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Transcript of the Prime Minister the Hon John Howard, MP address to Australian Industry Group Annual Dinner: Great Hall, Parliament House: 15 August 2005.\n\n\n

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15 August 2005




Thank you very much John for that very welcoming and very thoughtful introduction and presentation of some of the views of the Australian Industry Group. It is now just under a year since I addressed the annual dinner of this group and as your President indicated much has happened to Australian industry and much has happened to the Australian economy over that period of 12 months. Most of that has been positive. Our economy has continued a very strong level of growth, we are now in our 14th year of continued expansion, we have the lowest level of unemployment in 29 years and we have continued to diversify our trade balances around the world and we have been able to achieve something quite remarkable in both political strategic terms as well as economic terms and that is an ever closer relationship with the United States of America whilst at the same time seeing an enormous expansion in our economic relationship with China.

Something that John said in his introduction, when he touched upon the fact that today of course is the 60th anniversary of the end of World War II, reminded me of the importance of making political decisions for the future even though some of the contemporary pressures and some of the contemporary evidence might tilt in the opposite direction. I still regard it as one of the more courageous political acts of leadership that this country has seen since World War II, as the decision of the then Deputy Prime Minister of Australia John McEwen to argue for and lay the foundation of the Japan-Australia Commerce Agreement of 1957. That wasn’t very popular, there was a lot of strong political opposition, there was very strong opposition from some sections of the RSL, very understandable, and there was a widespread view in a lot of the Australian community that it was altogether too much too soon, a bare 12 years after the end of World War II. Yet looking back from the vantage point now of 48 years, who can doubt that that was the right thing for the long term future of


Australia and it laid the foundation for what is still our most valuable economic association in terms of export destination and it is a reminder that economic decisions must be taken to build future strength and not just be seen in terms of reflecting current conditions and current expectations, and I will return to that in a moment when I say something about workplace relations reform.

But I do, however, want to thank the AIG for its continued close and constructive relations with the Government. As John went through a number of the things that he had argued for and has seen successfully included in the last Budget and I think particularly the abolition of the 3 per cent tariff duty which I know was the cause and source of great anger within Australian industry for reasons which I fully understand. I also note his comments regarding taxation reform and no doubt along with many others, members of this organisation would have welcomed the final removal of the superannuation tax surcharge which I know was not the most desperately popular measure that this Government has ever introduced.

But ladies and gentleman, I can say with some degree of confidence, that the last year has been a year of very strong achievement for the Australian economy. We did, as I know your own representations would have wanted, we did place a great deal of emphasis on technical training and technical education in the October election campaign of last year. There are many individual things at a micro-level that need to be done to make apprenticeships more attractive particularly in the areas of traditional trades. But most importantly of all, we need to bring about a change in the Australian mindset and I can report to you tonight that the best applause line that I had in the last election campaign was when I would say to audiences of great diversity, I want an Australia where a prized technical qualification is as valued as a university degree. I think we did as a nation go through a stage when we downgraded apprenticeships. When we thought that the only path to a satisfying, rewarding career was to go to university. Now I have made these remarks in the past and some people have suggested that I’m denigrating university education, nothing of the kind, but what I am doing is extolling high quality and flexible technical qualifications as the right training path and the right career path for many young Australian men and women and one of the great values of the Australian Technical Colleges and I thank the AIG for its great contribution to partnering so many other people in industry and education, in bidding for these colleges. One of the great virtues of these colleges will be to emphasise the importance and the prestige of trade qualifications. We do face a desperate shortage of skilled tradesmen. There has been a pleasing increase recently that your President referred to, but we still have a long way to go. Our recent migration changes will help, the emphasis that we are placing on technical education will help and I believe that this is an area where the Federal and State governments can cooperate very closely together and I will continue to welcome very warmly the input of your organisation to the development of further government policies and without commenting on the detail of the proposals that you have released today, they will receive from Brendan Nelson and my other ministerial colleagues very careful consideration indeed.

I want to take this opportunity of assuring the members of your organisation representing as you do, so many thousands of Australian manufacturers, of the sensitivity that we feel towards the manufacturing sector as we set about negotiating the possible development of a free trade agreement with China. China is a great and


valued and growing market for Australia, and I am aware that not every industry sector sees that trade relationship in exactly the same light and in all of these areas it is necessary for us to achieve a degree of balance and to be sensitive to the pace and the rate of change.

I have noted your comments about the level of the Australian Dollar, as is customary in these matters, I am unable to say anything about the future level of the Australian Dollar except to observe as both prime ministers and treasurers must necessarily do on all occasions that the current value is about right and I am quite sure that there would be many people in this room who might say, ‘well he would say that wouldn’t he?’ but they wouldn’t share that view. Can I just make one observation that I hope you will all understand and appreciate and that is that the current level of the Australian Dollar is in many respects of course a reflection of the current strength of the United States Dollar and the course of economic developments and the maintenance of growth in that country have a very direct impact on the level of our Dollar.

When I launched the Australian Industry Group in August of 1998, following the merger of the old MTIA and the ACM, Australia’s unemployment rate was 8 per cent. By August of last year when I addressed you here, Australia’s unemployment rate had fallen to 5.7 per cent. A year on, our employment rate is 5 per cent and we are now witnessing the highest participation rate for at least 30 years, perhaps longer. So we not only have the lowest unemployment rate but the highest participation rate for at least 30 years or more.

