Speech to the BCA's 20th Anniversary Dinner
Sydney, 1 October 2003

Katie Lahey, Chief Executive
Business Council of Australia

Ladies and gentlemen thank you for attending the BCA’s 20th Anniversary Dinner. And a special welcome to the Prime Minister who will speak to us later this evening.

Prime Minister, I’m not sure if you attended the BCA’s first dinner but you’ve been a regular speaker at our functions since you became Prime Minister and we thank you for your involvement and interest in the BCA.

Tonight this room is crammed with VIPs and it’s probably a career limiting move for me to single out a few of them, but here goes.

I’d like to acknowledge Sir Arvi Parbo, the BCA inaugural President. Other former Presidents with us tonight are Sir Roderick Carnegie, Ian Salmon, Bob White and Dean Wills. Geoff Allen the Council’s first CEO is also with us. An impressively large number of our CEO Members have dragged themselves away from AGMs and the reporting season to join us tonight. As well we’re joined by the Chairmen of many of Australia’s largest companies. Thank you all for your ongoing support.

We’ve also got some of our newer Members attending their first dinner event:

- Greg Baxter (James Hardie)
- Ben Clarke (Kraft)
- David Deverall (Perpetual Trustees)
- Gail Kelly (St George Bank)
- Andrew Peacock (Boeing)
- David Reeves (Caltex)
- Stephen Roberts (Citigroup)

Tonight’s dinner is also an opportunity to thank the many others who have supported the BCA projects throughout the year. You’ve helped us with our Task Forces, assisted in the Scenario Project or guided us through the intricacies of Canberra. Thank you.

It’s also a time to say a special thank you to John Schubert, our outgoing President. The BCA Board will have other opportunities to thank John but it’s important in this forum to acknowledge all his hard work for the BCA over the last three years. John has been a delight to work with and for. The Secretariat is grateful for his effort, energy and tireless support.

Sir Arvi Parbo,  as our first President, talked about the President’s role as “corralling the stallions” - a much more macho mental image than herding cats! Well as you look around the room tonight you’ll see there are a few fillies now involved in the BCA. So stallions may be a bit outdated but corralling is still very appropriate. And John Schubert has done corralling with deft and diplomacy. I only saw him hesitate once – and that was directing the Chairmen’s Panel. Corralling CEOs is one thing – corralling Chairmen requires nerves of steel. So thank you John.

Tonight is also an opportunity for us to welcome our incoming President who takes up the reins in November. Hugh Morgan has been connected with the BCA since the early days – he’s been a BCA Member, Task Force Chair and Member of our Board, and now President. He was our longest serving Member and as soon as he finished his time at WMC we were knocking on his door enticing him to become President, so welcome Hugh. I’m looking forward to working with you.

Now that’s the thank yous, welcomes and farewells done with so I now just take you through the running order for tonight.

We’ll be serving the entrée shortly. Then John Schubert will give his President’s address and introduce the Prime Minister. The Prime Minister is of course our keynote speaker and the Vote of Thanks for the Prime Minister will be given by Hugh Morgan. So tonight we’ve got a Prime Minister wedged between two Presidents and I’m not going to say anything about a rose between two thorns.

Hugh’s thank you will signal the end of the formalities – we’ll serve the main course and then dessert and coffee. The desserts are designed so you can have them standing up and give you an opportunity to network.

Please enjoy the evening.

[ends]

To view a copy of Sir Arvi Parbo's 10th Anniversary speech, please click here.

 

Speech to the BCA’s 20th Anniversary Dinner
Sydney, 1 October 2003

Dr John Schubert, President
Business Council of Australia

Prime Minister, Ladies and Gentlemen.

This year marks the Business Council of Australia’s 20th anniversary.

The two decades since the BCA was formed has ushered in a period of enormous change in our economy and society.

I looked back in preparing these few remarks and found it interesting to consider how much some things changed and other have stayed the same.

That theme runs through the few comments I have tonight.

In this current era of growth and prosperity, it can be difficult to relate to the environment, which led to the creation of the Business Council in 1983.

Australia’s businesses and currency were largely protected.

Inflation was running at more than 10 per cent – as was unemployment.

Australia was emerging – albeit slowly - from recession. As a nation, we were under-performing compared with other western economies.

