EMBARGO: 9pm
PRIME MINISTER
FOR MEDIA FRIDAY, 9 OCTOBER 1981
ADDRESS TO SYDNEY CHAMBER OF COMMERCE,
MENZIES HOTEL, SYDNEY
Organisations such as the Sydney Chamber of Commerce with
strong traditions of support for the free enterprise system
have a significant role in maintaining the freedom and
prosperity that Australians can so easily take for granted.
I am very pleased to be here tonight and I want to discuss
the Government's economic approach and also take a look at
some wider aspects of the market economy and the free society.
But first, let me emphasise something we must never forget
or take lightly that freedom needs to be defended at home
as well as abroad and that freedom is the only way to secure
prosperity, and the way of life that Australians want.
This is why chann! bers of commerce are so important. Some people
might say that the defence of freedom in commercial life by
chambers of comnerce gives expression to their members'
commercial inter-ests. No doubt it does. But it also plays
an important role in preserving political democracy, for.
I know of no free state which has survived without a significant
measure of freedo.-ti in economic life. There is an important
message here for politicians too, because so many politicians
fall into the trap of th~ inking they know best when in fact the
regulations and restrictions they seek to impose, the boards
and bureaucracy they set up, are often utterly counter-productive.
Excessive regulation has been one of the West's great problems
in recent decades. It shackles trade, and ultimately destroys
freedom and it must never be allowed to regain a grip in
Australia. There have never been many free states in this
world, and there are few enough now. There are fewer still
with the level of economic buoyancy and prospects which
Australia is currently achieving or with the confidence and
dynamism -that are so plain to see in our private sector. So
while we need to be watchful, Australia also has cause to be
proud of its achievements.
Nearly 300,000 new private sector jobs were created in the two
years to June, and the unemployment rate throughout this year, on a
month on month basis, has been the lowest for four years and
this includes the September figure released yesterday. -Let inc
add that there is no doubt whatever that if it was not for the
enormous degree of industrial unrest this year and the absurd
wage claims that are being made, the unemployment position
would be a great deal better than it is.
Australia's inflation rate is continuing below the O. E. C. D.
average and confidence is obvious in the widespread investment:
in the mining and manufacturing industries that is now taking
place. The latest figures show that retail sales were up by 14% in
the year to August and the latest survey indicates that privat~ e
investment in 1981-82 is expected to increase by 32% which will
be a massive increase indeed especially following last year's
comparable increase, which was the highest for 30 years.
The benefits to the whole community from last year's growth are
also worth underlining because the increase in ' average weekly
earnings of more than 4% in real terms during 1980-81 has meant
an aggregate increase in real disposable household income of
$ 2.7 billion after tax.
I want to say two things about this increase. One is that our
policies are aimed precisely at making possible improvements in
the standards of living of Australia's families and while
living standards of some people need direct protection through
the Budget, most Australians should be looking to a healthy.
economy for real improvements.
But at the same time it is crucial that increases in incomes
reflect real i~ provements in productivity; otherwise they will be
short-lived and w-il1I undermine the capacity of the economy to
grow in the future. I don't n~ eed to say to you that economic!
success of the kind Australia has achieved does not come about
by chance, especially in times of sluggish world trade.
Good economic management is a discipline which calls for deliberate
and determined policies. And by the same token, sustainedeconomic
success and prosperity will continue to depend upon
constant attention by the Government to economic management.
Obviously no government policy can be a substitute for the drive
of individual initiative and private enterprise. But a sound
and responsible economic policy, which gives proper weight and
balance to every economic factor, to monetary as well as fiscal
policy, to foreign exchange and the balance of payments, to th e
requirements ofL a strong manufacturing sector as well as the
needs of resource development and thriving primary industries3
a policy which has the full weight and conviction of the government
behind it is indispensible to economic success.
The GovernnL-lent has been in the forefront in attacking the basic
causes of the economic downturn which still plagues so much -of
the industrialised world, and our consistent approach has been
based on the view that sustained prosperity requires lower
inflation, less government spending, less bureaucracy, and a
private sector which can compete efficiently in world markets.
Wie have stuck to the task with urgency and purpose and a landmark in
this year's budget is the virtual elimination of the deficit. The
billion deficit which the Government inherited which would
have been even higher without the expenditure reductions which we
made as soon as we came to office would now be almost $ 7.5 billion
if we had persisted with deficit financing at the previous
government's rate of almost 5 per cent of G. D. P.
The Government has consistently rejected deficit financing
as totally inappropriate for Australia's circumstances through
the 1970' s and into the 1980' s, for these circumstances are
quite different from those which existed in the 1930' s, as
Keynes himself would unquestionably have recognised. Deficit
financing is nothing more than a way of making the future pay
for the spending schemes of the past, either through inflation,
or through higher taxes, or both. Deficit financing encourages
expectations that are unreal and it means dishonesty about the
real level of taxation. With the deficit virtually eliminated
in this year's Budget, we will have greater freedom in future
budgets and obviously an enhanced potential for tax cuts.
The Government has got rid of the massive Labor deficit pa rtly
by an honest approach to taxation and partly by rigorous
restraint on its spending. We have worked at the problem from
both ends.
