of which estimates are more accurate, it is clear that the current rate of funding is inadequate to ensure that the degradation of the Murray-Darling Basin is stopped or reversed in a reasonable time frame.

The Liberal and National Parties are committed to working with the States and the Murray - Darling Basin Commission in undertaking a major rehabilitation program that would be completed by the Centenary of Federation.

The Coalition recognises and strongly supports the central objectives of Murray-Darling 2001. Obviously these objectives will form the basis of any comprehensive rehabilitation program.

It is abundantly clear that, at current levels of Commonwealth funding, it will be impossible, even with all the best ideas and intentions on the Commission's part, to achieve sustainable land management in the Murray-Darling Basin within the next 30 years - if at all.

As I have stated previously, the rehabilitation of the Murray-Darling Basin will be a major plank of the Coalition's Primary Industry and Environment policies for the next election.

Funding Regional Infrastructure

Australia's prosperity in the first half of the next century will demand a renewed emphasis on the development of world class infrastructure.

Much of this infrastructure will be in regional and rural Australia.

The Coalition's microeconomic reform program will improve the efficiency of existing infrastructure. It will provide a more accurate picture of future infrastructure needs and how capital funds should be allocated among competing types of infrastructure.

We recognise that the Commonwealth will continue to have an important responsibility in infrastructure development.

Private investors are often unwilling and unable to fully finance large infrastructure investments because of high risks and long time horizons.

In the years ahead, the demands of debt repayment to overcome the last 13 years of Labor mismanagement will mean that public funds for infrastructure will be severely limited, regardless of which political party is in power.

At the same time superannuation funds around Australia are becoming a major source of capital. It is estimated that the assets of superannuation funds will run to two trillion dollars by the year 2020.

I hasten to add that, contrary to the Prime Minister's claims about superannuation fund managers being "lemmings" and "donkeys", many superannuation funds are already investing in infrastructure. For example, AMP has committed $500 million to investment in infrastructure and has an additional $150 million from other funds.

As superannuation funds become more experienced in the evaluation of infrastructure investments we can expect them to play a larger role in this area.

The Coalition does not favour the arbitrary imposition of directed investment on Australia's superannuation funds.

Such a flawed approach would cause inequities, complexity, distortion, loss of confidence and would most likely reduce returns to fund members. It would negate the primary purpose of superannuation which is to maximise retirement incomes for contributors.

But it is undeniable that the development capital industry needs better, long-term, consistent and independently researched data to reassure conservative trustees.

There should be a more transparent process by which projects are fully investigated, assessed and then promoted for the investment of available funds. Private enterprise, including the superannuation industry, should be part of that process along with all levels of government.

The Coalition proposes the establishment of an Infrastructure Advisory Committee under the auspices of the Council of Australian Governments.

This Committee will assist in the provision of advice on future infrastructure needs, viable new projects, the condition of existing major assets, priorities and best practice benchmarks for infrastructure planning and investment appraisal across Australia.

The committee will publish information on the performance of previous infrastructure investments, comparative financial data on new proposals and a more nationally consistent approach to investment appraisal, including the treatment of non-commercial costs and benefits.

This process will be used to examine proposals for new infrastructure in regional and rural areas which incorporate world's best practice and involve significant social benefits that cannot be captured by private investors.

This could include, for example, export driven transport infrastructure which would cut transit times, particularly for exporters of perishable and time sensitive products who operate outside the main freight forwarding centres on the East Coast. Regional air-freight facilities and rail and road requirements are key components of Australia becoming the supermarket of Asia.

There also needs to be more work done on removing impediments to capital infrastructure investment by the financial services sector.

Infrastructure bonds and pooled development funds have gone some way to overcoming a number of these difficulties, but their effectiveness remains in doubt.

The issue of incentives for private investment in infrastructure remains under consideration by the Coalition.

Regional Communications Infrastructure

The second major area of infrastructure development is the upgrading of regional communications.

Ensuring that all Australians, no matter where they live and work, can access and derive practical benefits from advances in communications technologies is an enormous challenge facing policy makers in this country.

We must develop the essential infrastructure which will underpin the practical application of these new technologies in ways that increase Australia's competitiveness and improve our quality of life.

At present, and contrary to the government's rhetoric, Australia is falling further behind international best practice in terms of the availability and price of information services.

We also run the risk of creating a society of information haves and information have nots.

The two telecommunications carriers are spending $7.5 billion on a cable roll-out. The vast majority of this roll-out will be in capital cities. For the recipients, this cable will not only provide access to subscription television but also to a wide range of interactive on-line services.

But what about regional and rural Australia?

The application of information technologies outside our capital cities has a virtually unlimited potential to reduce the geographical isolation of communities and enhance their business competitiveness?

