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Transcripts from the Prime Ministers of Australia

Transcript 3847

CHIFLEY MEMORIAL LECTURE, DELIVERED BY THE PRIME MINISTER, THE HON EG WHITLAM QC MP, AT THE UNIVERSITY OF MELBOURNE, 14 AUGUST 1975

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Whitlam, Gough

Period of Service: 05/12/1972 to 11/11/1975

More information about Whitlam, Gough on The National Archive website.

Release Date: 14/08/1975

Release Type: Speech

Transcript ID: 3847

CHIFLEY MEMORIAL LECTURE, DELIVERED BY THE PRIME MINISTER,
THE HON. E. G. WHITLAM, AT THE UNIVERSITY OF MELBOURNE
14 AUGUST 1975
As the fourth Chifley Memorial lecturer in 1957 I said:
" The way of the reformer is hard in Australia." I
intended neither pessimism nor prophecy, although one may
concede that little has occurred in the intervening 18 years
or the last two and a half years to lead to the belief that
reform in Australia is altogether a primrose path. In my 1957
lecture I attempted to point up the difficulties confronting
the Australian Labor Party in carrying out its policies under
a federal system and in particular the impediments which the
Australian Constitution placed in the way of achieving reform.
This was no exercise in negativism, in finding excuses.
You will accept that that has never been my way. I was however
concerned then by the way in which the Labor Party's failure
to move on, to look ahead, to attempt to find new ways towards
reform was shortchanging the Australian people and shortchanging
the Party itself. In 1957, the Platform, policies and structure
of the Australian Labor Party had remained basically unchanged
since the days of the Chifley Government, already by then
8 years distant. Even in 1957, the Party still tended to interpret
the 1949 election result as an aberration, much as the Liberals
today still see 1972 as an aberration. The Party became
obsessed with the idea that rather than being about renewal for
the future, its purpose was to return to a more comfortable past
not renovation but mere restoration. As a result, both the
achievements of the past and the hopes for the future receded
equ~ ally . The Party stagnated and the Platform was stultified.
For his heirs, the setbacks which Chifley had met
became not an experience for building but an excuse for baulking.
At best we learnt only half the lesson of the Chifley experience.
We acknowledged that we could not nationalise the banks or indeed
any important part of the economic system, but our rhetoric remained
unchanged the rhetoric both in the Platform and from our
platform speakers. In at least one policy speech the acknowledgement
of the Constitutional impossibility of nationalisation was
presented as if it were a positive undertaking impotence was
to be a guarantee of future good behaviour. The acknowledgement
became an alibi an alibi for the Party's failure to develop new
policies, to work out new programs whereby the basic ends
envisaged by Chifley could be achieved by other means.
In 1956 I had been elected a member of the Joint
Committee on Constitutional Review. By virtue of that experience,
I became better acquainted and more preoccupied with the
difficulties and barriers raised by the Constitution against not
only reform but good government in Australia. With one exception
national responsibility for Aborigines the Constitution remains
unchanged, despite the unanimous all-Party recommendations of the
Committee in 1958 and 1959. These unanimous recommendations covered
a wide range of matters, particularly in the fields of economic
management and electoral reform. All-Party acceptance in 1959
has become partisan resistance whenever the opportunity to
implement these recommendations has arisen. / 2

