SPEECIH BY. THE PRIME MINISTER,
1TE lION, E. G, WHITLAM, M. P,,
AT THE i'ITH ANNUAL CONVIENTION OF THE
INDUSTRIAL RELATIONS SOCIETY OF N. SW.,
HOTEL FLORIDA, TERRIGAL, N, SJW., 5 MAY 1973
PRICES, INCOMES AND INFLATION
IT IS TEMPTING TO BELI'EVE THAT A SUCCESSFUL PRICES
AND INCOMES POLICY CAN BE A MAGIC REMEDY, NOT ONLY FOR
INFLATION, BUT FOR ALL THE ILLS OF SOCIETY, IF ONLY
-GOVERNMENTS COULD CONTROL PRICES AND WAGES SO THE ARGUMENT
GOES WE WOULD BE WELL ON THE WAY TO A MORE JUST AND
PROSPEROUS NATION. THE DILIGENCE WITH WHICH PRICES AND
INCOMES POLICIES ARE PURSUED IN MANY WESTERN COUNTRIES IS
TESTIMONY TO THE POWER OF THIS IDEA. THAT THESE POLICIES
HAVE SO OFTEN FAILED OR AT BEST MET WITH LIMITED SUCCESS
HAS NOT DETERRED OTHER COUNTRIES FROM ATTEMPTING THEM,
11/ 2,,
AUSTRALIA IS NO EXCEPTION, MY OWN GOVERNMENT,
AS YOU KNOW, IS COMMITTED TO A RANGE OF ANTI-INFLATIONARY
POLICIES INCLUDING THE ESTABLISHMENT OF A PRICES JUSTIFICATION
TRIBUNAL, BY WHICH WVIE INTEND TO BRING THE MOST FORMIDABLE
OFFICIAL AND PUBLIC PRESSURE TO BEAR IN AN EFFORT TO KEEP
PRICES DOWN, NEXT THURSDAY" WE SHALL BE MEETING THE STATE
GOVERNMENTS IN CANBERRA TO D'ISCUSS ' THE PROBLEM OF INFLATION
AND POSSIBLE SOLUTIONS TO IT,
FOR LET THERE BE NO DOUBT OF HOW SERIOUSLY MY
GOVERNMENT REGARDS THIS PROBLEM OR THE STRENGTH OF OUR
DETERMINATION TO TACKLE IT, INFLATION IS INCREASINGLY
RECOGNISED AS THE MOST FORMIDABLE AND INTRACTABLE PROBLEM
OF ECONOMIC MANAGEMENT, MANY GOVERNMENTS AROUND THE WORLD
NOW BELIEVE THIS TO BE SO. THE PACE OF INFLATION HAS
QUICKENED IN THE 1970s IN MOST COUNTRIES, AUSTRALIA INCLUDED,
IT IS ALREADY BECOMING CLEAR THAT THE THREAT OF
INFLATION WILL BE THE MOST SERIOUS ECONOMIC PROBLEM
FACING THE GOVERNMENT, THE LABOUR MARKET HAS MOVED RAPIDLY
IN RECENT MONTHS TOWARDS FULL EMPLOYMENT LEVELS AND THE
TREND SEEMS CERTAIN TO CONTINUE, WE WELCOME THIS; WE
ENCOURAGED IT, BUT IN SUCH CIRCUMSTANCES THERE IS THE
MAXIMUM OPPORTUNITY FOR PRODUCERS TO RAISE PRICES, THE
LEAST INCENTIVE TO RESIST INCREASING COSTS, AND THE LEAST
OPPORTUNITY FOR EFFECTIVE CONSUMER RESISTANCE,
PROBABLY THERE IS NO SINGLE SOLUTION PRACTICABLE
OR IMPRACTICAL, JUST OR UNJUST TO THE PROBLEM OF INFLATION,
THERE ARE, HOWEVER, SOME CLEAR CONCLUSIONS TO BE DRAWN FROM
AUSTRALIAN AND OVERSEAS EXPERIENCE ABOUT THE REQUIREMENTS
OF AN EFFECTIVE ANTI-INFLATIONARY POLICY, A PRE-CONDITION
FOR SUCH A POLICY IS EFFICIENt MANAGEMENT OF OVERALL DEMAND
BY SOUND BUDGETARY AND CREDIT POLICIES, No POLICY, OR
COMBINATION OF POLICIES, DESIGNED TO AFFECT PRICES OR
INCOMES DIRECTLY CAN BE SUCCESSFUL IF EXCESSIVE PRESSURES
ON RESOURCES ARE'ALLOWED TO DEVELOP,
SECONDLY, THE OVERALL ECONOMIC ENVIRONMENT MUST BE
RIGHT, THE EXCHANGE RATE MUST BE APPROPRIATE, POLICIES
ON RESTRICTIVE PRACTICES, TARIFFS AND CONSUMER PROTECTION
MUST ENCOURAGE COMPETITION AND LIMIT OPPORTUNITIES FOR
PUSHING UP PRICES, GOVERNMENTSAND THEIR AUTHORITIES MUST
FOLLOW RESPONSIBLE POLICIES ON PRICING AND EMPLOYMENT
CONDITIONS, THIS IS THE CONTEXT INTO WHICH PRICES AND
INCOMES POLICIES HAVE TO BE FITTED, THE GOVERNMENT BELIEVES
THAT THERE IS A PLACE FOR SUCH POLICIES, BUT IT DOES NOT
BELIEVE THEY ARE A CURE-ALL FOR INFLATION, v
THERE ARE, OF COURSE, FAVOURABLE FACTORS IN THE
PRESENT SITUATION, THE RISING STRENGTH OF THE LABOUR
MARKET SHOULD ENABLE POLICIES DESIGNED TO RESTRAIN PRICES
TO BE UNDERTAKEN WITHOUT FEAR , OF CREATING GENERAL UNEMPLOYMENT.
