PRIME MINISTER
FOR PPMS 9 DECEMBER, 1976.
ECONOMIC STATEMENT
Throughout this year, the Government has had one clear goal in front of it.
That goal is a sustainable economic recovery a recovery whichwill lead
Australia towards sustained economic growth, and increasing employment
opportunities. A pre-requisite for achieving that goal is the c * ontrol
of inflation. The dominant goal of our whole economic strategy has beenand
remains directed to the control of inflation.
In this statement, I want to set the measures of the last two weeks in
the context of that strategy. A realistic assessment of the impact of
those measures must take into account the effects of policies already
implemented during the last year. These policies have already achieved.
a slowdown in the rate of inflation and in the growth of wages and
salaries.
The increases in each of the last three quarters in the Consumer Price
Index were lower than any increase for two years, leaving aside the
effects of Medibank. In the September Quarter, the increase was 2.2%,
t he lowest since the March Quarter 1973.
Components of the Index show very encouraging trends other price
indicators have also been encouraging. For example, the price index
for materials used in house building rose by 0.5 percent, in Octoberthe
lowest increase since November 1972. Similarly, the price index of
materials used in building other than housing increased by 0.4 percent
in October again the lowest increase since November 1972.
Figures published recently show that Australia's rate of inflation is
now broadly in line with the OECD average. In fact, the Consumer Price
Index expressed as a compound monthly rate of is actually
marginally better than the 0.8% for the OECD countries as a whole during
September. While other indicators are mixed, there are encouraging
signs.
Among these the index of industrial production has firmed since July
and in October was 9 percent above its low point in June ] 975.
Recent figures show that investment spending on new buildings and
structures in manufacturing industry is expected to increase by some
31 percent in the half year to December. Some of the distortions inflicted
on the economy during ] 974/ 75 are eginning to be corrected.
For example, business profitability has grown; the savings ratio has
declimed and the shake-out in stocks appears to have run its course.
Despite this progress, we could not put off facing the problem posed
by our loss of Reserves.
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On coming to off ice, the government faced an exchange rate which I
already susceptible to speculation and uncertainty. In the weeks
immediately following the election in December 1975, several hund--x-d
million dollars of private capital flowed out of the country maK.,-ly
due to a widespread belief that the Australian exchange rate was overvalued.
In the three months to the end of November 1976, the decline escalated
our Reserves fell by over $ 700 million, if official borrowings by the
government in this period are left to one side. The decline in Reserves
continued despite the additional monetary measures of 7 November.
The continued outflow of reserves stemmed from the fact that most
observers in Australia and overseas beli,: -ved that our currency was
overvalued. The week before last, the government's official advisers jointly presented
two options to the government: overseas borrowing of around $ 1,000 million
or immediate devaluation. The Government looked at the se options with
a number of facts in mind.
One central fact was the uncompetitive position of
Australia's export and import-competing industries. In the last six
years wages in Australia's manufacturing industry increased by 130%
compared with 53% in the United States, and 70% in West Germany.
The Industries Assistance Commission estimated that the general
competitiveness of the Australian import competing sector fell some
17% between 1970/ 71 and 1975/ 76.
One drastic consequence of this and related factors is that employment
in Australiaimanufacturing industry fell by almost 100,000 between
May 1974 and the end of June 1976. There has been a growing tendency
for some sections of manufacturing industry to move off-shore to
minimise cost disadvantages. This export of jobs had to cease.
These facts were of deep concern to the Government. They could not
be ignored. Further, uncertainty about the exchange rate was causing
new projects involvi ng overseas investment to be'deferred.
There was continuing and growing belief overseas about the
inevitability of an Australian exchange rate adjustment.
Increasingly, the overwhelming view in international circles was that
the Australian exchange rate was overvalued, and that sooner or later an
adjustment would have to be made.
