A very clear example of economic rationality at work
was the decision to index excise rates. During the past decade
the proportion provided by excise to the general revenue
declined from 13 per cent to 7 per cent. Through indexation
we have made sure that over time they maintain
their real value and are not eroded by the processes of inflation.
We have put aside the destabilising and often arhitary
pattern of large discretionary increases which was the
way in the past. What we have done should have been done
much earlier.
The alternative to moving to maintain the real value of
the excise, would have been to lay greater demands on
other forms of taxation. The impact could have been quite
distortionary. The position now reached points to the need for detailed
examination of the actual and potential national revenue
base. Widely based community consideration of what is appropriate
in terms of economic efficiency and equity would
be timely. This might enable sensible and fair changes to be
mounted, not in a piecemeal fashion, but as part of a well
considered, properly integrated package.
In the meantime my Government is determined to press
ahead with its efforts to ensure that where benefits are paid
to the needy, it is in fact the needy who receive them. This is
the point of the proposed pension assets test. The alarm
engendered by that is unfounded.
Apart from home, car, boat, caravan, jewellery, furniture
and other personal effects, a single pensioner can have
17 000 and still receive the full pension and up to $ 106 000
and still receive a part-pension. A married couple can have
$ 28 000 and still receive the full pension and up to $ 177 000
and still receive part-pension. Most pensioners will not be
affected at all. Some will actually gain. Only those pensioners
with substantial assets, who are artificially avoiding
the current income test for pensions, will be affected in any
significant way.
Where the Government is paying out to the elderly and
others in need, the payment must be related to need. Otherwise
the whole of our resources are going to be distorted
and the interests of all Australians perverted.
There are still too many Australians forced to live at an
unacceptably low standard. Their situation must be addressed.
We simply cannot afford to direct welfare payments
to people who are not genuinely in need. To do so reduces
the resources available to help the truly
underprivileged. were elected to arrest the decline in the Australian economy,
to reverse the trend towards greater inequality in Australian
society and to bring Australians together again. The
mandate was clear and we have made major strides towards
its realisation.
A greater sense of national purpose around the restoration
of growth is nevertheless still needed. This will only
be possible if the benefits of growth, and the inevitable
costs, are shared equitably.
Destruction of Korean airliner by U. S. S. R.
2 September 1983 The Prime Minister, the Hon.
R. J. L. Hawke, said today:
The Australian Government is absolutely appalled at the
barbaric act that has been perpetrated.
I have been in contact with Bill Hayden and he is calling
in the Soviet Ambassador today to register that attitude of
my Government. I have sent a message of condolence and
sympathy to President Chun of South Korea.
I believe that all Australians will share the attitude of my
Government in this matter. There are absolutely no circumstances
whatsoever in which action of this type can be
begin to be justified. Message to President of Korea
2 September 1983 The Prime Minister, the Hon.
R. J. L. Hawke, today sent the following message to
President Chun Doo Hwan of the Republic of Korea:
I wish to convey to you on behalf of the Australian Government
and people our shock and concern at the loss of Korea
Airlines flight 7.
There are no circumstances in which the shooting down
of an unarmed aircraft serving no military purpose can be
justified. We are seeking an urgent explanation from the Soviet
Foreign Ministry and the Soviet Ambassador to Australia.
May I assure you of Australia's continued strong support
for the right of the Republic of Korea to its place in the international
community and its rights in international law.
Launching of Business Council
2 September 1983 The following is the text of a
speech by the Prime Minister, the Hon. R. J. L.
Hawke, at the launching of the Business Council of
Australia in Sydney:
This is an historic occasion in what has already proved to be
an historic year in the development of the political, economic
and industrial processes of our nation. And certainly
in terms of moving Australia away from the cruder application
of the adversary system in economic policy making,
with its emphasis on confrontation, towards better consultation
and co-operation, 1983 has, I believe, been a watershed
year.
