PRIME MINISTER QFOR
PRESS ( F. 76/ 28)
ADDRESS TO BRISBANE PRESS CLUB 13 FEBRUARY 1976
Since the elections in December, the Government has concentrated on
getting its economic programme under way. The first priority of
the Government should by now be well understood. It is to bring
inflation under control. Until this is done, there waill be no real
return to confidence in the economy and no soundly based expansion
of job opportunities. Fortunately, there is increasing appreciation
of the absolute importance of tackling inflation and tackling it
as rapidly as possible.
Our first task is to transfer back to individuals and private enterprise,
resources which have foolishly been diverted to the Government.
We have begun to do this. Inevitably there has been enormous waste
and-inefficiency involved in the very rapid increases which have taken
place in Government spending. We have made a large number of
economies in administrative expenses and spending programmes, starting
with the spending of Ministers and other Members of Parliament.
Economies worth $ 360 million have so far been announced. These will
be effected in the remaining months of this financial year. These
same economies in terms of annual rates, are equivalent to savings
well in excess of $ 1 billion.
A stop has been put on the growth of the federal bureaucracy.
On 23rd December, we announced our intention to hold staff ceilings
at the level they had reached at the end of November. As a result
of a further searching reappraisal of priorities and programmes,
we have reduced these ceilings still further. By the end of June
there will be 17,480 fewer peopl ' e employed in the federal bureaucracy
than under the ceilings set by the previous Government for Departmehts
and authorities.
We will be continuing to examine the Government's spending commitments.
Sir Henry Bland is heading a committee to review administrative
expenditure, with a view to achieving maximum efficiency and
eliminating waste and duplication within and between Departments.
Alongside these measures we have begun to implement a number of
policies to directly boost investment and job opportunities.
These include the 40% Investment Allowance, the suspension of
quarterly tax instalments, various measures to assist rural industry,
renewed encouragement to development of mineral wealth, greater
efforts to promote Australian trade, and a major set of monetary
measures to take up excess liquidity and encourage investment.
These measures will all contribute to the revival of job opportunities
and real economic growth.
Later this year, we will begin to implement our policy of personal
income tax indexation which will ease the pressure on individuals
of the constantly increasing tax burden inflation brings.
Steps have also been taken to establish a responsible Cabinet
Government which can give effect to coordinated policies. Much
greater care is being taken by Ministers to administer-their
Departments to ensure that the administrative means without
which policies cannot succeed, are well thought out and operate
effectively..
Many of these decisions have been hard ones, but they are decisions
which serve the over-riding goals of Australians. We have taken
the decisions we believed to be in Australia's interests. The
Australian people elected us to do a job. We will do that job.
And we will do what is necessary to make a success of that job.
Let me emphasise that restraint on the part of Government does not
mean doing less than we can in the present. It means maximising
our present gains without jeopardising our potential f or the future.
It means balancing the present against the future.
A fundamental cannon of good Government is that we must operate
within the limits of our resources. In the longer term, the best
safeguard against the history of the last three years repeating
itself, is for us all to be aware of an appropriate role for Government.
It is very ea sy to stimulate the kind of pressures we have seen in
Australia by exaggerating what Government can, or ought, to do.
Too many politicians, not only in Australia but also in the other
Western democracies, have promised too many things that they just
cannot deliver.
This is the greatest single threat to the . continuation of democracy.
The success or failure of democracy will depend on the ability of
both politicians and people to relate their expectations to the
resources available. Democracy will fail if democratic Government
cannot persuade people that they must not demand of Government
more than resources make possible. This is the great test of
democratic leadership, the great challenge to the people of the
Western democracies are we to be seduced by the irrational
promises of Socialism which cannot, by their very nature-be realised?
The last election result holds our great hope for the future.
Our qualities as a Government and a people will be tested by our
ability to take the hard decisions that responsibility demands.
We must exercise restraint. Restraint on the part of the Government
means that Government should not intervene unnecessarily in areas
of life where people can do things for themselves, if they really
want to. The apparent advantages of Government assistance to one
group must be weighed against the fact that help for one group is
given at a cost to others.
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The more the Government undertakes the role of deciding the
distribution of resources, the less freedom do people have
to decide which activities they will fund, because more and more
of the money they earn is allocated for them by Government.
People become more and more dependent on Government and in the
end, this increasing dependence on Government builds frustration and
political anger. If we rely too much on Governmen:, the demands
for assistance in the end press upon and overwhelm the limits of
resources. When this happens, everyone but particularly
the weaker groups suffer.
Over the long term, Australia's real wea lth has increased by about
5.3% per annum. This is the limit on real improvement in all
areas of where improvement is possible. We cannot cheat on this.
We cannot exceed these constraints without rapidly imposing other
costs on people. A massive attempt to evade these limits such
as we have seen in the last three years ends up by creating,
totally unacceptable social dislocation. It does this by reducing
the national wealth and our capacity to help the needy and
disadvantaged. There is another group, much more visible, who have also paid for
the excess Government expenditure of the last three years, the
unemployed. One major reason why Australia is suffering from the
level of unemployment we now have, is that resources which private
enterprise needs to expand plant and equipment, and create job
opportunities. You may recall that the Mathews Committee Report
last year went so far as to say that the very existence of the
private sector was threatened by this situation.