Throughout this year the Government has done everything possible to
protect the exchange rate, as part of the fight against inflation.
ultimately the point was reached where the rate was no longer
sustainable. By the time this decision was unavoidable we had been
able to bring each of the other major arms of policy to focus
in the fight against inflation. Policies in these areas must now be
tightened further.
In all these circumstances the first option of borrowing around
$ 1000 million, including funds from the IMF presented substantial risks.
A borrowing of this magnitude would not have ended speculation against
the downward movement of the dollar because people were looking as much
at the underlying cost position than the balance of payments position.
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T9i take just one example: as the chief international economist of
Morgan Guaranty has said: " You simply lost competitiveness because
of the amount of inflation". " This situation has been widely recognised
over the last year"
Since Australia only began in the battle against inflation in December last year,
further borrowings in the situation which had arisen would not have
provided the change in attitudes the government was determined to achieve.
Were that the case the strengthening economic recovery would have been
threatened and the eventual devaluation or further borrowing could well
have been greater.
In these circumstances it would have been nonsense for Australia to have
gone to the I. M. F.
The government was not prepared to put Australia in that position
once we had made the inevitable decision to devalue there were a number
of options ope ' n to us on the extent of devaluation and on the form, of
the new exchange rate system.
We could have moved to a new fixed rate which would, at some
future time perhaps require a further significant alteration in
the exchange rate. A move which, as the devaluation demonstrated,
is. attended by mal-or public concern.
We could have a market determined float which would make.
fluctuations possible on a daily basis, or We-could have an
administered and controlled managemenit of the exchange rate.
A further question requiring very careful consideration was the
magnitude of the initial change in the rate which would be made.
The choice before us was to make a move which would decisively end
further speculation against the downward movement of the dollar, or
a move which would leave the way open for speculation about a
further devaluation perhaps in the not too distant future.
The government took the view that it was essential to end definitively
further speculation against the dollar, and to establish a regime
which would in future permit the exchange rate to adjust smoothly
to changing circumstances.
The decision to devalue by 17 was made after full consultation
with the government's advisers and on the basis of a technical
evaluation of the magnitude required to achieve that result.
The magnitude of the devaluation indicates the seriousness of the
cost disadvantages which had been weighing with increasing heaviness
on Australian manufacturing industry.
It should awaken all Australians to the serious weakness in our economic
situation which will require a concerted national effort to overcome.
It is important that there should be a much wider understanding than now
exists, of the implications of adopting a managed regime
In taking this decision, the government has brought Australia more into
line with the system adopted by other major trading countries.
It needs to be understood that most major countries have tended -to adopt exchange
arrangements that permit more flexibility in rates in response to
changes in economic circumstances. The experience of a number of
countries ( including the United States, Germany, Japan and Canada)
has clearly demonstrated the important role that a managed exchange
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r O-e can play in the pursuit of domestic policy objectives. And in
context, it is interesting to note the comments of the I. M. F.
ir. ; Its 1976 Annual Report: " Faced with substantial uncertainty
cr':, rninq future balance of payments developments and exchange rate
t nd aware of the persistence of marked differences among
nt,. 4onal economics, in particular with respect to rates of inflation,
i rest rates and levels of economic activity, as well as of
_ ctural changes, the major industrial countries have continued
to) permit their currencies to float. Indeed, as underlying economic
conditions have continued to differ among countries whose currencies
are floating, frequent exchange rate variations have been a major
form of balance of payment adjustments".
Some people haive expressed surprise that under the new system of a managed
exchange rate the first change in the rate should have occurred so
soon. I regret to say that -this indicates a lack of understanding
of the nature of an administered exchange rate.
Suppose that we had adopted a fully floating exchange rate, under which
it is not unusual for rates to fluctuate daily. If under such a float
the rate had moved upwards on the first day would anyone have suggested
that it should not have done so? Of course not. Under the regime
we have adopted not infrequent changes are likely to occur in the
ordin'ary course of events. That is delibarate. The regime is designed
to avoid the large jumps that have occurred in the past.
