PRIME MINISTER
EMBARGOED UNTIL 9.30 P. M. CHECK AGAINST DELIVERY
SPEECH BY THE PRIME MINISTER NATIONAL CONFERENCE
THE AUSTRALIAN INSTITUTE OF POLITICAL SCIENCE
MELBOURNE 26 MAY 1984
I am pleased once again to participate in a National
Conference of the Australian Institute of Political Science.
Indeed, I particularly am delighted to have the opportunity
now to launch the book " Industrial Confrontation", which, as
you would all know, contains the proceedings of last year's
Summer School.
At that Summer School I outlined a new approach to
Australian industrial relations and economicdecision-
making. That approach very soon after was being
implemented by a Labor Government.
The pace of events following the 1983 Summer School was
quite extraordinary. I recall John Wilkes at the tea break
after my presentation last year congratulating me on my
Paper, suggesting it be made the main policy plank for the
next election and predicting that, if this were done, I
would become Australia' s next Prime Minister!
Whatever success I have enjoyed since in fact assuming that
office has been in large measure due to the quality of the
staff and advisers around me. Percipience is always at a
premium John feel free to come aboard!
The strategy I outlined to you last January became the main
thrust of the Labor campaign for the March 1983 election and
has guided the industrial relations and economic policies of
my Government'since then.
Central to that strategy is the overt recognition that there
is a large degree of mutual interest between the major
participants in our national economic system. There is no
necessary reason, in this view, why industrial issues-need
be addressed in a confrontationist fashion.
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This might sound rather unremarkable in May 1984. But need
I remind you of the pessimism implicit in your own January
1983 conference theme, ' Industrial Confrontation Can We
Survive It?'
This was a direct reflection of the fact: that Australia then
was a deeply divided society, with a disastrous recent
history of turbulent industrial relations and an economy in
the process of shedding a quarter of a million jobs in a
single year.
In those circumstances, what was needed was a deliberate
redirection of Australian attention to the compelling shared
interests of all parties to the industrial relationship.
The common ground or point of convergence lay in the
legitimate goal shared by all Australians of maintaining
and, over time, improving their real incomes. All
Australians share a fundamental interest in working
constructively towards the achievement of real growth.
At the Summer School I spelled out the conditions necessary
for the achievement of co-operative, more productive
endeavour by all Australians. Government, as I saw it, had
a particular responsibility to provide the framework within
which realization of those conditions might be possible.
The essential elements of that framework boil down to three
reasonably straight-forward propositions:
First, that all parties need to understand the context in
which their relationship is conducted; that is, a
requirement for adequate information about the issues and
choices available.
Second, that all sides need to feel they are involved in
decisions affecting that context; and
Third, that the rules which govern the relationship between
the parties be seen by all sides as compatible and
consistent. I would add that there is another requirement namely, that
the likely outcomes should be broadly accepted as being
fair. In our complex, modern democracy, many groups have
the power effectively to veto the changes necessary for
growth. It is unrealistic to expect Australians to co-operate in
joint endeavours to lift our national performance unless
they are confident the benefits of growth will be shared
equitably. In other words, a successful economic relationship requires
information, consultation and fair treatment under the
rules. T
3.
Quite obviously, none of those circumstances prevailed in
January 1983. Labor's strategy sought to address these
needs as a means of bringing together all the participants
in the industrial relationship, in Australian economic life.
We aimed to return to Australia a sense of purpose and unity
based on a genuinely co-operative approach between
Governments, business and unions.
The strategy of co-operation and consultation was begun over
three years before we won government. The ALP and the ACTU,
realising that competition over income claims would not
contribute to a better quality of life, and would restrict
and quite possibly destroy the efforts of government to
reduce unemployment, negotiated a Prices and Incomes Accord.
This was an achievement of historic significance.
The Accord is not just a wages policy. It encompasses a
spectrum of economic, industrial and social policies and
provides a framework for continuous consultation and
co-operation between the government and the trade union
movement. Those doomsdayers who have predicted the demise of the
Accord, have been shown to be wrong. They have not
recognised that the Accord represents a long-term commitment
to employment, stability and equity on the part of the
Government and the union movement. This commitment is
unshakeable, even if the detail of its implementation must
be the subject of complex negotiation.
The outcome of our strategy is now a matter of record. And
what gives me so much satisfaction tonight in reviewing the
past sixteen months is the great sense of achievement the
Government can derive from the speed with which our strategy
has been put into effect.
The National Economic Summit held in Canberra in April 1983
was our first step as a Government in the process of
bringing together the main actors in Australia's economic
and social life.
