LIBERAL PARTY RALLY. SYDNEY TOWAN HALL
Speech by the Prime Ministe. he Rt. Hon. R. G. Mnzs
Mr. Cha-2man, parliamentary colleagues, ladies and gentlemen:
Tonight I propose to confine myself to matters that I know
are vexing your minds. I won't tal~ k about international affairs
in the broad tonight, though I have no doubt that on some other
occasion 1 will have something to say about them. But I do want
to talk about the more m~ aterial aspects of our life as affected
by what goes on here, and by what goes on overseas.
I think it is proper to do that because there have beer.
times only a few but there have been times when I felt
frightfully popular. ( Laughter) And I must say that on those
rare occasions I have enjoyed it being like anybody else. And
thiere have been times when I have b~ on frightfully unpopular
and on the whole I haven't lacked some enjoyment of those.
Other times represent a sort of middle course.
But the fact is that last year, and particularly in
Novembar of last year, the Govcrnment, your Government, the
Government which all of you support and have helped to put in,
had to take some pretty stringent measures to deal with an
inflationary boom in Australia. Although inflation is properly
unpopular with many people, and with me, it is not unpopular with
some others who find in it the exhilaration of going out on a
booming market, and leaving the casualtius to look after
themselves. Interestingly enough since we adopted our course the same
problem has come to the top in Great Britain. lie live, of
course, all the great things in tho world in common with Groat
Britain. But it was only the other day, metaphorically, that
the Government of the United Kingdom had to bring down a "' little
Budget". Having brought down one or two " little Budgets" in my
own time I know that this is not necessarily a term of affection.
( Laughter) But they had to bring down a " little Budget" out of
the ordinary time for a Budget; and they had to bring it dIoxm,
may I remind you, for reasons not dissimilar to those for which
we brought down our economic measures in November last. They
found themsclves with a high measure of inflation at home; with
their trade balances getting a little bit weak, a little bit bad,
a little bit sick, worred about their exports and worried about
their imports, worried about the strength of their currency.
This is a pretty good short description of the kind of
thing that wo were experiencing in our own country, though, of
course, naturally, on a slightly smaller scale. iW~ hon I noticed
that the Chancellor of the Exchequer, M4r. Selwyn Lloyd, had
brought down a little Bqdget in which ho had incroasod sales
taxes, which they call purchase tax in England, in which he had
frozen wages and dividands, in which he had raised the bank rate',
as they call it there, the discount rate, which dominates the
interest structure of Great Britain, from to that he had
gone to the International Menetpry Fund to make a drawing to
protect his currency abroad except that he drew 1892m. and we
drew a beggarly 178Mf.; when I saw all these things I thought
" Well now, he'll be in trouble". ( Laughter) You know it is
one of the great tOuths of life that no; thing so takes your mind
off your own troublos as to sae another man in his. ( Laughter)
"' Well", I thought, " poor Selwyn, he's in trouble". And I
expected that some of my clos-c admirers in the newspaper world
would have made na~ sty remarks a~ bout him, but they didn't. They
seem~ ed to thinl: that what was right in Great Britain must be
wrong in Austra*-a.
2.
Now I mention those facts to you because if you find great
problems being dealt with in other great countries along similar
lines, then there is probably something to be said for what we
have been doing in our own country. And may I remind you on that
point that we did it first. ( Applause)
Now, you all know the kind of thing that we found it
necessary to do, the steps that we found it necessary to take.
You are no doubt very familiar with the criticisms which I don't
resent at all and no doubt you yourselves have made themo, or
heard thom. Therefore tonight I think I would like to show you,
if I may, that we are not unaware of these criticisms; and I,
for one, would like to help you to answer them, fairly and fully.
. Was the policy that we pursued, starting at the beginning of
last year, intensified, ultinately, in November of last year, a
pig-headed policy, a policy dictated by theorists? Or was it
not? And the second question is: Have we pig-headedly pursued
this policy after it was no longer nceded? Now I think those
are two questions that you have hoard and that I would like to
say something about.
