PM Transcripts

Transcripts from the Prime Ministers of Australia

Transcript 2535

PREMIERS' CONFERENCE - OPENING STATEMENT BY THE PRIME MINISTER - 14 FEBRUARY 1972

Photo of McMahon, William

McMahon, William

Period of Service: 10/03/1971 to 05/12/1972

More information about McMahon, William on The National Archive website.

Release Date: 14/02/1972

Release Type: Speech

Transcript ID: 2535

PREMIERS' CONFERENCE
/ 4x~ n Oeni' g Statement by the Prime Minister 14 FEBRUARY 1972
IT IS OPPORTUNE THAT WE SHOULD MEET HERE TODAY FOR A
WIDE-RANGING DISCUSSION ABOUT THE AUSTRALIAN ECONOMY AND YOUR STATE
FINANCES. THE TIMING HAS NOT COME ABOUT BY CHANCE. WHEN THE
COMMIONWEALTH ACTED-IN A NUMBER OF WAYS LAST NOVEMBER TO ASSIST DEMAND
AND MAINTAIN GROWTH IN THE ECONOMY, WE HAD IN MIND THAT IT WOULD BE
APPROPRIATE TO REVIEW THE POSITION AGAIN ABOUT THIS TIME TO STAND
OFF FOR A LITTLE AND THEN HAVE ANOTHER LOOK AT THE TRENDS.
THE DATE WHICH WE THEN SUGGESTED WAS CHOSEN WITH THAT
CONSIDERATION VERY MUCH IN MIND. THE APPROPRIATE TIMING OF THESE
DISCUSSIONS THUS RESULTS RATHER FROM POSITIVE FORETHOUGHT, CONSISTENT
WITH THE ASSURANCES OF THE TREASURER AND MYSELF TO KEEP THE ECONOMY
UNDER REVIEW, AND AS PART OF THAT PROCESS.
WITH THIS TIMETABLE IN MIND, WE IN THE COMMONWEALTH
UNDERTOOK LAST WEEK A COMPREHENSIVE REVIEW OF THE ECONOMY.
AS A CONSEQUENCE OF THAT REVIEW WE HAVE COME TO CERTAIN
BROAD CONCLUSIONS. BEFORE FINALLY MAKING OUR DECISIONS OR SOME
OF THEM WE WANT TO HAVE THE BENEFIT OF YOUR VIEWS IN PREMIERS'
CONFERENCE. WE SHALL, NO DOUBT, FIND OURSELVES IN BROAD AGREEMENT
WITH SOME OF THE VIEWS THAT SOME OF YOU WILL PUT TO US AND IN
DISAGREEMENT WITH OTHERS. THAT IS IN THE NATURE OF CONFERENCES
AND NONE OF US SHOULD FIND IT IN ANY WAY SURPRISING. .0 ./ 2

-2
OVER THE PAST FEW MCNTHS THE GOVERNMENT HAS MADE
SEVERAL CONSIDERED ADJUSTMENTS TO POLICY TO MAINTAIN AS FAR AS
POSSIBLE OUR OBJECTIVES: THE MAINTENANCE OF ECONOMIC GROWTH WHICH
IS ESSENTIAL AMONG OTHER THINGS TO OUR PURPOSE OF MAINTAINING A
HIGH LEVEL OF EMPLOYMENT; AND THE CONTROL OF INFLATION,
IN THE LIGHT OF OUR DELIBERATIONS I WILL ANNOUNCE SOME
FURTHER ADJUSTMENTS WITHIN THIS BROAD POLICY FRAMEWORK.
I WANT, AS AN INTRODUCTION,, TO SAY SOMETHING ABOUT THE
CURRENT AND PROSPECTIVE ECONOMIC SITUATION AS WE SEE ITol
WE HAVE BEEN DISTURBED BY WHAT WE BELIEVE TO BE THE
EXCESSIVELY GLOOMY VIEWS BEING PUT ABOUT RECENTLY REGARDING
CURRENT AND PROSPECTIVE ECONOMIC CONDITIONS0 ACCORDINGLY9 WE HAVE
GIVEN THOSE VIEWS THE MOST CLOSE AND CAREFUL EXAMINATION. WE HAVE
COME TO THE CONCLUSION THAT THESE EXTREME VIEWS ARE SIMPLY NOT
SUPPORTED BY THE FACTS. I SAY THAT BECAUSE WE MUST GUARD AGAINST
BEING OVER-INFLUENCED BY SUCH VIEWS.
REASONED CRITICISM IS ALWAYS WELCOME,-AND IT IS
IMPORTANT THAT WE SHOULD BE AWARE OF AND UNDERSTAND SUCH
CRITICISMS. BUT THE MORE OMINOUS OF THESE STATEMENTS CAN HAVE;
IN SOME DEGRIE., A SELF-FULFILLING CHARACTER IF THE COMMUNITY
TAKES THEM SERIOUSLYA
PUBLIC CONFIDENCE CAN BE VERY SENSITIVE, FOR THAT
REASON. IT IS I THINK THE DUTY OF ALL OF US TO EXAMINE THOSE
AREAS OF THE ECONOMY WHICH COME WITHIN OUR RESPECTIVE
JURISDICTION AND TO ASK OURSELVES ARE THINGS REALLY AS BAD
AS SOME ARE CLAIMING THEM TO BE? 0 0 0 0œ.