-2-
For example, it is often forgotten that all Parties,
the Country Party as much as the Liberal Party, accepted the
recommendation of the Committee that the enrolment in any
electorate should not vary by more than 10 per cent from the
average enrolment in all electorates within a State. As a
result of the Joint Sitting last year, that all-Party
recommendation is now the law of the land. But partisan
resistance has nullified that law. The redistribution proposals
by which alone the recommendation of the Committee of 1959 and
the legislation of the whole Australian Parliament in 1974 could
be made a reality have been rejected by the Senate.
Yet despite the lack of Constitutional amendment, there
has been Constitutional advance not by amendment at referendums,
but by interpretation in the High Court. The High Court, in
such matters as monopolies and restrictive trade practices, civil
aviation and television, has widened the powers of the national
Parliament in ways which, in my 1957 lecture, I looked for
through Constitutional amendment.
The chief purpose of my 1957 Chifley lecture was
therefore to examine not just the barriers against Labor reform
put up by the Constitution but the means by which these reforms
could be achieved within the Constitution. I put the view that,
while amendment of the Constitution must remain a fundamental
objective, neither the Party nor the nation should be expected
to wait indefinitely for amendment before reform. It was not
a question of trying to circumvent the Constitution, but to
make the best use of it, not supinely to accept the limitations
of powers imposed by the Constitution, but to use the powers
offered by it. For example I said:
" In our obsession with Section 92 which is held up
as the bulwark of private enterprise, we forget
Section 96, which is the charter of public enterprise."
I further illustrated how in the fields of social welfare, health,
education, housing, transport, urban and regional development,
industrial relations, restrictive trade practices and law reform,
significant advances could be achieved under existing powers to
a very great extent* The themes foreshadowed in that lecture
became the basis for the substantial rewriting of the Platform
at subsequent Federal Conferences of the Australian Labor Party,
particularly the great reform Conferences of 1967, 1969, and 1971.
The policies thus developed provided the framework for the 1972 policy
speech and to that extent, the framework for the programs of the
Australian Labor Government in the past two and a half years.
My purpose in this lecture is to review those programs
in terms of the basic objectives they were designed to achieve,
to examine how the successes of the program may best be
consolidated in the light of the economic conditions in which
Australia now finds herself.
It is easy enough to generalise about the need for reform.
Reform, however, must be relevant to objectives which are both
desirable in themselves and perceived to be desirable by the public.
A reform Party needs to convince a majority of the people that the
reforms it proposes are desirable and a reform Government has to
keep them convinced. Quite apart from overriding questions of
economic management there are always going to be four special / 3

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difficulties in that task. The first is the sheer problem of
public perception of what has been done and why it is being donethe
so-called communications problem. There may be even some
Members of Parliament who might not pass an examination of the
substance of the Government's programs.
Secondly, there is a law of diminishing returns in
politics whereby a demand once met ceases to be an issue.
Thirdly, there is frequently a long delay between implementing
a reform and the delivery of its actual benefits. Fourthly,
a great many reforms by their very nature benefit and are
expressly intended to benefit a minority in the community who,
in general, are among the least articulate and least influential
in the community; they are therefore the people least able to
translate their grievances into political action or their
gratitude into effective political support.
In a sense the Party of reform in a democratic system
carries a self-created handicap as a reforming Government.
In Opposition, its essential task is to raise the public
perception of the need for change, the need for reform. That is,
its task is to raise expectations. The nature of politics,
founded as it is on human nature itself, is that there will
always tend to be a gap, a shortfall, between expectations
aroused and expectations met.
A conservative Government survives essentially by
dampening expectations and subduing hopes. Conservatism is
bas ically pessimistic; reformism is basically optimistic.
The great tradition which links the American and French
revolutionaries of the Age of Reason with the modern Parties
of social reform is the tradition of optimism about the possibility
of human improvement and human progress through the means of
human reason. Yet inevitably there will be failures, and the
higher expectations rise, the greater the likelihood of at least
temporary failure to meet them.
Up to December 1972 the task of the Australian Labor
Party was three-fold: first to state the reforms we proposed,
secondly to state the means by which we intended to achieve
those reforms, thirdly to convince a majority of the electorate
that those reforms were both achievable and desirable. We
achieved office because we raised expectations and convinced a
sufficient majority that those expectations could be met.
Yet the specific reforms we proposed were related to
general goals and had to be so related if they were to be seen
and accepted as part of our general mandate to govern. The
meaning of the " mandate" in a Parliamentary system has been
subject to critical analysis by Parliamentarians and academics
for more than a century. In Australia the meaning has been
especially scrutinised in the past two and a half years because
of the very great emphasis my own Government has always placed
on the fulfilment of the program set out in the policy speech of
1972 and confirmed in the policy speech of 1974. Another reason
why the meaning of the " mandate" has become significant in the
current Australian political debate is because of the existence
of a hostile majority in the Senate and the use to which that
hostile majority has been put. So the debate about the meaning
of the mandate has centred on the question of whether in 1972 / 4

