3HA 31 July 1.977
Embargoed until 7.00 p. m. 3YB 4 August 197747,.
F77/ 163
4J) AUSlT AL L
PR9NME MINOSTER
FOR PRESS 31 JULY 1977
ELECTORATE TALK
This week, Australians heard more good news about progress in
our fight against inflation. The June quarter Consumer Price
Index increase of 2.4% was the lowest June quarter increase
for five years. The figure put Australia's inflation rate
over the last financial year as measured by the CPI at 10.2%.
This figure, of course, excludes the Medibank levy cost as health
insurance has always been a family cost.
our achievement in the inflation fight is considerable. It is
certainly a far cry from the 16% and 17% levels of only 18
months ago.
I want to make one point clear. Inflation is not coming down
because of magic wands of luck. It is coming down because of
sound and well-based economic policies and responsible economic
management. The gains were won because of our absolute determnination
to win despite strong and persistent pressure to return to
the disastrous ploy of more Government spending to aid one group
or another.
The Federal Government will not take our gains so far for granted.
We will not rest on laurels. Our determination to reduce
Australia's inflation rate below that of our overseas trading
partners is as strong as ever. We will continue with policies
that will keep grinding down inflation.
It is worth making the particular point that our success so far
in this fight has been due in large part to our last budget.
It is absolutely clear that my Government's first budget was
the right budget. The strategy was right. Government expenditures
were largely held within budget estimates for the first
time in some years. The deficit was substantially reduced. The
growth in the money supply was held on target. Investment
increased and mostC importantly, the economy began to grow again.
It is too easy to forget that only two years ago the Australian
economy actually shrank. I
In just over a couple of weeks, the Treasurer will present the
Government's second budget. The Government is aware that it
comes in a critical point of our planned economic recovery.
We are aware of the responsibility we carry. / In the
-2
In the last week, Cabinet has completed what I believe
has probably been the most exhaustive examination of
Government expenditure ever undertaken in framing a
Federal budget in Australia. We have put the microscope
over every area of Government expenditure. We have left
no dollar-of taxpayers funds unturned. I am pleased with
the results. I believe the Cabinet is on the way to framing
a realistic budget that will keep Australia continuing on
the path to full economic recovery. It will keep our antiinflation
attack on course.
Let no one be under any misapprehension that we are fighting
inflation simply to boast about trends and figures. We are
fighting-a real disease a disease that destroys the very
fabric of family life and builds divisions in the community
that take years to heal. Inflation is not about facts and
figures -it is about families.
While the Government can do a great deal in this fight, there
is one area where--our influence is indirect wages. It is
clear that our inflation fight is being hampered by overpriced
labour costs.
one set of figures graphically illustrates the point. Based
on ruling exchange rates at the time, average weekly earnings
in Australia in 1971 were 17% lower than in the United States.
Now, they are 13% higher -in Australia than in the United
States.
. A recent survey has shown that two-thirds of companies
. wholly-or partially absorbed the last two wage rises without
increasing prices, but that half-of these companies did so
by reducing their number of employees. one man's wage
increase is -without doubt -Another man's job.