-3
WE THINK THAT THE ANSWER TO THAT QUESTION IS CLEARLY IN
THE NEGATIVE. THAT BEING SO, THOSE WHO SO SHRILLY VOICE THlE OPPOSITE
OPINION BEAR A HEAVY RESPONSIBILITY TO THEIR FELLO CITIZElNS.
THE ECONOMY HAS BEEN GROWING STEADILY. THE GOVERNMENT
IS RESOLVED TO SEE GROWTH CONTINUE. WE HAVE NOT THE SLIGHTEST
INTENTION OF COUNTENANCING ANY OTHER OUTCOME. IT IS A TRAVESTY OF
OUR VIEWS TO SUGGEST OTHERWISE.
THERE ARE, IN FACT, CLEAR ELEMENTS OF STRENGTH IN THE
ECONOMY WHICH WOULD, EVEN IF NO FURTHER ACTION WERE TAKEN NOW,
ENSURE CONTINUED GROWTH IN THE MONTHS AHEAD.
IT FOLLOWS THAT ANY MEASURES NOW TO BE TAKEN AN]) I
HAVE ALREADY SAID THAT WE PROPOSE SOME WILL BE DESIGNED TO
STIMULATE THAT GROWTH.
CERTAINLY THE ECONOMY IS NO LONGER IN THE STRAINED
CONDITION OF A YEAR OR MORE AGO. LT WAS, IN'DEED, A BASIC AIM OF
OUR ECONOMIC POLICY THEN TO MODERATE THAT CONDITION. IF WE WERE
TO AVERT THE THREAT OFA SELF-PERPETUATING WAGE-PRICE SPIRAL, THAT
WAS A NECESSARY PRE-CONDITION AND~ OF COURSE IT REMAINS SO. FOR IT
REMAINS TRUE THAT THE MOST DIFFICULT TASK, AND ONE WHICH IS STILL
BEFORE US, IS TO QUELL INFLATION.
BUT THAT IS NOT TO SAY THAT WE CAN TURN AWAY FROM OUR
OTHER HIGH OBJECTIVE, NAMELY, TO MAINTAIN THE MOMENTUM OF ECONOMIC
GROWTH, WITH ALL THAT MEANS FOR EMPLOYMENT. o/ 4

-4
HERE ALSO WE HAVE PROBLEMS, INCLUDhING THE RURAL RECESSION
AND RESULTING RURAL UNEMPLOYMENT, WHICH WE HAVE ALREADY TAKEN STEPS
TO MEET AND WHICH WE SHALL DO MORE ABOUT IN ACCORDANCE WITH DECISIONS
WHICH I WILL MENTION LATER.
THESE FURTHER STEPS ARE IN LINE WITH THE FLEXIBLE APPROACH
THE GOVERNMENT HAD ADOPTED IN DEALING WITH PARTICULAR TRENDJS AS
THEY EMERGE. THEY REPRESENT A FURTHER MEASURED RESPONSE DESIGNED
TO MEET PARTICULAR PROBLEMS, WHILST MAINTAINING OUR COUNTERINFLATI
ONARY STANCE.
HERE I PAUSE TO LOOK MORE CLOSELY AT THE PROBLEM OF COST
AND PRICE ESCALATION. ONE DOES NOT HAVE TO SEARCH FAR TO FIND THE MAJOR FACTOR
PUSHING COSTS AND PRICES ALONG AT THE PRESENT UNACCEPTABLE AND INDEED
DANGEROUS RATE. IT MUST SURELY NOW BE CLEAR TO EVERYONE THAT THE
VERY RAPID INCREASE IN WAGE AND SALARY COSTS IS THE MOST IMPORTANT
FORCE WHICH HAS CHARACTERISED RECENT PERIODS OF~ COST AND PRICE INCREASES.
WE ARE, OF COURSE, AWARE THAT THERE ARE OTHER FACTORS; BUT WE SHOULD
NOT ALLOW THEIR EXISTENCE TO DIVERT OUR ATTENTION FROM WHAT IS CLEARLY
FAR AND AWAY THE MOST IMPORTANT CAUSE.
IN THIS FIELD, THE COMMONYEALTH HAS VIGOROUSLY PUT TO THE
ARBITRATION COMMISSION ITS VIEW THAT EXCESSIVE WAGE INCREASES IN THES
CURRENT CIRCUMSTANCES ARE VERY MUCH AGAINST THE COMMUNITY'S BEST
INTEREST. IN SOME DECISIONS TOWARDS THE END OF 1971 IT APPEARED THAT
THE COMMISSION HAD TAKEN COGNIZANCE OF THE EFFECTS OF ITS DETERMINATIONS
ON THE ECONOMY IN GENERAL. THERE HAS ALSO BEEN SOME WELCOME REDUCTION
IN THE RATE OF INCREASE IN OVER-AWARD PAYMENTS.