and again in 1974 the Australian Labor Party was given only
a general mandate to govern or a specific mandate to implement
each part of its program.
Is the mandate merely general or is it specific? Is it
a grant of permission to preside or a command to perform? our
opponents naturally interpret it in the weakest sense as a
general and highly qualified mandate to govern on their terms
and indeed by their grace and favour. I interpret the mandate
as being both general and specific a general mandate to govern
for the term for which we were elected and a specific mandate
to implement the undertakings we made, within that term. But even
when I speak of a general mandate I cannot accept the conservative
definition of a mere mandate to govern, a permit to preside over
the administration of government and, hopefully, to administer
the existing system in a sufficiently acceptable way to give
reasonable prospects of re-election for a further renewal of
the mere mandate to preside. The mandate as I interpret it is
to move by specific programs toward the general goals and the
general objectives accepted by the people at the elections.
What was that goal? I defined it in these words in the
Parliament on 5 March 1970:
" on this side we believe there is one clear goal that
this national Parliament should set for itself, which should
define and motivate each specific action we take. It is the goal
of equality. The true quality of our national life will be
principally determined by the way in which and the rate at which
we advance towards true equality. It is this that gives meaning
to our possession of prosperity. If I interpret the history of
this country and the character of our countrymen and women
correctly, it is this search which alone can give any worthwhile,
enduring meaning to our fortuitous possession of this most
fortunate, peaceful and privileged continent in this most turbulent
and deprived region of the world."
I regard the thrust towards equality as the natural
extension of the great thrust of the Chifley Government which
was towards security for all. There is no phrase more quoted
than Chifley's " light on the hill'. Very few remember what the
metaphor meant. As Chifley used it it was not-just a fine phrase
but a quite specific objective it was security. As Chifley
said in the policy speech of 1949:
" it is the duty and responsibility of the community
and particularly those more fortunately placed, to
see that our less fortunate fellow-citizens are
protected from those shafts of fate which leave
them helpless and without hope. That is the
objective for which we are striving. It is the
beacon, the light on the hill to which our eyes
are always turned and to which our efforts are
always directed."
In other words Chifley saw that the fundamental duty of the
community, acting as a whole through its elected representatives,
was to provide security for all its members. To that I add the
basic objective of promoting the basic goal of equality. As I
see it, the two goals are inseparable. I have always put the
search for equality in positive terms, that is, the promotion of
equality, not the imposition of equality. As I implied in my

1957 Chifley lecture and specified some years later in my
Curtin Memorial lecture of 1961:
" Socialists are now more concerned with the creation
of opportunities than the imposition of restraints.
Within Australia we do not have to ration security
but to plan abundance."
I state the underlying philosophy in this way: in
modern communities, even the wealthiest family cannot provide
its members with the best education, with the best medical
treatment, the best environment, unaided by the community.
Increasingly, the basic services and opportunities which determine
the real standard of life of a family or an individual can only
be provided by the community and only to the extent to which
the community is willing to provide them. Either the community
provides them or they will not be provided at all. In the
Australian context, this means that the community, through the
national government, must finance them or they will not be
financed at all.
over the span of years the common factor which links
the doctrine of security and the doctrine of
equality is the insistence upon community responsibility for
the promotion of these twin goals.
This concept of equality what I call positive equalitydoes
not have as its goal equality of personal income. Its goal
is greater equality of the services which the community provides.
This approach not merely accepts the pluralistic nature of our
system, with the private sector continuing to play the greater
part in providing employment and growth; it positively requires
private affluence to prevent public squalor. The approach is
based on this concept: increasingly a citizen's real standard
of living, the health of himself and his family, his children's
opportunity for education and self-improvement, his access to
employment opportunities, his ability to enjoy the nation'ss
resources for recreation and cultural activity, his ability to
participate in the decisions and actions of the community, are
determined not so much by his income but by the availability
and accessibility of the services which the community alone can
provide and ensure.
The quality of life depends less on the things which
individuals obtain for themselves and can purchase for themselves
from their personal incomes and depends more on the things which the
community -provides for all its members from the combined resources of
the community. What we aim at is the achievement of the classic liberal
idea of the career open to the talents equality of opportunity
in a vastly expanded form. Equality of opportunity is a splendid
ideal; but to confine it to equality of job opportunities is not
merely to restrict it, but to negate true equality of opportunity.
The older, narrower ideal of equality of opportunity concentrated
almost exclusively on education. The assumption was that the mere
provision of free education would guarantee equality of opportunity.
Even in a community as homegeneous and socially mobile as
Australia this has proved not to be the case. / 6