THE STRENGTH OF THE CURRENT BALANCE OF PAYMENTS AND THE HIGH
LEVEL OF INTERNATIONAL RESERVES ( DESPITE THE WITHDRAWAL OF
SOME FUNDS AFTER THE RECENT CURRENCY REALIGNMENTS) ALSO MEAN
THAT WE CAN CONTEMPLATE AN INCREASED INFLOW OF IMPORTED
GOODS WITHOUT ANXIETY ON THE INTERNATIONAL ACCOUNT.
WE HAVE ALSO TAKEN HELPFUL ACTION ON THE EXCHANGE
RATE. AN EXCHANGE RATE WHICH UNDERVALUES THE DOMESTIC
CURRENCY INCREASES THE COST OF IMPORTED GOODS, INCLUDING
MATERIALS FOR INDUSTRY, PREVENTS EFFECTIVE COMPETITION BY
IMPORTS, REDUCES RESISTANCE BY PRODUCERS TO RISING COSTS,
AND HELPS MAKE THE CONSUMER HELPLESS IN THE FACE OF ORGANISED
PRICE INCREASES, OUR REVALUATION OF THE DOLLAR LAST DECEMBER
WAS A VALUABLE ANTI-INFLATIONARY MEASURE, 1/ 5.
FURTHERMORE, my GOVERNMENT HAS UNDERTAKEN A RANGE
OF SPECIAL ANTI-INFLATIONARY POLICIES, DON'T WANT MY
REMARKS TO SOUND TOO MUCH LIKE A RECITAL OF GOVERNMENT
POLICY THE PROPER PLACE FOR THAT WOULD BE IN VICTORIA
RATHER THAN TERRIGAL BUT I SHALL MENTION BRIEFLY SOME OF
THE THINGS WE ARE DOING. L HAVE REFERRED TO OUR PRICES
TRIBUNAL. WE HAVE ALSO ESTABLISHED A JOINT PARLIAMENTARY
STANDING COMMITTEE TO REVIEW PRICES IN KEY SECTORS, WE WILLSTRENGTHEN
THE LAWS AGAINST RESTRICTIVE TRADE PRACTICES,
WE WILL USE OUR POWERS THROUGH TARIFFS, SUBSIDIES AND CONTRACTS
TO PREVENT UNJUSTIFIED PRICE RISES WHEREVER WE CAN, THE
AUSTRALIAN GOVERNMENT IS THE NATION'I S BIGGEST SINGLE CUSTOMER
AND MOST IMPORTANT SINGLE CONSUMER, As SUCH IT CAN EXERCISE
A CONSIDERABLE INFLUENCE ON PRICE MOVEMENTS, BY HELPING THE
CONSUMER TO A BETTER AND INFORMED AWARENESS OF THE PRICE AND
QUALITY OF AVAILABLE GOODS, WIE CAN DO MUCH TO DISCOURAGE
EXORHITANT OR IRRESPONSIBLE PRICE RISES,
IN THE LAST RESORT, HOWEVER, THERE IS A LIMIT TO
WHAT ANY GOVERNMENT CAN DO TO CONTROL THE LEVELS OF PRICES
OR WAGES, IT IS TRUE GOVERNMENTS CAN R'ESORT TO A STATUTORY
FREEZE IMPOSED BY EXECUTIVE ORDER, SOME COUNTRIES HAVE
ATTEMPTED THESE CONTROLS; NO COUNTRY HAS REGARDED THEM AS
ANYTHING BUT A TEMPORARY MEASURE, IN DEMOCRATIC SOCIETY
THERE IS A LIMIT TO THE WAY THESE POWERS CAN BE USED. THERE
IS A LIMIT TO THEIR EFFECTIVENESS,# THERE IS A LIMIT TO THEIR
POLITICAL ACCEPTABILITY IN A FREE SOCIETY, THERE IS A LIMIT
TO THEIR ENFORCEABILITY, THERE IS A LIMIT TO THE ADMINISTRATIVE
MACHINERY NEEDED TO SUPERVISE THEM,
6,
IN OTHER WORDS, IN ANYTHING SHORT OF A TOTALITARIAN
SOCIETY, GOVERNMENTS ARE RESTRAINED IN THEIR ABILITY TO ADJUST
WAGES AND PRICES AS THEY PLEASE. OUR PROPER CONCERN, THEREFORE,
IS NOT WITH WHAT GOVERNMENTS CANNOT DO, BUT WITH WHAT THEY
CA. AND SHOULD DO. THE QUALITY OF LIFE WHAT USED TO BE
CALLED THE STANDARD OF LIVING..-DEPENDS ON A WHOLE RANGE OF
CONDITIONS AND SERVICES WHICH GloVERNMENTS CAN DETERMINE AND
PROVIDE, WHICHi GOVERNMENTS ALONE CAN DETERMINE AND PROVIDE.