That is, indeed, the purpose of adopting a managed exchange rate.
The initial decision was taken in the context of the adoption of
such a system. Critics of the two percent revaluation are tied
to the past. They have not understood the nature of the change
which has been made. For example, some critics have asked why
all the criteria used by the bank in making decisions about the
rate should not be made public.
Such a course would only advance the cause of the speculator.
There is no responsible bank in the world which would give the
precise grounds on which decisions about changes in the rate would
be made, or for those on floating rates, about daily interventions
in the market.
As understanding of the new system grows it will be fully accepted.
Devaluation inevitably means that a number of other difficult
decisions had to be taken. It is a decision with some -inflationary consequences
which can only be countered by a tightening of policy in other areas.
Devaluation makes it more necessary than ever that the anti-inflation
strategy we have pursued throughout this year be persisted with.
In the light of the seriousness of the situation made clear by the
devaluation, that strategy will be pursued with renewed intensity.
The government has already announced a number of measures designed
to counteract to the inflationary impact of devaluation.
On the fiscal side, a review of expenditures aimed at identifying
scope for further savings through the deferment of expenditures has
been put in hand, through the new Department of Finance.
The Government is determined to hold government spending firmly in
check. This is essential to reduce the pressure on monetary policy.
Let me emnphasise that responsible further relief in income tax is
dependent on success in this area.
Further to this, in the preparation of forward estimates of
expenditure for next year now under way Ministers have been
asked to identify any increases in existing programmes so that these
can be looked at separately in the same way as entirely new proposals.
Keeping a very tight grip on government spending continues one
major line of the anti-inflation strategy we have been pursuing
with success. It is an unpleasant reality
that if we want to beat inflation and restore employment opportunities
th-i pressure on na--ional resources from high government spending
az.: i high deficits must be reduced.
: e are widespread calls for further tax cuts, and the gov4rnirnt in
p-nciple accepts this. But if thege tax cuts ar6 to be made
rx. sponsibly, they must be matched by further restraint in government
spending.
This year we have shown that we are prepared to take the tough decisions
required in this area. We intend to demonstrate that determination
again in the coming months.
On the monetary side, action has already been announced to help
ensure that monetary conditions do not become accommodatinig to
increased inflation, but at the same time providing adequate funds
to underwrite economic recovery. Yields on Treasury notes were
raised by 0.5% on 29 November. Subscriptions to the notes have been
encouraging non official holdings are presently at $ 1,400 million.
About half of which is held by the non-bank public.
Subsequent action by the authorities has brought about an adjustment
of similar magnitude-in yields on short-dated bonds, with consequential
adjustment on a diminishing basis of yields on other securities.
The long term bond rate has been increased by 0.3% to 10.5%.
The yield on savings bonds has been increased to 10%. Bank lending
will be monitored so as to prevent any increase in inflationary
pressures. Normal financing requirements of business will be met.
I should not need to emphasise that wages policy has assumed an
even greater importance in the post-devaluation context. To allow
the rate of increase in wage settlements to escalate as a result of
devaluation would be to negate the beneficial effects which
otherwise flow from devaluation for the competitive position of
Australian industry and for employment.
The government will therefore be doing everything within its power
to ensure that any identifiable effects of devaluation on the C. P. I.
do not flow through into wages and salaries.
A number * of major measures adopted during this year have been designed
to protect potentially disadvantaged groups from the costs of inflation
These measures include: the automatic adjustment of pensions for
inflation; the family allowance scheme; and full personal income
tax indexation. These measures which are of continuing benefit
should provide an important support to wage and salary restraint.
There should be a recognition that the important fact to the wage
and salary earner should not be gross income, but final real
disposable income.
The wagdes area is one where-as both the Treasurer and I have emphasised
throughout the year, the government cannot achieve success on its
own. In this area particularly, it will take a commitment by all
sections of the coi:.--unity to take up the fight against inflation and
to restore employme-, t opportunities.
