PRIME MINISTER'S QUEENSLAND BROADCAST NO. 19 -THE BUDGET
SUNDAY 27 JULY 1975
On Friday my colleagues and I finished a week of
intensive Cabinet discussions to frame the Budget which the
Treasurer, Bill Hayden, will be bringing down next month.
It wouldn't be proper to tell you what is in the Budget, but
I can tell you something of our general approach to it. I
might mention in passing that our Budget discussions were
more than a little hampered by the farce which the Senate
has enacted in the past two weeks, requiring Ministers to be
on hand for the Opposition's interrogation of public servants*
and others. But those are the Senate's priorities political
inquisitions first, the national Budget second.
It is not exaggeration to say that the coming Budget
will be the most important for Australia for a very long time.
And more preparation and consultation has gone into this
Budget than any before. We've listened to the views of
consumners, of unions, of employers, of farmers' organisations,
of industry a whole host of people in the community. And
P months ago we set up important new procedures to plan and
develop the Budget strategy. A special committee of ministers,
backed by a committee of officials, has worked hard to review
the whole range of government expenditures. So simply: this
will be the most thoroughly prepared and carefully planned
Budget Australia has ever had.
Our first two Budgets in 1973 and 1974 were ones
of heavy Government expenditure. There was a good reason for
that. When we came to office we had the task of redressing
many years of neglect by previous Governments in almost every
field of national life. For 23 years the Liberals had neglected
education, neglected our cities, neglected our country towns,
neglected local government, neglected the urgent needs of
public transport, health, the environment, migrants, women,
Aborigines, pensioners, children. A great many things were crying
out to be done programs and reforms of a fundamental and
long-term nature. After all, the people in two elections in
1972 and 1974 had given us a clear mandate, clear instructions
to get on with the tasks we inherited. So we had to spend
money big money. Things like Medibank, and better schools and
higher pensions don't come cheap, but it would have been utterly
irresponsible for us to ignore the people's demands for such
services. on top of that, there were other heavy unexpected
calls on Government finance such as funds for Darwin and for
flood relief here in Queensland.
While these programs were getting underway a further
need arose for heavy Government expenditure. Last year the
whole western world entered on the worst recession experienced
since the war. Australia has not escaped. In such circumstances
at a time of rising unemployment it was necessary to push
Goverhment expenditure further ahead in order to boost our
economy and keep Australians at work. On the whole that strategy
paid off. The recession in Australia has been a good deal less
severe than it has been in other countries. / 2
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Let me illustrate. In the United States, industrial
production during the recession has declined by about 14 per cent
compared with an eight per cent decline in Australia.
Unemployment in the United States has passed the eight per cent
mark. In Australia it is 4.5 per cent. In Japan the decline
in production was of the order of 20 per cent compared with
eight per cent here. So don't get the idea that unemployment
and recession have been confined to Australia; it's been a
world-wide upheaval with world-wide causes.
The point is that the world is nejust beginning to
climb out of the recession. The signs of recovery are appearing
both here and abroad. So we have this difficult problem:
flow much longer should we push ahead with expenditures to combat
unemployment, how much longer should we maintain our high levels
of spending on the great social programs we have started?
Economic questions of this kind have never been more complex
and difficult, because we have to try to look ahead and take4
decisions now whose effects won't be felt for many months to
come. In general we feel that, now that the worst of the
recession is behind us, our priority must be to at-tack inflation.
Inflation is another problem that has bedevilled every western
country. In former years, the standard way to attack inflation4
was to bring about a recession and throw people out of work.
That was thE! method the Liberals used. And of course it no
longer works anywhere in the world. We staunchly resisted that
approach when it was put to us in the Budget discussions last
year. True, unemployment has occurred, but we have managed to
keep it at lower levels than in most other countries. The
question now is: what other approach can we take to hold down
inflationary pressures?
There are two things we can do. One is cut back the
growth of Government qxpenditure. As part of this process, 4
I announced on Monday that we would be putting a strict limit
in the next financial year on the growth of the Australian Public
Service which, incidentally has been growing at a slower rate
than the State public services. In addition we are looking at
ways of reducing Government expenditure in other areas. This4
doesn't mean that we are no longer committed to our national
goals better public facilities, wider opportunities for all
Australians. It means that, having got these programs started,
having set up the machinery to run them, we can now take a breather
and slow down our spending sharply in the interests of the whole
economy. This won't be popular with those who benefit from our
programs and I don't need to tell you that it isn't particularly
palatable to us but it has to be done. And the other thing we
have to do is keep the national wages bill within reasonable
limits. Our economies in expenditure won't be much use in
countering inflation if wages and salaries in both the public
and private sectors are allowed to grow too quickly and push
prices up further. My Government fought a hard battle to persuade
the Arbitration Commission to give wage indexation a fair trial.
Indexation will protect the real living standards of every
employee. It must be given a chance to work. / 3
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I wouldn't be honest with you if I said there were
easy solutions to our economic problems. I can't promise a
popular Budget but I can promise a sound and responsible
Budget if you like, a tough Budget.. In the next twelve
months we are going to need all the help and co-operation we can
get in making the Budget work, in safeguarding our living
standards. I'll have no patience with knockers and whingers.
We must make sure that Australia is one of the first countries
in the world to come through this recession, and to come
through it in good shape, in fighting trim. We can do it.
We cannot afford to fail.