Business investment and growth was fragile. Labour relation problems were endemic.

In 1983, when I returned from overseas, I recall that Australian CEOs and senior management were spending 20 to 30 per cent of their time on industrial relations issues.

Industrial relations was completely centralised. In reality, management were not in control of their workforce. The ACTU and the Industrial Relations Commission was involved in all major disputes.

Those of us here old enough will remember that in those days there was always a beer strike at Christmas. There were two or three petrol strikes every year which lead to petrol rationing. There were regular power shortages and outages due to strikes, especially in Victoria. And there were regular train and bus strikes.

The level of influence of the ACTU at that time was huge.

I remember being summoned by the Prime Minister to a meeting with Bill Kelty and Industrial Relations Minister. At the meeting it was very clear who had more power sitting around the table. It was Bill Kelty.

There is something of a myth the Business Council was formed in 1983 at the instigation of the newly elected Hawke Government.

In fact, by the end of the 1970s, there was already a perceived need for an organisation of large companies representing all sectors of the economy.

The Australian Industries Development Association had existed in different forms since 1919 and was quietly effective as an organisation of senior managers from the manufacturing industries.

The Business Roundtable was formed in 1979 and included CEOs from all sectors of the economy but it lacked sustained research support. Consequently it did not go public with policies.

From 1980 to 1982 merger discussions were held between the AIDA and the Business Roundtable. By the time the Hawke Government was elected in 1983 the two groups had already made a commitment to merge.

The 1983 Economic Summit was a catalyst for rapid implementation of the merger.

Business was represented by 18 independent business leaders invited by the Prime Minister.

In Sir Arvi Parbo’s words ten years later, the 18 CEOs were the epitome of ‘uncorallable stallions’.

Of course no-one today would use such an analogy suggesting that CEO’s were uncontrollable stallions [certainly not the President of the BCA or company Chairmen).

Another contrast to today is that most of the CEOs of Australia’s largest companies scarcely knew each other and had not worked together for any purpose. This lack of a systematic involvement in the political processes made them vulnerable to political expediency and clever tactics by others.

The business leaders of the early ‘80s were much more secretive and not publicly exposed - another contrast with today.

Television coverage of the Summit was the first opportunity for the public to put faces to many that they had only known of by name.

In the end, the gang of 18 was outflanked by Labor in an orchestrated game plan. The result was the Prices and Incomes Accord.

The experience of the Summit made obvious the need to get on quickly with the merger of AIDA and the Business Roundtable.

Within three months the merger was agreed on the basis which is still as applicable today as it was then.

It is worth recalling the BCA’s 1983 ‘Objective and Modus Operandi’. It stated that the Council would attempt to be objective in stressing the importance of economic development while seeking a policy environment that served all Australians rather than narrow interests.

The Council would be proactive in seeking to place issues on the political agenda in order to shape them rather than reacting to the initiatives of others. The Council would be research-based and rigorous in argument and would be company not secretariat driven.

The 1980s was an era when CEOs of major companies had far longer tenure and were not always beholden to an incessant focus on short-term results.

They were not yet burdened with the persistent demands of overseas travel. With less media and shareholder scrutiny, CEOs arguably had more scope to participate in public policy.

Moreover, the vision and ideas of Australia’s business leadership was not received with the scepticism or suspicions of self-interest, as they are often today.

The Council’s early focus reflected the challenges of the times – increasing competitiveness, breaking down tariff walls, opening government monopolies to competition, as well as overhauling labour relations.

Some things perhaps don’t change.

Harnessing the thoroughbreds of business into a cavalry of respected business influence was then also problematic – as it will always be.

In the 1980s, it was the lowering of tariffs that brought out the differences between CEOs. This tested the Council’s resolve and unity, but in the end its commitment to the national good prevailed.

It is without a doubt the Council’s contributions in these areas had a significant influence on government thinking and action during the 1980s and beyond.

Since 1983, our economy has transformed from being largely inward and protected to one of the most open and dynamic in the world.

The total value of our imports and exports is now more than 40 per cent of our GDP and the size of our economy has doubled over the past two decades.

The service sector is now as much the basis of Australia’s success, as our traditional sectors of resources and manufacturing.

The evolution of the BCA and its Membership has held a mirror to this transformation.