The establishment of the Business Council of Australia is
beyond doubt a landmark along the new path, the new directions
Australia is taking. I am the more gratified to be
able to take part in these proceedings because, as most of
you will know, I have long been a firm advocate for such an
organisation to give the Australian business community a
stronger, clearer, more coherent and more cohesive voice in
the economic and industrial life of this nation. It is, to an
extent, the other side of the coin of my constant advocacy,
now carried on for two decades, of a more effective and
more coherent voice for the Australian trade union
movement. So I like to think that I have played some part in fostering
a recognition of the need for such an organisation; and
thereby some part, at least indirectly, in its formation.
But certainly, in this year of tremendous economic challenge
facing us all, in this year of the National Economic
Summit Conference, in this year of the inauguration of the
Economic Planning Advisory Council, the Business Council
of Australia is very much an idea whose time has come.
For those of us interested in the continuity in the development
of things Australian, it is appropriate that on this
occasion I should recall the association of another Prime
Minister-the first Labor Prime Minister of Australia, John
Christian Watson-with the establishment of the business
organisation later to become the Australian Industry
Development Association. That was some sixty-four years
ago, fifteen years after his Prime Ministership and long
after his retirement from active political life.
The organisation he helped to found has provided-and
never more importantly than in recent years-not only a
meeting point for business leaders, but also through its
economic research centre and its publicafions, enhanced
public appreciation of economic policy issues.
AIDA is now to merge with the Business Round Table
formed in 1979, to form the Business Council of Australia.
It is a measure of the responsiveness and forward looking
approach of both groupings in meeting the changes and challenges of th
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1396Commonwealth Record 29 August to 4 September 198329 August
challengcs of these difficult and crucial years in the economic
life of our country.
The Council will provide each of those organisations
AIDA and the Business Round Table--with a great opportunity
to build on the existing strengths of each. I note with
particular interest that the Council will establish a number
of small committees to seek to harness the insights and experience
of leading businessmen and specialist support
staff. Indeed these groups are to be aided, as necessary, with
expert assistance obtained from within member companies,
from the Council's own professional research establishment,
and possibly from outside sources. 1 believe that this
kind of exposure can only improve the quality of public debate
and advocacy in Australia.
The work of the Business Council in this area will I believe
complement that of other business and employer organisations.
In this respect I note that the Council has
stated its intention to work in co-operation, rather than
competition, with the Confederation of Australian Industry.
I applaud that statement of intent. These two organisations
together have a key role to play in the kind of partnership
which my Government wishes to forge with the
community. However, it is clear that the Business Council
will have its own unique position and flavour as a result of
the direct involvement of senior executives of Australia's
major companies in its membership and its work.
I look forward to an evolving and constructive relationship
between my Government and business leaders, not
least with the members of this Council. Gatherings such as
this one today can only help in this regard, including by
establishing and deepening personal contact between us.
Looking around me, I have already got to know many of
you personally and I hope in future to build upon that.
But it is not just personal contacts and the understanding
of each others' views which that brings that I see as being
important. My Government has also demonstrated its desire
to raise substantially both the range and quality of more
formal consultation and information exchange. This is
being done with a number of aims:
firstly, to provide for more informed policy making
secondly, to foster a consensus approach to economic
policy and conduct, with particular emphasis on the need
to find non-inflationary means of resolving competing income
claims, and to minimise avoidable and destructive
conflict thirdly, to promote a wider appreciation of our long term
goals as a society, and the path by which we might best
seek to achieve them.
These aims-the aims not just of my Government, but, I
believe, goals which are now shared by the greater part of
the business community and the union movement and
indeed, by the entire Australian community-were clearly
endorsed by the Summit in April. But the work and spirit of
the Summit must continue, if those objectives are to go anywhere
near achievement.
The Business Council, the establishment of which undoubtedly
received added impetus from the experience of
the business representatives at the Summit, will play an important
part in that continuing process.
The Economic Planning Advisory Council has been established
to carry on the work of the Summit by providing a
permanent forum for constructive dialogue between
governments and all sections of the community, especially
on medium to longer term economic issues.
As you will be aware, two of your number have been
appointed to EPAC. I refer of course to Alan Coates and
Bryan Kelman. They have been appointed, after consultation
with various business interests, for their general
ability to contribute to the work of that body. However, their appointment also reflected their intimate knowledge
of, and their prominence as members of the business
conmunity. EPAC's first meeting was held on 25 July, and another
will be held in a little over a month While it is early days
yet, as it becomes better established I would expect EPAC
to become a major source of policy advice and a key channel
for community involvement. In this role, the support
that the Business Council will no doubt give to Alan and
Bryan, and the opportunity that it will provide for them to
firm up amd inform their own views, will become of increasing
importance.