It is somewhat ironic to recall that we were attacked earlier in
the year for arguing as strongly as we did in our first submission
to the Arbitration Commission. Even then, there were those who
predicted that if the government based its policies on economic
commonsense, the result would be confrontation with the unions.
Unfortunately, too much credence has been given to the threats of
extremist union leaders to create further conflict.
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In this area there has been a capitulation to threats instead of
recognising economic commonsense. Not enough weight has been given to
the great comnmonsense of the vast majority of rank and file trade union
members who know full well the importance of restraint at this time.
I believe most are fed up as Australians with the disruptive tactics
of a few.
This government will not allow an unreasonable burden in the fight
against inflation to fall on any section of the community including
wage and salary earners. The government has deliberately taken a
number of major measures designed to encourage wage and salary
restraint and to protect potentially disadvantages groups from
the costs of inflation.
These measures include: the automatic adjustment of pensions for
inflation, the family allowance scheme, and full personal income
tax indexation. These measures, which are of continuing benefit
should provide an important support to wage and salary restraint.
As well the government's submissions before the Arbitration Commission
are designed to protect lower income earners. There should be a
recognition that the important fact to the wage and salary earner
should not be gross income, but final real disposable income.
These measures provide a totally reasonable basis for wage and salary
restraint. It is in this total context that the government intends to argue
more strongly before the Commission for recognition of the absolute
importance of wage and salary restraint. Beyond that we will be taking
every step within our power to secure restraint. The Treasurer will,
for example, be discussing the impact of wage levels on the State
Loan programmes with the Premiers at the Loan Council next week.
Quite clearly, with wage restraint, the States can achieve more
effective loan programmes.
This again is part of action to tighten the main lines of the strategy
we have followed throughout this year. In addition to action on
the Budgetary, Monetary and Wages front, action has also been taken
on the prices front.
The Prices Justification Tribunal has been asked to pay special
attention to price increases consequent on devaluation. This will not
be limited to companies technically covered by the Act. The purpose
is to ensure that devaluation is not used as an excuse for unjustified
price increases.
The Government's legislation regarding the P. J. T. will in fact increase
its surveillance capacity and its ability to investigate areas where
there is evidence of price abuse. The P. J. T. will report progressively
to the Minister, and at the end of three months, the Government will
review its request.
In the external area, as a result of the devaluation of the Australian
dollar, the Government has examined the Australian tariff. We have
not made across the board cuts in tariffs but have acted selectively
to reduce inflationary effects arising from the devaluation
without negating the improved competitive position that devaluation
has brought to Australian industry.
This improvement is greatly needed by Australian industry if jobs are
to be created and industries are to be discouraged from going off-shore.
Our decisions on tariffs have been the right decisions taken at the
appropriate time.
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An across the board tariff cut would have been foolish. Selectivity
was necessary and it was therefore imperative to take advice.
In this case, advice could not be sought until after the devaluation
was announced. To have done otherwise would have been imprudent
to say the least it would have extended the circle of people who knew
about the devaluation beyond responsible bounds. Accordingly, the
decisions on tariffs had to be taken after the devaluation.
We were fortunate to have before us, IAC recommendations and we acted
on those recommendations. The government's decisions affect over 900
of the 2,750 items covered by tariffs, the value of the trade in
these items being around $ 2,000 million.
The reason for the selectivity of the tariff reductions, for our
refusal to engage in across the board cuts, is clear. Manufacturing
industry has in recent years had its competitive position eroded by
rising wage costs, a dollar which was until recently overvalued and the
shocks imposed by the Labor Government's 25% across the board tariff cut.
What needs to be understood is that the competitive position of
Australian industry had to be restored. Devaluation will achieve
that. At the same time, we have sought to reduce the inflationary
impact of the decision. Thus following devaluation, the government
has acted with respect to each of the major arms of policy.
