There are so many distinguished Australians - particularly of course Scottish Australians - here tonight that I cannot possibly do justice to their achievements. But I would like to say a word about your President, Sir Ninian Stephen. He gave great service to Australia as Governor General and has shown great vigour in all the activities he has taken on since then, including for example serving on the International Tribunal investigating war crimes in former Yugoslavia.

He also played a significant role in the Northern Ireland peace process. When I first went to work in the Prime Minister’s office, in 1992, Sir Ninian was chairing what was called Strand 2 of the Northern Ireland Political Talks, covering the vital but controversial issues of the relationship between Northern Ireland and the Irish Republic.

Those talks laid much of the ground-work for subsequent agreements, from the Downing Street Declaration of 1993 right through to the Good Friday Agreement of 1998. It has been a long process, but Sir Ninian was in right at the start. And it was a tribute to his patience and his skill as chairman that he commanded such respect across all the different communities. The British Government remains grateful for the role he played.

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I was invited as your guest last year, and much enjoyed the occasion. But I have had a sense of foreboding in the year since then, knowing that I would be asked to speak this year. I well remember last year one speaker being booed when he announced he had been born in England.

Well my position is slightly different. I was born in London ... but I was conceived in Scotland. Indeed if newspaper reports are to be believed, I will share that in common with Tony and Cherie Blair’s new baby, who apparently was conceived when they were staying with the Queen at Balmoral.

In my case, my parents were living in Scotland and my father fought a by-election in West Dumbartonshire in 1950. He lost narrowly, and on the strength of that, was offered a safe seat in London in the General Election that followed a few months later. And as a result I was born down south.

My father’s family originally came from Ayrshire. And have a family connection with Robbie Burns, whose verse we have heard tonight. Robbie Burns’ father William was a gardener on the Fairlie Estate at the same time as my many-great grandfather James Allan was a carpenter there. And they married sisters.

It was James Allan son, another Alex Allan, and Robbie Burns first cousin, who founded the Allan Shipping Line that used to have the Royal Mail contract between Glasgow and Montreal.

The family mostly lived in and around Glasgow, but when my grandfather died his house was sold. It became - and I know this will raise mixed emotions in this predominantly protestant gathering - a site for training Roman Catholic monks.

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I used to spend a lot of time in Scotland as a child. But it wasn’t until the early 1980s that I got to some of the really remote and most beautiful parts. I sailed with my wife Katie in the two-handed Round Britain and Ireland Race. And our experiences included inching round the island of Saint Kilda in the mist, and beating around Muckle Flugga, the lighthouse on the northernmost point of the Shetlands, in an easterly.

In Barra, in the Outer Hebrides, we got an example of Scottish enterprise, when as soon as we’d finished the leg, our boat was surrounded by boys in dinghies, all called Alastair McNeil, all offering to row us ashore, or to refill our water tanks - for a price of course.

In Lerwick, in the Shetlands, we asked where there was a good pub to go for the evening and were sent across the harbour to a bleak stone house on the hillside opposite. We rowed across and climbed up the hill, getting more and more dubious, since the place looked completely deserted. But then we opened the door and inside was a log fire, lots of friendly Shetlanders and quite the best Shetland fiddlers I’ve ever heard. Also some fine whiskey - I can’t say I remember much about the row back across the harbour.

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I mentioned earlier the Prime Minister’s annual visit to Balmoral to stay with The Queen, and I had the privilege of accompanying John Major there on several occasions. It is a unique experience to arrive for a barbecue and see the Duke of Edinburgh in chef’s hat and apron barbecuing venison sausages.

One year I was up there in the midst of a sterling crisis, and I had to set up a phone call between John Major and the Italian Prime Minister. They were finding it hard enough to communicate when their conversation was almost completely drowned out as a piper started walking up and down the lawn outside the castle.

I was initially appointed as Principal Private Secretary by John Major, but I stayed on after the change of Government in 1997 to work for Tony Blair. That in itself is quite a story. We have General Elections on Thursdays, and on the Friday, at about 11.30am, John Major walked out of the front door of 10 Downing Street for the last time and said a few words to the assembled press. He then got into the Prime Minister's car, his wife Norma got in the other side, and I got in the back-up car. We drove the five minutes to Buckingham Palace where John Major tendered his resignation to the Queen and was driven away in another car. Tony Blair was summoned and sworn in as Prime Minister. He got in the Prime Minister's car, his wife Cherie got in the other side, and I got in the back-up car. We were driven the five minutes back to Downing Street, where Tony and Cherie Blair walked down the street shaking hands with well-wishers while I went around through the side entrance. By 12.30, less than an hour after John Major had left Number 10, I was opening the door and saying "Welcome Prime Minister" to Tony Blair.