In modern communities, not least Australia, opportunities,
social, economic and cultural opportunities are really determined
by where a family lives, even more than by a family's income. So
we have no preoccupation with equality of incomes. We are striving
for an equality of environment in the total sense of those things
which increasingly the community alone can provide welfare,
health, education, recreation, transport.
The general argument against this concept turns on the
question of private incentive and individual initiative. This
really gets to the heart of the philosophical differences between
the Labor Party and its opponents. The argument that collective
welfare destroys private incentive is a very old one indeed.
It is the argument which has been used to resist every advance
in social welfare, even the most basic ones, such as the provision
of old-age pensions. It was the argument used at every stage of
the very massive expansion of the social security system under
Curtin and Chifley represented in money terms by an increase
from $ 36 million provided before the war to $ 200 million in 1949.
Such were the colossal sums which Chifley used in those days
to undermine free enterprise and destroy individual incentive.
The argument is in fact based on a particular view about
human nature and human motives. In the final analysis it
predicates fear and greed as being the principal spurs to human
action. It says in effect that if people know they are guaranteed
an income in retirement they will be both lazy and improvident during
their earning days; if people are not afraid of the price of
sickness they will abuse and overuse the health services the
community provides; if public schools are made as good as
private schools then parents will not work so hard to earn the
fees for their children's eductional; if the attempt is made to
make underprivileged communities more decent places to live,
people will lose the competitive urge.
we are going to hear a lot more of these arguments,
put in perhaps more subtle ways. The counterargument is that
the removal or reduction of basic fears and insecurities, far
from being a limitation on individual incentive, represents a
liberation for human creativity. The contest between the two
opposing views of human nature and human society is still the
esseace of the philosophical debate between the Parties to
the extent that the political debate is conducted in terms of
philosophy and to the extent to which either Party can be said
to have a philosophy.
The programs developed between 1967 and 1971 and presented
in the policy speech of 1972 sought to give practical application
to these attitudes. A political program, particularly a program
for a democratic election is of course not an essay in philosophy.
Policies are not developed in a political or economic vacuum;
still less are they implemented in a vacuum once the appeal to the
electorate has been successful. The program as presented in 1972
had to be related to economic and political realities as we
judged them to be in 1972 and as we assumed, to the best of our
judgement, they would exist during the three years for which we
sought and won a mandate. Carrying out the program has to be
related to the political and economic realities as they exist.
In 1972, we made two important assumptions which seemed very
reasonable at the time. One was political; the other was economic.
Both proved partly wrong. The first, the political assumpetion
was that if elected we would have a clear three years to fulfil
the program. / 7

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The second, the economic assumption was that domestic
growth would be sufficiently restored and that the world economy
would remain strong enough to permit an avowedly expansive and
expensive program of social reform to be implemented without
massive tax increases or without massive inflation.
The fundamental and continuing difficulty of the
Government has been and remains to reconcile the demands of the
program with the falsification of two of the key assumptions on
which it was based.
It is hard to estimate and hard to exaggerate the damage
done to the Australian political system and the Australian economy
by the conduct of the majority in the Senate. From the beginning,
that conduct has had one overriding objective to deny the
very legitimacy of the Labor Government. But its real effect
has been to cast doubt on the legitimacy of an elected Government
itself, to cast doubts on the legitimacy of the electoral and
constitutional proceses.
One has to bear in mind that the elections of 1972 were
for the House of Representatives alone. The program was drawn
up as a 3-year program. Whatever the result of the 1972 elections,
the state of the Parties in the Senate had to remain unchanged;
an anti-Labor majority was guaranteed until at least July 1974.
So the question of who would control the Senate was
never an issue in 1972. If you cast your minds back, you would
agree that nobody approached the 1972 campaign with any thought
other than what Australians were doing then was electing a
Government for a normal three-year term. There. might have been
some fleeting thought given to the possibility of the circumstances
by which Labor, if successful, might be brought to the need for a
double dissolution. But certainly no-one seriously considered
the possibility of the House of Representatives being forced to
an election by the refusal of Supply by the Senate. And no-one
considered the possibility of a double dissolution triggered off by
the threat of refusal of Supply by the Senate. It has been a remarkable
example of the unthinkable becoming apparently quite acceptable.
During the 1974 campaign I frequently quoted an article
written in 1968 by Sir Robert Menzies in which he castigated Senate
pretensions as " a falsification of democracy". That phrase is
now very well known. What is not so well know is that what
Sir Robert Menzies was condemning was not the ultimate falsificationthe
refusal of Supply but the repeated rejection by the Senate
of legislation passed by the House of Representatives by the
majority forming the Government. I quote from Sir Robert Menzies'
article in the Sydney Daily Telegraph of 18 February 1968:
" In Australia we practise the system of ' responsible
government'. Indeed it has been judicially declared
that it is embodied in our Constitution by necessary
implication. In that system Ministers sit in and are
responsible to Parliament; but Cabinet may be
displaced by a vote of the House of Representatives
( not Sir Robert's emphasis the Senate) and therefore
holds office at the will of the House of Representatives...
" It would be a falsification of democracy if, on any matter
of Government policy approved by the House of Representatives
possibly by a large majority, the Senate, representing
the States and not the people, could reverse the decision." 1

