MVEETING OF CHAMBERS OF COMME RCE, MANUFACTURE RS, MINES
AND THE EMPLOYERS' FEDERATION
PERTH, W. A.
Speech by the Prime Minister, the Rt. Hon. William
McMahon, C. H., M. P. MAY, 1972.
Mr. Britten, Mr. Brodie-Hall, Mr. Hammond, Mr. Pullan
Ladies and Gentlemen,
You will notice I kept those introductions very strictly inalphabetical
order because, in mentioning the distinguished
Presidents of the four very important groups which are sponsoring
this occasion, I would not want to attempt to differentiate between
them in the status, or importance that we in the Government attach
to them. They are all important organisations and provide a-good and
effective representation of the business spectrum here in Western
Australia. i want to assure you, as the members of these important
business groups that your views occupy a. n important priority in
our decision-making. I am also delighted to note that, to use a
common expression, " the place is packed out". If attendance is any
guide then I can say we are a very good bet indeed in Western
Australia when the election comes around. Thank you for coming.
During our generation of national government in Canberra with
our coalition partners, we in the Liberal Party have always seen our
role as having a central theme and a commitment to the concent of
individual rights, and support for free enterprise. I want to
emphasise these last five words. We have always believed in the
value and the real benefits of consultation with business groups in
considering economic policy measures. I will go further and assure
you that there is going to be no change in this attitude in this
very strong commitment of ours to private enterprise; or to our
continuing efforts to create and maintain the right type of climate
in which private enterprise can continue to make its magnificent
contribution to the growth and development of this country: An
effort which has resulted in our gross national product multiplying
by a factor in money terms of eight since we came to power in 1949,
from about 4,000 million dollars then to well over 30,000 million
dollars in the early seventies. / 2
All the other indicators tell the same story of the fantastic
growth of this nation. Whether you look at public. investment,
private investment figures or the record of exports and international
trade which place us up near the top of the list of the world's
trading nations. No matter which way you look at it you must come
to the same inescapable conclusion that our generation of government
has been one in which the energies and initiative and dynamism of
private enterprise have been encouraged and released to make possible
the exciting story of Australia's postwar developnment.
I think our period in Government to date can fairly be called
the " growth generation".-Australia's great leap forward. Western
Australia has played a significant role in this development, thanks
to managers and entrepreneurs like yourselves: And thanks to men
like David Brand and Charles Court, and all those others at the
state level who have done so much. I pay my Government's tribute
to them all.
You have had the minerals boom and the great boost to
prosperity that went with it. You had your own local " population
explosion" and the great growth that came with it here in Perth,
a really attractive city. It is true that there has been a
temporary pause in the great growth of the mining industry here,
caused mainly as a consequence of the world currency crisis and the
slowing down of the Japanese economy in its very rapid rate of
growth, but the biggest part of the big projects are going on. I
refer to the Japanese economy. I am confident that these
characteristics of the Japanese people strong, vigorous and
efficient will be reflected before long in a resurgence of the
Japanese economic growth and n resumption of the hiah level demand
and of the kind of orders we previously enjoyed from them. In the
meantime, growth and development Jhere in Australia are going on.
Only this week you cpened the new alumina plant here at
Pinjara. This plant will lift Australia into number two position in
the world as a producer of alumina. That is something you in the
" west" and all Australians can be proud of. We have been and are
still facing something of an economic challenga, today. That is true.
But I wonder sometimes whether many Australians stop for a moment
to remember the stark economic challonges that faced us when Robert
Gordon Menzies led us so brilliantly into Government
In the late forties and early fifties the problems were
really renacing. We had a virulent form of inflation. The Labor
Government had just about given up in despair of doing anything
about it and was in its dying days. When we assumed the
responsibilities of Government, we diagnosed the situation quickly
as one of under-production, too much money chasing too few goods,
shortage of manpower, and a coal and power famine. In those days
of the " battle for prdcin as it was called, we had a three
pronged approach, against communist influence in the unions,
against inflation, and towards development.
In three to four years, we had transformed the situation: We
literally produced our way to prosperity. Many Australians would
hardly remember that time. ./ 3
After all, half the population today is under 30 years of age: And
of course, our economy is far stronger, more complex, and more
diversified than in those days. We no longer face recurrent balance
of payments problems: And thanks for that are due in no small
measure to the great contribution of the mining industry, and we
all know of the West Australian contribution to this success story.
But as our economy and other western economies here become
more complex, the problems they can pose for economic mangers have
become the more difficult. This is true of ourselves as well as
other nations. We have found that new problems are not necessarily
amenable to the more traditional responses. And so we here had to
be prepared to be more flexible than we have ever been. We have
had to be ready to correct trends as they emerge and if necessary,
to frankly acknowledge where our predictions have not been borne out.
It is true too that we have been through a period of some pessimism,
but I think we passed through the trough over the Christmas and New
Year period. In the last couple of months there has been a
resurgence of business and community confidence.
I think you will find that is fairly readily acknowledged in
Canberra and the rest of Australia too. It reflects of course, the
realisation that our basic long term prospects for growth and rising
standards of living are aood. But it also reflects some favourable
short term developments w.-ich I want to mention to you today.
To illustrate my point let us have a look at the various
sectors of the economy. I first mention what we have done in
monetary policy. Financial conditions are very easy, with funds
readily available to the private sector. The reductions in interest
rates we induced have now spread fairly generally throughout the
financial system, and rates are well below those prevailing in the
early part of this financial year. The banks are very liquid, and
their new lending commitments are rising very strongly. The
normal winter rundown in liquidity will not put a strain on
financial markets this year. To sum up on the monetary side,
financial and credit conditions are very conducive to increased
activity in the economy. We believe we have helped significantly to
create the right climate in this way, for a return of business
confidence. Late last year, we removed restrictions on bank
lending. We followed this up later with a large release from the
statutory reserve deposits and lower interests rates.