There is little or no likelihood that there will be any cable roll-out in major regional centres in the foreseeable future, let alone in more remote areas.

Many rural and regional areas still do not have the benefit of digital telephone exchanges and, under the government's current plans, will not have until the turn of the century.

It does not have to be this way.

As a high speed data transfer technology, the Integrated Services Digital Network or ISDN is readily able to deliver a wide range of on-line services that will be of direct benefit to farmers, to small businesses, to families, to individuals, to local education institutions and to community organisations.

These include distance education, remote health diagnosis, home shopping, electronic banking, interactive computer entertainment, faster access to the Internet and video telephony.

In the mid 1980s Australia was considered a world leader in ISDN technology. A decade later our ISDN installation, rental and user charges are many times greater than those in Singapore and the United States and we now have a mere 30,000 ISDN subscribers.

As a readily available technology ISDN can provide both the technical platform and the critical mass of consumers which are the two essential ingredients for a viable on-line services industry.

There are three simple steps which must be taken to provide all Australians with access to the benefits of ISDN technology. First, the digitisation of telephone exchanges, or as Telstra calls it, the Future Mode of Operations (FMO) must be completed. Second, new software which is expected to be fully developed in June 1996, must be installed on the digital exchange. Third, the old analogue line cards or printed circuit boards must be replaced by ISDN line cards.

Today I announce that a Coalition Government will require Telstra to offer all of its customers who have lines connected to digital exchanges with access to ISDN as a standard service.

We will also require Telstra to substantially complete its FMO or digitisation of exchanges by 1 July 1997, instead of its current year 2000 target date.

Together these initiatives will mean that, by mid-1997, some 97 per cent of business and household customers should have access to enhanced phone services such as call waiting, call diversion, itemised billing and advanced voice mail services as well as an on-line services delivery system that is more than ten times faster than the existing analog technology.

This will be of particular benefit to those Australians living outside metropolitan areas. Instead of becoming second class passengers on the information superhighway, farmers, business operators and their families will be able to tap into the latest information, education and entertainment from across the country or across the world.

The Coalition also recognises that, if ISDN is to become a preferred technology for small and medium size businesses as well as for residential consumers, ISDN tariffs must better reflect underlying costs. To ensure that this occurs, the Coalition will bring ISDN within the price cap regime from July 1996, with the object of a substantial decrease in prices in the first year.

We will also require the Australian Competition and Consumer Commission to monitor ISDN prices against world benchmarks. Should progress on price reductions prove unsatisfactory, an ACCC prices investigation would be an appropriate response.

There are certain remote areas of Australia which will not benefit from the digitisation of exchanges. The Coalition recognises the importance of ensuring that those communities are not left behind the rest of Australia. Upon coming into government, we will undertake an investigation of the most appropriate and lowest-cost technical options for providing the some three per cent of customers who will fall outside the FMO with access to enhanced phone and digital information services.

Last year, the Coalition foreshadowed that it would establish a National Cultural Network to provide local communities with on-line access to the collections of Australia's major cultural institutions. Today I announce, that as part of our overarching strategy to provide public on- - line access to a wide array of government services and information, the Coalition will assist in encoding our national cultural resources in digital computer files which will be accessible through the telecommunications network, including the Internet.

This will be of particular benefit to people in rural and regional areas who are less able to visit Australia's national cultural collections held in capital cities.

Each of these very practical measures - the earlier digitisation of telephone exchanges, vastly improved access to much cheaper ISDN technology, an investigation of the most appropriate telecommunications options in r-note areas and a National Cultural Network - are specifically designed to ensure that all Australians, regardless of where they live, are able to share in the business, consumer and cultural benefits of the emerging communications environment.

Conclusion

In conclusion, the Liberal and National Parties will be saying a lot about our policies for regional and rural Australia during the election campaign. Today, I have outlined some of the directions those policies will take.

. Australia can become the supermarket of Asia.

. We will not allow the family farm to become an endangered species.

. We will reduce the cost of doing business and play our role in providing market access for Australian goods.

. We are committed to a new infrastructure program.

. We will be taking direct action to link rural and regional Australia with communications technology so that isolation is only geographic, not in education or information or business.

. We are committed to the sustainable use of our land - and that means taking measures now to ensure that future generations can continue to farm.

. The Liberal and National Parties are firmly committed to rural and regional Australia.

. We acknowledge the special needs of country areas but we also recognise the unique opportunities which lie ahead.

The window of opportunity in our region will not remain open forever. If we can get the next few years right, we can secure the future for the generations to come. But first we have to put the thirteen years of Labor neglect behind us and then with a new Coalition government the bush will be back in business.