When you add that to the fundamental strength of the Australian economy, people are perfectly entitled and naturally do pose the question, why on earth do we need further economic reform? It’s a question that has been posed to me, particularly in the context of our workplace relations reforms, by many people, some who are my political opponents and some who are my political supporters, and I want briefly tonight, to try and answer that question.

In other fora I have likened the economic challenge that this country faces as that of participant in a foot race with an ever-receding finishing line. It’s incredibly frustrating because you can never really get there but you know you must keep trying as hard as possible because there are other competitors that will run past you if you don’t keep trying and you don’t keep lifting your performance. The economic strength that Australia has today is the product of earlier reforms. We are in 2005 living off the fat of earlier economic reforms, that is why I believe so passionately in further reforming Australia’s workplace relations system and having reminded you of what the unemployment rate was in 1998 and how it has fallen steadily since then, I pose the rhetorical question, what will it be like in five years time at the annual dinner of the AIG, will it be about the same, will it be lower or will it be higher? And the answer to that question will very much be determined by whether this country has the commitment and the gumption to make further measured, not extreme, but measured, workplace relations reforms.

You’ve had representatives from many countries at this gathering, let me point out very simply to you that when our legislation goes through and the changes have been implemented, we will still have a labour market more highly regulated than that of the


United Kingdom and of New Zealand and if you ask for evidence and if you ask for the case in favour of further change in this area, look at the economic and employment experiences of countries such as France and Germany and Spain and compare them with the unemployment levels of the United Kingdom, the United States and New Zealand. Remember the words of the British Labor Prime Minister Tony Blair when he addressed the Trade Union Congress in 1998 and he said very accurately and very prophetically, that fairness in the workplace starts with a chance of a job.

At the end of the day no industrial relations system can prevent people being hurt when the economy weakens. In the early 1980s when we had a deep recession, we had a heavily regulated centralised wage fixation system. More so than it is now, more so than it was in the late 80s and early 90s, that didn’t stop people getting hurt. Heavy regulation can’t compel job creation, heavy regulation can’t produce wage increases, it therefore invites the inevitable comment that the best industrial relations system is the industrial relations system that contributes to a strengthening of the economy. Because it is a strong economy which enables employers to pay their workers more, it’s a strong economy which reduces unemployment. We have seen over the last decade the most sustained period of real wage growth in at least 30 or 40 years. In 9 ½ years we have seen a 14 per cent real increase in wages and that has been on top of the very significant reductions in unemployment and the reason that I am committed so strongly to workplace relations reform is not because it is something that I have believed in for 20 or 30 years, that’s not the main reason, the main reason is that I believe that unless we undertake further reform, we will not maintain the gains of recent years.

Economic reform produces benefits but in time those benefits expend themselves and further and new reform is needed if additional benefits are to be purchased in the future and that in essence is what this is all about. It’s not about unfairly altering the balance in the workplace, I have no interest in tilting the playing field against the wage and salary earners of this country. In fact I am very proud of a lot of things that we have achieved over the last 9 ½ years, but nothing makes me prouder than the fact that last Friday week, the ABS released some figures which showed that the take-home pay or the living standards position of low and middle income earners had increased over the last 10 years or so at a faster rate than had the remunerative position of people in the higher income brackets. No government has an interest in hurting ordinary people, no government wants to hurt ordinary people and no government I lead will hurt ordinary people. What we will do is to contribute towards to the maintenance and the development of a workplace environment in this country where the productivity gains of the past are continued into the future. That 14 per cent real increase was only achieved because we are able to lift our productivity.

Overwhelmingly because of past workplace relations reforms and that simply put, is why we need further reforms. They are balanced, they recognise the global environment in which we live, they preserve the freedom of association rights that are fundamental to both employers and employees. But they recognise as your President said that the best workplace relations environment is ultimately the environment in which most differences and disputes and issues are resolved at the workplace level. They also recognise and will continue to enshrine the reality as all of you as employers know and that is that the most valuable asset you have is a well qualified



workforce dedicated to the joint endeavour in which you are engaged and the great success of the Australian economy over the last ten years has been due overwhelmingly to the quality and the adaptability of the working men and women of this country and without that extraordinary Australian capacity to adapt to a new environment, we would never have achieved what we have over that period of time. But we cannot stand still, we are in that race with that frustrating but nonetheless ever-receding finishing line and there are people trying to run past us and the most effective response to that is to continue with the process of reform.

My friends, I have had a very long association with many people in this room, I take this opportunity again of thanking you for the great contribution that you make to the generation of wealth in Australia. Wealth generation remains fundamental to the future security of Australian families. There has been a lot of discussion recently about the balance of work and family and the importance of family time in the lives of all of us. We all know how valuable and treasured that is but we also know that financial security and financial advancement and economic security is an important ingredient in the enjoyment of a fulfilling family life. Your group has made a great contribution to the economic debate in this country particularly since its formation in 1998, I thank you for that. I thank in particular my colleague, the Minister responsible for your sector Ian Macfarlane and all my other colleagues from Cabinet who interact with you. Let me assure you that we will continue to have an open door, we’ll listen to what you put to us, where it makes eminent sense we’ll do it, where it doesn’t, we’ll politely decline to do so but you can be assured that we will remain a government whilst representing all of the Australian people and beholden to no one group in the Australian community, we’ll nonetheless remain a government that is four square with you in the cause of private enterprise and wealth generation for the benefit of all the Australian people. Thank you.