A MANUFACTURER CAN INCREASE THE PRICE OF HIS GOODS; HE CANNOT
PROVIDE A HOUSING SCHEME, A DOCTOR CAN RAISE HIS FEES AT
LEAST HIE MAY THINK HE CAN BUT HE CANNOT PROVIDE A HEALTH
SERVICE. A BUSINESS F* IRM CAN INCREASE ITS CHARGES: IT CANNOT
PROVIDE MORE SCHOOLS, BETTER ROADS'OR IMPROVED COMMUNITY SERVICES,
THESE THINGS ARE THE PROVINCE OF GOVERNMENTS,
ISIMPLY MAKE THE POINT THAT THE SEARCH FOR A PRICES
AND INCOMES POLICY HOWEVER DESIRABLE IT MAY BE MUST NOT
BECOME A SUBSTITUTE FOR ACTION IN AREAS WHERE GOVERNMENTS HAVE
A REAL AND UNCHALLENGED POWER TO IMPROVE THE STANDARDS OF OUR
LIVES, NOR MUST THE FEAR OF INFLATION BLIND US TO THE FACT
THAT THERE ARE WORSE ECONOMIC EVILS, IDO NOT ACCEPT THAT THE
DELIBERATE CREATION OF UNEMPLOYMENT CAN * EVER BE AN ACCEPTABLE
REMEDY TO INFLATIONARY PRESSURES. [ HIS VIEW IS STILL HELD BY
SOME OF OUR OPPONENTS. IN THE PAST, BUDGETS HAVE BEEN FRAMED
AND ECONOMIC POLICIES IMPLEMENTED IN BLIND SUBSERVIENCE TO THIS
CRUEL AND DISCREDITED THEORY, EVEN IF THE. THEORY WERE TRUE, MY
GOVERNM~ ENT WOULD UNHESITATINGLY REJECT SUCH AN APPROACH, THE
CURE WOULD BE WORSE THAN THE DISEASE, 1 17 a
7,
THE REAL VICTIMS-OF INFLATION ARE THOSE ON SMALL
INCOMES -MORE ESPECIALLY THOSE ON FIXED INCOMES, FOR THE
MAN WHO MUST SPEND NEARLY ALL OF HIS INCOME IN ORDER TO LIVE,
INCREASES OF A NEW CENTS IN THE BASIC COMMODITIES ARE KEENLY
FELT. THEY MAY INDEED BE CRUCIAL TO HIS HEALTH, HIS WELL-BEING,
HIS COMFORT. HIoW THEN CAN A HUMANE GOVERNMENT BEST ASSIST HIM?
THE TRUTH IS THAT EVEN IF INFLATION IS CONTROLLED, THE MAN ON
SUCH AN INCOME IS STILL AT A CRIPPLING DISADVANTAGE. GOVERNMENTS
CAN THEREFORE HELP HIM BY ATTACKING THE SOCIAL INJUSTICES THAT
DISCRIMINATE AGAINST HIM AND RENOVATING THE INEFFICIENT PUBLIC
SERVICES HE IS FORCED TO USE.