I have the great pleasure of having on this platform half a
dozen of my colleagues in the Government at Canberra. I don't
think any one of them was ever accused of being a theoretical
man: all are men of wide experiences of one kind or another,
not at all the kind of people who want to got a University
professor to write them an essay and they say, " That goes for
me". Not at all. I have had a lot more practical experience
in dealing with the economics of Australia than any of then not
my colleagues, but any of the theorists and I take leave to
tell you that whenever I have expressed a view on behalf of the
Government it has represented a view which stoes from my own
experience and my own judjment, a view that I am prepared to
stand up to, as you would wish me to stand up to it.
There was a boom roaring along in 1960. I have mot many
people, some of then politely and some of thym impolitely,
critical; I have never yet not one who didn t admit that there
was a boom blowing up in 1960, a boon in which the demand on our
resources, the demand on manpower and materials and everything
else was so tremendous that prices were rising fast, that the
cost of getting things done was rising fast. If you have a
boom like that what do you do about it? In the short run it is
popular to do nothing about it. There are a lot of people who
say, " What is wrong with a boom?" We have had plenty of, those in
the world and of course those who speculate in money don't mind a
boom because they chase it along. But from the point of view of
a sound colmunity like Australia, a boon is every bit as anathema
as a great depression; and every bit as dangerous.
You know, I sometimes wonder whether our memories are as
good as thuy should be. Jo are not going to have, in my lifetime
or in anybody else's, a depression of the kind that we knew in
the early 30' s. The day has gone by for that. People know too
much today to have that happen, But it is perhaps worthwhile
recalling to ourselves how that one happened: a depression,
which in Australia at the beginning of 1932 exhibited 25 to
unemployment. It didn't come about for reasons peculiar to
Australia. I know that my poor predecessor Stanley Bruce was blamed for
it. Prime Ministers are always blamed for something. It is
fair enough because they are given credit sometimes for things
that they didn't do. So I don't mind.
I/
But the origin of that boom, and that burst, that
depression, was -to be found,, above all places, in the United
States of America whichi came out of the first world war for the
first time in its history, a great creditor country and had
millions invested all round the world, On the strength of these
invest,_ its the United States had an enormous credit structure.
You mustn't suppose that all these fine-spun credit schemes that
vre are so familiar with recently are new. There they rere after
the first world war in the United States of America, with the
Stock Exchange booming, people gambling on margins on the
Exchange, millions being won and millions being lost, because
it usually works out that way.
But what they hadn't realised was that it is no use having
thousands of millions invested in other countries unless you can
get the fruit of your investment. They found they couldn't get
the fruit of thneir investment because they wanted to be a great
creditor country and, at the same time, have the highest tariff
in the world. So they shut out the goods of the countries where
thiey had invested their money. By the time all the gold had
come in and was parked away in Fort Knox they found that their
investments w;: re fruitless.
And yet on the strength of those investments, in the
atmosphere of boom in the middle of the late 201s, they had this
enormous structure of success in their own country. When their
overseas investments became sterile, became unprofitable, then
the whole structure began to collapse on itself. That is the
simplest and truest explanation of what went on at that time.
So, almost overnight, the great boom became the great smash,
and the great depression, and this, of course, influenced
countries and people all round the world, It came to Australia
to impose the most enormous suffering on Australian people.
Now we are not going to have that again. I, for one,
decline to allow a boom in Australia to go to the point of burst
and depression. And * that goes for my colleogues. This is our
duty; and even in politics your duty must be the prevailing
element in your mind. ( Applause)
Suppose we had said as I have heard some people say
". lell what is wrong with inflation" ldhat is wrong withi a boom?
It~ just a sign of health in a g'rowing country". Itve even
read some economists credited withi such remarks. Let me answer
them. Inflation running, running, growing, growing, as it was in
1960, is the complete enemy of social advancement not it's
friend, it's enemy. You just consider: if we have inflation,
if we have price levels rising and rising at a rapid rate, who
wants to put money into anything at a fixed interest rate? Who
wants to buy Commonwealth Bonds, or Bonds for one of the great
public utilities in a State, if he believes that the value of
his investment is going to be whittled away with great speed by
inflation, by a fall in the -value of money? We have found, in
the past, ' that when you have an inflationary boom, or even the
beginnings of one, the loan marlrct becomes sick,
11Now, when I talk to you about the loan market you may say,
I'm not intere sted in the loan market". But you are. You
may never have bought a loan bond in your life, but you are
interested in the loan market. And I will tell you why: because
the great public w.. orks programmies of Australia have to be paid
for out of loan money; or out of revenue from taxation. The
smaller the amount raised by loan, the greater the taxation and
we are all interested in that.
