ADDRESS TO VICTORIAN STATE COUNCIL

SOFITEL HOTEL

MELBOURNE

SATURDAY, 28 APRIL 2007

Well first of all David Kemp, thank you for taking on this wonderful role as State President.  You have the support of the whole of the Victorian Division of the Liberal Party and we wish you every success.

Can I also pay tribute to Russell Hannan, the retiring State President?  Russell, your health has been a terrible difficulty for you during the course of the year.  You have been to hell and back but you have come through with courage and we thank you for everything you have done.

It is a disappointment to lose an election.  And it is a disappointment that we were not successful in last year’s Victorian State election.  But we cannot afford to dwell on that defeat.  We need to pick ourselves up and re-dedicate ourselves to victory in 2010.  But before we get to victory in 2010, we have another important item of business this year, a federal election.

Mr Kevin Rudd thinks he has won the federal election already.  He thinks he is a shoe-in.  He is already beginning to talk as if he runs the country – but we have news for him.  The Australian people are our focus and we intend to win their trust and win back government at the end of this year in the federal election.

This election is about Australians.  And it is about where we want to take our country.  It is about the opportunity we want to give our young people.  It is about their future.  And it is about giving them the hope that they too can share in a lifestyle and opportunity of what I believe is the greatest country in the world, Australia.

As we go into the Budget week, as we put together the Budget for Tuesday week we will be thinking again about how to develop opportunities for young people in our country:- how to look after families; how to make sure that businesses are secure and strong and can provide jobs; how young people can get jobs and build careers; and how older people can be secure in their retirement. 

And it is after a decade or so of economic management, we are now beginning to see results that are making the lives of our people here in Australia better.  I am always astounded to see in the lead-up to a Budget the press speculating on what the size of the Budget surplus might be.  It is funny you know, before our government was elected nobody ever speculated on the size of a Budget surplus.  All the speculation was on the size of a Budget deficit!

I read the Financial Review during the course of the week with the headline ‘Costello on notice over big Budget tax cuts.’  The object was to warn me against cutting tax too much.

Before we were elected, nobody use to write headlines like that.  Did you ever see a headline, ‘Bracks warned against land tax cuts,’  ‘Bracks warned not to cut stamp duty by too much?’ You will never see a headline like that in any newspaper concerning a state Labor Government in any State or Territory in this country. 

And of course it was all the key reforms, the key reforms that are now setting us up that Kevin Rudd and Labor opposed:- balancing our Budget; paying off $96 billion of debt; achieving an interest rate saving of $9 billion per annum; reforming the tax system; cleaning up the waterfront; decentralising industrial relations.  These were all achievements which the Labor Party opposed. 

Imagine if you had a next door neighbour, who when you came to build your dream home opposed the plans, and went to the Council to try to stop you building on your block.  And when you dug the foundation, he tried to kick in the foundations before they were poured.  And when you had the bricks delivered, tried to steal the bricks.  And when the carpenter came around, tried to pull down the frame.  And when the water was connected, tried to turn it off.  And when the painting was done, tried to throw the paint all over your front yard.  And when you finally finished, against the odds, imagine if the next door neighbour walked in and said – “I would like to live in this house.” 

Labor didn’t have the wit to build economic reform.  They opposed us every step of the way and now they are putting themselves forward as the inheritors and the owners and the occupiers of economic management in this country.  Well, it is not good enough. 

Your business doesn’t run itself.  And nobody says the Chief Executive can go on holidays for a couple of years and come back after the company has paid its dividends.  You wouldn’t think that you could run a business in that way, you can’t run an economy in that way.  The Australian economy doesn’t run itself, it is not on auto-pilot.  We don’t just raise $230 billion and spend it.  We have to manage the global challenges of rising oil prices, and volatile exchange rates, and inflationary pressures and drought.  This takes management.  This takes work.  And it is the work of the last ten years that is beginning to pay dividends.  And to sit back and to say well, it all runs itself, is to fundamentally misunderstand what managing economic opportunity is in our country. 

At the moment there are some industries in Australia which are strong.  The mining industry is strong but it wasn’t always that way.  Back in 2000 there were many people who thought the mining industry in this country was “old.”  They were describing it as the “old economy.”  In fact the Labor Party back in 2003 wanted to put additional taxes on the mining industry.  They wanted to withdraw part of the diesel fuel rebate.  That is how important they thought the mining industry was going to be to Australia’s future.  But there are other industries in Australia which are in difficult times.  Agriculture is one.  The great agricultural industry of Australia has been suffering a one in one hundred year drought.  Our manufacturing industry is under pressure because of international competition and high exchange rates.  Some parts of some industries are profiting from international conditions and some are under pressure.