It was the first time in our national history that such a
diverse but representative group actually joined together to
identify goals, to come to some understandings about the
options before them, and to establish agreemeht about the
appropriate means of pursuing joint goals.
The Prices and Incomes Accord was endorsed at the Summit and
was accepted as the foundation of the Government's policies
for setting the economy on an upward path once more.
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Importantly, the Accord has provided an essential measure of
stability and predictability to decision-makers in the
economic process: The trade unions have committed themselves to wage
restraint in the knowledge that the Government's
policies will work to their advantage in job
creation and improved standards of living over time
An environment of stable real costs, in which
profitability is being restored, has also been
created. As a result there is a basis for renewed
confidence in the business sector.
Apart from ratification of the Prices and Incomes Accord,
the broader achievements of the Summit were also
tremendously important in creating an appropriate climate
for the pursuit of economic growth. It provided the
opportunity for the sharing of views, the exchange of
information and perspectives across what could have been
thought of in the past as the Australian ' Industrial Divide' what,
truly, had been " The Great Divide
The work of the Summit in sponsoring a pooling of knowledge
and viewpoints has been carried forward since April 1983 in
the work of the Economic Planning Advisory Council
EPAC and in a wide range of other formal and informal
bodies. In this manner, the habit of consultation and
consensus has been established in our economic system and I
have no doubt that it will be continued. The most
persuasive argument in its favour is quite clearly its
success. The main economic indicators confirm the view that recovery
is well and truly underway.
Economic growth has gathered pace somewhat more quickly
than had been expected. The growth performance for the
six months to December was the strongest since records
have been kept in Australia.
While this record in part reflects a low base and is not
therefore likely to be sustained, the fact remains that
growth into the forseeable future is likely to be very
strong by historical standards. A review of recent economic
indicators justifies this confidence.
S Exports have reached a new record level
The housing sector is bouyant
Industrial production has picked up
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At the same time inflation has fallen dramatically with
a rise in the CPI of only 5.9 per cent in the last
twelve months. Even with the medicare factor excluded
the CPI rose by only 7.6 per cent the lowest inflation
rate for a long time.
There has been strong growth in employment with 225,000
new jobs being created since AprSl last year. And the
unemployment rate has fallen by 4 of a percentage point
to 9.5 per cent in the same period
Non-seasonal interest rates have dropped to levels
significantly lower than a year ago. We expect that a
reduction in the deficit for 1984/ 85 will further reduce
public sector pressures on financial markets.
Business investment is also beginning to pick up. The
figures for the March quarter of this year show a
seasonally adjusted estimate of new fixed capital
expenditure seven per cent higher than the December
quarter result.
There has, finally, been a very sharp drop in the level
of industrial disputation:
The number of working days lost per thousand
workers as a result of industrial conflict is at
its lowest point in seventeen years.
We have achieved in little more than a year a basis for a
return to confidence in our capacity, as a nation, to get
our resources working for us again. The economy is now
moving in the right direction. We aim to see the recovery
sustained. Indeed, the challenge before us now is to consolidate our
achievements and to ensure that our basic economic structure
is appropriate for charting a sustained growth path into the
medium and longer term.
In this regard I think it quite right that this conference
should be asking: ' Australia Poor Nation of the
Pacific'? Provocative as this question might be, it draws attention to
the real issues which must be confronted by-those concerned
with Australia's long-term economic outlook.
Our postwar record in harnessing the economic potential of
Australia's significant resources human, technological and
natural has not been good. Australia's per capita gross
domestic product ( GDP) growth performance between 1960 and
1980 was in the bottom 25 per cent of OECD nations.
Compared with some of our East and South East Asian
neighbours, our per capita GDP growth performance has been
even less impressive. S
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While care needs to be taken with direct extrapolation of
such trends, we would be foolish to seek to deflect
attention from some of the uncomfortable truths which are at
the foundation of these comparisons. An inward-looking and
reactive Australia, not geared to the prospects available
through innovation and market expansion, will inevitably
suffer a comparative decline in its standards of living.
The risk is real. This reflects an Australian inheritance
of past policies which have insulated our industry from the
dynamic realities of world markets. The price of the
misallocations and distortions caused by these policies, in
additional costs for consumers and industry alike, has
become unacceptably high.
In an era of lower global growth and proportionately weaker
world demand for many of our major primary exports, we can
ill-afford such polic: ies.
And even more se iou ; ly, to continue with an inward-looking
industry strateg wi Ll mean forgoing the opportunity which
now exists to sh: ire in the rapid economic growth of our own
region. Premier Zhio was right when, earlier this year,
during a visit to t ie United States, he spoke of the 21st
century being the c ntury of the Pacific. President Reagan
has also drawn atte. tion to this prospect.
