PRIME MINISTER
FOR MEDIA SUNDAY, FEBRUARY 14 1982
ELECTORATE TALK
With the Autumn Session of Parliament about to * commence,
I would likE! to take the opportunity of speaking to you
about Australia's priorities and prospects, about the
challenges we face as a people over the coming months.
We need a proper perspective on our achievements in the
economic arEna because the underlying strength of the
Australian economy is great, and we have the right policies
in place to keep it well on course.
We need to understand that Australia's economy has been
growing, while many other economies have been stagnant or
shrinking, a~ nd the OECD predicts further growth of over 3%
for Australia in 1982, compared with an OECD average of just
over We need to understand the consumer demand remains
strong. The value of retail sales last December was ' 13%
higher than in 1980. We need to understand that 83,000
new jobs were created in 1981, that the average unemployment
rate throughout 1981 was the lowest for four years, and that
while the January unemployment rate was too high, it was still
below last year's January rate. We need to understand that
business expects continuing strong investment growth this
financial year, and that following the projected record of
$ 1.25 billion on petroleum exploration and development in
1981, the projected figures for 1982 almost doubles that
again to nearly $ 2.5 billion.
We need to understand that this level of investment would
not occur unless there was confidence in Australia's economy.
We need to understand that over six years, the Commonwealth
has consistently held down its own spending, both in absolute
terms-and aS a proportion of Gross Domestic Product in a way
which our major trading partners have not rivalled, and that
the recent tightening of budgetary expenditure has been
designed to maintain that overall restraint, especially in
the face of some unexpected large wage increases.
We need to understand that real household disposable income
after tax rose by nearly $ 3 billion in 1980/ 81, and that in
the two years to last December quarter, average weekly earnings
have increas3ed by over $ 13 in real terms. We * need to understand
that total -taxation revenue as a proportion of GDP, is lower
in Australia than for all our major trading partners with the
exception of Japan. And the Commonwealth budgetdeficit as a percentage
of GDP has been less in Australia than that of all our major
trading partners in 1979/ 80.
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There is no doubt whatever that Australia's position in relation
to economic management and development is the envy of many other
countries because we pioneered and stuck to policy approaches
which are increasingly widely recognised as appropriate in the
1980s. The Government's economic ' policy has the enduring objectives
of curbing inflationary pressures, achieving continuing
private sector recovery, and gaining sustained improvements
in living standards for all Australians.
There are obviously challenges and threats to these objectives,
both at home and overseas, and the Government has been
responding to these challenges. People are fed up with the
kind of strikes and unreasonable wage demands which have been
all too common, especially in the second half of the past year
which have damaged our international competitiveness, have thrEatened
investment, and have destroyed job prospects for many young peo~ ple.
There were twice as many working days lost through strikes in
the 1981 September quarter as in the corresponding period
in 1980. The Minister for Industrial Relations, Ian Viner,
is bringing forward three measures to address the present
industrial situation, both immediately and in the longer
term. I have. no doubt that these measures are sound.
They will help to equalise legal responsibilities and balance
the bargaining positions of. unions and employers. And I believe
the communit~ y will give them the support they deserve.
Accelerating, wages are the main danger to continued economic
recovery, an~ d it is essential that all parties to wage
bargains exercise restraint. If wage rises are allowed to
exceed the capacity of the economy to pay, Australia will
price itself out of international markets, causing loss of
jobs and confidence. Consistent with its philosophy, the
Government supports wage settlements proceeding on an industry
by industry basis. The Government believes that employers and
unions bear the prime responsibility for wage settlements,
and agreements which ignore the total economic environment
can only lea~ d to unemployment and lower growth.
The depressed condition of the world economy also poses
a challenge to Australia's economic pos-ition. The Australian
economy dEtrives enormous benefit from overseas trade and
from access to overseas capital markets. At the same time,
if overseas economic conditions are poor, if overseas interest
rates are high, the Australian economy is bound to be effected.
The Government can't totally insulate the Australian economy
from the effects of overseas trading, but we can and already
have shaped our policies in response to the challenges that
they pose. One clear indication of the impact of poor economic
conditions o~ verseas can be seen in our balance of payments
B~ ecause of our strong growth of real incomes, and the demands
created by resource development, our import bill has been rising
significantly, but because of depressed world trade, and falling
commodity p rices, our export earnings have been falling. In this
connection, exchange rate management is critical. The Government's
approach in this area is one of a carefully managed exchange
rate with very gentle, sometimes almost imperceptible adjustments
according to the overall state of the balance of payments,
but also wi-: h an eye to other important considerations such
as inflationary implications. ./ 3
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SWe will continue to follow this practice, ad adjust the
exchange rate on a gradual basis in line with market
circumstances. The exchange rate has already been devalued
by 5% against the trade weighted index since early August
1981, and by 5.6% against the United States since early
December 1981. The Government recognises that economic
management is a continuing process of facing new circumstances,
anticipating new challenges and adapting to them.
In the final analysis, the best service the Government can
provide to the Australian economy is to create conditions
conducive to sustained economic growth by continuing to bear
down on inflation and by minimising Government demands on the
private sector. This is the foundation on which are policies
are built and it provides the only basis for Australia's
continued economic success.