People and Governments must recognise that there are limits on
what Government can perform. Performance must be matched to
resources. This involves hard decisions. The fact is that
we have no choice if prosperity is to be restored.
Two of the most difficult decisions concerned the future of the.
Prices Justification Tribunal and Wage Indexation. In both these
cases, we-re-examined previously held views in the light of new
evidence. Thus, over the P, J. T. we agreed to consult with
interested groups. This move was generally hailed as being a
wise one based on a willingness to re-examine the merits of
the case.
In the case of Wage Indexation however, the very people who had
described our attitude on the P. J. T. as one of proper flexibility
now called our reconsideration of a passing on of the full 6.4%
C. P. I. into wage increases, a " breach of trust". Two inconsistent
responses to similar actions. What's good for the goose is
apparently not good for the gander.
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Government believes that an increase of 6.4% would be in the
interests of no-one. It would undermine the confidence of both
consumers and industry in Australia's future. Some industries
have no capacity to pass on higher costs. In these industries,
unemployment would grow. In other industries, the pricing
situation is more flexible and costs can be passed on.
But these higher prices will then be reflected in the C. P. I. index.
The Index, will then be used for the next wage adjustment, and so on.
What advantage is there to anyone in this vicious spiral of higher
prices, higher money wages, higher costs, and yet more price increases?
I am certain that most Australians now recognise that this is the
process which has been undermining Australian prosperity.
Mr Hawke has said that we need a consumer-led recovery. Consumers
have had higher wages and tax cuts. Because of their uncertainties
they have not spent but saved, saved to hedge against inflation.
The -factors that prevent consumers spending, are the factors that
prevent business investing -uncertainty about the future, about the
course of inflation.
Those who say we need a consumer-led recovery in this fashion are
applying the logic of Theodore, the logic that Keynes wrote into
his theory. But these ideas are now forty years out of date. The
preconditions for these ideas to apply are high unemployment,
a stable currency , and low interest rates. The only precondition
that exists at the moment is high unemployment.'
Because of the policies now being implemented by the Government,
the Arbitration Commission today has the greatest opportunity in
its history to decisively affect the course of inflation and
unemployment. Its decision is of the greatest importance.
it cannot avoid responsibility by claiming that it is only concerned
with the wages dispute, with the particular case before it. The
decision of the Commission today will affect everyone.
Because of the policies the Government has initiated, the Commission
now has the greatest opportunity to break the inflationary spiral.
I am certain that the Australian people want that spiral broken.
The Government has an unequivocal commitment to get unemployment
down, to provide job opportunities for Australian workers.
During the Labor years, the union movement said little about the
highest unemployment since the Depression. They failed to
protect the interests of their members -particularly their weaker
members.
While afew strategically placed militant unions were able to benefit
from increased wages, the consequences of this were higher and
higher unemployment and inflation. Some unionists benefitted by
taking away their workmates' jobs.
Now they propose to destroy even more jobs in the pursuit of
illusory paper wages, perpetuating the wage-price spiral which
only benefits the few at the expense of the many.
I look to the A. C. T. U. and its President to represent the
interests of all their members and not the interests of the A. L. P.
One man cannot speak effectively for both the Labor Party and
trade unionists especially a man who hopes to come into
Federal Par ' liament. This ambition must make it impossible for
Mr Hawke to'do both jobs with commitment and dedication. When a
choice had to be made in the past, he placed the A. L. P. above the
Union movement and especially above the unemployed.
Now Mr Hawke again has an opportunity to show that he can be
a great Australian and place the interests of the unionists and
unemployed first. I hope that he takes it.
The-. Government's commitment to increasing employment opportunities
is unyielding.
The Government expects, and I am sure the Australian people expect,
the cooperation of all sections of the Australian community in
restoring prosperity and job opportunities.
There have been suggestions from some quarters that trade unions
may boycott the tripartite Conference with the Government on the
economic situation because of the stand of the Government on the
wage case, and because of our intention to legislate for secret
ballots. I do not expect that this will happen. I have too much confidence
in the basic common sense and dedication to the national interest
of the majority of trade union leaders.
Business also cannot escape from its obligations to the whole
community. The law requires that businesses have an obligation
to their shareholders. Morality requires that businesses also
have an oglibation to their employees and to people generally.
This obligation should weigh particularly on big businesses,
including multinational corporations. International companies
have a major obligation to the people of the countries in which
they operate. Business must be concerned for the working environment
of their employees, for the consumer, for the quality of their
product, for the environment.
Some businesses evidence that concern, in the same way that some
trade union leaders are conscious of their wider responsibilities.
Some businesses unfortunately do not.
Both business leaders and trade union leaders must look to their
responsibilities. The Government, employers, and the trade unions
all have a responsibility to those who are unemployed, to the
weaker sections of the community to all who will continue to
suffer until inflation has been brought down.
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I expect that employers and trade unions will continue to
both work with the Government because they recognise that this
is a time when over-riding common interests must take precedence
over narrow special interests.
The decisions taken and the procedures adopted are important in
placing Australia back on the path of economic recovery and
prosperity. In our initial attempts to rein -in the budget
deficit, limit the growth of the public sector, and give the
community an increased confidence in the future, we are confident
of success. oOo...