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Address to Liberal Party Federal Council, Sydney.

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3 June 2007



Thank you very much Madam President, my fellow Australians. It is an enormous privilege as Federal Parliamentary Leader and Prime Minister to again address this gathering of the Federal Council of the greatest political party that Australia has ever seen, and a political party to which I personally owe so much, and a political party that has extended to me the most extraordinary privilege that could come the way of any man or woman in this country and that is to be Prime Minister of Australia.

We have understandably spent a great deal of time at this Council talking about the achievements of the past decade but it’s important, as well as doing that, that we throw forward to the next decade because it’s my passionate view that good though the last 10 years have been, Australia’s greatest years lie ahead of us. We are a nation richly blessed by providence with remarkable supplies of resources, a wonderful civic-minded population and a degree of social cohesion and unity which is the envy of the world. Why else do people in their tens of thousands seek to come from the four corners of the earth to live in our country? We are nation that has shown the maturity and foresight to tackle the problems of the years ahead, the Inter-Generational Report first released some five years ago identified the great challenge of the ageing of the population, and the update of that report released before the last Budget, although it still reminded us in a very sober way of the challenges that lie ahead, was also a wonderful report card on the progress that had been made and how in the five years that it passed between the first and second Inter-Generational Report, the economic reforms implemented by the Government meant that the challenge in the years ahead, although still daunting, was not quite as daunting as might otherwise have been the case.

The most recent Budget was the most visionary in the area of higher education for probably 50 years because it laid especially through the Higher Education Endowment Fund and the $5 billion down-payment into that Fund, it laid a


framework for further reform and further investment in that area, as well as continuing the process of reform and change in the area of technical education.

We are enjoying the enormous fruits of a resources boom. There is one great difference though between the two sides of politics on the resources boom, one side of politics, the Labor Party, has predicted that it is about to come to an end, or indeed has already come to an end, and is doing its level best to accelerate the process of bringing it to an end through its industrial relations policy. The other side of politics, our side of politics, sees no reason why the resources boom, if the right policies are applied, and we understand that competitive advantage is only maintained by high commitment to domestic reforms, that there is no reason why that resources boom cannot continue for many years into the future.

Our future therefore is one of great hope and great optimism. We’ll need to maintain our constant resistance against, and our constant determination to fight, the forces of global terrorism. Terrorism is an enemy the like of which the world has not faced before. The war against terror is not like a conventional war, we’re not trying to return an invading army from whence it came, we’re dealing with a deadly enemy that

operates in a borderless world without any regard for such basic instincts as self-survival. The war against terrorism is taxing the patience of many in the western world but we have to maintain our commitment, our resilience, our determination and our willingness to fight an enemy knowing that that fight will go on for many years into the future. And can I say to all of you that resisting terrorism in one part of the world is as important as resisting terrorism in another. If it’s important to Australia that terrorism be defeated in Afghanistan, it is equally important to Australia that terrorism should be defeated in Iraq. A defeat for the coalition in either of those places would represent a huge setback for the cause of the west, an enormous propaganda victory for terrorism, a revitalisation of organisations such as Jemaah Islamiah in Indonesia and the Philippines and therefore represent a direct threat to the general security of Australia.

In recent months there has been very intense debate on the issue of climate change and last Friday I released the report of a task group, uniquely joining together the five most senior bureaucrats in the Federal Government and leaders of industry, a report which analysed the circumstances in which an emissions trading system might be introduced in Australia. And I want to spend a few moments this morning talking about that issue and indicating the Government’s immediate response to that report released on Friday. Let me say by way of background that this is an issue that requires a balanced application of commonsense, it requires a measured but determined response, it requires a response that recognises that in the vernacular the world is not going to come to an end tomorrow because of climate change, and we shouldn’t imagine for a moment that that is the case, but equally we would be foolish indeed to ignore the accumulated scientific evidence that mankind’s behaviour has contributed to the process of global warming. Australia, it should be remembered, is one of the few countries in the world that is actually on track to achieve the emissions target set by the Kyoto Protocol, unlike many of those in other parts of the world that spend a great deal of time lecturing Australia in increasingly moralistic terms about our failures in this area.


And this is quite a remarkable achievement given that our economy is set to grow by 90 per cent and our population by a third over the Kyoto period, and that’s from 1990 to 2012. But now we must plan for the world beyond the end of the Kyoto period. The world beyond when the current target that Australia will meet is no longer relevant. And today I therefore announce a number of things by way of response to the report

released on Friday.

