DRIVING OUR ECONOMY

_{05 October, 2006}

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Well thanks very much Richard and thank you for that generous introduction.

It’s certainly a delight to be in this wonderful new facility in this exciting part of our country - and to be with a group of outstanding community leaders.

The North Queensland Regional economy has been booming for some time with high employment figures, very significant building approvals, record exports through the Port and major business and tourist activity.

What is it that has been driving our regional economy?

If you look around, you could pick any number of reasons for the success of this region.

A booming mining and metals processing sector, good and aggressive leadership from the 7 local authorities in the region, high retail turnover, good leadership from Townsville Enterprise Limited, increasing numbers of tourists and the general feeling of wellbeing which Les (Tyrell) would claim is the result of the Riverway Project and Tony Mooney who would claim is a result of the Strand Foreshore Development – and both to a certain degree would be correct.

There has been significant Federal Government infrastructure investment in the region with expansion of the Defence facilities in town and the construction of major transport infrastructure and there has been some State Government expenditure in the region.  The surprising (for those who do not know the history of the industry) turnaround in the fortunes of the sugar industry, on the back of the huge federal government rescue package that kept the industry going until the world price leapt ahead, has also played a big part in boosting confidence and allowing additional private investment.

But sustaining, and providing the ground work for, this prosperity is the general economic outlook of Australia which in turn has been the result of very careful management by the Australian Government, and by the state of the world economy – dramatically influenced in recent years by the rise and rise of China and the potential in India that is currently being realised.

Demand for Australian commodities has helped Australia, and new industries and activities in Asia have provided enormous scope and opportunities for Australia’s ingenuity and commitment to hard work.

Whilst many find it trendy to be critical of the United States, the United States economy is still an enormously important factor in World affairs and Australia’s close ties with the United States through the Free Trade Agreement and through the support we give to each other’s country in maintaining World Peace, have played a significant role in the prosperity Australia enjoys today.

It is more than political rhetoric to acknowledge that having paid off all Government debt (and that was something that was simply unheard of and considered impossible a decade ago) has made a difference to the Australian economy and to interest rates and the creation of new jobs.

Not only have we, through careful management, paid off all Government debt but we are again doing something that is almost unique in the world – we are actually putting away surpluses into a Futures’ Fund to provide for tomorrow’s liabilities – acknowledging that an ageing population will require some support in the future.

These things just don’t happen – they are a result of a decade of careful but enlightened management by Peter Costello and leadership by our Prime Minister.

You know, young people that I associate with through my work simply do not comprehend that people like them were twenty years or so ago paying interest rates of 17 % on their housing loans. Can you imagine how all of these people who are buying all of the units in the Townsville-Thuringowa area would feel if their interest bills were in the range of 17 - 18 %.  People who have started in business in the last ten years likewise could not appreciate how they could possibly run a business if they were paying between 22 and 28 % and business loans, but that was how it use to be and it has required a lot of hard work to get interest rates to where they are today.
If you followed the quite entertaining but very inaccurate advertisements on the TV about the Work Choice legislation, you would be surprised to understand that since the Work Choice  legislation was introduced a mere six months or so ago over 150,000 new jobs have been created in Australia. The freeing up of our workforce and the flexibility has been beneficial to both workers and employers and has helped the high unemployment figures in Australia and added to our prosperity.

Our embracing of foreign investment, our relaxation as far as we can go in Australia’s interests, of regulation and red tape and our commitment to the freest of trade throughout the World have all played a part in Australia being in the position it is in today.

Whilst other economies around the World are doing well enough, the growth in the Australian economy has been recognised in the highest circles – the OECD referring to it as ‘the miracle economy’.

Against this global and national backdrop the North Queensland region has done particularly well from the mining and energy resources needed to feed the growing Asian economies.

Careful local management has enabled this region to take advantage of the demand for minerals and energy and the innovation of Townsville businesses through Townsville Enterprise Limited and through the Local Councils, has all helped.

There can be no doubt that the Defence Force establishments in this city are a major contributor to the solid growth of this region.

The Prime Minister’s recent announcement of an additional Battalion to this area has again given confidence to all other sectors of the regional economy.

