Address to Institute of Company Directors

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Crean’s Knowledge Gap
July 30, 2000

Address to Institute of Company Directors

Transcript No. 2000/84





Address to Institute of Company Directors

Sheraton Hotel


Friday, 28 July 2000

12.30 pm



I thought I might talk today on where our economy is, where we would like to take it,

and what I see as some of the opportunities that now lie in front of us. Taking my cue off

that introduction again, we’ve seen some of the results, good policy in the past. We

are now seeing some of the rewards of reform. But I must say to you, it’s the reforms

of today that are going to bring the policy benefits of tomorrow. And I’ve come to

the conclusion that in the business of running a national economy, in setting a

country’s course, you should never stop. There is always unfinished business. And in

this country of about 19 million people, the story of the last three or four years has

been a very good one. But we are not big enough to be able to (inaudible). We are one of

those countries which always has to make the right decisions. And I said in this

year’s Budget speech, that the Budget was designed to lay strong economic and social

foundations and to secure the future for Australia. The story in economic policy over the

period since the Government was elected in March of 1993, has been putting the Budget back

into balance and surplus. Before our Government was elected the last two Budget deficits

have been $13 billion and $5 billion, over two Budgets there. And when we were elected in

March of 1996, we said, we are going to put this Budget (inaudible) and keep it there. We

imposed a two year programme and put the Budget back into balance in 1997 and 1998. And

the most recent Budget which I brought down in May was the one, two three, fourth Budget

surplus in a row. With good prospects (inaudible) Australian economy continues to grow,

with Budget surpluses in the future. We put those estimates out there as to what would be

(inaudible), but I don’t (inaudible). The important thing is (inaudible) the fourth

surplus Budget in a row (inaudible). What do you do with a surplus Budget? Where the

Budget is in surplus, that is, you are paying all of your (inaudible). The surplus should

be retiring debt. I was giving a press conference at this year’s Budget, one of the

economic journalists said, Treasurer, shouldn’t you be building better surpluses? And

I said, what would we do with it? (inaudible) said, well, you’d have more things to

spend on. And I said, it doesn’t quite work like that, the surplus is what you have

after you’ve spent. And because we have build those surplus Budgets over the last

five years, we’ve been paying down debt. Here are the five Budgets before we were

elected – one, two, three, four, five. We (inaudible) a bit more than it raised, set up

financial markets and borrowed, and over five Budgets increase Australia’s debt by

$80 billion – one, two, three, four, five. In those five years, up until 1995/96 they

sold off assets, expended the proceeds – the assets were Qantas, Commonwealth Bank

(inaudible). Still didn’t have enough money, and borrowed one, two, three, four, five

$80 billion (inaudible). Putting the Budget back into surplus means that you cover all of

your expenditures, and with the surplus you start paying down debt. One, two, three, four,

five. We have now paid back $50 billion of Labor’s $80 billion deficit (inaudible).

Five Budgets of $80 billion borrowing (inaudible). We are not yet back to where we were

before this fiscal disgrace (inaudible). I’d like to say (inaudible). What you see

here is what would happen in relation to Australian debt (inaudible) current surpluses,

that if we privatised the remainder of Telstra (inaudible) Australia would eliminate

(inaudible) net debt. The Commonwealth Government (inaudible) debt. And I had a slogan

some time ago – debt free by 2003. (inaudible) remaining privatisation of Telstra,

Australia would be debt-free, the Commonwealth Government would be debt-free by 2003

(inaudible). We would join those three other countries. And we would be in a position that

frankly we haven’t been in since before the 1st World War. The

Commonwealth began borrowing (inaudible) 1st World War and never stopped. And

we could be, looking back (inaudible). When we finished our first surplus Budget in 1996,

and I was going through the Budget papers, Treasury (inaudible) and said, Treasurer, we

had a surplus Budget and that means that our financing requirements