What are these works programmes? You know I occasionally
hear men talk about public works as if they were some horrible
competitor with private enterprise. On the contrary! Private
enterprise, to which I am devoted, couldn't advance without
public works. Public works cover all sorts of things: roads,
bridges, power production, the great Snowy Mountains enterprise,
school. hospitals, transport of all kinds, water supply. Look,
you could go through the whole gamut of public works and when
you add them up they are all things that we are demanding as a
people; and they are all things without wlich industrial
advancement in Australia would be impossible.
Who would dream of establishing a new factory, a great
enterprise, unless he felt that there was going to be housing and
roads and streets and schools and all the things that would
enable him to get employees to live in a happy community? The
thing doesn't need to be laboured.
I just say to you that if you have an inflationary boom
unchecked you will still need to have these public works. True
they will cost fabulously more money because as inflationary
booms go on up goes the cost of everything. And the money will
more and more come out of your taxes which, of course, will be
increased accordingly; and less and less out of the normal
processes of borrowing capital on the public market.
I could give you a dozen illustrations of what I mean by the
effect of a boom on the country. ! oe saw it going on and we
decided that we must '; heck it. Now you don't check a boom by
going to it and saying, courteously, " Would you mind quieterLing
down a little?" On the contrary. If you are dealing with boom
conditions you must be resolute, you must be prepared to take
measures which, of course, nobody will like very much and some
people will dislike very bitterly because those who profit from
a boom don't want to have it checked. If you analyse the boom
and you find that in certain industries there is an over-demand
and that this is causing a boom, then of course you are going to
have objections. I will give you one simple illustration, and that is the
motor vehicle industry. Now let us speak quite plainly about
this. I know that there are one or two great motor car
enterprises in Australia which feel the pinch of poverty at the
present time. But let's face up to it: do you know that by the
time we took these last measures of ours in November, 1960
roughly a thousand motor vehicles a day were being produced and
sold in Australia; Australia, with 10 million people and
350,000 motor vehicles coming out in the course of the year.
So great was the demand on labour, so great was the demand
on materials in this industry that everybody was competing with
the other man for the labour that he needed: bidding up on pay,
conpetition for supplies of raw materials and half-finished
materials. If over there was one particular industry that was
contributing to inflationary conditions in Australia it was the
motor vehicle industry.
It seems odd to say that because it is a great industry, a
useful industry. It has given enormous employment in Australia
and, so long as it doesn't eot entirely out of hand, it is vital
to the economic existence of Australia. I grant you all that.
But it was going too fast and too far. Therefore we had to
check it. And we checked it, partly by what is now callod the
" credit squeeze" though I will say something to you about that
a little later on partly by the provisions we introduced to
render non-deductible certain payments of interest made by
companies, and partly by a 10 per cent increased sales tax on
motor vehicles. So the general policy and the particular policy
were directed, among other things, to the motor car industry.
It is quite true that the impact of this has been that the
motor vehicle industry is not producing as many vehicles. I want
to say to you in plain, blunt, homely terns, that if it were, our
policy would have failed. Do you see? It was bound to be
producing less unless our policy was a fiasco. And if it
produce less, so nany less, then it will enploy so many less
people. Now this is one of the facts that I want you all to
face up to. You can't reduce the pressure of the motor vehicle
industry without reducing, for a tine, its production; and you
can't reduce its production for a tine without having some impact
on the employment that it gies. Therefore there were bound to be
some people, through no fault of their own, who would cease to be
employed in the motor vehicle industry and would, in due course,
be employed in some other.
You know there are a lot of people who credit themselves
with a spurious sort of logic, who will say to you, " Ah, so you
intended to put people out of work. What a monster you are".
A monster I may be I don't think so. But how do you reduce
even to a small degree, the activities of a great industry in the
interests of the overall stable economy of the country without
touching the affairs of a number of worthy individuals? It can't
be done. If somebody had said to me when we were devising our
programme, " Look old boy, you can't do that because General
Motors, or somebody else, will employ less people" and I had said
" Oh, well, of course I can't face up to that", and my colleagues
had adopted the sane weak-need attitude we would still have a
boom; and before long we would have the smash of a quarter of a
century. We are not going to have it. Our duty is to this country,
not to somebody else, on these matters, but to our own country.