On monetary policy: adjustments to interest rates on Treasury notes,
Australian Savings Bonds, and other government securities.
On tariffs: a review of temporary assistance arrangements followed
by measures announced to offset the inflationary impact in certain
areas. On budgetary policy: a further review of government expenditure
aimed at holding real expenditure levels. We will also maintain
pressure on the wages front and we have acted to establish conditions
in which restraint is possible. We intend to persist with our antiinflationary
strategy in full measure.
In the circumstances that Australia faces, it is disappointing to
note that some people who should, by now, know better, continue to
promote policies which only add to inflation. The vast majority of
people realise that it is no longer possible to spend our way out
of inflation and unemployment.
One consistent feature of all the alternatives offered by Labor Party
leaders has been the willingness some might say eagerness to vastly
increase public spending once more, or to pump up the size of the
Federal Budget deficit. The Leader of the Opposition some weeks
ago urged the Government to adopt measures which would increase the
budget deficit by some $ 1 billion. The Premier of Tasmania followed
up with an extravagant 24-point plan. The Premier of N. S. W. outshone
both of them with proposals for almost $ 2 billion more in federal
spending. Others have urged, and continue to urge, tax cuts and
inflationary spending.
It would seem that these proposals are made in total disregard for
their consequences. Each of these proposals, without exception,
would be highly inflationary. The over-riding need of this country
is to conquer inflation. What the Labor Party is proposing would
create yet more inflation. Surely they understand that by now.
Throughout its period in office the Labor Party failed to develop
a credible anti-inflationary policy. All its essays in economic policy 8/
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this year have been designed to give a further spur to inflation.
Let me explain in plain terms the effects of increasing the government's
deficit in the present context. Every new expenditure mreans a higher deficit
and this must be paid for in some way. Let me explain in plain terms
how this can happen. It can be done by the Reserve Bank printing money
which adds further to inflationary pressures. Secondly, it can be paid
for through higher interest rates, which can lead to a credit squeeze
on business, and a loss of job opportunities. Thirdly, it can be met
by increased taxes, and noone is proposing that. All these alternatives
are inflationary. The clear consequences of further increases in
spending are unacceptable. When people propose policies of this kind,
they must be prepared to follow through the full consequences of these
policies, Unfortunately, this is too often not done. The government reject,.
these as desirable or viable alternatives. Higher government
spending, larger deficits would do nothing whatever to correct the
imbalances in the economy, such an approach would: further damage
the private sector; increase further government's demands on the nation's
resources; it would increase unemployment.
Those who propose to solve our problems through yet higher
government expenditures are in fact whether they know it or not
perpetrating a cruel deception.
Contrast the effects of devaluation. It does not add significantly
to the deficit. It will reduce the burdens on thos sectors which
have been hardest hit by inflation and which have not been protected
by some form of indexed returns, which have not had guaranteed selling
prices for their products. It will create conditions where more jobs
can be created. It will reduce the reason for Australian companies
to move off-shore. Overseas and domestic investment projects will
start moving again.
The real possibilities of increased production for dauestic industries
constitute a substantial benefit from devaluation. Many manufacturing
firms are able to expand their currently underutilised capacity.
At present their fixed costs such as plant and equipment depreciation,
capital costs, rent and salaries represent a high proportion of
total costs. In this situation, increases in demand and production
can produce quite significant reductions in unit costs.
It is worth recalling the words of the 1975 Jackson Committee Report:
" Australian manufacturing industry is in acute financial crisis.
Unemployment is high. Factories are running below capacity Their
profit record and prospects make it hard to raise equity".
The Jackson Report also mentioned the damage caused ID manufacturing
industry by recent adjustments in the exchange rate and the levels
of protection. Our company tax measures have made a contribution
to alleviating this situation, but beyond this, devaluation presents
an opportunity for much needed relef in the problem areas identified
by the Jackson Report. The alternatives to devaluation would have been
massive subsidies or even higher tariffs.