It remains, of course, a fundamental truth that however
much the processes of consultation can be widened and
strengthened-as we are determined to do-the ultimate
responsibility for the key decisions of national economic
policy must rest with the national Government.
Last week's Budget represents the fullest but by no
means the complete expression of our commitment to
accept our responsibility for the economic management of
this nation. The Budget is not the only arm of policy, nor
can it be viewed in isolation from other actions the Government
has taken in its first six months.
Those actions include the Summit, with its general discussion
of policy directions; the May statement, which
began the process of gradual restructuring of budgetary
priorities, with particular emphasis on priority areas such as
housing, support for the needy and the institution of Community
Employment Program; and the Premiers' Conference,
with its opportunity to assist the States in fostering
economic recovery. However. the Budget remains the most
important single statement of the Government's aims and
aspirations, and the way it will go about achieving those
aims. These aims-and the Budget policies designed to achieve
them-have three major strands. These are:
first, to set a floor of activity in the economy while the
private sector remains depressed
second, to spread the burden of current sacrifice more
fairly among the community, assisting those most
severely affected by the current recession
and third, to set in train those reforms and policies
necessary to ensure that recovery, once underway, is sustained,
and not choked off by higher inflation and
interest rates.
As the effect of the Budget and our other measures, combined
with the effect of the international recovery, begin to
impact upon the Australian economy as a whole, we will all
need to shift the emphasis of our attention from the immediate
task of achieving a recovery, to the longer term and
more difficult task of ensuring that the recovery is sustainable,
and that its benefits are not lost, or wasted in a
new round of inflation. The success of the prices and incomes
policy will be absolutely critical in that regard.
Following the Summit and in our submission to the current
wage case, my Government indicated support for a
general wage increase in the order of 3 to 4 per cent in the
second half of this year. Until the good news associated
with the breaking of the drought raised food prices sharply,
it seemed that an increase based on the increase in the CPI
in the first half of this year might fall comfortably within
this range. In the new circumstances, we judged that it was
best to accept a wage increase of 4.3 per cent, to secure
workers' firm commitment to pursuing wage claims only
through the centralised system.
If the recovery proceeds strongly in the year ahead and
beyond, this wage adjustment will be seen as a good investment
in future wage moderation. In the first half of next
29 August to 4 September 1983 Commonwealth Record
year, the introduction of Medicare will take a few percentage
points off the increase in the Consumer Price Index. As
a result, even with full wage indexation, money wage increases
in 1984 should be in line with the United States and
other major economies experiencing strong growth with
relatively low inflation.
But I repeat, the prices and incomes policy, based on the
prices and incomes accord, will be crucial in determining
whether or not there will be a genuine reco'ery, and
whether or not that recovery can be sustained. and whether
or not its benefits can be fairly shared by the Australian
workforce and all sections of the Australian community.
The linchpin of the policy is the return to the centralised
wage fixation system.
If, in this period of incipient recovery and in the period
beyond when the objective will be to strengthen and sustain
the recovery, significant wage increases should be extracted
outside the centralised system, then the policy would not
succeed and the recovery would falter and fail.
As a responsible government-not least as a Labor
Government accepting a special but not exclusive responsibility
for the constituency composed of the Australian
workforce. the men and women in the Australian workforce
as well as the legion of unemployed-we are determined
to uphold the prices and incomes policy, to uphold
the principles of the accord, and to ensure that the policy
succeeds in its central aim of achieving a sustained and sustainable
recovery.
It follows from this that significant wage increases outside
the centralised wage fixing system are unacceptable.
That is no more than a statement of fact. of logic-a statement
of the reality of recovery. And of course, it is no more
than a restatement of the principles and the spirit of the
Summit-adopted, I believe, in a spirit of sincerity and
common sense and co-operation by all the participants a
short five months ago. Lest there be any doubt, I should emphasise
that the principles and the spirit of the Summit
place obligations on business just as they do on Australian
workers. The improvement in activity and moderation in inflation
that we see in the year ahead provide a great opportunity
for Australia to turn its back on the mediocrity, the stagnation
that has characterised much of our economic performance
in the past decade. We must grasp this opportunity.