And our duty in this country is to all the elements of
stability, that solid foundation for a country which alone can
enable a great edifice to be built on it. hfe have a very lively
interest in my Government, in the future of Australia. We
foresee in our own country, in the next ten years, a degree of
development, of growth, of strength, which will surpass the
record of the last ten years. But we are not so crazy as to
believe that we can move confidently into that decade if, in the
meantime, we have allowed the foundations to be broken by a boon
and a smash
There is one other reason why we had to deal with this
matter. I refer to it with some hesitation, but really it is
very important. It is that Australia lives to a very large
extent by trading with the world. Don't let us get into our
minds the idea that we can live comfortably in Australia by
taking in each other's washing at a premiur rate and that
everything . ill be right. Not at all. Je are a great trading
nation. Ten million people we nay be, wretched Government we may
have, but Itell you, with pride, that this Australia of ours is,
in actual intrinsic terms, one of the great ten trading nations
in the world. ( Applause) That means, of course, that we sell
to the world; and we buy from it. Because it is one of the
oddities of life that if you don't buy you will soon be out of
the business of selling. Trade happens to be like that: it runs
both ways. As our wool is sold, as our wheat is sold, as our moat is
sold, as our sugar, and some manufactured exports, and so on, are
sold so we., as a nation, acquire funds in the rest of the world.
Then as we buy things from the rest of the world I don't mean
the Government, but John Smith, or John Jones Ltd., or whatever
it may be so there is a drawing made onthe funds that we have
in the rest of the world. The balance that we have at any given
moment we call our overseas reserves, our balance of payments
producing our overseas reserve.
Well I must tell you that in November of last year we found
that our overseas balances were running down quite steadily and
we had to think about that a groat deal because if you start off
with so many millions in your overseas funds and they are runming
dcwn, month by month, y~ u got to a point where they look as if
they might disappear. I want to toll every importer in the
country though they know it already that if overseas funds
disappe they will never import anything because there won't be
any money to pay for the imports.
The whole existence of our international trade dopends upon
us maintaining, as a nation, outside Australia, chiefly with the
Bank of England, reserves which will enable us, even though we
may have a failure of a harvest, or a grievous fall in the price
of wool, to pay our way in relation to the things that cone into
Australia, so that we won't dufault, so that we won't be
internationally bankrupt. We found that these precious funds
were running down.
That was another reason why we imposed those stringent
measures. We believed that if we did have, call it what you
like, a " credit squeeze", a restriction in Australia, less and
less money would be available to be spent on imports and
therefore our overseas funds would not run down ony longer. So
that you won't think that we have been theorising about this
matter, I tell you with groat satisfaction, that putting on one
side all the money that we arranged to get from the International
Monetary Fund, our overseas reserves, as a result of the
policies pursued by your Governpent, are today just on 1lOOm.
more than they were at the end of January of this year. ( Applause)
And just as it is a very good thing for a human being to remain
solvent if he can, so it is an essential thing for a nation to
remain solvent, if it can.
I was told, and no doubt some of my colleagues have been
told, that we had made a mess of all this in Australia. We,
this wretched Government who, by some accident have really
managed the country tolerably well for 10 or 11 years, have made
such a mess of it in the llth year that everybody would lose
confidence in us. I thought, " ell0, there will be a very
interesting way to test this because a great deal of our
internationi solvency has been based upon the fact that with all
our errors, with all our defects, with all our follies, we are
the most popular country for investment in the world."
Now I wonder how that happened? Did that happen because you
had a Government that would seek popularity at all costs? Or
because you had a Government that would do what it thought was
right and set out to have stability and security in this country?
I say we are the most popular country for investment purposes in
the world and I confirm that to you tonight.
Last year, 1959/ 60, going back to June of last year, we had
a very large inflow of private capital. I don't mean money
borrowed by governments; I mean capital brought in here by hardheaded
people who see in Australia a great future. They are the
people we want: the people who have some imagination about the
future of Australia, the people who say to themselves, " That's
the country to go to", just as on one occasicn, if the
circumstances had arisen, they would have been saying that the
United States, in its beginnings of expansion, was the country to
go to. These are hard-headed people. They are not philanthropists.