It is within our choice to make Australia a participant in
the dynamism of the region or to slump passively into
relative inefficiency and, by comparison with others,
declining living standards.
What we need to do nationally is to make sure that we make
the best use of the resources available to us in both our
private and public sectors to meet the requirements or
preferences of society. Creating the conditions for growth
will at the same time contribute to the achievement of a
more equitable society.
In present circumstances, the Government's emphasis has been
particularly on the employment generating effects of growth.
Given the disastrous effects of the recent recession this
has been an inevitable priority. It will, however, be
apparent that strong growth will also provide scope for
improved and more equitable provision of services to the
community in fields such as social welfare and education.
: J With strong growth we can provide:
Maximum opportunities for employment;
High quality education which equips us for the demands
of the workforce;
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A decent standard of living for all, including the aged
and the disadvantaged;
S Universal health care services;
S Adequate housing;
Essential community facilities such as services for
children, immigrants and other special groups;
Encouragement for the expression of national art and
culture;
SCommunity sport and recreation facilities;
Preservation of unique aspects of the environment;
And so the list could be continued.
Ultimately, the scope which we have as a community to work
towards these and other goals depends critically on the use
which we make of our national resources of land, minerals,
skilled labour and capital.
In this sense, it will be far easier to devote resources to
improving living standards if the economic cake as we
measure it is growing bigger. This has be achieved both
through raising the quantum of the resource base, or by
achieving a more effective application of Australian skills.
In essence this means there can be no shrinking from the
need to improve our economic efficiency. In order to
achieve this, we need to make more effective use of our
existing natural and human resource endowment.
I have already outlined to you the successes the Government
has recorded in its macro-economic policy setting to date.(
1 We have also adopted a number of measures aimed at
encouraging industry to become more efficient, more flexible
and more responsive to changes in economic circumstances.
In respect of financial markets, our decision to deregulate
the exchange rate was a major step.
We have also acted on the Martin Committee recommendations
on deposit regulations and on foreign exchange licences.
Major aspects of that Report still remain for decision and
are currently the subject of wide-ranging consultation by
the Government.
We have also been active in exploring with our regional
neighbours the scope for improved trading opportunities both
bilaterally and as they might emerge from any future global
trade negotiations. N. C 4 1 r'I
8.
These are all important policy areas which will have a
profound influence in the medium to longer term on
Australian prosperity.
A particularly pressing requirement, is the need to secure a
properly co-ordinated approach to industry policy.
In this regard useful progress has already been made. The
concentrated attention being given by the Government to the
issues involved has already seen the sterile discussion of
past years on appropriate levels of industry protection
replaced by a more realistic and constructive concern with
the parameters, processes and timing of industry
restructuring. This has involved not only thorough reviews of Australian
opportunities in such major markets as Japan and China, but
has also seen a vigorous, co-operative effort with countries
of the region to secure international attention to the
region's most important interests in the international trade
system. The recent meeting of the region's senior trade officials at
Denpasar in Indonesia was particularly successful in this
latter regard, and has seen a good number of the countries
of the region, including Australia and all the ASEAN
countries, register their particular and shared concerns
with the participants at the forthcoming Western Economic
Summit in London.
Quite early in my Government's period in office we
confronted the need to make some urgent decisions about the
future of the steel industry in this country. In
co-operation with the trade unions and industry we worked
out a plan for rationalisation and recovery in that sector.
That plan has been enormously successful.
Another area requiring attention has been the motor vehicle
industry. Details of the Government's new motor vehicle
industry policy will be announced by Senator Button next
week. It has also been developed through an intense, and I
believe highly productive, process of consultation with all
interested parties.
It is a policy which will clearly demonstrate the
Government's commitment to the gradual achievement over the
long-term of rational, competitive industry structures.
The question of industry structure generally is too
important, and the consequences too far-reaching, for the
policy issues which effect it to be treated in isolation
from one another. Accordingly the Government is giving
particular priority to co-ordinating more effectively all
those aspects of our policy making which impinge on our
long-term industry structure. Above all, we need a sense of
direction and purpose in our efforts.
04
To this end a special Committee of Ministers, chaired by the
Minister for Industry and Commerce, Senator Button, has been
established to co-ordinate Government work in areas relevant
to structural change in the economy. The issues are also
being examined within EPAC and the Australian Manufacturing
Council. Clearly a wide range of Government policies have an
important influence on the performance prospects of various
sectors of the economy and should be encompassed by any
strategy aimed at improving the efficiency of Australian
industry. The macroeconomic framework is obviously of paramount
importance. But decisions made today, for example, in the
areas of education and training, and science and technology.
policy will also have a critical impact on the options for
Australia's productive capacity and possible industry
structure further down the track. Consideration, as well,
needs to be given to improving the mechanisms by which
Australian industry can benefit from the applicaton of
research results.