From a Member base dominated by Melbourne’s minerals and mining houses in the 1980s, now two-thirds of our Members are Sydney-based and the majority are from the services and knowledge sector.

Overall, BCA members account for the jobs of one million Australians, with 250,000 in regional and rural areas. They account for one-third of all exports and one-third of new investment and that is without the multiplier effect of their activities.

The BCA’s current policy agenda reflects both changes within our Membership and what is now a fundamentally different world from that of 20 years ago.

In the 1980s, the BCA’s priority issues, such as tariffs, labour reform and foreign debt were hard economic ones.

Reflecting the changes that have occurred in our economy, the Council’s policy agenda now has two broad themes.

The first theme hasn’t changed - optimising the strengths of our economy.

In this category our current agenda includes two key areas of micro-economic reform - taxation and regulation.

The second is different - reform that maximises Australia’s environmental and social advantages that are both a product and a generator of economic success.

This category currently includes education, population and participation and greenhouse. These latter issues all have a long-term timeframe and therefore fly in the face of the growing trend to short-termism.

In an era of instant information, there are enormous pressures on decision-makers and the public to take a short-term view on most issues.

Given the length of the electoral cycle, Governments have always been pressured towards short termism. Today there is much greater short term pressure of business.

There is no better illustration of this than the impact short-termism has had on our Members.

Chief Executives in Australia have on average the shortest tenure in the world and it is continuing to fall.

With a shelf life of 4.4 years, it is approximately half that of their US and European counterparts.

I believe this has negative implications for Australia’s long-term economic performance.

Even so, the Council’s greatest attribute in this day and age is its ability to take a long-term perspective on Australia’s future.

Our current major initiative, our Scenario Project, looking out to 2025, illustrates both the long-term view and the broadness of interest of the BCA.

To mark the BCA’s 20th anniversary, Council Members have agreed to fund this ambitious and quite costly project.

The Scenario Project aims to articulate the challenges and opportunities Australia is likely to face over the next 20 years.

Based on the changes we faced over the past two decades, you’ll appreciate this is no easy task.

The Scenarios are not a set of predictions and they are not strategies.

Rather, each tells a credible and logical story about Australia’s future – how it may evolve at an economic, social and governance level, and the policy challenges these might raise.

The Scenario Project has bought together 80 of the most incisive and informed minds in the country, from all walks of life.

The Scenario Workshops have involved leaders in business - including a number of our members - welfare, science, education government, environment have all been invited to contribute, as well as young people.

The Project has developed three quite distinct scenarios and while the details of each are being fleshed out, they are broadly as follows.

The first, Riding the Wave, describes an Australia which continues to enjoy high economic growth and prosperity in a growing and benign world.

Yet it is a double-edge sword.

Prosperity breeds complacency and a reluctance to continue the reforms that underpin prosperity. The country experiences reform fatigue.

Our wealth runs down. We become economically irrelevant. We can no longer fund a fair, safe, clean and prosperous society.

The need for reform is finally recognised and the hard decisions start to be made. A slow recovery eventually begins but from a low base.

The second scenario, known as Stormy Seas, has Australia growing initially and becoming more connected to our region. Then we are hit by a series of significant external events and regional instability. This leads to reduced travel due to security concerns.

The impact on Australia is severe - economically, politically and socially. The response to this impact generates much debate as spending on defence goes up at the expense of everything else.

We become more internally focussed as we stand at a crossroads with our economic and political relations with regional neighbours.

The third scenario, Changing the Crew, examines how Australia’s values and norms change as the baby boomers age and generation X and Y move into positions of power and influence.

The baby boomers are reluctant to pass the baton. Tensions increase around polarising values between generations such as egalitarianism versus meritocracy and the allocation of scare resources such as spending on aged care versus education.

As values polarise, Australia becomes more divided, less fair and more resentful.

Scenarios are designed to be challenging but they are not an end in themselves. Their objective is to make all of us think seriously, strategically and longer term about the possible challenges and opportunities Australia may confront. In this way, they provide a framework for testing strategies and policies.

Next month concludes my almost 15 years as a Member of the BCA.

Over the past three years, the Council has played a major role in debate and policy changes to higher education, completion levels at year 12, regulatory reform, international tax, innovation and workforce participation.

