Speech at the National Press Club

Canberra, Wednesday 7 December 2005

Our Vision for a Changing Australia

Introduction

The first twelve months of the fourth term of the Coalition Government have been very challenging and rewarding.

We have confronted disasters in our region, more terrorist attacks nearby in Bali, and - more recently - the discovery of suspected terrorists in Australia.

Then we have continued on with our nation building reforms and the legislative challenges they have required.

We would never have been able to manage all these challenges without a strong coalition.

Imagine a different Australia - an Australia where the Country Party refused to go into coalition with the Nationalists in 1923.

It could have happened easily. Many important people in the new party believed it should aim to hold the balance of power in Parliament and bargain with both sides for concessions. Their slogans were ‘measures not men' and ‘neither Labor nor anti-Labor.'

Following the 1996 election, the Liberals would have had a majority in the House and governed in their own right, but the last seven years would have been very different. The Government would not have been able to make the decisions that have made Australia a star economic performer and delivered 1.7 million new jobs.

Meanwhile, The Nationals would have remained on the cross benches - the rural equivalent of the Australian Democrats.

The party would have won a few noisy victories, but they would have been insignificant compared to the results that we have achieved in coalition for the people of regional Australia.

In the last six months alone, The Nationals have made a major contribution to the Government's reforms to telecommunications and workplace relations.

The results have been outstanding. They demonstrate to us that there is no substitute for working around the cabinet table and through the joint party room as part of a successful Coalition Government.

Through this process, we developed the Connect Australia package, which will future-proof regional phone and internet services. It will lead to more choice and lower prices; it is underpinned by the $2 billion perpetual Communications Fund that we proposed and $1.1 billion in funding over the next four years.

Similarly, WorkChoices will make it simpler for employers and workers to make agreements that suit their own circumstances. It will create more jobs in Australian small businesses. It will protect workers who want to spend public holidays with their families. It will reflect the often unique circumstances of workplaces in regional Australia.

A changing Australia

Our strong coalition means that we will be able to continue delivering good policy into the future, in the face of the social and demographic changes that will affect every aspect of Australian life over the coming decades.

During the next fifty years, the number of Australians over the age of 65 is expected to double. The number of people of traditional working age will stay about the same.

It will have a slow, but steady, effect on society and the economy. Most of us won't notice it for years - until suddenly the state government closes the local school because of its low enrolment and it is converted into a retirement village.

The second change is more obvious: the shift of the Australian population from the cities to the coast and provincial areas within a short distance of the cities: the seachangers and treechangers, as they are known.

About four million Australians now live on the coast outside the capital cities. The figure will continue to increase, as more people retire and move to the coast in search of a better lifestyle. At the same time, the emergence of new technologies will create more jobs and business opportunities in those areas. So what are we going to do?

Infrastructure

It will be an enormous challenge to maintain the infrastructure we need to support those demographic changes and to meet the growing demand for our exports.

The Government's forecasters predict that the total amount of freight on our roads will double over the next twenty years. Passenger travel is forecast to rise by 40 per cent, and it will increase even further in the seachange and treechange areas.

We have responded by establishing AusLink, our $12.7 billion national land transport plan. We're not just spending more on the transport system. We're planning it better, from the local roads that carry our exports from the loading dock or the farm gate, to the ports where they leave Australia.

The Labor Party claims that any investment in local roads is pork barrelling. They're wrong, of course. The important thing to our customers overseas is whether their order is on time or not. If it's late, they don't care if the delay was caused by a washed out bridge on a local road or congestion on the waterfront. Our task is to make sure that every part of the supply chain works effectively - even the parts that the Labor Party doesn't like.

From 2004-05 to 2008-09, we will spend $1.45 billion on the AusLink Roads to Recovery programme, which is critical to local councils as they struggle to maintain and upgrade their local roads.

It includes a $100 million increase in the AusLink Strategic Regional Programme, which will help councils develop regional roads that support economic development and better access to services. We will almost certainly need to invest more money in the strategic programme in the years to come.

The Government and the Australian Rail Track Corporation will invest more than $2 billion in the rail system, which has been in decline since the end of the Second World War because of a lack of investment by the states.

The investment will upgrade the interstate main line and reduce the time it takes a freight train to travel from Melbourne to Brisbane by about nine hours.

It will also increase the capacity of the Hunter Valley rail system, which delivers coal to Port Waratah - the world's biggest coal port. The rail system's capacity will go up from 85 million tonnes a year to 140 million tonnes a year, with better reliability.

Our $12.7 billion investment in AusLink is a major boost to Australia's transport system. There is no doubt, however, that we will need to make ongoing investments in the future as the necessary corridor studies are completed.

The infrastructure needs of our booming coastal areas go well beyond transport and the other areas of Australian Government responsibility. The rapid population growth is putting massive pressure on basic infrastructure such as water and sewerage, as well as essential services like the health system.

The state governments - and particularly New South Wales - have completely failed to understand the dimensions of the challenge they face. They're not short of money. The states and territories will receive an extra $4.6 billion from the GST between 2005-06 and 2008-09. They're just not prepared to spend it outside their state capitals.

In the months to come, I'll be working closely with my state counterparts to highlight the states' failure to fund essential basic services in the seachange and treechange areas.

Tax reform

I want to turn now to tax reform, where the Government has a strong record. As a nation, we can be proud of our achievements. We can be proud that we have one of the best performing economies in the world. We can be proud that we are in a situation where we can afford to have a debate about tax cuts.

In the last Budget, the Government announced $21.7 billion in personal tax cuts. Over 80 per cent of taxpayers now face a top marginal rate of 30 per cent or less.

The Government's strong economic and financial management means we now have the ability to consider further tax cuts as well as making the infrastructure investments that we need.