5
NOTWITHSTANDING THESE MODERATELY HOPEFUL SIGNS.. THERE
ARE STILL EXTREMELY SERIOUS UPWARD PRESSURES ON THE WAGES FRONT
PARTICULARLY ON AWARD. WAGES, I WILL HAVE MORE TO SAY ABOUT THIS
MATTER LATER115 REDUCING THE IMPACT OF INFLATION IS~, AS I SAID, ONLY
PART OF OUR TOTAL OBJECTIVE,.
IN RELATION TO OUR GROWTH OBJECTIVE-THERE ARE SOME
FLAT ELEMENTS IN THE ECONOMY. THERE IS THE DEPRESSED SITUATION
IN SOME OF OUR RURAL INDUSTRIES AND THERE IS THE SUBDUED GROWTH
OF CONSUMER EXPENDITURE,-THERE IS ALSO EVIDENCE TO SUGGEST SOME
PROSPECTIVE LEVELLING OFF IN CERTAIN AREAS OF PRIVATE INVESTMENT
EXPENDITURE,. FOR EXAMPLE, IN THE FIELD OF NON-DWELLING CONSTRUCTION!
AS THE ECONOMY HAS COME OFF THE BOIL THERE HAS TOO,.
BEEN A RISE IN UNEMPLOYMENT -A RISE WHICH SHOULD NOT BE JUDGED,~
HOWEVER BY COMPARISON WITH THE VERY LOW LEVEL OF UNEMPLOYMENT
WHICH HAD BEEN REACHED IN 1970.
A GOOD DEAL HAS BEEN SAID IN RECENT MONTHS ABOUT THIS
LATTER ASPECT OF ECONOMIC DEVELOPMENTS AND I THINK IT IMPORTANT
THEREFORE THAT I SHOULD SAY SOMETHING ABOUT IT.
IT IS IMPORTANT TO NOTE THAT THE CURRENT ( END-JANUARY)
LEVEL OF UNEMPLOYMENT, AT 1. 62 PER CENT OF THE WORK-FORCE IN
SEASONALLY-ADJUSTED TERMS, IS LITTLE DIFFERENT FROM THE LONG -TERM
AVERAGE OF 1.4 PER CENT EXPERIENCED IN THIS COUYNTRY; AN]) THAT
LONG-TERM AVERAGE IS REMARKABLY LOW COMPARED WITH THE EXPERIENCE
OF MOST ADVANCED WESTERN NATIONS,

-6
CERTAINLY, THE UNEMPLOYMENT SITUATION IS MUCH CLOSER TO THE
LONG-TERM NORM THAN IS THE CASE WITH PRICES, WHERE THE CURRENT RATE
OF PRICE INCREASE ABOVE 7 PER CENT PER YEAR CONTRASTS WITH OUR
EXPERIENCE THROUGH THE 1960' s OF SOME 2--3 PER CENT PER YEAR.
SECONDLY, I POINT OUT THAT THE TREND OF UNEMPLOYMENT HAS
VIRTUALLY FLATTENED OUT IN RECENT MONTHS. IN SEASONALLY-ADJUSTED
TERMS, IT HAS-INCHED UPWARDS DURING THE PAST FEW MONTHS FROM ITS
LEVEL OF 1 .53 PER CENT AT END-SEPTEMBER TO 1 .62 PER CENT AT ENDJANUARY
THAT IS, A RISE OF LESS THAN 0.1 PER CENT OVER FOUR MONTHS.
ANY BALANCED APPRAISAL OF OUR PRESENT ECONOMIC CONDITION
AND PROSPECTS MUST HAVE REGARD TO THESE POINTS. WHAT I WANT TO
STRESS IS THAT IT IS WHOLLY CONSISTENT WITH OUR OBJECTIVE OF
MAINTAINING STEADY GROWTH IN THE ECONOMY THAT WE SHOULD MAINTAIN A
HIGH LEVEL OF EMPLOYMENT.
IT WAS, INDEED, WITH THAT IN MIND THAT THE GOVERNMENT
LAST NOVEMBER AND DECEMBER TOOK A NUMBER OF STEPS STEPS WHICH
I SHALL NOT DETAIL AT THIS POINT BUT WHICH, AS YOU KNOW, INCLUDhED THE
ARRANGEMENT FOR-GRANTS TO THE STATES FOR THE RELIEF OF UNEMPLOYMENT
AS WELL AS A NUMBER OF OTHER ACTIONS.
SUBSEQUENTLY, AS PART OF THE THOROUGHGOING REVIEW OF THE
ECONOMY WHICH HAS BEEN PROCEEDING SINCE ABOUT MID-JANUARY, WE MOVED,
WITH YOUR APPROVAL, TO EFFECT FURTHER SHARP REDUCTIONS IN INTEREST
RATES ON GOVERNMENT SECURITIES. AT THE SAME TIME, AND IN PART AS
A CONSEQIJENCE, WE MOVED ALSO TO HAVE SIGNIFICANT REDUCTIONS MADE IN
TRADING BANK LENDING AND DEPOSIT RATES. THESE LATTER MOVES WERE,
IN EFFECT, FRUITS OF THE REVIEW WHICH COMMENCED SOME WEEKS AGO.