Those who criticise the decision to devalue, fail to appreciate the
continued thrust for more and more tariff protection which carries
its own inflationary impact. In the last two weeks, there has been
a remarkable unwillingness on the part of some commentators
to assess the decisions objectively in their full ramifications. 9/
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One well known economic commentator writing on the devaluation of
the Australian dollar has made the following points. He stated
firstly: that " most spectators would have felt the devaluation would
have been timed for some time next year. The government, by getting
in early before speculative pressures built up, has avoided a
haemorraging of Australia's international reserves through capital
outflow". Again: " the extent of the devaluation will be
sufficient to convince potential foreign investors in Australia that
there is unlikely to be any further devaluations". Again: the devaluation
" will give a breating space to some Australian industries now suffering
from severe import competition". Again: " the economy is running below
full capacity, so the extra stimulus to domestic demand and employment
will hopefully take up some of the spare capacity....." And finally:
" the devaluationwill give a fillup to business confidence".
There could be no better description of the positive aspects of the
1976 devaluation. But these comments were made about the 1974 devaluation,
which was undertaken in an inflationary context and followed by a number
of inflationary measures. The same commentator condemned the 1976 decision
neglecting his own earlier arguments not to mention the complete
different policy context within which the 1976 decision has been taken.
Many of the statements being made in recent days about the devaluation
are quite out of touch with reality. Wild assertions about interest
rates, the availability of credit and exchange rate confusion are
not based on a considered assessment of what has actually been occurring.
The information available suggests the transformation to the new interest
rate yield curve has been successful. The greater indications of support
for the government treasury notes is encouraging.
A cautious observation of the stock market indicates strengthening
since devaluation. The government welcomes renewed interest from overseas
in portfolio investment. The changes made in the exchange rate
have halted speculation against the dollar and the haemorraging of our
reserves. The massive inflow of capital that some people have predicted
has not occurred.
Much of the criticism failed to understand the changed nature of the
regime. This week's adjustment reflects no more than the success of
the initial move. Commodity markets have also shown continuing
strength. The hysteria and humbug which certain people have tried
to create in relation to the last two weeks is not supportable by
the evidence to hand. The government condemns it.
The government believes that the movements will be seen as responsible
and appropriate.
What a contrast has been provided by some more measured reactions
overseas. In accordance with normal practice the executive board of
the International Monetary Fund has considered Australia's decision
to devalue. The board appreciated the factors behind the decision.
All directors who spoke supported Australia's decision to devalue.
In addition, the greater flexibility that would be permitted under
the new exchange arrangements was welcomed. There was no suggestion
that the devaluation could be regarded as a competitive devaluation.
Most international reaction to our measures has recognised the soundness
of the decisions which have already been taken. The New York Morgan
Guaranty's Chief International Economist described the 17.5% devaluation
as a very correct amount and noted the wide recognition of Australia's
international uncompetitiveness.
Milton Friedman has observed post-devaluation that " Australia is
very well regarded international because now and this is comparatively
rare amongst Western nations at the moment it appears to be pursuing
a mature and steaccourse".
Our Ambassador to the U. S. has reported that our emphasis on the
anti-inflationary objectives accompanying the devaluation is being
applauded, and that the devaluation has been seen as removing a
significant disincentive to investment in Australia.
In balancing the arms of economic policy, the government considered
inflation as the number one priority but we have never contended that it
was the only priority. Nor has it ever been argued to my knowledge
that it ought to be the only priority.
In a number of decisions, such as the introduction of family
allowances, full personal tax indexation, the investment allowance,
and the allocation of monies to aboriginal and welfare programmes,
the government has moved to help the sectors of the community hit
hardest by inflation, and to encourage activity. If inflation had
been the only priority then there would have bee no family allowances,
no indexation, and no increases in money for social programmes.