In this next year we must establish a beachhead for
an assault on impediments to a great improvement in our
long term growth performance.
Only strong growth over a long period will enable us to
destroy the scourge of unemployment. Strong growth over
long periods is necessary for the improvement in living standards
for all Australians. We will only achieve strong
growth over long periods if we put our resources to their
most productive uses. As I have said on many occasions,
productive use of our resources requires acceptance of new
ways of doing things, structural change in our economy,
rapidly changing patterns of foreign trade, and high levels
of investment from home and abroad.
We believe that we are establishing a political and social
framework within which strong, sustained growth can be
achieved. We believe that an Australian society that is
broadly united on the great national goals, that is seen by
most of its citizens as a fair society, and which offers its
people security of incomes and employment, will embrace
the changes that are necessary for sustained growth. We are
working to build that Australia. r
But the right political and social framework and a more
congenial short term macro-economic environment underpinned
by a successful prices and incomes accord, by themselves
will not be enough. Australia needs creative, dynamic business lcaderhip, directed at the r. iiing of incomes ; ind
the creation of realw ealth.
Is Australi: ii business leIdership good enough? We , ire
pretty good at the takeover and merger, which redistribute
wealth but which do not alw% a. is increase it. Are , e: igso od
at using opportunities for creating new weallh, new income
and new emplo. meint? These . ire questions that you should
be asking yoursc. vcs.
Some of you might want to respond thathe system of
incentives in Australia is biased towa. rds the quick capital
gain. and against investment directed at the generation of
income over long periods.
We accept that it is the business of business to seek
profits. Within a sensible s. stein of incentives, the most productive
investment is most profitable. If you believe that
there are important distortions in the s\ stem of incentives,
we would welcome the assistance of the business community
in analysing the problem and suggesting solutions.
But I hope--and I am certain from my personal knowledge
of so many of you that I can expect--that we get
advice that is more than special pleading. Special pleading
is an inevitable part of our democracy, but it is not helpful if
it is the only advic ew e t from business. What we welcome
is responsible advice about reform that makes sense for the
Australian economy as a whole.
I can tell you now that there is no prospect ofa radical reduction
in the share of government revenue in gross domestic
product. That would be inconsistent with the demands
of a fair and secure society on public expenditure, and with
non-inflationary financing of that expenditure.
But the new Labor Government will be receptive to
suggestions for reform designed to improve the efficiency
and equity of the Australian fiscal system. EPAC provides
an ideal forum for the discussion and transmission to the
Government of responsible business suggestions for reform.
I welcome the formation of the Business Council of
Australia for its intrinsic merits as a means of providing a
more effective voice for business, and a means of enabling
business to make a more effective contribution to the Australian
economic debate and the quality of economic decision
making in our country. But I also welcome it as an
extension-a continuing expression-of the essential spirit
of the Summit-a spirit based on the belief that cooperation
and consultation, without in any way limiting or
inhibiting the rights and freedoms of a great democracy, can
achieve greater benefits for all Australians than needless
confrontation or contrived conflict.
Destruction of Korean airliner by U. S. S. R.
3 September 1983 -The Prime Minister, the Hon.
R. J. L. Hawke, said today:
The Australian Ambassador in Moscow, Mr David Evans.
called on Soviet Foreign Ministry officials yesterday ( Moscow
time) and handed to them statements made by the
Foreign Minister, Mr Hayden. and me
He asked for a full and early explanation of the circumstances
surrounding the shooting down of Korean Airlines
flight 7.
No information was provided by the Soviet Foreign Ministry.
The Australian Government regards the latest TASS
statement as totally inadequate and deliberately misleading
and calls on the Soviet Union to provide us with a full and
proper account.
During the current Security Council debate, Australia's
acting Permanent Representative to the United Nations.
Mr Lance Joseph, has added our voice to the worldwide
condemnation of the Soviet action.
Commonwealth Record 29 August to 4 September 1983 In his statemen
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