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The basis of Sir Robert's concern at that time early
in 1968 is interesting and instructive. He was writing shortly
after the Liberal Party had elected Senator Gorton as its leader.
Sir Robert's concern was that once the Senate had made the
big breakthrough in providing a Prime Minister, its ambitions
and pretensions would thereby increase. He feared the Upper House
might become altogether too uppity.
He pointed out that the situation by which a Government
in the House of Representatives lacks a majority in the Senate
is frequent enough in itself to be normal. The falsification
aginst which he warned was the rejection of legislation, not the
refusal of Supply. He didn't deal with that question for one
simple reason: it just never crossed his mind that this was a
practical possibility worth arguing about.
Yet the Labor Government, the Australian administration,
Australian business and the Australian community have had to live
with this possibility since April 1973 according to the evidence
of Senator Withers, the Leader of the Opposition in the Senate,
who said in April 1974:
" We embarked on a course some 12 months ago to
bring about the House of Representatives election".
That is, for all but the first few months of the Labor Government
a new and gross element of instability and unpredictability has
been introduced into Australian political life. No important
aspect of our political or economic system has remained
unaffected by it.
It may be true that hanging concentrates the mind
wonderfully but it is not generally regarded as good for the
morale or the health.
We can see in retrospect that the election campaign of
1974 and its long drawn-out aftermath interrupted for more than
four months the normal business of the nation and, at a critical
time, diverted the attention of the planners, whether they were
in Government, in administration, in finance or in business, from
crucial matters relating to the economy to purely political
pre-occupations. One should not think that administrators in Government
can divorce themselves from the preoccupations of their political
associates least of all in so political and politicised a
capital as Canberra. The fact is that during political crises,
decision-making in Australia virtually halts. This regularly and
properly happens when there is a normal election in the normal
course of events that is each three years. To make this turmoil
endemic, to threaten it each six months, is thoroughly destructive
of good administration and good government.
The present Australian Government is the only Government
since Federation and the only Government in the English-speaking
world to have been placed in this situation. I confine my remarks
in this context to the political consequences, the direct
consequences, of the continuing threat by the Senate to refuse
Supply. It's not to my present purpose to deal at length or in / 9

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detail with the Senate's record of legislative obstruction the
score of key bills which have failed to pass. In passing, however,
I mention two aspects of that obstruction, both related to the
concept of the mandate, as I see it, and the proper working of
democracy, as Sir Robert Menzies saw it.
The legislation rejected in the Senate was foreshadowed
in 1972 and repeated in the 1974 campaign. Much of it was put
as long ago as 1969. These Bills are not ring-ins. They are not
to be dismissed just as Whitlam's whims. I put this proposition:
if a matter is thrashed out in three campaigns and throughout the
intervening years, and if the proposals which a Party has put on
those matters are endorsed by sufficient Australians to result
in that Party being elected, surely in the name of anything that can
pass for democracy, that Party in Government is entitled to claim
a mandate for such proposals. More, is not that Party obliged
as a Government to try to implement such proposals? That has
been the background, the basis put in 1969, in 1972, in 1974
of so much of the legislation now stalled or rejected by the
Senate. Reflect that Medibank itself would not now exist if
the Senate had had its way. Medibank exists only because of the
double dissolution of 1974 and our subsequent ability to get
the legislation through at the Joint Sitting.
Furthermore, for all the present pretensions of the Senate,
for all the Hamlet-like approach of the Leader of the Opposition
to what he will or will not do about the refusal of Supply,
the fact remains that while the Government did not obtain a
majority of the Senate seats in the Double Dissolution, it did
obtain a majority of votes for the Senate over all the Parties
then represented in the Senate a majority of 43,000 over the
Liberal Party, the Country Party, the Democratic Labor Party,
combined. A majority of seats in the House of Representatives;
a majority of votes in the Senate is this or is it not a mandate
to govern? Yet on specific legislation forming an integral part
of the policy put at these elections and on its basic right to
govern, the legitimacy of this Government is challenged month
by month, day by day.
So for most of the period of our Government we have had
to live with an unprecedented political problem. Equally,
there has been the problem of world-wide economic difficulties.
As I said before, our program was predicated on certain assumptions
about internal growth and the strength of the world economy. We
had devised a program of social reform designed to catch up
with a backlog, as we perceived it, created by 23 years of
conservative rule. We were concerned that so wealthy a country
as Australia, which had once been a pioneer and leader in social
reform, should have fallen so far behind. I had stated our
belief in these terms in the 1969 policy speech:
" We make these assertions: firstly, that Australians
should not be deprived of opportunities which citizens
of every comparable country enjoy. Secondly, there is
every reason why Australia, wealthy and well-endowed,
in many respects incomparably so, should be giving a
lead to other nations in the equality of opportunities
and the quality of the opportunities we make for our
own citizens and in the help we can give to others.
Twenty years ago, Australia was indeed a pioneer and a
leader: now we lag behind."

