Thank you for this opportunity to talk to you today. I want to do so largely via the eyes of a politician.

I want today to put more emphasis on the politics of structural change than the change itself and the messages that need to be passed to the public. Tomorrow at the conference I will reverse that pattern.

OECD studies show that politicians tend world-wide to avoid structural reform until it is forced on them by economic stagnation, a collapse of the currency or some other equally costly economic and social disaster.

Obviously there are a large number of up-front political an economic costs involved in structural reform. That includes corporatisation and privatisation.

If we focus primarily on the problems, the prospect can seem so daunting that we never get started. But if we stand back from the problems and focus instead on the political opportunities opened up by structural reform, the view is 100 percent positive.

Voters rightly place a higher value on policies that improve their longer term future than they place on policies which may look successful in the short-term but only by sacrificing larger and more enduring gains further out into the future. Every decision involves trade-off costs. There is no free lunch.

A basic choice is involved. We can take the costs up-front for larger medium-term gains or we can maximise short-run satisfaction, in which case the accumulated costs will sandbag us at some later stage.

Going for quality means choosing the actions that deliver most benefit to the nation in the medium-term instead of choosing more now for supposed political gain, at the cost of less later. Those concepts are not foreign to the general public. People sacrifice earnings to get a university degree. They save up to buy a house.

People, in my view, want politicians with the guts and the vision to deliver sustainable gains in living standards to them and their children. By committing yourself wholeheartedly to a strategy of thoroughgoing structural reform, you make a fundamental change in the nature of the whole political ballgame.

A non-reforming government has no remedy for the structural problems under its management. Those problems slowly get worse. Ministers end up misrepresenting or suppressing vital economic information. Events continuously gnaw away the credibility of the government. Life as a Backbench Government MP becomes a non-stop misery.

One compromised policy is announced after another. None of them ever deliver the satisfaction the public really wants. The situation worsens further. Ultimately the economy and the government both collapse together.

On the other hand, as soon as you commit yourself to reform, you are freed of responsibility for the mistakes of the past. You can talk to the public in an honest, up-front way about the real problems, the damage to growth, incomes and employment. People like that and quite properly, they respect it.

Public demand for reform is built on a sense of outrage over the mistakes of the past and the people responsible for them. You lay out the facts and ask your audience:

So corporatisation and privatisation should always feature as just one thread in a very much wider pattern. Corporatising or privatising one state enterprise, for example, is not going to make a lot of difference to anyone except the vested interests who directly lose by it and all the other vested interests who think they would lose if this case set a precedent.

Taking them one by one fails to mobilise any support for the reform programme but it does very effectively mobilise the opposition. To win, you have to boost the stakes and boost them as high as possible.

Corporatising or privatising a large number of important state businesses can demonstrably make a major difference to both taxpayers and consumers. The broader the approach, the more strike power you have.

Again, the foundation for reform is laid by making sure that the dog can see the rabbit.

Past governments were able to avoid reform because they were careful to conceal the inefficiencies of state enterprises wherever possible, so there is genuine shock value and dynamic power in revealing what actually goes on inside those organisations. That value is maximised by asking reputable, high-level, independent business people to investigate each state enterprise, then report in detail to the government about the inefficiency, waste and stupidity they have found.

Some of the examples that come out of the woodwork are so breathtaking that they almost have a quality of legend about them. They stick in the public mind. It becomes difficult to defend the status quo without blushing.

For example, in New Zealand it was costing us $122,000 per job per year in our state coal operation to keep hundreds of people on the staff contributing absolutely nothing except costs to the organisation's output.

Coalcorp halved its staff numbers after corporatisation without loss of output. As a result, in one year, without raising prices, they were able to turn a $23 million loss into a small profit. Coalcorp is now planning to double production over the two years ahead and do so with just a minor increase on their present staffing levels.

In some U.S. industries, the cost runs as high as $750,000 a year per job saved by protection. For the same money, well-spent, much larger numbers of more productive jobs could have been created elsewhere in the economy. They would have helped to enrich the whole community, instead of pouring money straight down the drain.

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