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Australian Industry Group national dinner, The Great Hall, Parliament House, 29 March 1999: transcript of address.

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29 March 1999






Well, thank you very much Mr Thomas, to your joint President, Mr Hale, to m y ministerial colleagues including in particular Senator Nick Minchin the Minister who directly relates to your organisation, Peter Reith, Robert Hill, Philip Ruddock, to Kim Beazley the Leader of the Opposition, other distinguished guests, ladies and gentlemen.

I certainly do remember that occasion some seven and a half months ago when I launched the AI Group at the National Press Club. And I took the opportunity then of commending all of those who had played such an important role in bringing your organisation together. And I look back over that seven and a half months and I can record that quite a bit has happened. We launched a tax policy a few days after your group was launched. We then had a federal election during which the principal issue of debate was the taxation plan detailed by the Coalition. We enjoyed, those of us who were successful, the results of the election and perhaps even more importantly than all of that I think since the launch of your group and during the past seven and a half months the true extent to which the Australian economy has been able to stare down the worst economic recession the Asian-Pacific region has experienced in decades has become apparent to all of us.

There was a time in the middle of last year when the majority view amongst economic commentators was that some kind of quite significant slow down was just around the corner. There was a widely held view, I guess based on the experiences of past economic history in Australia, that it just wasn’t going to be possible for the Australian economy to avoid the impact of the Asian downturn. But through the later months of last year and certainly in the first three months or so of this year that sentiment has turned around. And now it is no exaggeration, it is no piece of empty triumphalism for somebody in my position or any of my senior Ministers or people who talk about these things to assert the obvious and that is that the Australian economy has performed remarkably well, that we have enjoyed very high economic growth for a sustained period. We have the lowest interest rates in 30 years, we have a persistently lower inflation rate than we used to have. In three years we have turned a deficit of $10.5 billion into a surplus. We have presided over very significant levels of business investment and very importantly we have been aided and you as exporters have been aided by the very intelligent management of the Australian exchange rate by the Reserve Bank of Australia. And all of these things have come together to give to our economy a sense of strength, a sense of resilience and a sense of optimism that not even the most enthusiastic of us may have thought possible seven and a half months ago and indeed 12 months ago.

So it is possible as I speak to you tonight on behalf of the Government and congratulate you on the progress that has been made with your new organisation over the last seven and a half months and particularly to you Mr President to thank you for a thoughtful and constructive speech which as this organisation and its predecessors has always done, made a very good contribution to the ongoing economic debate in our country. One of the many encouraging things about the taxation debate which we have had in this country and we continue to have is the way in which it has been possible to bring forth intelligent, thoughtful debate about the long-term structure of our taxation system.

The core of our taxation reform is, of course, comprised in the legislation that is now before the Australian Parliament. But the process of business tax reform which we highlighted in the lead up to the election is a very important, indeed crucial, element of the long-term challenge of economic and taxation reform. And I think all of us are greatly in debt to John Ralph for the way in which he has been prepared to bring his great business and accounting skill and integrity to the task of presiding over the taxation reform group.

Australia is indeed fortunate to have men and women out of the business community like John Ralph who are willing to commit themselves to such an important task. And I do warmly welcome the way in which your group has responded tonight and has put forward its views and made its constructive, intelligent, thoughtful contribution to the debate. And knowing as I do the diversity of the companies that you represent forming that consolidated view would not have been easy. And it is an act of leadership and an act of courage on behalf of this organisation to do precisely that.

But, ladies and gentlemen, although we gather at this dinner at a time of tremendous optimism about the Australian economy, at a time when because of rising real incomes, low interest rates and the lowest unemployment level in eight or nine years the purchasing power and the sense of optimism of the average Australian is at a very high level and we are therefore entitled to feel a sense of satisfaction and a sense of pleasure as Australians about that.

I don’t speak to you in any sense of smugness or complacency about that situation and mine is not a counsel of resting on our oars, mine is not a counsel of saying the reform task is behind us. Indeed, the reform task in the modern economy is never behind us. There is no alternative in the modern globalised economy in which we all live than to go on indefinitely with the process of economic reform. The idea that any nation that wants to preserve a decent living standard can opt out of reform, the idea that there is such an alternative to ongoing economic reform is to completely misread the changes that have occurred in world society over the last 20 years.

We are permanently part of a globalised economy. That will never change. There is no going back to the creation of national fortresses where barriers can be put up against the rest of the world. We may delay and temper the impact of change but in the end it will envelop all of us. And the intelligent response of national policy makers is to take the opportunity to reform on an ongoing basis and I can’t think of a time in Australia’s recent economic history that bodes better for ongoing economic reform than in the early months of this year. It is precisely because our economy is doing well, it is precisely because we do have low interest rates and low inflation and a strong budget position that we should embrace in a very enthusiastic manner ongoing economic reform. And this is exactly the right time to be reforming our taxation system.

I have been involved in the debate about taxation reform in this country now for something like 20 years. In a former government I argued the case for broad based indirect taxation. I remember giving my old political adversary, Paul Keating, very strong support in the middle 1980s when his Government advocated the introduction of a broad based consumption tax. But in all of the occasions that it has been on the table before I can’t think of a time when it is more appropriate for taxation reform to occur. We have low inflation, we have an opportunity to grab by the scruff of the neck and consolidate even further the competitive advantages that our strong economic position are providing us around the world. And the boost to our exporters that a taxation reform package would give. The way in which our farmers and our miners would be made more competitive through the changes we have in mind in relation to diesel fuel and the list goes on.

