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FOR MEDIA SUNDAY 22 JUNE 1980
ELECTORATE TALK
The Government's determination to continue with responsible
economic management is unwavering. We can never mratch the
economic promises of our opponents and their promises of
enlarged and more powerful 9overnment. To do so would run
counter to our own notion of government responsibility.
A central plank in discharging that responsibility is to continue
our fight against inflation. The importance of this fight was
emphasised this week with the release of international inflation
figures. The latest statistics from the OECD that is from the
advanced Western democracies-show that Australia is continuing
to improve its competitive position in relation to other major
industrialised nations.
During 1979 and 1980 inflation rates around the world have risen
boosted in part by steep increases in oil prices and by prices
of other commodities. We have been subject to the same pressures
yet the rate of inflation in Australia has increased by only
half as much as inflation in other major industrialised countries.
Official figures make this point very clear.
Since the end of 1978 the inflation rate for all OECD countries
has risen by 5 per cent while in Australia it has risen by less
than 3 per cent. In the United States it has risen by approaching
6 per cdenit; in Japan by nearly 5 per cent; in Germany by about
3 per cent and in the United Kingdom by a massive 13.4 per cent.
The inflation rate has more than doubled in Japan, Germany and
the United Kingdom.
Yet in Australia our inflation rate is more than 3 percentage
points lower than the OECD average and the margin in our favour
has been increasing since the middle of 1978. Nevertheless we
cannot afford to be complacent. These raw statistics reflect
our improved trade performance, and our economic strength and
prospects. Exports are up, confidence is higher, and employment
in Australia has increased. The prospect is for further gains,
by continuing with sound and responsible economic policies.
This picture of economic strength and vitality stands in contrast
to those bleak years of 1974 and 1975, when the then government
with total disregard for the effects of its policies decided to
spend its way into the hearts of the electorate.
Inflation went -through the roof -in 1975, our inflation
hit 17 per cent and was nearly 4percentage points higher
than the OECD average during the ycear nf 1975.
It has taken four years of hard work-by my Government and the
people of Australia together to rebuild the economic strength
of this nation; the economic strengbCh that Labor so . wijlfully
destroyed. Australia's achievem~ nts have been won by persistence.
By accepting that, hard decisions were necessary. This is not
the time to throw our gains away.
Against this background, the current national wage case is of
vital importance. The Full Bench of-the Arbitration Commission
is now considering its decision. All Australians would expect
a decision which would allow us to reap the benefits of enhanced
international competitiveness. A large wage increase would add
intolerable pressure to the costs of production, thereby raising
prices, weakening the momentum of our trade overseas, and
depressing output and employment-within Australia.
In this context, the 35 hour week being advocated by some trade
unions is patently irresponsible. Shortening the working week
by five hours without a corresponding cut in wages would raise
labour costs by at least 12 per cent more if overtime increased
as a result. It has been estimated that the full additional
cost of labour from a 35 hour week would be in the region of
21 per cent. No-one could responsibly advocate this sort of
increase in hourly wage rates at this time. our survival in the
harsh world of international trade depends on sanity prevailing
at home. We must reject moves to shorten hours of work.
During the coming week while the National Wage case is being
considered the States and the Commonwealth will meet at the
Premiers' Conference in Canberra. Just as this is not the time
to meet high wage demands., it is also not the time for extravagant
Government spending by the Commonwealth or by the States. We have
to maintain vigilance over all levels of Government spending.
I am meeting with the Premiers' to discuss a wide range of matters
including financial arrangements for next year. In past years
the Federal Government has been generous to the Statesirrespective
of what may be said at the time by individual
Premiers. The Government's new Federalism policy reversed the
trend of the 11hitlam Government by giving the States more freedom
to decide how they would spend their money.
General tax sharing payments to the States through the
Government's tax sharing arrangements have grown from just under
per cent to 57 per cent of total payments to the States since
1975-76. There has been a corresponding decline in theproportion
of total payments tied to particular programmes.
Therefore the States have had more freedom to use federal monies
in the way that they prefer.
On top of that, we have guaranteed to Local Governments throughout
Australia 2 per cent of income tax collections. This move
has been warmnly welcomed by the local administrators, who were
for too long the poor cousins in the Australian system of
Government. We have also introduced a new programme which allows the State
authorities to borrow from overseas to financo major infrastructure
developments and more than $ 2 billion worth of borrowings
have already been approved. These funds help provide the imoetusfor
a great programme of national development which will provide
investment and employment opportunities and rewards for
Australians in the decade ahead.
However, with the new freedom enjoyed by the States come new
disciplines. For example, the tax sharing arrangements make
sure that the States as well as the Commonwealth, are constrained
in their rate of growth of expenditure by tax indexation.
The fight against inflation should not be a matter for the
Federal Government alone. All levels of government have a part
to play in exercising restraint. There are always individual
progranumes and projects which, if looked at by themselves
seem to have a case for additional funds.
But as'the Federal Government we have an over-riding responsibility
to look at the total picture. We must never forget that the
unchecked expansion of government Commonwealth and State
would threaten the success of our continuing fight against inflation.
And therefore in the long run would threaten the well-being of
every business and every individual in Australia.
Australia enters the 80s with lower inflation; significant
successes in cost containment; and an economic system with more
appropriate rewards for risk taking and enterprise. It is
understandable that investors are now loohing to Australia with
justifiable confidence and, as Australians, we are entitled to
view the short and the longer term prospects with optimism.
Our success in recent years in the face of significant economic
difficulties has made this possible. We know there will
be difficulties in the future.
We must commit ourselves as a nation, as one community, to
overcome whatever the difficulties may be; to make sure that
Australia takes advantage of the enormous opportunities open
to us. 000---