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One thing that was clear right from the start is that Tony Blair fully recognises is the talent of the Scots, and the benefits of a Scottish education. Indeed he himself was educated at Fettes in Edinburgh. He filled most of the senior positions in his Cabinet with Scots. Robin Cook was made Foreign Secretary. Gordon Brown was appointed Chancellor of the Exchequer. Derry Irvine was made Lord Chancellor. George Robertson was made Defence Minister, though he has recently left that job to become Secretary General of NATO.

And I'm glad to say that the Government carries this through to other important postings too. It seems for example to be a requirement to be Scottish to get the job of Consul General in Melbourne, with one Scot, Peter Innes, succeeding another, George Finlayson.

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It’s good to be proposing a toast to Scotland at a time when Scotland is doing so well. Sir Ninian Stephen remarked to me that some of my predecessors might have had a harder time in finding positive things to say. Ten years ago, Scottish unemployment was 15%. Today it’s 7% and still falling. Scotland is attracting new firms and new investment from right around the world, including of course Australia. Over the past eight years, Scotland has attracted 650 inward investment projects, worth over £8 billion (A$20 billion) in total and contributing nearly 100,000 jobs to the Scottish economy.

But it is for another reason that 1999 will be seen as a momentous year for Scotland. And that’s because of the most far-reaching constitutional changes since the Act of Union in 1707. This year we have seen elections for the new Scottish Parliament and the setting up of the new Scottish Executive.

It’s powers are remarkably similar to those of State Governments in Australia. It controls education, health, police, industrial development, transport and so on. But interestingly, there are some powers that were not devolved even though they are State responsibilities in Australia - and the subject of some controversy. I am thinking in particular of gun controls and gambling, both of which are reserved for the Westminster Parliament.

This does illustrate one difference between the constitutional positions in the two countries. In Australia, the Federation was formed by the States deciding to merge some of their powers into the Commonwealth. In the United Kingdom, the Scottish Parliament was created by an Act of the Westminster Parliament. At least in theory, it could be repealed by the Westminster Parliament. But several constitutional experts have already questioned whether that would in practice be possible, at least without another referendum in Scotland.

In Canberra, I am sometimes asked, "why on earth is the British Government doing all this devolution? Surely it’s better to keep control at the centre?" Well I only have to stand in Melbourne and say this, for you to realise what a Canberra-centric view this is. The right question is "why on earth was power in the UK kept centralised for so long?"

In the General Election in May 1997, the only political party opposing devolution - the Conservatives - failed to win a single seat in Scotland. And in the subsequent referendum in Scotland, over 70% voted in favour.

I don’t pretend that there won’t be bumps along the road. I am sure we will see some tussles over vires between the Scottish and Westminster Parliaments. And no doubt some quarrels over funding. All that is very familiar in Australia.

There are also issues to be resolved about the implications for England and the English regions, but you will rightly regard those as being of lesser interest tonight.

The other question I am sometimes asked is whether devolution will be the first step in the break-up of the United Kingdom. Well I don't believe that's true. The United Kingdom should be stronger, not weaker, as a result of devolution. One of the factors that has fuelled the pressure for independence or separatism in the recent past has been the frustration with so many Scottish issues being decided in Westminster. Now that Scotland has its own Parliament, and more say over its own affairs, I hope we will find Scotland growing more comfortable with the Union again.

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So it is a propitious time to be proposing the toast to Scotland. I am an unashamed enthusiast for Scotland. And I’ve always liked the old story about the day when God said to the Archangel Gabriel, "Gabe, today I'm going to create Scotland. I will make it a country with dark, beautiful mountains and purple glens. I will fill its rivers with salmon. I will give it all the best ingredients for brewing whisky. And I will fill the seabeds around its shores with vast deposits of oil and gas."

"Wait a minute" said the Archangel Gabriel. "Don’t you think you’re being a bit too generous to these Scots?" "You really think so?" said God. "Just wait until you see what they’ll have to put up with when I create the English as their neighbours!"

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