Our more honest approach to taxation, which has involved lifting
Commonwealth revenue by 2.4 percentage points as a proportion
of Gross Domestic Product, has gone into getting rid of the
deficit. The Government's view has been that our children should
not have to pay the costs of the Government programmes of today.
I reject utterly any claim that this is a high tax approach.
It plainly is not. And if we look at the sales tax increases and
the Government's objectives in connection with them, objectives
of deficit elimination, of reduced pressure on interest rates,
of a better balance in the tax mix, and of enhanced potential
for personal income tax reductions, the Government's overriding
concern with reducing the burden on the community of taxation and
of the high costs of government is again apparent.
But it is expenditure restraint which has been the major ingredient
of this Government's approach to getting rid of the deficit and to
making room for the private sector growth on which the future
prosperity of Australia. so fundamentally depends. In 1975-76,
the CoLmonwealth Government spent over 30 cents of every dollar
that Australia produced. In 1981-82, the Commonwealth Government
will be spending 2 cents less than in 1975-76 of every dollar
produced 4in Australia. This reduction, which would be nearly
3 cents but for the extra payday which comes at twelve year
intervals, means that the Government will be spending
$ 3.7 billion less than if the 1975-76 proportion had, in
fact, continued. If this economy can keep growing
and if alt the same time rea'l growth in budget outlays can
be held down~ the consequences, especially
in terms of an enhanced potential for income tax reductions,
and of further reductions in the cents of each dollar spent
by governments, must be obvious to everyone.
The average real growth in budget outlays between 1975-76 and
1980-81 has in fact been 1.2% and when that is placed against the
demands on the budget of increased defence expenditure, of an
aging population, and of our com-mitment to' increased allocEtions
in priority,, areas of need, our expenditure restraint i impressive
by any standards.
A comparison with the performance of other countries who have!
shared our objective of restraint shows that while Britain
has matched Australia's achievement, the Australian figure
of 1.2% stands in stark contrast to the comparable figures of
nearly 3 per cent for West Germany, about 5 per cent for the
United States of America, and over 10 per cent for Japan.
The Government's steady progress in reducing its expenditure
requirements has resulted from a resolute commitment to the
cause of restraint and more limited government and from
consistency in its basic economic approach.
But while a sound economy requires a consistent policy approach
there is also need for flexibility for flexibility permits
better management of the changes that must inevitably take place
in matters such as interest and exchange rates, in expenditure
priorities, in aspects of taxation and indeed in levels and
forms of protection. We have recognised that change is better
made in small steps as illustrated by our handling of exchange
rates and bett _ er introduced progressively and gradually as
illustrated in our handling of protection.
Australians also need to recognise that we live in an interdependent
world which is a major reason for us to be concerned
about the needs of the developing countries. More than 40% of
the United States trade is with the developing countries, arid
in the case ofE Japan, the figure is more than 50%. Something
like one quarter of the enti're trade of the West is with
developing countries, and this means that hundreds of thousands
of jobs in Western countries would disappear if this trade were
to cease. wnether through instability, or through an inability on
the p~ art of developing countries to continue to import Western
goods. This issue, which was highlighted during the Commonwealth Meeting,
is of vast importCance to Australia. And when we realise that
exports from developed to developing countries increased by over
on average in each of the years between 1973 and 1978, it
is very plain indeed that our continuing trade with these coiintries
must depend on their capacity to build up their economies and
increase their exports and one of the problems is that the
imports of" developed from developing countries have only been
growing by
The worldtmust develop the will to confront problems such as
these head on, just as we in Australia have attempted to tackle
the particular economic problems which we have experienced over
recent years.
But while I have stressed the importance of economic policy-, it
is equally important to realise that economic management is, not
an end in itself. In fact, by providing the preconditions for
so many other individual and community aspirations, economic
success inevitably calls for broader policies covering every
sphere of cqovernmental concern.
And I believe that people have responded with tremendous
enthusiasm to the encouragement and efforts that have been
made to enable all Australians to feel they are a vital part
of a vibrant, diverse and unified society and I think we
are entitled to pride ourselves on the fact that our selfconfidence
as a nation has been so widely noticed by so many
of the distinguished overseas leaders who attended the
Commonwealth meeting.
Pierre Trudeau in fact went so far as to say that some words
of his predecessors, namely that the twentieth century belongs
to Canada, have been translated into " Australian", because,
as Trudeau himself Put it, these words have a real meaning
here in Australia " because this country, with its tremendous
economic potential, with its exciting technological and natural
resources, with its intense and vibrant culture, seems to be
very much part of the definition and formulation of the
twentieth century as it's meant to be".
I have picked out Trudeau's particular words, but lots of other
leaders and journalists said very similar things.
Let me just say that whatever the twentieth century may be for
the rest of th.-e world, this kind of vision of an intense and
vibrant culture, flourishing in a free and prospering society,
is certainly my vision of Australia through the twentieth an~ d
into t'he tL-wenty-, first century. We must look far ahead, because we
have so much going for us in this country, because we have so
much to offer other countries by way of inspiration and examrple
as well as in other ways, and because we owe it to our children
to keen buildina the kind of Australia in which there will be.
opportunities and freedom in a secure and stable environment..
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