It is this Government’s policy to continue to play its part in defending Australia and Australia’s interests throughout the World and this will mean increasing an already extensive investment in Defence facilities and people.  It is also quite clear that a substantial part of Defence spending in the years ahead will be in the north of Australia and Townsville with its significant and working infrastructure in the Defence area will continue to be the focal point for Defence expenditure in Australia in the years ahead.

On the negative side though, this region suffers, as do other parts of Australia with the difficulty in growing a skilled workforce.  The Australian Government’s Australian Technical Colleges will help in the long term but it will require a huge effort from Industry, Universities and other training facilities to address the shortage of skills that we have in Australia, and indeed in the world, in a sensible, constructive way.  The other major cloud on the horizon is the seeming inability to confirm a secure, substantial and local power supply in the North Queensland region.  This is an area which must be addressed by the State Government, and addressed soon.

If you are the worrying kind I guess you could spend your nights thinking of ways that the current prosperity could collapse.

If something happened to the huge Asian and North American economies there could be difficulties for Australia generally which would include the North.  A fall in meat or sugar prices would have an impact, international terror could disrupt the tourism industry although, then again, international terrorism can, at times, enhance the attraction of Australia as a safe destination.

If a Government in the future decided that it was not necessary to defend Australia’s borders, then I guess facilities like Lavarack could disappear.  That scenario is however one that will not occur under the current Government, and more generally, I would find difficult to contemplate.

A secure economic future for this region relies on a continual appraisal of where the region is going, its opportunities and its limitations. 

We do have an asset which few other parts of this continent have and that is a relatively limitless access to quality water.  This is an asset which I believe will become increasingly important as the lack of foresight and attention to appropriate infrastructure in the South and in southern states exacerbates problems that will have a negative impact of continued development and expansion in those areas.

Enhancements in telecommunications, which will again receive Australian Government encouragement with major reform of our media and communication in the package being introduced into the Senate next week, have lessened the isolation once felt in the north – and have given us instantaneous contact between suppliers in remote areas, processors in the cities and customers in Asia.  We are no longer disadvantaged by distance.

One thing that does need to be addressed by the Federal Government is the additional cost of living and working in the remote parts of our country and this necessitates a review of the Zone Tax Rebate Scheme.

Introduced in 1946 to allow for geographical isolation and the additional costs of living in remote Australia, the Zone Tax Rebate in those days was effective in encouraging people to far flung places. The reasons today are as valid as they were in the immediate post war years.

In those days the allowance was something like ten times the average weekly earnings and if that relativity were maintained today the allowance would be in the range of $7000 rather than the $338.00 or $1143.00 that applies at the moment.  I believe we are long overdue for a new look at and an upgrading of the Zone Tax Rebate Scheme.  It won’t be very popular in this room but I do think that the allowance of $57.00 that we get in Townsville, Ayr and Ingham is not warranted.  I don’t consider we are disadvantaged by distance and I think that should be abolished but I do think the proceeds should go into an effective Zone Tax Rebate Scheme in the remote parts of Australia where it could make a substantial difference in attracting people there.  This area produces a lot of Australia’s wealth and I believe the difficulties and costs of living in those areas should be acknowledged and addressed.

Continued population growth attracted by the north’s relaxed and comfortable but energetic lifestyle would continue to support a critical mass that may help lessen the impact of a future world downturn.

We need to be thinking of innovative ways to use our water, to encourage people to this area and we need to continue to support and build upon the strengths we have locally in the Defence facilities.

We have to continue to work assiduously to attract investment to this area and that requires this region to be competitive and supportive of any proposal for new investment in the area.

We need to demonstrate by our actions, that this is a part of Australia, and indeed a part of the globe, which is innovative, is supportive of new investment and to which Governments and investors can turn when solutions and profits are needed.

This requires ongoing promotion of our strengths, our university, our port, our defence facilities, our natural industries, our science establishments in AIMS, CSIRO and GRUMPA, our secure water supply.

It requires an ongoing recognition by State and Federal Governments of our importance and assets – and it requires local business and community leadership to drive that promotion and the opportunities which follow.

It is through gatherings like this one today involving so many community, business and local Government leaders that we can achieve those goals and ensure the continued prosperity of the North Queensland region.

Thank you for having me.

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