I announce specifically that Australia will move towards a domestic emissions trading system, that’s a cap and trade system beginning no later than 2012.

Secondly, we will as a nation set a long term aspirational goal for reducing carbon emissions but we need to access very carefully with detailed economic modelling the impact any target will have on Australia’s economy and Australian families, this target will be set next year 2008.

Thirdly, the scheme will be national in scope and as comprehensive as practicable, designed to take account of global developments and to preserve the competitiveness of our trade exposed emissions intensive industries.

Fourthly, Australia should not pay higher energy costs than necessary to achieve emissions reductions, in other words, governments need to let the market sort out the most efficient means of lowering emissions with all low emissions technologies on the table and that of necessity must include nuclear power.

Australia will continue to lead internationally on climate change, globally and in the Asia-Pacific region. Not in a way that lectures and moralises, but in a way that builds support for global action to tackle this enormous global challenge.

And I very much want to highlight the important fact that our aim is to ensure that firms which undertake additional abatement between now and the start of emissions trading will not be disadvantaged. And this will provide additional confidence to companies already doing an enormous amount to cut their emissions.

This will be a world-class emissions trading system, more comprehensive, more rigorously grounded in economics and with better governance than anything in Europe. Implementing an emissions trading scheme and setting a long-term goal for reducing emissions will be the most momentous economic decisions Australia will take in the next decade. This emissions trading system must be built to last. It needs to last not five or 10 years, it needs to last the whole of the 21st Century if Australia is to meet our global responsibilities and further build our economic prosperity. This is a great economic challenge for Australia as well as a great environmental challenge. Significantly reducing emissions will mean higher costs for businesses and households, there is no escaping that and anyone who pretends to do otherwise is not a serious participant in this hugely important public policy debate. It will change the entire cost structure of our economy, we must get this right, if we get this wrong it will do enormous damage to our economy, to jobs and to the economic wellbeing of ordinary Australians, especially low-income households. The question I pose to the Australian people, quite directly, is this, who do you trust to take these vital decisions about our future? Who do you trust to strike the right balance so our firms and families can plan for the future with confidence? A Government that has given


Australia 11 unbroken years of prosperity, that has brought our economy back from high interest rates, high debt and high unemployment, a proven team of economic decision makers that have been tested and have performed for more than a decade or a party that has been missing in action on every key economic decision over that period? A party whose policy approach is steeped in recklessness and symbolism rather than reality and substance?

Yet again my friends, Labor has not done the hard policy work on this issue. Labor says it will reduce Australia’s emissions by 60 per cent by 2050 but it won’t tell you what the impact will be because it hasn’t done the analysis. Peter Garrett, who would be in charge of all of this if Labor were to win office, wants a 20 per cent reduction in emissions from 1990 levels by 2020. He said it explicitly, indeed that’s his starting point, because he said it could be 20, 25 or even 30 per cent. Peter Garrett and Kevin Rudd have absolutely no idea what the consequences of these numbers are. A 20 per cent reduction from 1990 levels would do enormous damage to our economy and to Australian living standards. To meet such a target the Emissions Trading Taskforce, that’s a group of people whose report I released on Friday, concluded that it would require and I quote, ‘replacing Australia’s entire existing fossil fuel-fired electricity generation capacity with electricity from nuclear power, while at the same time

removing all vehicles from our roads,’ end of quote. Can I say that again, ‘removing all vehicles from our roads,’ end of quote, that’s not John Howard’s analysis, that’s not the Liberal Party’s analysis, that’s the Emissions Trading Taskforce analysis and that group includes the Secretary of the Federal Treasury. A 20 per cent cut from 1990 levels by 2020 would be the recipe for a Garrett recession. That is not a recession which Australia has to have.

I find a huge irony in all of this, Labor’s whole mindset on this issue is basically that of a post-industrial Europe. Having spent more than two decades telling us, no, lecturing us all that Australia’s only economic destiny lies in Asia, Labor now wants to approach the biggest economic challenge of our time with a policy framed in Europe for European conditions, as if Australia were a small densely populated nation with high winds somewhere east of Denmark. We do have global responsibilities and we’re going to live up to them, but Australia’s climate change policy must be made in Australia and take full account of Australia’s unique economic circumstances, including our highly competitive resources sector that is so crucial to our present and future prosperity. Australia’s economy is very different in its economic structure, its natural advantages and in its ambitions to grow, compared with many in Europe. For example resources account for 37 per cent of Australia’s exports and that’s almost five times the average of the OECD. Labor continues to put its faith in the Kyoto Protocol, itself a political instrument crafted quite deliberately to favour Europe. The EU, the European Union, has a significant economic interest in preserving Kyoto’s 1990 baseline since that year marks the collapse of Co2 emissions in the United Kingdom and Eastern Europe; the former because Margaret Thatcher closed the coal mines, and the latter because of deindustrialisation after the fall of the Berlin Wall following the collapse of Soviet imperialism.