7
BEFORE ANNOUNCING WHAT WE NOW HAVE IN MIND AS A FOLLOWUP
TO THOSE RECENT AND EARLIER ACTIONS; IT MAY BE WORTHWHILE FIRST
TO LOOK BRIEFLY AT SOME PARTICULhAR ASPECTS OF THE CURRENT ECONOMIC
SITUATION AND THE REASONS FOR THE CHANGES WE INTEND TO MAKE,
NON-METROPOLITAN UNEMPLOYMENT
ONE IMPORTANT ASPECT OF THE CURRENT LABOUR MARKET
RESULTS FROM THE EXTRAORDINARILY DIFFICULT SITUATION WHICH IS
CONFRONTING SOME OF OUR RURAL INDUSTRIES. THE GRANTS WHICH WE
INTRODUCED LAST DECEMBER FOR RELIEF OF NON-METROPOLITAN
UNEMPLOYMENT HAVE. IT IS TRUE, ALREADY HAD A USEFUL IMPACT ON
THIS ELEMENT IN THE SITUATION.
THESE GRANTS ARE DESIGNED) TO FINANCE ADDITIONAL LABOURINTENSIVE
ACTIVITIES OF A PRODUCTIVE KIND BY STATE, SEMI-GOVERNMENT
AND LOCAL GOVERNMENT AUTHORITIES IN ORDER TO PROVIDE EMPLOYMENT
OPPORTUNITIES IN NON-METROPOLITAN AREAS, AS SUCH,-THEY HAVE
ALREADY PERMITTED MUCH URGENT AND USEFUL WORK TO BE UNDERTAKEN
AND HAVE MADE A SIGNIFICANT CONTRIBUTION TOWARDS THE STRUCTURAL
PROBLEM OF NON-METROPOLITAN UNEMPLOYMENT THAT [ S INVOLVED,,
IN THE LIGHT OF EXPERIENCE WITH THIS SCHEME, THE
GOVERNMENT BELIEVES THAT MORE COULD NOW BE DONE IN THIS AREA.
WE THEREFORE PROPOSE9 SUBJECT TO YOUR AGREEMENT, THAT THE MONTHLY
RATE OF EXPENDITURES.. UNDER THE SCHEME BE*' TNCREASED,
AT PRESENT2~ THE GRANTS ARE SET AT $ 2,25 MILLION PER
MONTH,, WE BELIEVE THAT THIS AMOUNT COULD BE INCREASED; EFFECTIVE
AS FROM TODAY,. TO A RATE OF $ 4 MILLION PER MONTH. IN THE BALANCE
OF THIS FINANCIAL YEAR AND SUBJECT TO REVIEW IN JUNE THE
ADDITIONAL FUNDS INVOLVED WOULD AMOUNT TO $ 7.75 MILLION. v/