LET US TAKE THE TYP-ICAL ' AUSTRALIAN TYPICAL AS
PORTRAYED BY THE STATISTICIANS. YOU WILL NOTICE TONIGHT THAT
IHAVE REFRAINED FROM USING TOO MANY STATISTICS. ISUSPECT
THAT IN THE PAST 24i HOURS YOU HAVE HAD A SURFEIT OF THEM. IT
IS IMPORTANT TO REMEMBER WHAT WALTER BAGEHOT SAID OF STATISTICS:
" THE ECONOMIST USES STATISTICS MUCH AS THE DRUNKARD USES LAMPPOSTS
FOR SUPPORT RATHER THAN ILLUMINATION." NEVERTHELESS,
WE MAY CONSIDER AN AUSTRALIAN EARNING $ 1011 A WEEK AS AN EMPLOYEE
( THOUGH THE AV'ERAGE WAGE MUST NOT BE REGARDED AS THE TYPICAL
WAGE), BRINGING up 2AL CHILDREN AND LIVING IN A SUBURB OR TOWN
OF 10,000 PEOPLE, THE FIRST AIM OF A MODERN GOVERNMENT MUST
BE TO ENSURE THAT HIS EMPLOYMENT IS SECURE, 1/ 81 1
8,
BY ABOLISHING THE INEFFICIENCY AND UNFAIRNESS OF
THE PRESENT HEALTH SCHEME WE CAN REDUCE THE COST OF CONTRIBUTIONS
OF THE AVERAGE MANI WE CAN REMOVE THE FEARS AND DOUBTS OF
THOSE WHO STILL HESITATE BEFORE MAKING AN EXTRA VISIT TO THE
DOCTOR, BY ATTACKING INEQUALITY IN EDUCATION FROM PRE-SCHOOLS
THROUGH TO UNIVERSITIES WE CAN ENSURE THAT THOSE ON LOW
INCOMES WILL NOT BE DISADVANTAGED MORE THAN OTHERS THROUGH
THE EROSION OF THAT PART OF THEIR INCOME THEY SPEND ON
EDUCATION FOR THEIR CHILDREN, PENSIONERS THOSE ON FIXED
INCOMES, THE PRIMARY VICTIMS OF INFLATION MUST BE ASSURED
THAT IN ILLNESS THEY WILL GET ALL POSSIBLE CARE, AND THAT
THE ABOLITION OF THE MEANS TEST AND THE INTRODUCTION OF
NATIONAL SUPERANNUATION WILL HELP REMOVE THE HARDSHIPS OF
RETIREMENT, WHEN THE EFFECTS OF INFLATION ARE MOST UNSPARING,
NONE OF THESE MEASURES CAN BE REGARDED AS-A CURE
FOR INFLATION, THEY ARE NOT A SUBSTITUTE FOR A SUCCESSFUL
PRICES AND INCOMES POLICY, ANY MORE THAN A PRICES AND INCOMES
POLICY CAN BE A SUBSTITUTE FOR SOCIAL REFORM, MY GOVERNMENT
BELIEVES THAT RESTRAINTS ON PRICES, ANDTHE ORDERLY DETERMINATION
OF PERSONAL INCOMES, ARE MERELY ONE INGREDIENT IN THE RECIPE
FOR A MORE JUST AND PROSPEROUS NATION,
IHA\' E NO DOUBT, FROM THE ATTENDANCE AT THIS
SEMINAR, AND œ EEING SO MANY DISTINGUISHED SPEAKERS, THAT YOU
HAVE MADE A VALUABLE STUDY OF A DIFFICULT AND PERHAPS
INTRACTABLE PROBLEM, I CONGRATULATE THE INDUSTRIAL RELATIONS
SOCIETY OF NEW SOUTH WALES ON. ITS MOST SUCCESSFUL MEETING.
IT IS A TRUISW TO SAY TH4AT THERE ARE NO EASY SOLUTIONS TO
MODERN INFLATION OR THE FEASIBILITY OF PRICE-INCOME POLICIES.
MY CONCERN IS TO REMIND YOU THAT WHILE WE MAY NOT KNOW THE
ACCEPTABLE SOLUTIONS, AT LEAST WE KNOW THOSE WHICH ARE NQT
ACCEPTABLE. N'O SOL. UTION IS ACCEPTABLE IF ITS BURDENS ARE
NOT SHARED FAIRLY BY THE WH1OLE COMMUNITY, NO SOLUTION IS
ACCEPTABLE IF IT DISCRIMIIATES AGAINST THE VEAKEST AND MOST
DEFENCELESS SECTIONS OF SOCIETY. No SOLUTION IS ACCEPTABLE
IF IT TOLERATE: HIGH LEVELS OF UNEMPLOYMENT, NO SOL. UTION IS
ACCEPTABLE IF T IGNORES THE NEED FOR FUNDAMENTAL REFORMS,
IT IS WITHIN THOSE LIMITS, AND UPON THOSE CONDITIONS, THAT
INFLATION MUST BE FOUGHT. MY GOVERNMENT BELIEVES THAT WITH
YOUR CO-OPERATION, THE CO-OPERATION OF ALL SIDES OF INDUSTRY,
THE BATTLE CAN BE WON.