But I want to say this to you:- increases in the terms of trade have always given us problems in the past under the centralised and regulated way we use to operate the Australian economy – whether it was the Korean War wool boom of 1951-52, the credit squeeze of 61-62, the Whitlam experience of 74, drought and the recession of 81 and 82 or the recession we didn’t have to have in 1990-1991.  We have normally ended prosperous times badly.  We normally had a recession about every ten years or so in this country and quite often in the aftermath of prosperous times.  One of the big risks in Australia with a centralised economy was in profitable industries, wage increases could be paid.  But centralised wage fixation took those outcomes and applied them right across the board, right across the whole economy, so that a fitter in the mining industry whose pay rise could be easily justified in Karratha because of profitability set the standard for a fitter’s rate in a Moorabbin fabrication plant where you didn’t have the same profitability or a fitter in Parramatta which might have been struggling.

And we took wage settlements out of profitable areas of the Australian economy and we applied them across the economy and we had general wage increases, inflation and the inevitable hangover.

And this is why decentralised wage fixation is more important in the Australian economy now than ever before.  Because if you started taking wage outcomes from profitable areas of the Australian economy and applying general wage increases either through pattern bargaining or through the abolition of AWAs or through union power, you would get general wage pressures and general inflation pressures and you would bring to an end a period of prosperity, the like of which we have not seen in terms of continuous expansion to the Australian economy.  And a moment’s thought will make that clear to you.  Nothing could be a bigger threat to the Australian economy at the moment than moving away from decentralised wage fixation and going back to the past.  That is what got us in trouble in the past.  And a big part of our secret has been industrial relations reform.

Well I don’t know if the Labor Party understands this.  I don’t know if they care.  Because they are a political party which is blinded by ideology.  To them it is much more important to appease the trade union movement than to do what is right for the Australian economy.  And I give you this promise, and John Howard gives this promise, we will always put the interests of the Australian economy and people above any sectional interest in this country. 

The whole future in economic terms is going to be about enterprise and ingenuity and creativity and home-based businesses.  The world is moving fast and in order to adjust we need to be flexible.  We can’t afford to go back to centralised structures like we had in the past.  We can’t afford to go back to the 19th century:- the idea that there is this inevitable clash between labour and capital, employer and employee, business and trade unions.  Only political parties rooted in the outmoded structures of the 19th century would think that way.

But you see, we are about the future.  We are about decentralised opportunities, workplace based relations, ingenuity, creativity, flexibility, opportunity.  That is the Liberal way.  That is going to be the future for our economy. 

We are also about building today to face the inevitable costs that the future will bring us in terms of demographic challenges.  We know the ageing of the population is something that has been set in motion and is coming at us in the decades which lie ahead.  We know it is going to put inevitable strains on aged care, on health, on pharmaceuticals.  We know we have got to start beginning to prepare for these pressures and that is what we have been doing:- getting rid of debt and building a Future Fund which can set us up for those opportunities in the future. 

And no sooner had we decided to get rid of Labor debt and to build a Future Fund, than on cue – on cue – the Labor Party came back and said: “we would like to put our hands on that and start spending it today and robbing from the Future Fund.”  You know a leopard doesn’t change its spots.  Like a bear to honey, Kevin Rudd and the Labor Party decided that they would like to help themselves to the Future Fund and raid the future opportunity of our kids.  We have got to stand firm against this.  We have to stop this.  They never had the wit to establish a Future Fund themselves and they shouldn’t have the opportunity to destroy it.

We don’t want to risk it.  We don’t want to put our kids back in hock, we don’t want to destroy their opportunities for the future.

Why would you steal from the future?  You know where the risk to the future comes from.  Do you know who wants to raid the Future Fund?  His name is Kevin and he comes from Queensland.

His name is Kevin, he comes from Queensland and he is a menace to the future opportunity of the young people of Australia. 

And so, the great contest begins as to who has the plans for the future of our country and the future of our children.

I want to say this to you, the people who will be best placed to shoulder that challenge in the future are the people who had the courage to do the key reforms of the past.  They have got us to where we are today.  The people that had the courage to reform the tax system and the industrial relations system and balance the Budget and pay off debt and establish the Future Fund.  That is the track record.  It is not the people who opposed the reforms, they can’t be trusted with these great opportunities. 

Over the last ten years I have stood shoulder to shoulder with John Howard on those key reforms.  It wasn’t easy, it was hard.  Reform was really hard.  And to do all of those things, and there were times when it was very, very unpopular, we were always motivated by the fact that if we could do the right thing we would do something which would benefit our public and our future generations. 

We did this together because we believe in the interests of Australia.  We will work together with the interests of Australia in the future.  The track record speaks volumes for the future and I want to say the Liberal Party, that John Howard, and our Coalition represents future opportunity for future Australians on the back of a proven track record which will give our country the kind of opportunity it needs.  Please welcome the Prime Minister.