8-
IN TERMS OF IMPACT ON THE ECONOMY, A CLEARER IMPRESSION
IS CREATED IF WE THINK IN TERMS OF AN ANNUAL RATE OF INCREASED
SPENDING OF $ 21 MILLION PER ANNUM' BRINGING THE ANNUAL RATE OF
SPENDING UNDER THE SCHEME, AS REVISED, TO $ 48 MILLION PER ANNUM IN ALL,
IN REACHING OUR DECISION, LA ST DECEMBER, TO OFFER THESE
FUNDS FOR NON -METROPOLITAN EMPLOYMENT PURPOSES, WE WERE OF COURSE
VERY CONSCIOUS OF THE PARTICULAR PROBLEMS AND SOCIAL COSTS OF UNEMPLOYMENT
IN RURAL AREAS, WHERE AVENUES FOR NEW EMPLOYMENT ARE OFTEN VERY
LIMITED. UNEMPLOYMENT, HOWEVER, CAN AND DOES BRING HARDSHIP WHEREVER
IT OCCURS. THIS IS THE REASON WHY THE GOVERNMENT HAS, OVER THE YEARS,
PAID BENEFITS TO ELIGIBLE UNEMPLOYED. IT IS SOME TIME SINCE THE RATE
OF THIS BENEFIT WAS INCREASED. FOR THAT AND OTHER REASONS WE THINK
THE TIME OPPORTUNE TO CHANGE THE RATE. WE HAVE DECIDED TO INCREASE
THE ADULT* RATE FOR UNEMPLOYMENT BENEFIT, AND ASSOCIATED SHORT TERM
SICKNESS AND SPECIAL BENEFITS, FROM $ 10 PER WEEK TO $ 17 PER WEEK.
JUNIOR RATES FOR 16-17 YEAR OLDS AND FOR 18-20 YEAR OLDS WILL BE
INCREASED RESPECTIVELY BY $ 3 AND $ 5 PER WEEK.
WE WILL BRING FORWARD LEGISLATION TO THE PARLIAMENT To GIVE
EFFECT TO THESE INCREASES AS A MATTER OF URGENCY.
SOME MEASURES, SUCH AS THE NON-METROPOLITAN EMPLOYMENT
GRANTS, HAVE A DIRECT INFLUENCE UPON DEMAND FOR GOODS AND SERVICES,
INCLUDING LABOUR. BUT BROADER MEASURES WHICH SHOULD INFLUENCE CONFIDENCE
AND ACTIVITY WILL ALSO BE OF BENEFIT. THE GOVERNM4ENT HAS ACCORDINGLY
DECIDED THAT ADDITIONAL MEASURES OF THIS BROADER KIND ARE NOW
DESIRABLE.

9-
INVESTMENT ALLOWANCE
WE HAVE HAD IT PUT TO US FROM MANY QUARTERS IN RECENT
WEEKS THAT THE SINGLE MEASURE MOST LIKELY TO BOOST CONFIDENCE AND
ACTIVITY ON THE PART OF INDUSTRY, AND MANUFACTURING INDUSTRY IN
PARTICULAR, IS THE RESTORATION OF THE SPECIAL IN-VESTMENT ALLOWANCE
FOR MANUFACTURING INDUSTRY.
THIS WAS, YOU WILL RECALL, SUSPENDED TWELVE MONTHS AGO.
ALTHOUGH THE MAJOR DETERMINANT OF IN-VESTMENT EXPENDITURE MUST, OF
COURSE, BE THE EXPECTED GROWTH OF DEMAND RELATIVE TO EXISTING
PRODUCTIVE CAPACITY, WE ARE PERSUADED OF THE FORCE OF THE VIEW I HAVE
STATED ABOUT THE INFLUENCE OF THE INVESTMENT ALLOWANCE IN BOOSTING
CONFIDENCE. ACCORDINGLY, THE GOVERNMENT HAS DECIDED TO RESTORE THE
SPECIAL INVESTMENT ALLOWANCE ON NEW INVESTMENT IN MANUFACTURING
PLANT AND EQUIPMENT AS FROM THIS DAY, IN THE FORM IN WHICH IT
PREVIOUSLY EXISTED. ON THE BASIS OF THE VIEWS THAT HAVE BEEN PUT
TO US, THIS STEP CAN BE EXPECTED TO STIMULATE ACTIVITY ACROSS A WIDE
SPECTRUM OF AUSTRALIAN INDUSTRY.
THE TREASURER WILL MAKE A FURTHER STATEMENT ON THIS SUBJECT,
IN A MORE DETAILED FORM LATER TODAY.
THE MEASURES WHICH I HAVE JUST ANNOUNCED, TAKEN TOGETHER
WITH THE MONETARY MEASURES WE ANNOUNCED LAST WEEK AND THE ACTIONS
WE-TOOK LATE LAST YEAR, WILL WORK BOTH DIRECTLY AND INDIRECTLY TO
ENCOURAGE ACTIVITY IN THE PRIVATE SECTOR.
PUBLIC SECTOR FOR OUR PART, WE THINK THIS IS APPROPRIATE. BUT THERE
IS CLEARLY ALSO A CASE FOR SOME MEASURED ADJUSTMENT TO DEVELOPING
CIRCUMS'" ANCES IN THE PUBLIC SECTOR.