It should be remembered however that that period of
conservative rule in Australia coincided with an extraordinarily
protracted period of world economic growth. The world had enjoyed
a virtually uninterrupted boom of twenty years. In general, a
relatively high rate of growth was accompanied by a relatively low
rate of inflation. Through most of that period Australia shared
both these characteristics of the world economy. Although in 1972
the Australian economy was already showing the signs of the twin
problems of inflation and unemployment, with a poor growth rate
which was subsequently to become world wide, the great
catastrophes about to fall on the international economy were not
foreseen. With hindsight we should perhaps have foreseen the
inevitable economic consequences of the way in which the United
States chose to finance the war in Vietnam. We could not, however,
have foreseen the energy crisis of 1973.
I know that it is now considered in some quarters to be
mean-spirited, to be buck-passing, for an Australian Minister to
mention international economic problems or to make international
comparisons, or to explain any of our economic problems whatsoever
in international terms. But these international problems remain
a fact of life and, whether we like it or not, they affect our
national life.
When my Government was elected our aim was to finance
our new programs from growth. But world-wide inflation and
recession frustrated this objective. This is no mere selfjustification.
The whole industrialised world is currently going
through the worst peacetime inflation on record and the deepest
recession since the 1930' s. Within the OECD, the membership of
which includes virtually every industrialised country in the
world, the average rate of inflation jumped from 3.9 per cent
per annum in the decade 1962 to 1972, to 7.9 per cent in 1973
and 13.4 per cent in 1974. Real Gross National Product which
ros e at the rate of 5.4 per cent per annum in the decade to 1972
declined slightly for the OECD countries as a whole in 1974 and is
expected to show a decline of about 1.5 per cent in 1975.
The OECD Economic Outlook stated on 17 July 1975:
" The present recession in OECD countries is the most
serious since the war. It is remarkable not only for its length
and depth a third consecutive half-year of negative growth
has now been recorded for the area as a whole but also for its
widespread nature: virtually every OECD country grew by less
than its medium-term average rate in 1974, and no economy is
expected to take up slack in 1975. The margin of idle resources
in the OECD area is now the largest in the post-war period, with
unemployment at record levels. The forecasts presented in the
December Economic Outlook, and to a greater extent those being made
at that time by national authorities, proved to be too optimistic.
Industrial output in the major countries fell very sharply in the
last quarter of 1974 and the first quarter of this year. The extent
and simultaneous nature of the decline was unlike anything recorded
in the post-war period. The combined GNP of the major countries,
which was thought at the time to have increased marginally in the
second half of 1974, is now estimated to have fallen, at an annual
rate, by over one per cent. Output was expected to continue
stagnating in the first half of this year; it may in fact have
fallen at an annual rate of about five per cent. The December
Economic Outlook gave reasons for supposing that the balance of
uncertainties attaching to the forecasts was on the downside; but
the extent to which this proved to be the case is astonishing." / 11