I hoven't met many philanthropists in my life. There are few, far
example, in V-all Street in New York. Yet this year, this
financial year that has just ended, the flow of private
investment capital for business and development in Australia has
boon much higher than it was last year and in fact is an all-time
record for Australia. ( Applause)
Of course you see what that means? When one opens the paper
and sees that some gr-at enterprise has a development progranne
of œ ifm. or œ 20n. and I have seen several of those in the last
few weeks that doesn't noan that something is going to happen
next week, because things have to be got going. But it does
mean that with all the impact of this enormous investment, with
the de-opment that it produces, with the demand that it sets
up, 1962 is going to be a very great year of prosperity in the
history of Australia. ( Applause)
Now perhaps I night refer to a particular criticismL which
sone of you, ry friends, must have encountered. Every now and
then somebody will say, " Ah, yes, well the Government r: ay be
right, but it keeps on changing its mind". " Stop and go", I thirk
is the operative phrase.
It is quite true that we have modified our measures from
time to time; it is much more inportantly true that our policy
has never changed at all. Our policy is stability and
development. You can sum it up in that way. The economic
stability of the country and the development of the country on
that sound foundation, We have never lost sight of either of
them. We know we can't have perfect stability. I don't want to
be academic about that but we do know that unless you have some
reasonable stability that gives people some confidence in what
they have, then your development is going to be modified in
consequence. So, stability and development.
Our policies of last year, our policies in March, our
policies in the Budget last yoer, our policies last November were
all designed to produce stability and encourage development. You
remember, in the broad, what they were.
But, of course, we have changed some of the things we did.
'. hat sort of fools would we be to start at the beginning of a
year and say, " Well those are the measures for the year and
whatever happens we are not going to change them"? h', at sort of
noodles, to use a good old fashioned word, would we be to go on
in that pig-headed sort of fashion? I wouldn't hesitate tomorrow
to change some measure that we had introduced if I thought it had
outlived its usefulness, if I thought that so far from doing good
it was beginning to do some harm. What do you expect? I don't
know why all these charges of insanity should be concentrated on
our unhappy heads in Australia because all over the world this
is done. Nobody complains if the Chancellor of the Exchequer in
England raises the bank rate from 3J% to and reduces it to 4%
six weeks later; and pushes it up to and then reduces it to
six weeks later. He knows that this is a flexible instrument
for dealing with the economy. ' e don't have it. We have to
choose rather broader methods. Nobody says of the Chancellor,
" The poor fellow doesn't know his own mind". If he didn't move
the bank rate around people who knew what it was about would say
he wasn't fit for the job.
So this charge that we change front, let me answer it
specifically. We wanted to reduce the pressure of the motor car
industry I've told you about that so the general policy
applied which touched hire purchase, which touched a number of
financial dealers, money dealers, which touched bank credit; and
we also put on an extra 10% sales tax.
When we looked at the matter a few months later, early this
ye'. r, we said, " Well, we are having an effect on the motor car
industry, but it is going too far because there are quite a few
people who say, ' IWell they couldn't koop that extra sales tax on
in the Budget, in an election year' you know what people think
of us politicians ' therefore wo will hold off buying the new
car until the Budget'". Therefore we thought that we were
inflicting, ' nadvertently in that way, a double disability on
the motor car industry, and so we abandoned the extra 10% sales
tax. Was this sensible? Was this a proof that we didn't know
our own minds? You can take your choice. I think it was
thoroughly sensible. If we had been unwilling to do it we would
have needed to be ashamed of ourselves.
Wu found that in some places, and in some ways, there was
what shall I call it politely? a little bit of a racket going
on in the great financial world by the borrowing of money at
fancy rates of interest, and then being able to deduct the whole
of the interest before you worked out your taxable profit. A
very agreeable device, one that no doubt is faniliar to every
accountant in the audience; a very agreeable device from the
point of view of the taxpayer because it meant that he saved tax
equivalent to about half the interest, or about in the
This was, of course, extraordinarily popular. We came down with
a wallop on this. We introduced a provision about the
deductibility of interest before you assessed your taxable income
that was a bit of a crippler, a bit of a wallop, to put it in
those terms. It achieved results. I tell you that if the
speculative boom in land for which there are probably many people
in this audience who have had to pay, had been allowed to go on
the cost of houses, the cost of homes, would have risen more and
more every year because of the fabulous amounts of money in a
speculative market that had to be paid for a home site. Under
those circumstances you hit, and you hit hard. Today most people
would agree with you that that speculative boon has been quelled,
that there is a great deal more sobriety in these matters than
there was. When we found that we said, " Very well, to make this
rather rough and violent measure of ours permanent would be
unfair to legitimate business". So we dropped it. Do you see
what I mean? All these changes that you have hea d about have
been changes in the direction of mitigating the severity of the
measures that were taken.
