PRESS OFFICE TRAN4SCRIPT WEDNESDAY MARCH 18 1931
BUSINESSMEN'S BREAKFAST, BRISBANE, ADDRESS AS DELIVERED.
on a regular basis, but that will probably be. once a
year for Federal Cabinet meetings in Brisbane. I certainly
find them valuable... inaudible.., and meet in a more informal1
way than is generally the case if we are coming to Queensland
for a particular function, and then going out again.
I welcome very much the opportunities that have been
available. I said yesterday at this kind of function, two, three
or four years ago, it would have been a necessity to argue
our economic policy quite hard and to try and demonstrate
the factsaid figures that the policy was working, that it
was right, there was no alternative policy, and that we just
had to persist with it. But, I don't believe there is a need in Australia
and certainly in Queensland for remarks of that kind at the
present tlimle because this State is moving forward very
strongly indeed. Investment is going ahead rapidly and
employment in Queensland grew by nearly 5% over the last
12 months.
I haven't taken out comparisons with earlier years, but
I think: it riust be the best growth in employment for many,
many vei3 nd -it iJS much better than many countries overseas.
This -esult c_ policies. None of it has happened
by az~.:. It has a-t times, been a hard grind in . inaudible..
back :. u. Ier anai getting inflation down and helping
to he circ-um:-stance for Australian industries
and en: r': r_-ses to again be competitive. Butthat has been
done.' It is not only in the resources area. There is the optimism
and the enthusiasm and activity in Queensland or in Australia.
The manufacturing industry, as many of you here would know,
have been doing md-ch bet-ter and have been getting out into
export markets in a way which four or five years ago they
would have believed to be quite impossible. We see the results
of that, of the cost of an export incentives scheme which
has probably cost them four times more than the partners(?)
estimated when it was first introduced. That is because of thd
success and growth of exports.
The priorities we have as a government -our tactics obviously
change from time to time as circumstances change and the settings
of policy obviously have to change but the strategy doesn't.
alter. It is just as important as it ever was, to keep bearing
down on inflation as a prerequisite for profitable enterpriset
and for growing employment. We intend to do that.
That obviously has consequences for expenditure. It has
consequences for monetary policy, and for total levels of
government activity. There has been a good deal of discussion
about tax over recent days or weeks or months depending
on . whateve perspective you want to look at it I suppose.
I ' don't think it has been adequately understood that over / 2
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the last five years, while the Commonwealth expenditures
have grown by about 1% a year in real terms, State expenditures
and local government expenditures have grown very much more than
that. I don't know how many people are aware that States
and local government end up by spending over 50% of all
the dollars collected by Australians in tax. State levels
of government spend more than does the Commonwealth.
If there is to be expenditure restraint of a kind that
will make reductions in income tax of a reasonable and useful
kind and I don't want to be dramatic about that reasonabl,.
and useful kind possible, expenditure restraint will have to
be exercised by State governments as well as by the Commonwealth
government. I always believe that the best measure of restraint in a
government is what it does with its own employees. Over the
last five years, our employees have been reduced by about
10,000, while State employees, not just Queensland but
all States, have increased by the best part of 100,000.
That doesn't seem to me to be the hallmark of the government
activity that is particularly restrained in its expendithre.
If you look at the levels of expenditure in the States,
compared with 10 years ago, and if you projected forward
the same reai level of expenditure as States had been
involved in years ago, you would find that in this State
and at t-e level of expenditure today, instead
of a .: irler leve1 you would find that the citizens of
Queens hod txes reduced by $ 900 million a year.
Now, be a substantial sum. : t has nothing to do
with oo. ro nwCeoalmrhm onwealth taxes. It indicates
the e::: znrto which gcovernment has grown, and the extent
to wh.-. n es have grown over and above the real levels
that e a decade ago.
Queensland is not by itself in that. I think the equivalent
-figure for New South Wales is $ 1,700 million, for Victoria
$ 1,500 million. In-the first five years of the decade, under
our predecessors the Commonwealth was a pretty fierce sinner
in the area as well. Over the last five years we have done a
good deal to seek to redress that, as the employment figures
indicate. But the point that I do want to emphasise, is that if there
are to be tax cuts which I know, as I have said before,
the good Premier wants, there also has to be expenditure
restraint. I am not quite sure that any of the States want
to hear that side of the story because at every Premiers
conference that has ever existed, on every item that has
ever been raised, Premiers have asked for more money. If
we said yes to all the requests of all the Premiers there
would be no point in employers paying their wages to employees,
they could post them straight to the Federal tax man, because
even then it would not be enough to meet the requests and
aspirations of the States in terms of expenditure. / 3
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It might seem odd that that is so, but that is just the way
it is operated. One of the greatest disappointments for me
over the years at Premiers conferences is that in. terms of
expenditure restraint, in terms of putting some kind of limit
on what the markets can bear for loah cuts, it always has to
be the Commonwealth, and generally it ends up by being some
kind of unilateral decision as to the maximum that can be
taken from the tax payers of Australia or the maximum that
we take out of the markets, because obviously, if we press_
too hard, it does have an impact on interest rates, and'
it absorbs funds and resouces that would otherwise go to
the private sector.
