FOR MEDIA 14 May 1984
In reviewing the current and prospective state of the
Australian economy, EPAC members agreed that in all significpnt
respects, performance was superior to the expectations of any
group at the time of the Summit. Recent performance on growth,
employment, inflation, the relationship between wages and prices,
and improvement in corporate profitability, have all been well above
expectations.
While it was recognised that the exceptionally good seasonal
conditions and the strong growth performance of the United States
economy had contributed to our own growth, and that these positive
influences could weaken or reverse in future, the domestic noni-farm,
economy had performed extremely well.
The strong underlying peiformance and the continued successful
operation of the Prices and Incomes Accord, have provided
Australia with a rare opportunity to MOVE! to a path of sustained
growth with inflation no higher than that of our trading partners.
The objectives of the 1984-85 budget therefore must be the
continuation of high growth based on the maintenance of stabil. ity
in costs, prices and policies and the consequent expansion of
the nation's productive capacity and international Competitiveness.
EPAC believes that in framing the 1984-85 budget the Government
should not be obsessed with any particular budget deficit figure.
It recognises the Government's overall objective to reduce
pressure on financial markets by significantly reducing the
deficit. it is4 vital that budgetary policy continue to be based on
providing economic stimulus without accommnodating any reversal
in the downward trend in inflation, while supportung the
Prices and Incomes approach to economic management. To this end
budgetary policy should be aimed at:
Providing significant income tax cuts as an essential
feature of the Accord to reduce cost pressures faced by
employers and employees, having regard to increases in
inflation and their effects on the tax scales, the
impact on the Medicare levy and the ulesire to maintain
wage anid price stability. EPAC believes that the priority
for such tax cuts should be for low and middle income
earners.
Ensuring that the level of demand is sufficient to
provide an adequate incentive for private investment.
Developing a positive framework for investment, particulari.
private investment. In this respect EPAC believes that"
budgetary policy must be integrated with and not
disruptive of industry policy.
Co-ordinating the demands of the Commonwealth, State
and local governments upon financial markets, within
an environment of rigorous control of total government
expenditure. Priority for increases in welfare expenditure for those
most in need.