The industry policies adopted by the Government should also
be informed by a balanced appreciation of the relevance for
those policies of other Government decisions in the fields
of trade, transport, taxation, labour market and foreign
investment. Effective co-ordination of approach is a
necessity. In the final analysis, however, what is particularly
important is that comparative advantage whether natural or
created be recognised and accepted as the key factor in
determining restructuring policies.
Particularly crucial to the development of a coherent and
considered approach to industry policy is the need for a
national economic information base which is as full and as
accessible as possible. Already we have moved some way in
this direction through EPAC which will each year prepare a
detailed medium-term assessment of the economy.
We should expect that, through the collection and
dissemination of such information to the business sector,
unions and other community groups, the process of rational
decision-making at the levels of the firm, the industry and
the whole economy will be made easier.
The process of adjustment from our present industry
structure to one which maximises the opportunities provided
by our resource base and our location in the Asian region
will inevitably mean costs for some in the community. I
have said before that such costs should not be borne
disproportionately by those industries and employees
directly affected by such change. '-. C7
Rather, because the change involved will ultimately benefit
the whole community, compensating policies designed to
spread the burden are absolutely necessary. Community
endorsement for policies of the kind needed will hinge on
there being broad agreement that all parties are receiving
fair treatment.
It will only be by openly and deliberately addressing issues
such as these that Australia will secure its path to a
prosperous future.
If we are to establish for ourselves an appropriate place in
the ' Century of the Pacific' we must apply to the challenges
involved those characteristics which in the past twelve
months have enabled Australians to pull this country out of
its worst recession since the 1930' s. In many respects
those challenges are more difficult.
During my visits in the Asian region in the last year there
was a widespread welcoming of our moves to establish the
conditions necesary to ensure a dynamic economic
relationship between Australia and the region. There was a
clear appreciation that the Australian Labor Government is
committed to seeing Australian industry more competitive and
more capable of responding to opportunities within the
region. The corollary of a more open Australian economic
system is judged important by our regional neighbours.
There is, at the same time, acknowledgement within the
region that the necessary changes in Australian economic
structures can only be phased in gradually. It is
particularly appreciated that too rapid a movement would
A result in negative domestic reactions leading to the sort of
stop-start gyrations that are inimical to consolidated and
successful change.
QIt is only by effectively managing the process of change
that we will be able to stand our ground in competition and
co-operation within our region and consolidate our national
economic future.
The challenge is considerable. But with an appropriate
national economic framework, and with effective mechanisms
for -consultation on our goals and how to approach them, I
believe we can confront this challenge successfully.
Certainly all Australians stand to gain considerably from
the extent to which we do so.
Finally, let me say this. To this point I have been talking
in essentially economic terms. I have been trying to
convey what I believe is one of the most important truths to
be understood by my fellow Australians concerned about the
future of our great country the truth that the standard
and quality of life of our children and succeeding
generations will be determined by the standard and quality
of our relations with the countries of our region.
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We can, with good sense and constructive imagination, make
the right decisions that will enable our economy to benefit
from, and contribute to, the dynamic growth we can expect to
see characterise that region. But we delude-ourselves if we
imagine we can so conduct our affairs as to create the fact,
or even the impression, of second-class citizenship for
those of our people who have settled amongst us from the
countries of that region.
Put simply, this is not only morally repugnant, it is
economically self-defeating. Those who, either explicitly
or implicitly, give sustenance to such a position in terms
of professed concern about lost job opportunities should get
their perspectives right, ignoring as they do, in any case,
the fact that our immigration levels are framed in the
context of employment and capacity considerations. All the
correct economic decisions we may make will be diminished,
even negated, in terms of creating a productive and
employment generating partnership with this dynamically
growing region if we are perceived to go down that dangerous
path sign-posted in the language of racial intolerance.
I had cause to say in my maiden speech in the Parliament
that if considerations of morality will not produce correct
decisions perhaps the more persuasive element of
self-interest will lead to that end.
The events of recent weeks and I am not concerned here
with attributing blame have been sad and they have
certainly been against the long-term interests of our
country. Let us, as Australians, understand that fact. And let us,
as Australians, understand that we shall not be " the poor
relation" but together as partners, based on a shared human
dignity, we can provide the basis for a glowing and proud
future for all the future citizens of our country
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