Embargoed against delivery 3HA 5 December 197'
3YB 9 Dece-lber 1976
PRIME MINISTER
FOR PRESS 5 DECEMBER 1976
ELECTORATE TALK
What Australians want is prosperity, stability and security.
A year ago the Government took over the economic management
of a country in which a generation of progress had been
destroyed, and from which the prosperity, stability and
security which Australians had come to take for granted,
had disappeared. We began the fight against inflation
immediately. The Government's goal was economic restoration with the
fight against inflation as first priority. That fight has
gone well better than expected.
Nevertheless, the high cost structure developed between 1972
and 1975 continued to have its effect. Australian manufactured
goods were no longer competitive in world markets. The returns
to Australian farmers became more and more out of line with
wages and salaries for the rest of the community.
For instance, before devaluation, the forecast for average
nett farm incomes was expected to fall to around $ 126 a week.
This is only about two-thirds of average adult male earnings,
which currently are around $ 185 a week.
The social structure was becoming more and more distorted with
the Arbitration Commission protecting trade union members
against some of the effects of inflation, while the burden
on others became heavier and the economy and the nation as
a whole suffered.
In September, regrettable and incautious remarks by the
Federal Opposition exaggerated a run against the Australian
dollar. 800 million dollars drained out of our national
reserves. Devaluation halted this run on the dollar. It
has opened the way for a recovery in foreign investment and
of exports by rural industry, by miners and by manufacturers.
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The fight against inflation goes on. Those sectors hardest
hit by rapid wage increases and declining overseas markets
now have their chance for revival. Those overseas firms which
have held back from investments in Australia by approval for
specific projects given by the F. I. R. B. have been encouraged
to press ahead. Those Australian firms, with plant capacity
under-utilised because of pressure from imports, now have the
potential to expand production. There will be greater return
in Australian dollars for primary producers. Over the past
year, these sectors of the economy, along with Australia's
unemployed, have made sacrifices in the cause of fighting
inflation. The burden on them has been eased, or will be
eased, as a result of the restored competitiveness of Australian
industry.
As a result of the decision to devalue, farmers can now look
forward to an increase in their nett incomes of about thirteen
percent to a forecast $ 143 a week. This is still $ 40 less than
the adult male wage, but it is an improvement. Nevertheless,
farmers, together with all other sections of the community,
must face the fact that the fight against inflation will go on.
Devaluation is part of an overall approach. The business
community has been warned to make preparations now for the
seasonal tightness in liquidity in the June quarter next year.
A new, slightly higher, interest rate structure has been
established as another of the control measures. An examination
has been launched of the structure of customs by-laws to see
whether tariff reductions can be made in areas where imports
do not compete with domestic industry and do not endanger
Australian jobs.
Devaluation means an increase in economic activity, and a
decrease in unemployment. It does not mean any diminution
in the fight against inflation. Our resolve to fight and beat
inflation is stronger than ever. 2