There was a considerable boom in the building industry and
nobody gets very happy about doing anything about that
unncossarily, because hc-sing is one of the great problems of the
nation, and one of the great human problems in Australia. But it
was affected by the measures that we took. We found that the
measures were going too far. Therefore without any hesitation we
modified their impact; and, in modifying the impact we provided,
or arranged for, very substantial additional finance for housing.
Earlier this year after all these measures of ours had
been taken the Reserve Bank asked the Savings Banks to
increase their rate of lending. The Trading Banks also
increased their lending for housing. In May we arranged, as a
special move, that the Commnonwealth Savings Bank should provide
an additional œ 5m. during the ensuing few months. At the sane
time in May my colleague, the Minister for National Developnont,
who administers War Service Homes, was able to announce a special
arrangement to eliminate waiting time for now homes under the
War Service Homes Scheme. In June a very large sum of money was
allocated in the defence vote for the building of , dfence hones
in Queensland. In other words great additional provision was made in order
to cunteract any undue fall in the rate of housing. And at the
same time, in the Loan Council this year, in June, we, the
Corronwealth, agreed to support a borrowing programme and
" support a borrowing programme" means putting a good deal of it
on our Budget by way of taxes a borrowing progra~ me of œ 240m.
for State works and housing that is œ lOm. more than the
previous year. The allocation for housing, agreed to by the
States, was set at œ 42.9m. call it œ 43m. which is very
nearly œ 6m. more than in 1960/ 61. And in order to encourage the
rapid attack upon housin& schemes, we offered, as the
Cormonwealth, to provide the State G: Dvornments with these
housing funds at an accoloratod rate during the first half of
the year. Now, Sir, I won't labour that. All those things indicate
what I ' ve been saying to you: that whare it has becorac
necessary to make a change In the sanse of modifying the
severity of some measure already taken we have done so. I am
happy to say that in the field of housing, whure, a few years
ago, we used to talk about 65-70,000 houses as a prot.; large
annual programme in Australia, the figures already in this
calendar year suggest a total of something like 78-80,000 houses
for the year. Now this I regard as a remarkably good state of
affairs. You have heard a lot about the " credit squeeze". It has
almost become like the-blessed word " Mesopotamia". Wherever you
go somebody says " I have been knocked about by the credit
squeeze" and some people have. Some people, of course I have
bcen knocked about by unwise trading on their own account, but
only some. There are others who have felt the stringency of
these matters; just as they enjoyed the advantages of the
inflationary boon conditions when they existed.
But today what is the " credit squeeze"? I hope I tuon't be
haunted to my grave by ghosts coming out of the corner and
talking about the credit squecze to me because I want to tell you
in plain terms that the credit squeeze, as people understood it,
nine months ago is not with us today. I ea. quired only yesterday
as to what the last directive was from the Reserve Bank, because
the Reserve Bank has the supremely important task of trying to
regulate the monetary supply in Australia, and banking policy,
and banking interest rates. Well the Governor of the Bank
announced publicly at the end of June, five weeks ago, that in
recent months the banks have been encouraged to increase their
new lending in selective fields, in particular for housing and
for primary production.
The reduction of inflationary pressures in the economy has
now enabled the Reserve Bank to restore to Trading Banks greater
discretion in the allocation of loans. They have been asked to
ensure that appropriate bank finance should continue to be
available for housing and for export production in riaC mniirf
and manufacturing industries. And within the limits of a
modorate increase in their new lending, they may grant additional
accommodation on the basis of normal banking tests, subject -to
continued observance of two broad principles this is all that
remains of the credit squee) ze first, existing restraints
should continue to be exercised in providing credit to finance
imports and for hire purchase and instalment selling; and
second, finance should not be provided directly, or indirectly,
for speculative activities.