We don't have to choose between them .

The Nationals' approach to tax issues will be based on three principles:

• Any tax reforms must recognise the needs of regional taxpayers, who generally earn less than their counterparts in the city. The Nationals represent four of the five electorates with the lowest average family incomes. Almost 40 per cent of the families in Cowper and Wide Bay earn less than $500 a week.

• Any reforms must not undermine our ability to invest in our infrastructure priorities.

• We must maintain the tax concessions that were put in place to support farms and businesses in regional Australia, such as the Farm Management Deposit Scheme.

I want to emphasise that The Nationals will not support tax cuts that just benefit top marginal taxpayers. The 47 per cent tax rate will only apply to 3 per cent of taxpayers from 2006-07. They deserve tax relief, but the 97 per cent of taxpayers on lower incomes deserve it as well.

Improving the Party Room Process

The social changes that we face do not just raise public policy questions. They raise critical issues for the future of The Nationals.

It's sometimes suggested that we need to revisit the debates of the 1920s and sit on the crossbenches and the government benches at the same time. It's an argument that overlooks the enormous benefits that Australia and The Nationals have gained from our strong coalition.

I do think, however, we could look at ways to improve the way that backbenchers from both coalition parties contribute to the development of legislation.

The Coalition has been in office for nearly ten years. Our party room process has served us well, but it was designed for different times, when we did not have a majority in the Senate.

At the moment, ministers submit outlines of their proposed Bills to the responsible backbench committees. The Bills then go to the joint party room for consideration, and are usually introduced into Parliament later the same week.

It's worth discussing whether we can give Government Members and Senators more scope to discus the details of Bills in the collegial setting of the joint party room before they go into Parliament.

Trade

I want to conclude by talking about trade. It's vital now and will only become more important, because the population changes that I've talked about will restrict the prospects of some of our important domestic industries, like the retail sector and housing construction.

These industries are structured around continued population growth, as the demographer Bernard Salt has pointed out. Australia grew by 11 million people during the last fifty years, which created endless opportunities for development and a huge increase in the size of the domestic market.

Our population is forecast to grow by only six million people during the next half century and will stabilise after that. The great business opportunities created by population growth will be overseas.

That's one of the reasons the Government is working so hard to expand Australia's access to overseas markets.

Our highest priority is to secure an ambitious outcome to the Doha Round of trade negotiations, particularly agriculture.

The discrimination against agriculture in world trade is a disgrace and shames the rich countries of the developed world.

Compare the figures: in the developed world, tariffs on manufactured goods average about 3 per cent. Yet in those same countries, the average agricultural tariff is 22 per cent.

On some products, tariffs are ridiculously high. The tariff on rice into Japan is 771 per cent. The tariff on sugar into the EU is about 180 per cent - and these are two of the tariffs of most interest to Australian farmers.

Export subsidies have been banned for decades in manufacturing, but we are only now talking about phasing them out in agriculture. The subsidies paid to farmers from wealthy countries amount to US$280 billion per year, grossly distorting the world market in farm products.

It's not surprising, then, that a recent World Bank report estimated that two-thirds of the gains from the Doha Round would come from the liberalisation of agriculture.

ABARE has estimated that it would increase the average income of Australian broadacre farmers by $11,800 a year. An ambitious outcome to the round would also lift an additional 140 million people throughout the world out of poverty.

I am pleased to report that overnight in Geneva there has been a significant breakthrough that will help the world's poor. We have reached a deal to amend the WTO intellectual property agreement to give poor countries easier access to cheap drugs for diseases like AIDS and malaria.

The breakthrough should provide developing countries with confidence that we will address the issues that matter to them at the World Trade Organization meeting in Hong Kong next week.

I have just returned from a meeting of the core guiding group of ministers for the meeting, including my counterparts from the United States, the European Union, Japan, Brazil and India.

We are further advanced on a deal to reform world agricultural trade than ever before, although we have not seen as much progress as we would have liked.

In Hong Kong, we will need to capture the progress we have made on agriculture so far, as well as the progress made in other areas of the negotiations, such as industrials and services.

For the first time, we have on the table a commitment to phase out export subsidies, and we have an offer from the United States to reduce substantially its domestic farm subsidies. We can't allow backsliding on either of these commitments or on the many other advances we have secured in the past four years of negotiations.

It will take political courage from the protectionist countries to achieve a decent outcome and establish a beach-head of progress for the new year.

There are 149 economies in the WTO. Some of them have strong offensive interests like us. Others are strongly defensive in key areas. The European Union and what is called the G10 - protectionist countries like Japan and Norway - need to show more flexibility on agriculture. Brazil and India need to be more ambitious on market access for industrials and services.

I remind the leaders of those countries that there is nothing to fear from trade liberalisation. As Australia has shown over the past 30 years, the economies that reduce their own trade barriers are the ones that benefit the most.

If everyone remembered that simple economic truth, we could break through the impasse and deliver a deal that would lift millions of people out of poverty and underpin world growth for decades to come.

So the Australian Government will continue to argue for an agreement that will:

• Slash domestic agricultural support programmes, with the highest subsidisers - such as the EU, Japan, and the USA - making the biggest cuts.

• Substantially reduce farm tariffs, so there will be real increases in market access for developing countries and Australian farmers.

• Phase out export subsidies by 2010, and

• Provide manufacturers and service exporters everywhere with more access to protected markets.

Conclusion

In conclusion, the continued success of our strong coalition confirms that Earle Page and his colleagues made the right decision in 1923, when they decided to become a party of government and not a party of critics.

The Nationals will remain a party of government because that is the only way we can deliver results for the people we represent. We will continue to succeed because we have the policies to address the social and demographic changes that are occurring across regional Australia.

Thank you.