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There is no way in which Australia could have escaped
being caught up in these disruptive world-wide economic developments.
We are after all a major trading company, . so what happens to
our major trading partners the United States, Japan and the
United Kingdom is bound to affect us. It is estimated that in
the course of the recession industrial production fell by
per cent in Japan, by over 14 per cent in the United States and
by over 8 per cent in the United Kingdom. Even West Germany,
which has ridden out this storm better than most, suffered a fall
in industrial production of over 11 per cent. What is more, these
declines should be viewed against strong upward trends previously
existing at least for the Japan and West Germany; on this
basis the loss of potential output has been much greater than
these figures imply.
What is not widely recognised is that Australia has
fared comparatively well among the industrialised countries during
this period of economic turmoil. Our unemployment has been a
great deal lower than that suffered by a number of industrialised
countries; our loss of production has been less; and many
industrialised countries have had much more severe inflation.
Unlike most industrialised countries, we have moreover been
entirely free of balance of payments problems.
In spite of our economic problems the Australian employee
has on balance done well over the last two years. Average
minimum award rates have risen by 55 per cent and average earnings
by 48 per cent while the cost of living as measured by the CPI
has increased by 32 per cent. There have, therefore, been
substantial real gains to wage and salary earners, supplemented
by improved education, health., and other benefits by this
Government. There is a widespread expectation that 1976 will see
strong economic recovery across the world, accompanied by a
continued slowdown in the rate of inflation. It is important that
Australia should participate in both. There is a widespread view
that, to the extent that inflation is not contained, the recovery
may not be a sustained one. I share this view. I am convinced
that we must get inflation down to an acceptable level in
Australia, all the more if other countries with which we trade
and compete in world markets do so.
I again acknowledge the awful impropriety of my making
international comparisons. I'll have to bear that cross. But
despite everything let me make this assertion: while Australia
shares to a greater or less extent these economic problems, while
in some respects we are making a better fist of dealing with them than
some other nations, we are alone in this that while dealing
with very difficult, with unprecedentedly complex economic problems
which all nations share, we have made significant and enduring
advances in social reform, in so changing the structure of welfare
in this nation as to be of permanent benefit to future generations
. when the problems of the present are but a vague and distant memory.
Our goal now is to consolidate the reforms instituted in
the past two and a half years.
The 1975-76 [ Budget which the Treasurer, iIr Hayden, will
introduce into Parliament next week will be a major step towards
this goal. In spite of the urgency we see in proceeding with our
programs, we have decided to slow down the rate of increase in
outlays this year. Let me emphasise that, contrary to a lot of
ill-informed comment, we are not going to reduce expenditure, but
/ 12

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to slow down the rate of increase. Our expenditures will still
increase in money terms and in real terms, but less rapidly than
would otherwise have been the case.
One effect should be to leave room for the private sector
of the economy to expand, to play its proper role in the recovery.
Another effect will be to moderate the extent to which the
Australian Government's budget generates monetary expansion.
A slowdown in the rate of monetary expansion is clearly essential
if inflation is to be brought under control.
It is not appropriate, however, for me to say too much
about the Budget at this stage, beyond that it will be a responsible
budget consistent with out long term objectives of reform, with
consolidation of what we have already achieved, and with progress
towards a stable, growing economy. What I can speak of, however,
are our plans stretching beyond this Budget.
We plan, and I use the word advisedly, to review our
programs and commitments to ensure that, in total and in each
category, our expenditures will be consistent with our overall
objectives for the economy and will consolidate the vast new
programs we have introduced.
We have to look carefully at the question of what
proportion of the resources available in the economy should be
directed through the Australian Government's Budget and how these
resources should best be allocated between the various programs
of the Government. I see this task as having immediate priority.
All new programs and proposals will have to be assessed against
and accommodated within this framework.
Now is a time for consolidation, evaluation planning
for the future with an appropriate balance between welfare and
economic responsibility. Policy must always reflect our concern
for those in want; it must choose the most effective and
efficient means to that end.
We have striven to reform the overall structure of the
Australian economy. In our first year in office, before Australia
was engulfed in the world-wide economic turmoil, we pushed ahead
with the revaluation of the Australian currency and tariff reductions
and removed a number of anachronistic subsidies and taxation
concessions which operated to support less efficient industries.
We replaced the aged Tariff Board machinery with the more up-to-date
and broadly constituted Industries Assistance Commission. Trade
Practices Legislation has been passed and a Trade Practices
Commission established to protect the consumer and enhance
competition. I have no doubt that, in the long run, the Australian
economy will benefit greatly from these measures.
We shall certainly continue to maintain proper exchange
rates and tariff policies. We have made clear our resolve to
encourage and assist the Arbitration Commission to maintain a
wages policy consistent with the slowdown in the rate of inflation,
while protecting the position of wage and salary earners in this
country. / 13