There would have been no budget deficit and much more extensive cut
backs in government programmes. If inflation were our sole objective
we should have had a balanced budget. I do not recall the government
being urged to bring down a balanced budget. The reason is obvious.
The hardship in the other areas would have been too great.
The fight against inflation, although our dominant objective, cannot
be conducted with an utter disregard for its effects on other areas
of social policy. The fact that devaluation has taken place does not
mean that combating inflation has lost its place as our first priority.
The fact that the government has been forced to take a decision which
has some inflationary consequences can no more be adduced as evidence
that the anti-inflationary strategy has been abandoned, than the fact
that the government did not plan for a balanced budget.
The reverse is the truth.
The devaluation decision requires that we redouble our efforts
to get on top of inflation that there be no let up that
we press ahead with our announced strategy more strongly
than ever before.
Let me review the year's major economic decisions.
In February, $ 360 million worth of savings resulting from an
expenditure review were announced. In January, decisions
were taken to soak in the financial system.
In May, a package of fiscal policy decisions was introduced
tax indexation, $ 2,600 savings to forward estimates, famil-y
allowances. In the Budget, spending was held and the deficit
contained, monetary guidelines were laid down and strategy for
recovery was firmly implemented.
Let me state the main elements of our strategy again. The most
rigorous restraint on Government spending to rein in the bloated
public sector and free resources to productive private enterprise,
the provision of a wide range of incentives to industry to resume
expansion and provide employment opportunities. We are seizing
every opportunity to emphasise the importance of restraint in
wage and salary demands; establishing, through a variety of
measures a climate which will make wage and salary restraint
possible. This is essential to keep costs down and create
conditions in which employment opportunities can be expanded
as rapidly as possible.
We always said that this strategy would take time that it would
be a full three year programme. It is the only strategy which
is going to work.
Let me state the Government's attitude to inflation so there can
be no possible misunderstanding. Inflation is the enemy Australia
must defeat. It undermines security, destroys the value of savings
and incomes, hinders the expansion of job opportunities, erodes our
position in the world, and in the end eats away at the vitality
of our institutions and our way of life.
Twelve months ago, Australia, we all know, was in economic disarray.
When we came to office were were faced by the worst unemployment
since the nineteen thirties, an actual decline in the gross domestic
product, a depression in company profits, a decline in business
investment to its lowest level in three years, a desperate
situation in the farming sector and an inflation rate that was
fourteen per cent higher than it had been a year before and
showing no substantive indications of declining.
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In the past year, we have focussed the arms of policy on the problem
of inflation and have achieved improvement in our position.
The fact that it was not possible to avoid devaluation shows
the magnitude of the problems which still fact the Australian
economy and every one of us as Australians.
Some people appear to believe that devaluation was a soft option.
Nothing could be further from the truth it is the hardest. option
of all.
If we dno not take advantage of the opportunities that devaluation
offers us, if we don't bring every weapon ofpolicy to bear on
inflation then the future will be a grave one we may not get another
opportunity. The present situation facing us all demands a concerted national
effort. All Australians, all sectors of the community, have an
overrinding national interest in achieving a soundly based economic
recovery. We have made a beginning and we must not squander our national
opportunities and our national strengths.
The Government's measures have been the right ones but the
Government cannot do it alone. In the battle against inflation,
we need the support of all Australians.
We need to find a national will and determination to overcome
inflation. Too often our institutions seek to sharpen differences
in the community to pursue an adversary relationship with each
other for temporary advantage rather than emphasising the
common interests we all share.
This is a time when all our institutions, all Australians
businesses, trade unions, all in positions of leadership in the
community must seek to set aside narrow interests in favour
of the overriding common interests we all share.
Devaluation should underline for every Australian the seriousness
of the problem that confronts us. It also gives us an opportunity
that we as a nation cannot afford to lose.
The fight against inflation is a fight we are going to win.