Now, in circumstances in which the private part of this
economy is growing much more strongly than before, if
we are to avoid the inflationary pressures and a resurgence of
those pressures, it's perhaps more important for governments
to be restrainted in their expenditure because otherwise
there will be greater competition for resources that
are inevitably finite. That competition would put up
the price of money and re-establish inflationary pressures
of a kind that we wouldn't want. That is only to say that
restraint in government expenditure this year is just
as important as it was five years ago, and on some counts,
more important than it was then.
That iS : Z4-the Premiers conference in April is going to be
all ab: u: the lev of funds that are going to be made
availah-> the States from the Commonwealth. It has
nothiu. c -io with the split up of funds between the States.
In 197-e Premiers all agreed that the distribution of
funds th1e States was something that ought to be
examined. : ne formula between them was set in 1959 and this
is so. e-2=. the Commonwealth can be pretty relaxed about
because indoesn't affect our budgets as it was set in
1959, but it is still heavily influenced by the end of
State taxation and the introduction of uniform taxation
going as far back as 1942, by the distribution in those
days. I--
Obviously circumstances have changed. All the Premiers
recognise that they have, that there ought to be a look
at the relativities between the States to see whether the
break up of funds that are available to the Commonwealth
is just and fair equitable in the interests of all Australia.
That is what the Grants Commission is all about. I don't
know what they are g6ing to report. I don't know what
evidence the States are putting in front of the Grants
Commission. I hope that the various things the Premier has been
saying about resources over the last couple of days
has been said to the Grants Commission because that is where
they ought to have been said. If he hasn't even at this late
stage I would urge him to.
But we need that Grants Commission report and then hopefully
we can look at the in the clear and careful manner to see what
changes if any ought to be made in the distribution of the
quantum which the Commonwealth is prepared to make available. / 4
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That repor-t won't be available, as I understand it, until
June. There hasn't been an interim report as was reported
a couple of days ago, certainly not one that I have seen
and not one the Treasurer has seen. It will be available
in June so it can't be part of the discussions that are taking
place in April which will be relevant to the total
sum that we are prepared to provide, and that obviously
will have a. very high relevance to our capacity to make
adjustments to income tax.
I think you probably understand now why we didn't move
to much greater indirect taxation. It could have been
done, but if you were going to reduce the tax scales by
say seven points each, each scale, to make the standard
rate 25 cents and take 7 cents off the two higher rates,
that would cost $ 3.5 to $ 4 billion. To collect that money
by indirect taxation would add on direct and indirect
affects and much more depending upon the reactions of
the Arbitration Commission in relation to wages. It would
add 6% to 7% to inflation. We know what that would do
to businesses, exports, overseas investment it seemedN
to us that it would put the progress of Australia back
a considerable distance and in the circumttances that
were stili far more inflationary than we want, and more
inflationary than you would want, that we shouldn't have
taken that step.
That t c2s force us back, with adjustments I have
ever i income tax, to expenditure restraint.
There 7 believe-pienty of room for that.
There -oncerns i the community at the present time. We are
y concerned in relation to the 35 hour week
and -i : d2rl Govrnrr. ent has made decisions to make
sure n -hwe ider Australian community will fully understand
the coEst:.-of a 35 hour week, or fully understand that
trade unions that press for a 35 hour week are in fact
. pressing for higher unemployment, reduced sales of Australian
made goods, and reduced activity in this country.
We will obviously be lending continuing and full support
to the industry associations, through Arbitration Commission
cases, and we will alsobe undertaking a public campaign on
our own account to make sure that the costs of a 35 hour
week are fully understood by the wider Australian conmmunity.
I believe that it is tragic that sections: of the trade union
movement and the ACTU in its official policies so avidly
press for policies whose only practical result can be much
higher unemployment than would otherwise be the case.
It is especially so against the circumstance in which
last year average wages went up between 13% and 14%, nearly
five points higher than inflation over the same period.
That again indicates that there is need for greater efforts
by all of us, I think, on that account, because with the
enormous prospects open to us, unreasonable union activity
lack of control over wages and wage adjustments I think
they are the only two things that run any possibility of
marring the prospects ahead of us. There is no doubt that
union activity could destroy Australia's future. I don't believe
5
it will happen because I have much greater confidence in the
general common sense of the average Australian and the average
Australian trade unionist. It is common-sense that a number
of union leaders give their constituents little credit for.
I don't believe the activities of the ACTU as we have seen
over the last month win any support amongst the rank and file
of unionists, or amongst the generality of the Australian
public. It is going to be up to governments, State and Federal,
and all those with a real interest and concern about what s
happening to their own enterprise to make sure that in terms
of industrial relations, wage changes, reductions in working
hours, the great future which is within the grasp of all
Australians isn't signficantly damaged. That will take
considerable effort.
But that aside, the prospects ahead of us, and the prospects
for this State, are good indeed.
I would like to thank you for coming here this morning.
I would be happy now to react to whatever you might want?
to say or to any questions you might like to put.