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In the context of arbitration, it is difficult to take
into account the immensely enhanced value of services now provided
by the ccinmunity and no longer provided from incomes. I mention
in particular the Schools Commission in school year 1974 and
onwards, Medibank in fiscal year 1975-76 and onwards.
We are now in the process of adjusting our fiscal policies
to ensure that they will now and in the long run contribute to
the stability of the economy. Through the Reserve Bank and the
banking system we shall maintain responsible monetary policies
which ensure that credit is available, as needed, for the
development of the Australian economy but that the monetary system
is not awash with liquidity in a way which permits and even promotes
inflation. We must all recognise that the path to price stability
and full employment will not be a short one. We certainly
cannot hope to get there in 1975-76. It is important, however,
to make quite sure that we get on that path and stay on it.
Our aim is to consolidate what we have done, to plan ahead
to produce an environment conducive to economic growth, and
thereby to produce the means of completing the task we set ourselves,
and which we were elected to carry out.
An essential part of the consolidation relates to the
provision of income security for all Australians. When we camne
to power in 1972 there was need for immediate improvement in
welfare services. Considerable progress has been made to effect
that improvement. Further improvements of a more fundamental
kind are needed. To assist in determining new directions, the
Government has a number of expert reports which will form the
basis of a review process over the next year.
We have the reports of the Woodhouse Committee and the
legislation arising from it which the Senate hasreviewed and inxotedupon.
We have some of the reports of the Henderson Inquiry into Poverty.
We have the interim report of the Hancock Inquiry on National
Superannuation, and the final report is expected within the next
few weeks. We have a report from the Priorities Review Staff
canvassing issues raised in the inquiries already mentioned and
discussing possibilities for social welfare reform in Australia.
We are expecting a report later in the year from Mr Justice Toose
on Repatriation. The Asprey Report on Taxation also needs to
be mentionedt there is, of course, a very close relationship
between reforms in the welfare and taxation areas.
Two of the reports I have just mentioned the Henderson
and PRS reports will be released before the end of this month.
They both draw attention to a number of problems which need
attention and to a variety of possible solutions to those problems.
They are reports which require the most careful examination by
the Government. They are reports which I hope will stimulate
public debate and public contribution of a kind which will assist
the Government in taking decisions on them in due course.
Against that background, the Government has decided that
a full year should be set aside in which, in the light of published
expert reports, to develop an equal, fair and workable income
security system for Australia. The review will be conducted by
the Government itself, with Ministers closely directing the work
undertaken and reviewing the progress at regular intervals. / 14
I

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By the time of the 1976-77 Budget I expect the Government
will be in a position to determine its long term program of reform
in the welfare area and the steps which will need to be
progressively taken to achieve those reforms.
The new Budget attempts to be as relevant to the
implementation of the Labor program as its two predecessors. In
the framing of those Budgets, we were concerned about priorities,
the priorities of meeting needs as we saw them, the priorities
of reaching towards goals as we saw them.
The common ground of economic debate between the parties
today is the need to reduce the rate of growth of government
spending. The present Leader of the Opposition makes no specific
proposals about what cuts should be made, while the Leader of
the other Party proposes only more subsidies and new spending.
The Leader of the Opposition's most recent predecessor did at
least make a specific proposal: it was to make percentage cuts
across the board. We have not taken that course because it
avoids the basic task for a Government the task of determining
priorities. In this Budget you will find that we have been as
much concerned about getting our priorities right in circumstances
of great difficulty and complexity as we tried to do when both
national And international circumstances permitted us a far
wider range of options.
The abiding challenge for statesmanship in a democracy is
to try to get the priorities right and to resolve the conflicting
demands about priorities in the context of the desirable and the
possible, the politically possible, the economically possible.
The nature of our Australian society is such that everyone
in politics or government is faced with an ever-increasing range
of demands from the articulate, from the powerful, and equally
inescapable demands and hopes from the less articulate, the least
powerful, that their priorities are the ones which should be adopted.
A remarkably permanent aspect of our Australian society
and Australian history is that for all our sense of independence,
for all our ability to improvise, to take initiatives, our demands
for action always turn into demands for Government action, for
Government assistance. At this very moment, almost every demand
for the protection of free enterprise, for the enhancement of
business freedom, is couched in terms of Government assistance
a subsidy, a quota, a tariff.
It has ever been thus. From the beginning, when we in
Australia have spoken about national priorities, we have really
meant priorities set for the nation by the Government.
Australian political debate has always been extremely vehement.
The peculiar vehemence of Australian political debate
has always been about priorities set by the Government of the day,
whether elected or appointed. One only needs recall that one of
the principal charges against Macquarie, one of the principal
items used to discredit him in the Bigge Report, was the building
of the Obelisk which still stands in what is now Macquarie Place
as the measure of distance from all places out of Sydney. It was
charged against Macquarie-that he had got his priorities wrong.
Those who govern Australia are still accused of trying to build
monuments, when their real wish is to get Australians priorities
right, right for the present and right for generations ahead.

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