These are varied issues.

Yet all are fundamental to helping build an Australia that, in the words of the BCA’s aspiration, is one of the best places in the world to live, to learn, to work and to do business - not just for next year but the next twenty years and beyond.

My sincere thanks go to the Board, BCA members and the Secretariat for their ongoing support and valuable contribution.

I also wish my successor, Hugh Morgan, the very best in his new role as President.

As one of the longest serving chief executives in Australia in recent years, Hugh has been a BCA stalwart and tireless contributor.

I am sure Hugh will continue to make a very real and significant contribution to the Council in his new role.

Thank you for attending tonight.

It gives me much pleasure to now welcome the Prime Minister, the Honourable John Howard, to deliver tonight’s keynote speech.

 

 

 

TRANSCRIPT OF THE PRIME MINISTER
THE HON JOHN HOWARD MP
ADDRESS TO THE BUSINESS COUNCIL OF AUSTRALIA
SYDNEY

Thank you very much John, ladies and gentlemen. It’s a great pleasure to share this very important occasion with the Business Council and to share with many of you some reminiscences on what has been achieved in this country and what has been done to lift the economic performance of Australia over the last 20 years.

It’s an interesting conjunction that as well as this being the 20th anniversary of the formation of the Business Council, today is the 20th anniversary of the launching of Medicare, it was back in 1983 that Medicare was launched by the former government and the interesting conjunction is that it’s a salutary reminder to all of us that there’s never a disconnect between economic policy and social policy. That economic policy is never an end in itself but unless it delivers better outcomes for people’s lives, unless it generates more jobs, it gives people rising living standards, it gives them the greater sense of striving and aspiration then it’s been a comparative failure because human contentment is the social dividend of good economic policy and there has always to be a link between those two.

It’s been a very remarkable 20 years. And when you think about it the five great economic reforms that have transformed the Australian economy have all occurred in the last 20 years. Financial deregulation, first advocated by the Campbell Committee established by the former Coalition Government, to its credit implemented by the incoming Labor Government with very strong Coalition support in Opposition. We floated the dollar, what in December of 1983? Tariff reform introduced largely by the former government with Opposition support, I think a very courageous act by that government given its workforce associations, implemented in a series of steps through the 80s and early 90s. And then of course the three major reforms that I think can be claimed by the current government, industrial relations reform, the hardest and most vigorously fought because of the strong ideological differences on that issue, the transformation of industrial relations in this country over the last 20 years has been quite amazing and those of you present in this room that, as John Schubert did and Arvi Parbo would have, Bob White and so many others would have attended meetings in the Cabinet room of the Old Parliament House which bought together the players as they were colloquially called of both business and the trade union movement and to think that those meetings don’t take place anymore because the constellations of power and influence in our economy have altered so much over the last 20 years. Industrial relations reform, taxation reform, and of course that’s a reform that’s never finished as the Business Council quite properly reminds me and I’m very conscious of that. But at least we have made a major dent in the task of taxation reform through the introduction of the Goods and Services Tax and the [inaudible] changes that were put to the people in 1998. And then of course very importantly, and we have been forcefully reminded of it with the Budget outcome announced by the Treasurer yesterday, fiscal consolidation. When one thinks of the dept to GDP ratio of this country it’s 3.9 per cent, the OECD average is 48.7 per cent and in countries such as Japan it’s over 100 per cent.

So it has been a very remarkable 20 years, and the five things that have transformed our economy have all occurred during that 20 year period and that is why what John said is so right, that you look back at Australia 20 years ago and you compare it with Australia today, it is a transformed country, it’s a country which is far more open, we often compare, and I will in a moment in saying a couple of other things about the economy, but we often say that the Australian economy is now enjoying an experience like the golden years of the 1960s, in fact there was something superficial about this, or insubstantial let me say rather about those years because the Australian economy then was a far more protected economy than what it is now. We not only had a controlled exchange rate, but we had very high tariff walls and of course exports in the 1960’s only comprised eight per cent of the Australia economy. By late 2000 it was 23 per cent. Even as recently as 20 years ago, or 23 years ago in 1980 direct foreign investment abroad, in other words us investing in them, was only about 20 per cent of inward foreign investment. Yet would you believe that for a period in 2001 direct foreign investment abroad exceeded inward investment into Australia, which is another illustration of the way in which things have really changed.