10
PUBLIC AUTHORITY EXPENDITURE OVERALL IS PRESENTLY ONE OF
THE STRONG POINTS IN THE ECONOMY. IN REAL TERMS, THE OVERALL POSITION
IS ONE OF STRONGER GROWTH THAN LAST YEAR. WITHIN THIS OVERALL PICTURE,
TOTAL PUBLIC AUTHORITY CAPITAL EXPENDITURE IS GROWING MORE SLOWLY
THAN CURRENT EXPENDITURE. THIS FOLLOWS A PERIOD WHEN, IN 1970-71 THlE
IMPACT OF RAPIDLY-ESCALATING WAGE COSTS ON STATE BUDGETS WAS SUCH
THAT, DESPITE CONSIDERABLE SPECIAL ASSISTANCE FROM THE COMMONWEALTH,
A NUMBER OF IMPORTANT STATE WORKS HAD TO BE DEFERRED.
SIMILARLY, THE WORKS ACTIVITIES OF CERTAIN OF THE STATE
SEMI-GOVERNMENTAL AND LOCAL AUTHORITIES HAVE ALSO HAD TO BE CURTAILED
AND WE ARE AWARE, FROM THE DIRECT REPRESENTATIONS COMING FORWARD TO
U31IN THAT FIELD, THAT SOME RELAXATION THERE WOULD BE WIDELY
WELCOMED. IN THIS RESPECT I MENTION THAT THE SEMI-GOVERNMENTAL
AUTHORITIES HAVE BEEN VERY SUCCESSFUL IN THEIR LOAN-RAISING ACTIVITIES
IN THIS FINANCIAL YEAR TO DATE.
WORKS AND HOUSING AND SEMI-GOVERNMENT BORROWING PROGRAMMES
IN THE LIGHT OF OUR OVERALL OBJECTIVES, WE BELIEVE THERE
IS NOW A CASE FOR SUITABLE INCREASES BOTH IN THE STATES' WORKS AND
HOUSING AND THE SEMI-GOVERNMENT BORROWING PROGRAMMES. ANY INCREASE
IN THE WORKS AND HOUSING PROGRAMME TO WHICH WE MIGHT AGREE WOULD,,
OF COURSE,* INVOLVE THE COMMONWEALTH IN TAKING UP PART OF SUCH
INCREASE, 24.4 PER CENT TO BE PRECISE, IN THE FORM OF INTERESTFREE
CAPITAL GRANTS.
IN PROPOSING TO INCREASE THESE BORROWING PROGRAMMES, WE
SEEK YOUR ASSURANCE THAT THE ADDITIONAL FUNDS SHOULD, SO FAR AS
IS PRACTICABLE WITHOUT LOSS OF EFFICIENCY AND EFFECTIVENESS, BE
UTILISED QUICKLY, HAVING IN MIND WHAT I BELIEVE TO BE OUR COMMON
OBJECTIVES RELATING TO EMPLOYMENT. / 11

11
AS WE UNDERSTAND IT, YOU HAVE NO LACK OF TASKS TO BE
DONE, PARTICULARLY IN YOUR URBAN AREAS. HOUSING, SCHOOLS, WATER
SUPPLY AND SEWERAGE ALL THESE, WE KNOW, AND OTHERS, PROVIDE
OP'OORTUNITIES FOR EXPENDITURES OF THE KIND WE HAVE IN MIND.
STATE REVENUE BUDGETS PROSPECTIVE POSITIONS
SOME PREMIERS MAY WISH TO REFER NOT ONLY TO THEIR LOAN
PROGRAMMES BUT ALSO TO THEIR PROSPECTIVE REVENUE BUDGETS FOR
1971-72. I TAKE THE OPPORTUNITY OF INFORMING YOU THAT, SINCE THE
COMMONWEALTH BUDGET ESTIMATES WERE FRAMED, THERE HAVE BEEN REVISIONS
TO ELEMENTS OF THE FORMULA DETERMINING THE FINANCIAL ASSISTANCE
GRANTS TO BE PAID TO THE STATES IN 1971-72.
THESE REVISIONS WILL RESULT, ON PRESENT FIGURING, IN AN
INCREASE IN THE AMOUNT STATES WILL RECEIVE BY WAY OF GENERAL REVENUE
ASSISTANCE IN THIS FINANCIAL YEAR. WHILE THESE ESTIMATES, LIKE
OTHERS MADE AT THIS TIME OF THE FINANCIAL YEAR, CAN ONLY BE BEST
GUESSES, WE PRESENTLY CALCULATE THE INCREASE IN-VOLVED AS OF THE
ORDER OF $ 20 MILLION.
IN THINKING ABOUT THIS MATTER MORE GENERALLY, WE HAVE
IN MIND THE UNCERTAINTIES WHICH SURROUND OUR OWN BUDGET-ESTIMATING
PROCEDURES EVEN AT THIS TIME OF THE FINANCIAL YEAR. WE EXPECT THAT
SIMILAR UNCERTAINTIES ALSO EXIST IN THE CASE OF STATE BUDGETS.
FOR THAT REASON, OUR OWN VIEW HAS NORMALLY BEEN THAT THESE
MATTERS ARE MORE APPROPRIATELY SUBJECTS FOR DISCUSSION AT THE
REGULAR JUNE PREMIERS' CONFERENCE THAN AT A CONFERENCE SUCH AS THIS
TODAY, CONVENED AS IT HAS BEEN PRINCIPALLY TO DISCUSS THE ECONOMIC
SITUATION. / 12