A simple statistic highlights the flaws in the Kyoto approach. During the Kyoto timeframe China and India will build almost 800 new coal fired power plants. The combined Co2 emissions from those plants will be five times the total reductions in Co2 mandated by the Kyoto accord. Yet the Labor Party is impervious to this reality.


One is tempted to say never get between a Labor leader and a piece of empty symbolism. Again might I say the comparison with Tony Blair, someone who deals most of the time in substance rather than symbolism, is quite instructive. At least Tony Blair is honest enough to recognise the limitations of the Kyoto approach, and he said this last week, and I quote, ‘without America and China in this deal the rest of

the world, frankly, can agree whatever it wants, but it’s not going to have the effect of improving the environment’. We know we can’t solve this problem alone, with Australia accounting for less than 1.5 per cent of global emissions, that’s why the

Australian Government has been a the forefront of efforts to build a new consensus for global action on climate change. The key point for all of us to remember and to remember always is that we will only tackle climate change successfully if we

maintain our economic strength. We will only tackle climate change successfully if we know the economic consequences of any emissions target for Australia and we will only tackle climate change successfully by marrying human creativity and innovation to the market and to the tools of economic liberalism.

Ladies and gentlemen we do as a party face a great challenge of the months ahead. This will be the most crucial and most challenging and most difficult election the party has faced in more than a decade. But the significance of it, important though it is for us politically, is much more in the significance it represents to the Australian people. It’s their future more than the future of any political party that matters most. And the questions we must ask ourselves and we must ask the Australian people are many. But I can think of three that are fundamental to the choice that will be made at the end of this year. And the first of those is; will Australians be better served by having wall-to-wall Labor governments? By having Labor governments at every level, at every level, throughout this nation for the first time since Federation, is that really going to serve the best interests of the Australian people? A total absence of the checks and balances that are inherent, no matter our partisan passion about our own political cause, the checks and balances that are necessary and inherent in a properly functioning democratic system. Will the interests of the Australian people be better served by having the trade union bosses back in town? Will their interests be better served by having Greg Combet, as he wistfully wondered aloud, the union movement once again running Australia? Will the interests of the employers of Australia be served by allowing people like Joe McDonald, and Kevin Reynolds and Dean Mighell to run amok? I think the answer to that is a resounding no. And as Peter Costello reminded us yesterday, will the interests of the Australian people be better served by electing a federal Labor government so that it can do what state Labor has begun to do, and that is to go back into debt, to borrow in competition with private enterprise and thus exert upward pressure on interest rates in this country. The truth is that as I speak to you Labor governments in New South Wales, in Victoria, in Queensland and in South Australia, that’s representing about 80 per cent of the state government economic activities around the nation are all now in deficit. Always look at what Labor does, and not what Labor says. The single greatest economic achievement of this Government in an overall sense, the great human achievement has been of course to drive unemployment to its lowest level for 32 years, but the great overall economic achievement has been to make this nation free of debt. Because there is no greater thing you can do for your children than to bequeath them a debt-free future. And just as state Labor has gone into debt at a time of extraordinary national prosperity, and a bountiful flow of revenue from the Federal Government by courtesy of a Goods and Services Tax system that they vigorously opposed and tried to stop coming about, just


as they have done that at a state level, it is inevitable that they will do the same thing at a federal level and all of the hard won gains of the last 10 years will be put at risk.

My friends it’s a great challenge, what is at stake is enormous for us as a political movement, but more importantly what is at stake, what is at stake is the stability and the hope and the aspirations of current and future generations of our fellow Australians and that is a greater responsibility, it is indeed the greatest responsibility of all. Can I conclude by thanking all of you for your wonderful support over the years and looking every one of you in the eye I know that that support will be more than delivered and will be magnified and exceeded in the months that lie ahead of us as we make sure that the great gains of the last decade are preserved and expanded for the benefit of all of the Australian people. Thank you.