And on top of that, as we were reminded by Chris Richardson of Access Economics only a few days ago that the planned personal income taxation cuts which will provide an enormous additional boost to personal spending power will, in fact, come in at the very time that some of the capital spending in this country in areas like the Olympic Games and so forth would be going off the boil. And Mr Richardson made the very interesting observation that on past occasions when governments have delivered personal income tax cuts they have often chosen the wrong time to do it. And he said that on this occasion the personal income tax cuts that are planned under the Government’s taxation package are coming in at precisely the right time.

Not surprisingly I argue very strongly to you as I will to any audience anywhere in Australia the long-term economic benefit of the taxation plan that we took to the Australian people last October. It is not without importance in that debate that the detai l of that plan was quite unparalleled in Australian political history. No government before ours had presented in such minute comprehensive detail a blueprint for such major and fundamental economic change. And that is a consideration that we believe should certainly not be lost on the Parliament as it deliberates on that plan and makes a decision some time during the next three months.

I have no doubt that the long-term cause of economic reform in this country, I have no doubt that the long-term cause of making this nation an even more competitive nation will be done a very grievous blow if that plan is not implemented. And I would not want any of the people who are here tonight to underestimate the determination of the Government and my own personal determination to ensure that the verdict of the Australian people last October on that issue is given full effect to by the Parliament of this country.

Could I also say to you, ladies and gentlemen, that it is not only in the area of taxation reform that I believe further reform and change should take place. I welcome the remarks that have been made about the Government’s workplace reform agenda and I want to acknowledge the contribution that Peter Reith, who is here tonight, has made to the reform process in our Government. It hasn’t always been easy and there was a time almost a year ago in relation to the waterfront reforms where there was no shortage of people who were ready to criticise what the Government did in that area but time has vindicated those decisions and the productivity improvements particularly on the Melbourne waterfront have demonstrated the wisdom of the actions that were taken by the Government.

But we have foreshadowed further reform in that area and one of the principal reasons why further industrial relations reform is needed is the contribution that it can and will make to providing further flexibility in the Australian labour market. We are disappointed that the Senate has chosen thus far to reject our attempts to entrench youth wages within the Australian industrial relations system. We are also disappointed thus far that those who had the numbers in the Senate have rejected our attempts in relation to the unfair dismissal laws. We will persevere with those measures again in the future because we believe they and others are important to the long-term and sustained attack on unemployment levels within the Australian community.

So, ladies and gentlemen, my message to you tonight is not a message of smug complacency and satisfaction, it is not a message of saying to you look what a terrific job has been done in relation to the Australian economy. Quite naturally, I, as Prime Minister and my Ministers take some pride in the Government’s economic achievements. I take some pride in the fact that we took the difficult budget decisions three years ago which helped deliver us the economic security which is now working to the benefit of all Australians. But this is not an occasion for smugness and backslapping, it’s not an occasion to say what a great job we have done, it’s an occasion to acknowledge the real strength of the Australian economy. But above all, it is an occasion to recognise the undeniable reality of modern economic life.

There is no alternative to the reform process. Arguments about reform fatigue are important in so far as they remind those in government and indeed all of us involved in public life that the obligation to reform carries with it an obligation to explain the benefits of reform and the reasons for reform. And I have always believed that the Australian people can be persuaded of the wisdom of economic reform if two conditions are satisfied. The first of those conditions is that you must persuade them that it is in the national interest. And the second of those conditions is that you must persuade them that it is, generally speaking, fair to all sections of the Australian community. And if those two obligations are discharged then I believe the Australian people as they have demonstrated in relation to all of the reforms that have occurred over the last 20 years the Australian people will respond to and they will support those reforms.

But there is no national interest to be achieved in anybody seriously believing or anybody seriously arguing the proposition that in some way the Australian people and the Australian economy can opt out of the globalisation process, that we can turn our ba cks on the realities of modern economic life. That option is no longer available. But in asserting that reality I, of course, accept that the overwhelming obligation on myself as Prime Minister and the members of my Government to explain to the Australian people the ongoing benefits and the ongoing advantages of economic reform. If we can seize the moment which our remarkable economic strength gives us to press ahead with reform we can give to future generations of Australians an even stronger economic base on which they can prosper and build their lives and the lives of their children.

Can I say to the members of the AI group which, of course, was formed out of two other great industry organisations with whom I have had a lot to do over the years. And as I have looked around the audience tonight I recognise many familiar faces going back to some I met 25 years ago when I first entered Federal Parliament. I want to thank your group, I want to thank its antecedents for the contribution that they have made to the cause of industry in this country. I think your President did us a service in reminding us of the ongoing fundamental importance of manufacturing industry to the Australian economy. And I admire the way in which Australian manufacturing has changed and modernised particularly over the last 10 or 15 years. The way in which it has picked up the challenge of successive governments in this country to shift its emphasis to exports. The way in which it is in no sense of shame or lack of pride in its past the way in which it has shared its image of being entirely concerned with what was regarded as the old traditional industries and the way in which it has embraced the new technologies and the new export opportunities that go with those new technologies.

I thank you very warmly for inviting me here this evening. I thank you again Mr President for your constructive contribution to the taxation debate and more particularly I thank the members of your group for the tremendous contribution that you continue to make to the employment of a million Australians or more and the building of the strength of the Australian economy. Thank you very much.