12
THIS IS NOT TO BE TAKEN AS IMPLYING THAT THERE CANNOT
BE DISCUSSION. WE SHALL LISTEN CAREFULLY TO ANYTHING THAT YOU
MAY'CARE TO PUT ON THIS POINT JUST AS YOU WILL, I AM SURE,
CONSIDER THE VIEWS WE HAVE AS TO WHETHER ACTION IN THIS AREA IS
NOW APPROPRIATE. THE MEASURES I HAVE ANNOUNCED AND THOSE THE GOVERNMENT
HAD PREVIOSLY TAKEN IN RECENT MONTHS ARE DESIGNED TO DE~ AL WITH
SPECIFIC PROBLEMS WHILE AT THE SAME TIME PROVIDING A STIMULUS TO
THE ECONOMY IN LINE WITH OUR CONTINUING OBJECTIVE OF MAINTAINING
ITS GROWTH ' MOMENTUM.
BUT I MUST EMPHASISE THAT THERE IS A FINE LINE BETWEEN
ACTION DESIGNED TO THAT END AND ACTION WHICH WILL TILT THE BALANCE
TOO FAR, RESULTING IN THE LOSS OF SUCH HARD-WON SUCCESS AS HAS SO
FAR BEEN ACHIEVED IN CONTAINING INFLATION.
THE MEASURES WE HAVE CHOSEN, AND THEIR EXTENT, ARE
DESIGNED TO MAINTAIN THE BALANCE. IN THIS RESPECT WE HAVE A
NARROW PATH TO TREAD: WE MUST TREAD IT.
INFLATI ON HAVING ACTED TO STIMUIATE ACTIVITY AND EMPLOYMENT, WE
MUST CONTINUE TO SEEK ANOTHER OBJECTIVE THE CONTROL OF
INFLATION. FOR THE EFFECTS OF INFLATION ARE INSIDIOUS. IT IS
NOT MERELY AN ECONOMIC PROBLEM, BUT ALSO A SOCIAL ONE. o / 13

13
I HAVE ALREADY MENTI ONED) THE COMMONWEALTH'S
INTERVENTION IN ARBITRATION COMMISSION AWARD HEARINGS. IN RECENT
TIMES THAT INTERVENTION HAS. IN RECOGNITION OF THE INCREASING
GRAVITY OF THE PROBLEM OF WAGE-INDUCED INFLATION,; BEEN MORE
FREQUENT AND MORE VIGOROUS THAN FOR MANY YEARS PAST,
I INSTANCE AS EXAMPLES THE'CARPENTERS CASE, THE ANNUAL
LEAVE CASE AND THE BANK OFFICIALS' CASE. I ADD THAT WE WILL; OF
COURSE,. BE MAKING VERY STRONG REPRESENTATIONS TO THE COMMISSION
IN THE NATIONAL WAGE CASE WHICH HAS BEEN LISTED TO RESUME NEXT
WEEK. IT HARDLY NEEDS SAYING THAT THE OUTCOME OF THAT CASE WILL
BE OF GREAT IMPORTANCE TO YOUR OWN BUDGETS AND WILL HAVE A CRUCIAL
IMPACT ON COSTS AND PRICES IN THE FUTURE.,
WE HAVE BEEN URGING PIVATE EMPLOYERS TO RESIST
EXTRAVAGANT CLAIMS FOR INCREASED WAGES AND IMPROVED CONDITIONS
MADE UPON THEM,. AND WHICH CAN CIY RESULT IN FURTHER PRESSURE
UPON THEM TO RAISE PRICES IN ORDER TO CARRY THEIR INCREASED COST
STRUCTURE, WE RECOGNISE, HOWEVER, THAT VE CANNOT HOPE TO EXERCISE
A SIGNIFICANT INFLUENCE IN THAT WAY IF THERE IS ANY WIDESPREAD
FEELING AMONG BUSINESSMEN THAT WE ARE NOT; IN FACT, EXERCISING
RESTRAINT WITHIN TH-E AREAS OPEN TO OUR DIRECT INFLUENCE THE PUBLIC
SERVICE AND THE VARIOUS COMMONWEALTH STATUTORY BODIES.
THE COMMONWEALTH PUBLIC SERVICE BOARD HAS, IN FACT:, A
FIRM POLICY OF NEITHER LEADING THE WAY IN ITS DETERMINATIONS ON
WAGES AND CONDITIONS OF SERVICE NOR LAGGING SO FAR BEHIND THAT
RECRUITMENT TO AND THE EFFICIENCY OF THE SERVICE BEGINS TO SUFFER,.