I’ve mentioned the extraordinary transformation bought about by those economic reforms. We now have fewer than one in five private sector workers who belong to trade unions. We’ve had 12 years of continuous economic growth, and that’s the longest economic expansion since the 1960s. A little while ago we recorded our lowest unemployment rate for 13 years, at 5.8 per cent. But probably the real nugget out of the last few years has been productivity improvements. We’ve had a three per cent annual growth since the mid-1990’s, and I never cease to talk about this statistic and you’ll forgive me if you hear a lot more of me talking about it over the next nine to 12 months, but we’ve had a 12.2 per cent rise in real wages over the last seven and a half years, between 1983 and 1996, a random 13 years, there was a rise of only 2.3 per cent. Now in the end, as I said at the beginning of my remarks, it’s the dividend you give to people out of economic policy that really does matter. And the dividend of higher real wages built on a non-inflationary base because we’ve had productivity improvements. If I were asked to single out the greatest achievement of the Australian economy over the last 20 years it’s really that, our workplace culture has altered, there is a greater culture of co-operation by and large in the workplace now, and everybody made a contribution to that, of course industrial relations changes have made a huge contribution, the approach of management, the more cosmopolitan international approach of business in Australia, the more outward looking character of young Australians now, all of that has made an enormous contribution, I think the feminisation of the workforce has made a contribution to it, there are a whole range of things that have altered the culture of the Australian workplace and have therefore made a massive contribution to that, and in the end it’s the greatest guarantee that we can have of continued economic growth and economic prosperity.

So having said all of those things I wouldn’t for a moment want you to imagine that we’re going to fall victim to the latter elements of scenario one, and that is abandon further economic reform and further economic challenges. And can I say to the President, John Schubert, that I am most interested in these scenarios and I indicated to John and other members of the executive committee of the BCA at the recent dinner we had at the Lodge that I would like those scenarios to be presented to a Cabinet meeting later on this year because my colleagues and I would very much like to share the thinking of the BCA on these issues. And I recognise they are not predictions, they are but scenarios but they are the sort of propositions that do provoke thought about the future of this country and if we are to consolidate the self-evident gains of the last 20 years we do need to embrace that kind of thinking and that kind of examination process.

The BCA itself has played a very big role in the economic debate over the last 20 years. It played a particularly important role in shifting the attitudes of the business community on industrial relations. When I was first a Minister for Business and Consumer Affairs in the middle to late 1970s, I had responsibility for what was then called the IAC, it was described by some manufacturers as the industry’s assassination commission, it was often described by some trade union leaders by that same title or even worse and the attitude of different companies was sharply in variance, some believed that protection, a return to full scale protection was the only road ahead, others had a different attitude. I think the BCA has played an extraordinary productive role in changing not only the attitudes on tariff but very particularly the attitudes on industrial relations and of course in more recent times I’m very indebted to the constructive contribution that leading members of the BCA, some here, some not here, and the BCA itself took to taxation reform. I think 10 years ago most people in this room would have wondered whether we would have ever got through the taxation changes that we ultimately did and can I say that we would not have got through the Parliament what we did get through the Parliament without the assistance in the end of a large part of the Australian Democrats, and I remain particularly indebted to the very constructive approach taken by that party’s former leader Senator Lees.

But your organisation has played a very important role and you continue through your emphasis on some of the things that might not immediately be seen as overwhelmingly economic but are really at the core of our economic hopes and prospects for the future. I think particularly of higher education reform, something that’s very much on the agenda at the present time. But we really badly need to get these higher education reforms through the Senate, I accept that our political opponents don’t agree with our approach and they have a perfect right, as they will, to advocate an alternative approach. My only plea to them is that please support the changes that we now propose and if you win the next election then you can change the system according to your own policy. But if we lose the momentum and we lose the opportunity that our current package of reforms provides of injecting some additional public money as well as additional private money into our universities then the sector is going to be very much the loser.