Now that is what is left of the credit squeeze. In the last
few months the better part of œ-90m. has been released from special
reserves to the Trading Banks and I am happy to say that the
Trading Banks today have a position of liquidity which is
substantially above the normal ralnimum and, in fact, is
substantially higher than it was in June of 1960.
The re3al trouble this perhaps is the only other thing that
I have time to t alk about the real trouble is not a credit
squeeze, it is not bank policy, it is not the unwillingness of
banks to lend, because in may recent experience they all exhibit
willingness to lend, on a proper proposal. The real trouble is
this: there have beaen too many calamity howlers in this country.
I am shocked, occasionally, when I see, as I did in my own State
recently, people publishing advertisements to encourage in the
minds of employees the idea that their job is coning to an end
tomorrow. If I ran a business I don't think I would run it that
way. S. primarily, is there some unemployment? Of course there
has been a great stocking up from the past and it takes a while
for stocks to be sold off. But basically the trouble is that the
calamity howlers, and I want you to go out and deal with the: n,
are always trying to persuade people that the worst is yet to
cone, that there is some frightful calamity around the corner.
My political opponents, and yours, thrive on this, live on it.
Well, what is the fact? The fact is that in Australia,
unlike the United States or Canada, where they would regard our
position as most envirble, it is quite true that out of every
100 people willing and able to work 97 have a job and are
working at it. That is making a liberal estimate of what
unemployment may be today. I am not defending une mployment; I
hate unemployment. I think that the great responsibility that
we have to restore stability and security to Australia involves
getting rid of unemployment. But there are 97people out of
every hundred at work. And if they went along and lived in the
ordinary way, and bought what they wanted to buy, I will
undertake to say that the position in trade, right back to
manufacturing in Australia, would improve steadily week by week.
But they have people saying to them, " Oh, no, you might be the
next to go; you are one of 97, but perhaps you are the one to
go". And so the whole 97 button up and I don'L blame them
if they listen to these false prophets who are so plentiful.
What we have to do is to make it clear to people that this
policy has worked, has produced the most magnificent results in
the broad, has saved our international balances, has steadied
down the increase in prices. It has achieved all these results
superbly well.
From now on what we need is a steady state of affairs in
which people go about their work in the ordinary way, do their
buying in the ordinary way, and the retail stores are able to
clear their stocks and pay their bills to the wholesalers, and
the wholesalers to the manufactures, and the manufacturers set
about replenishing their own stocks by manufacturing processes
and employment. All this is a simple enough thing to say. But
the process doesn't begin if you have people in Australia who are
undermining the confidence of the 97 people in 100.
This is a , reat task, a great task, and it is a task for all
of us. I am myself an unlimited optimist about the future. I
know that somebody may say that over the next month or two months
things may not be very satisfactory. I don't expect things to
happen overnight. But I believe in my bones that by this time
next year many of us will be wondering what the argument was
about; and most, if not all, of the 97 will be wondering what the
argument was about. And the other three working alongside of
them will have occasion to be glad for what has been done.
This is not a crisis in the economy. The economy of
Australia has never been stronger. Anybody who looks at it with
any detachment and even I can do that occasionally will say,
as the people looking at us from around the world will say, that
the economy of our country has never been in a sounder position;
and that the measures that have booeen taken have been good, and
sensible, and profitable measures from the point of view of
Australia.
11.
The only crisis that exists, and I admit its existence and
call on you to join with me in destroying it is a crisis of
confidence. Isn't it a romarkable thing that a people like us in
Australia so rich in material things, so high in our living
standards, so possessed of advantages that most of the countries
in the world envy beyond words, should even begin to think of
undermn -ng our own strength by losing confidence in ourselves?
I had always thought that the people of Australia had irmmuense
confidence in themselves. I know that when I go abroad from time
to time to represent this country in the councils of the world I
find myself able to speak with confidence because I speak for a
confident country. And this is no bad thing for us. ( Applause)
Sir, that is really half of what I intended to say to you
but it is, perhaps, all that I needed to say to you that had
importance. This is a splendid opportunity, tonight, to have
this great meeting of people who work, of people who are
supporters, who have loyalty and zeal, a great opportunity to say
to you " Don't you lose any confidence yourselves; don't you
become weakened in your resolution". Because if there is one
thing about which I have taken a private vow, and now take a
* public one, it is that Ipropose once more at the next election,
to lead this party to victory. ( Applause3