14
I WISH TO UNDERLINE THAT POLICY.
AT THIS TIME, HOWEVER, WE HAVE A PARTICULAR SITUATION
REL; ATING TO THE WHITE COLLAR AREA WHICH GIVES CAUSE FOR VERY
SERI'OUS CONCERN NOT MERELY TO THE COMMONWEALTH BUT I THINK TO ALL
OF US HERE TODAY.
IN ONE STATE, ADMINISTRATIVE AND CLERICAL OFFICERS WITHIN
THE PUBLIC SERVICE AN]) THE STATUTORY AUTHORITIES HAVE BEEN GRANTED
AN INCREASE OF 9 PER CENT IN WAGE RATES.
I AM NOT CONCERNED TO-CANVASS THE CIRCUMSTANCES IN WHICH
THAT INCREASE CAME ABOUT, ALTHOUGH I NOTE AND WELCOME THE SUBSEQUENT
ANNOUNCEMENT BY THE PREMIER OF VICTORIA THAT HE PROPOSES A RADICAL
OVERHAUL OF THE WAGE-FIXING MACHINERY IN HIS STATE DESIGNED TO
ENSUR~ E THAT SUCH A CHAIN OF CIRCUMSTANCES COULD NOT OCCUR IN
FUTURE. WE SHOULD BE GLAD TO HEAR FURTHER FROM HIM ON THAT MATTER
SHOULD HE SO DESIRE.
WHAT I AM CONCERNED ABOUT NOW IS TO ENSURE THAT THE
INCREASE IS " QUARANTINED" TO THAT PARTICULAR STATE, AS FAR AS OUR
OWN ACTIONS AN]) POLICIES MAY MAKE THAT POSSIBLE AND THAT THIS
INCREASE DOES NOT SPREAD GENERALLY TO WHITE COLLAR WORKERS THROUGHOUT
-TH1E ECONOMY. SHOULD WE FAIL IN THAT RESPECT, THE CONSEQUENCES ARE
CLEAR. STATE BUDGETS WILL ONCE AGAIN BE UNHINGED, PUBLIC AUTHORITIES
AT ALL LEVELS WILL BE FORCED ONCE AGAIN TO CONSIDER RAISING THEIR
CHARGES TO MPEET THEIR INCREASED COSTS, AND THE INFLATIONARY SPIRAL
WILL BE GIVEN A NEW AND SERIOUS TWIST. SUCH AN OUTCOME WILL OBVIOUSLY
BE DAMAGING TO THE BEST INTERESTS OF THIS COUNTRY.

15
I THEREFORE TELL YOU NOW THAT THE COMMONWEALTH PROPOSES TO
TAKE WHATEVER ACTION IT CAN TO CONTAIN THE FLOW-ON OF THE 9 PER
CENT INCREASE TO WHICH I HAVE REFERRED IN THE AREA OF THE COMMONWEALTH
PUBLIC SERVICE OR COMMONWEALTH INSTRUMENTALITIES. WITHIN THE
PROVISIONS OF THE PUBLIC SERVICE ARBITRATION ACT, WE WILL PUT OUR
CASE RELATING TO SUCH INCREASES AT APPROPRIATE STAGES OF THE ARBITRAL
PROCESS. WE WILL ALSO INTERVENE, WHENEVER THE OPPORTUNITY IS OPEN
TO US, AGAINST CLAIMS OF A LIKE KIND IN THE PRIVATE SECTOR.
THIS IS A SERIOUS DECISION, AN) NOT ONE THAT WE HAVE
TAKEN LIGHTLY. NEVERTHELESS, WE BELIEVE IT TO BE NECESSARY IF THE
UPWARD THRUST TO THE GENERAL LEVEL OF WAGl COSTS IS TO BE BLUNTED AND
IF ANY REAL PROGRESS IS TO BE MADE IN THE BATTLE AGAINST COSTINFLATION.
IT IS CLEAR, HOWEVER, THAT THE PROSPECT OF ACHIEVING THOSE
OBJECTIVES WILL BE VERY MUCH ENHANCED IF A UNITED FRONT IS TAKEN
TOWARDS THEM BY THE PUBLIC SECTOR AS A WHOLE. TO ACHIEVE THIS
OBJECTIVE, I INVITE THE PREMIERS TO JOIN WITH THE COMMONWEALTH HERE
TODAY IN EXPRESSING THEIR DETERMINATION ALSO TO RESIST THESE " NEW ROUND"
CLAIMS WITHIN THE AREAS OF THEIR OWN PUBLIC SERVICES AND STATUTORY BODIES.
WE REGARD THIS AS A MATTER OF HIGH NATIONAL IMPORTANCE.
WE SIMPLY CANNOT STAND ASIDE AND PASSIVELY ALLOW THE
EVENTS THAT HAVE ALREADY OCCURRED IN VICTORIA ( AND WHICH OF COURSE
CANNOT NOW BE UNDONE) TO BE MULTIPLIED ELSEWHERE WITHIN THE ECONOMY.
THIS, GENTLEMEN, IS THE PROGRAMME WHICH WE PUT TO YOU
TODAY FOR* DISCUSSION AND ON WHIChf WE INVITE YOUR VIEWS.

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