That of course brings me to an issue that has played on my mind quite a bit and will get somewhat more airplay next week when I release the discussion paper on Senate reform. I hope to engage the community on a debate about the need to alter the deadlock provisions currently in the Australian Constitution. We now have a system of voting and a method of choosing the Senate, which more or less guarantees that neither side of politics, that is neither the Labor Party nor the Coalition can ever in its own right control a majority in the Senate. Now there are some, and there’s one here tonight, Andrew Bartlett, who would probably say that is an extremely good thing and I respect that fact and I respect the fact that in the Australian community now there is a desire to have a greater smaller party voice in the Upper House and I don’t argue with that because that’s the will of the Australian people then that will has to be respected, but would I would argue for is that we need to have a process for resolving differences over legislation that does not involve the rather cumbersome heavy handed approach of a double dissolution with no guarantee if there’s a close result from that double dissolution that the deadlock itself can be resolved because if you go back over the last 20 years some of the reforms that were put through, particularly in the time that the former government was in office were only achieved because of the bipartisan support that was extended to that government by the then opposition. And there are a number of very important reforms that we’re endeavouring to get through at present, those relating to the viability of the Pharmaceutical Benefits Scheme, we are all conscious of the ageing of the population, we’re all conscious of the fact that in common with all other Western societies we will have fewer taxpayers and more and more dependents as years go by and two of the great challenges are to manage the cost burden of that, particularly in areas of health and pharmaceutical benefits and also to secure a greater participation of older people in the Australian workforce. And one of the things that I believe that we have to, as a community debate, as to whether we can achieve a better way through constitutional reform of resolving deadlocks between the two parliaments.

This country does not lack a very very large agenda of debate on major issues over the next five to 10 years. We achieved historic reforms at the last COAG meeting in relation to water and it’s laid the foundation of some major national changes that are going to tackle the challenge of that very precious resource. We need as a country to make further progress on energy market reform to properly marshal for the benefit of this country the extraordinary energy reserves that we have and to further breakdown the wastefulness of state boundaries and duplicated regulatory regimes which do enormous damage to the proper utilisation of those resources. We need to continue the momentum that’s come out of the Backing Australia’s Ability programme in the areas of research and innovation, part of that of course is tied up with the higher education reforms of which I’ve spoken earlier.

We need to continue the process of not only investing in university education but also promoting the skilling of the workforce in the non-university sectors. And I’m especially proud of the fact that in December 1995 there were 140,000 apprentices in this country, yet there are now just under 400,000 apprentices and trainees. That represents a very significant expansion of that.

But ladies and gentlemen it’s been a fascinating 20 year period. As I look around this room there are people such as Arvi Parbo and Bob White who were there and a number of others, Eric Neal, and I’m sure I’ve left out many who were present at that first meeting which I think was held at the Regent Hotel just down the road and presided over by my predecessor but one Bob Hawke, and over that 20 year period I have engaged in various positions in discussion and debate with the Business Council. I think the business community of this country has made an enormous contribution to what we have achieved over the last 20 years and the thing that cheers me most about the last 20 years is that it’s been a demonstration that in the end competitive capitalism is better able to lift people’s living standards and is better able to deliver good outcomes for the majority of people then any alternative economic system. It’s perhaps no coincidence that during that 20 year period we also saw the final collapse of ideology built on the command economies through the collapse of the decaying East European controlled economies because if you look at the last 20 years you have seen an emphatic demonstration that competitive capitalism, so far from making the rich richer and the poor poorer, competitive capitalism has in fact been the force and the ideology, economically speaking, which has delivered the best outcomes because the growth economies of that period have been the economies that have increasingly embraced that and despite the apparent conflict between the political doctrines of China and its economic practices to watch the embracing year by year of more market oriented approaches and dare I say it more competitive capitalism by that economy is one of that great experiences of the modern world.

So ladies and gentlemen thank you very much for having me here tonight, I want to thank John Schubert for the leadership he’s given to the Business Council over the last three years and Katie for her role as Chief Executive. I know your incoming president well, I wish him well, I will continue to ensure that the members of my Government, both newly rearranged and continuing, will maintain the very close linkages that I know we’ve had over the last seven years. We haven’t always agreed on every single thing, and nor we should, but we do share common goals, we all believe in the security of this country, we all strive to give it economic strength and we’re all very strongly committed to its social stability and if we can continue that partnership then I hope we can continue to leave it in an even better shape than we found it.

Thank you.

[ends]