That was only one part of our flexible response at the
Premiers' Conference in February and I believe it was the most
successful I have attended in all my time in politics. We
stimulated the economy further through the provision of extra funds
for the states, we approved a big lift in unemployment benefits,
and we stepped up the scheme of job creating grants for rural areas
which we had begun in February. But the major decision directed to
overcoming the lack of business confidence at that time was the
restoration of the investment allowance. We did this in response
to very strong representations that it would be the single most
important action by the Government in boosting business confidence.
I think this was a clear indication of my views and those of the
Government, in relation to our strong commitment to private
enterprise to which I referred earlier. / 4
We also decided to continue for a. second five year-period the
industrial research grants scheme, and we have-reviewed the
conditions which apply to it, and we expect that the total--amountof
grants will show a significant increase in this-second.. stage of
the scheme which begins.. in July,
We have taken other decisions which will help in stimulating"
activity. In December for. example, I announced an emergency grant
of twenty million dollars over eighteen months to be used for
primary and secondary school class.. room construction. in the states.
About 6.7 million dollars of that amount will be used before June
Then there are our-recent decisions, which are known as " the mini-
Budget". These-decisions on taxation . and'pensions will stimulate
activity directly to the-extent of 180 million dollars, and in
indirect-terms we expect the total.. stimulus will be of the order of
350 million dollars. Public spending on goods and services i one
of the strong areas of demand at the moment. Between the first
halves of 1970/ 71. and this financial year, the increase in this. area
was 15%. Continued strong growth can be expected-here because of
the-extra money we gave to the states in February for their works
and housing programme and the continual pressure for many quarters
for increased commonwealth spending generally.
There are other reasons for optimism I want to mention to you:
Particularly the recovery in the rural economy. Our best judgement
is that farm output is going to go up by about 4% this financial year.
Farm prices, particularly for wool, have improved considerably and
the result is that farm incomes should rise by as much as 11% this
year. This is encouraging, and we believe it should help to stimulate
business conditions. The private housing sector is very strong.
Motor vehicle industry spokesmen are confident about improved export
prospects and a lift in domestic demand. Some of them have already
stepped up recruiting of labour. The steel industry has also gained
substantial export orders.
So you can see that we have been prepared to take action to
stimulate the economy and boost business confidence without delay
when we believed action was required. Actual unemployment have
fallen sharply from the peak of 130 thousand at the end of January
to less than 98 thousand at present. Under the scheme rural employment
grants, 12,600 jobs were created up till the end of .' arch.
We expect the employment position will continue to improve, but as I
said to the press when I arrived here yesterday, we stand ready to
take further action at any time we believe it is necessary tc
provide extra stimulation.
I think you will agree, even from this necessarily brief outline
of our actions in recent months that we have adopted a very
responsive and flexible stance. We have been on the job continuously
in keeping our finger on the economic pulse and we have at no stage
hesitated in deciding what should be done. To us, the way ahead is
one of steadily returning confidence in the short term, and the
resumption in the long term of the very strong growth and development
which this country has enjoyed for so long under Liberal and Country
Party governments.
We havo-beon working hard on a num~ ber of fronts to overcome
the serious problem which havc been that of inflation. This is no
doubt that wage costs are clearly the prime element in the
inflationary process when you have average weekly-earnings rising
as they did by more than eleven per cent last year and productivity
rising by only 2 5 or 3 per cent then it is inevitable that you are
going to get a strong inflationary pressure. In the March quarters
the rate of increase moderated as was indicated by the rate of
increase in the consumer price index.
Amongst the steps we have taken are the amendments to the
arbitration act introduced to Parliament in Canberra only a few
days ago. These amendments are designed to curb the militant
use of union power to extort unreasonable wage increases and to
ensure that the community's interest is preserved in wage settlements.,
We have also made certain that there has been continued commonwealth
intervention in important wage cases to impress on wage tribunals
the economic consequences of their decisions. We have also acted
to stress the desirability of wage moderation in wage increases
wherever this has been practicable. And lastly, we are moving to
promote a more competitive environment in the business community
itself. we are doing this by our actions in deciding to strengthen
the restrictive trade practices legislation.
We are also moving to review the overall levol of tariff
protection. I think we can say with somo justification that our
efforts in trying to restrain wage cost inflation arez beginning
to bear fruit. This was shown in the recent Commonwealth Public
Service pay decision and it was also shown in the decision of the
arbitration commission announced this morning. The commission's
decision on the national wage case was for an increase of two
dollars in the total wage and an increase of four dollars 70 cents
in the minimum wage for adult -males. National wage case decisicons
always provide debate, but all round, I think this is a well balanced
decision. On the one hand it provides a sizeable lift in the wages
of those in the work force who have been left furthiest behind in
the race for ever higher and higher wages those on the minimum
wvage and, I might add, it conforms with the submissions the
Commonwealth mado to the commnission on their situation. On the other
hand, by exercising moderation in adding further to rapidly increasing
wages in general, the commission has given the economy a real chance
to make some headway against inflation. That is in the interest of
every wage earner and of the people generally.
Ladies and Gentlemen, it has been a Pleasure to be here
today and to outline to you how we in Canberra see cconomic
conditions moving at the moment. I can assure you that we are
determined to improve employment and contain inflation, and I hope
that my remarks today have shnwn you that we are winning the battle
to, achieve these objectives. Thank you.