Speech by the

(Check Against Delivery)

(Note: this is the final draft from which Mr Fischer drew his own remarks; no transcript was taken)

It's a pleasure to have this opportunity to talk to you for the first time in my capacity as Deputy Prime Minister and Minister for Trade.

It's a pleasure for two reasons.

First, because the Coalition has always believed strongly in consulting fully with business. And secondly, because the Coalition is now in a position to carry out the policies it has been calling for.

Tonight I want to talk to you about the new Government's economic and trade policies, particularly the links between domestic and external policy; and how they relate to the robust economic relationship we are pursuing with Hong Kong.

Successful export performance begins with good economic policy at home.

The Australian economy is much more open and much better integrated with the global economy than ever before. As a result, what we do at home in terms of economic management has a greater impact on our trade performance than ever before. The borders between domestic and international policy have blurred.

Big changes in Australia's trading patterns over the last decade show this quite clearly.

Export trade is now much more important to Australia's well-being. Exports of goods and services amounted to 15 per cent of GDP in 1995, up by a half from10 per cent in 1985.

It is more important, even for smaller players. The number of small and medium sized exporters has grown substantially, particularly in the services area. Over the last five years, Australia's services exports to Hong Kong alone have grown some 15 per cent a year.

Trade is more important,too, for sectors which, in days gone by, were sheltered and could not venture beyond domestic borders. For example, exports of elaborately transformed manufactured goods have been the fastest growing component of Australia's exports - they now account for 24 per cent of total exports and almost half of our exports to Hong Kong.

Another broad change in recent years has been the fundamental importance of Asia to Australia. Our fastest-growing export markets are in Asia and just under two-thirds of our exports went there in 1995, up from around a half of our exports just ten years before.

The fact that we now engage in more trade than we did a decade ago is undeniable. But the question of whether our trade performance has improved is another matter altogether.

Since World War II, every time the Australian economy has grown at rates much above 3 to 4 per cent, our trade account deficit has fed our current account deficit and forced a slowing of GDP growth.

This has to change if growth and employment are to be sustained at high levels.

It is true that Australian agriculture and energy producers are among the most efficient in the world. However, more needs to be done. Higher rates of productivity will make our exports more competitive and contribute to higher living standards in Australia.

Higher productivity will allow us to do that without living beyond our means, and without borrowing from future generations in order to satisfy ourselves today.

With its first budget of 20 August, the Government has started down the track of redressing the structural weaknesses in our trade performance. We will boost our competitiveness, and improve the general business climate so as to enhance the potential for productivity gains.

Our key priority is to achieve a more responsible mix of macroeconomic policies by reducing government expenditure. This will get the budget back into surplus.

The Government is committed to doing this despite the political difficulties it poses.

Yes, there is a lot of noise about cuts to government funding in a range of areas. But we are committed to boosting national savings, and easing our current account problems.

I emphasise this because it means that everyone has to share a part of the burden of plugging the budget black hole, including business.

We are also committed to a revitalised approach to microeconomic reform.

That approach includes three major elements:

First,establishing a more flexible labour market.

Second, improving efficiency in the provision of infrastructure services in areas such as the waterfront, aviation and energy.

And third, reducing the burden of regulation and paperwork for business, particularly small business.

I know that you here in the liberal environment of Hong Kong are particularly aware of the desirability of positive action on all three of these fronts. So while we may take away some areas of short-term funding for business, such as the DIFF scheme, we also hope to return to our business community some of the capacity to achieve dynamic growth, improve export performance, expand investment and sustain higher levels of employment.

That means long-term capacity - capacity which previous governments have eroded.

The national competition policy reforms agreed by Australian Governments in April 1995 will support the microeconomic reform strategy.

We are already pursuing a full agenda on competition policy. It includes reviews by all governments of regulatory impediments, a stocktake of microeconomic reform by the Productivity Commission, and the Wallis inquiry into financial regulation.

An efficient and internationally competitive financial sector is fundamental in supporting Australian enterprises in global markets. As barriers to entry to overseas financial markets are reduced, there are also emerging opportunities for Australian-based financial service providers.

I would note here that Australia's presence in this sector in Hong Kong is highly visible and growing, with the large Australian banks and insurance companies well represented.

I hope that I have been able to give you a clear idea of the steps the new Australian Government is taking to ensure that the performance of our economy at home does justice to our trade and investment opportunities overseas, particularly in the dynamic economies of Asia.

How well we compete in our own region is vital to Australia's economic future. That is why I have made a point of visiting Hong Kong and China now, early in the life of the new Government.

However, for all that the Government does, the entrepreneurial engine of better trade performance rests with you - the business community.

The Government can and will clear up structural impediments to competitiveness at home. We can and will negotiate to remove trade barriers in other countries - although fortunately access is not a major problem in Hong Kong's free market!

But the capability of our entrepreneurs to take the natural resources of our country, to take the talents of our people and our ideas, and to market them to the world, is what will ultimately determine how successful our trade performance is.

That is why AustCham is doing such a great job for Australia.

Hong Kong is a special place for Australia. It is no accident that AustCham is the largest and most successful Australian chambers of commerce in Asia, with some 350 corporate members. It is no accident that over 30,000 Australians live and work here.

Because our strengths in research and innovation fit well with Hong Kong's recognised entrepreneurial flair and role as an international business centre. This has helped make Hong Kong one of our top ten export markets. Just as importantly, it is our fourth-largest source of and sixth-largest destination for foreign investment.

Australia will continue to see Hong Kong as an important business partner in the coming years. We already have a very substantial direct economic stake here. But perhaps even more important is the unrivalled potential to develop strategic alliances with Hong Kong companies to do business in the greater China market, and Asia more widely.

Although I have concentrated tonight on Australia's domestic economic policy framework, and our bilateral links with Hong Kong, I want to reaffirm the importance this Government attaches to a multilateral, rules-based system; and to the benefits of multilateral and regional cooperation for trade liberalisation. We value Hong Kong as a partner in WTO and in APEC. Hong Kong is a unique example of the trade liberalisation WTO members work for. And it is an innovative source of ideas for regional work in APEC.

Hong Kong's economic future is bright as it approaches the return to Chinese sovereignty in 1997. Britain and China deserve much credit for having achieved so much to lay the groundwork fo a smooth transition. We hope that remaining uncertainties can be resolved through goodwill and commmonsense. In this way, the people of Hong Kong and the international community can have confidence that the free and open economic and social systems which underpin Hopng Kong's success can be maintained.

The challenge for all of you as business leaders, as well as to the Government, is to ensure that Australia makes the most of its opportunities in Hong Kong. How well we compete in this dynamic market shows how much Australia has to offer Asia as an economic partner. The "Celebrate Australia '96" promotion is a good example of how we can work together to showcase our strengths in science and technology, business, food and wine, and the arts; and also to show our commitment to Hong Kong's future. And I am delighted to be here tonight to support that campaign.

In conclusion, let me assure you in my capacity as both Deputy Prime Minister and Trade Minister, that the Government is committed to supporting Australian companies like yours, companies that are competing in international markets .

And we are also committed just as strongly to providing the right economic environment at home to support Australian firms in competing in those markets.

So with your support, the Government will continue to review and reform the regulatory framework and to provide a stable macroeconomic climate. Not just because this is what the domestic economy needs, but also because we see these things as integral to our efforts to boost Australia's trade performance.

There is one message I would like to leave you with today - and it applies equally to both business and government.

Good export performance really does begin at home.