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FOR PRESS: ECONOMIC TALKS
Statement by the Prime Minister_,_ h Rt Hon. R. G. Menzies
During the talks we had recently with representatives
of business, a good many suggestions were put forward. as to ways
in which expansion could be promoted, business confidence
sustained and unemployment further reduced. A numaber of these
suggestions related to matters on which the Government already
had action in view.
As to employment, for example, we had just ahead
of us the Loan Council-meeting at which the works and housing
programmes for this year were to be reviewed. Uhile we wished
to have our discussions with the Premiers before deciding what
the Commonwealth should offer to do, we had already made a very
thorough study of the whole employment situation.
In the event we found that the view put to us by
industry representatives did not differ greatly from our own
assessment nor from the account of things given by most of the
Premiers. In the main, the opinion was that some increase in
expenditure on works and housing could have useful results; it
was generally emphasised, however, that any such expenditure
ought to be channelled as far as possible into localities and
occupations where, for various reasons, employment opportunities
were not coming forward very readily,
That, of course, had been the aim of two of the
chief measures we took last year0 The grant of œ-10 million we
made to the States last February for employment-giving activities
and the subsequent grant of œ C12.5 million in our 1962/ 63 Budget
had just that purpose. Furthermore, the Commonwealth last June
took the initiative in removing any Loan Council limit on the
overall amount that might be borrowed by local authorities
seeking V100,000 or less in any financial year. The grocat value
of this step is that it gives relatively small bodies all over
the country a better chance of obtaining money to spend on works
in their own towns and districts.
It is encouraging now to find that authorities of
that type had been able to borrow, up to the end of January last,
some œ 16.7 million. This is substantially more than they
borrowed in the comparable period of 1961/' 62 and it is, in fact,
al~ most as much as they used to 1b able to borrow in a full twelve
months up to a couple of years ago.
As was announced last week, the Commonwealth agreed
at the Loan Council to an increase of : C5 million in the 1962/ 63
borrowing programmes for Commonwealth/ State works and housing
aind to an increase of œ C6 million in the programmes of semigovernmental
authorities those seeking to borrow more than
œ-100,000 in 1962/ 63.
The Commaonwc2althi also increased the grant for
emioloyment-giving activities by œ C5 million, bringing the total
grant for 1962/ 63 to fœ 17,5~ million. It stipulated thatc expenditures
from the grant should be over and above those from the
State works and housing programmes and should be distributed o. o 9/ 2
2
to areas, like those of the New South Wales coalfields and the
Northern coastal areas of Queensland, where more general
measures are not so likely as elsewhere to give rise to employment.
On housing, the majority of those who took part in
the consultations thought that rather more finance should be
available both for the erection of new homes and the purchase
of existing homes. A good deal was also said about the problem
of the gap between the amount of loan finance people can obtain
and the deposits they are in a position to make when acquiring
a home. These are problems the Government ha3 very much in
mind. They are highly complex matters, It is far from being
a simple question of making more money available for housing
at large; rather, as with unemployment the problem is to ensure
that action is directed to the real centres of difficulty.
We have, in fact, undertaken to make some additional
finance available for housing through established channels. The
decision to increase Loan Council borrowing programmes for works
and housing this year means that the Commonwealth will add œ 2.4
million to the funds available during the next few months u-ider
the Commonwealth/ Stato housing agreement.
Furthermore, the Commonwealth Baxiking Corporation
has now decided to increase the lending limit for the credit
foncier loans of the Comnonwoalth Savings Bank from œ 3Q, 000 to
œ 3900. The Commonwealth Savings Bank being a large-scale
lender for housing this is, of course, an important step.
War Service Homes When the maximum loan under the War Service Homes
Act was increased from œ 2,750 to œ 3,500 in May, 1962, the
objective was to stimulate the home-building industry as well
as to provide more favourable conditions under which eligible
ex-servicemen could obtain homes or carry out essential additions
to their homes. These objectives have been achieved. It is expected
that the number of new homes which will be financed during
1962/ 63 will be some 800 more than was expected at the beginning
of the year. The increase in the maximum loan has greatly
reduced the number of ox-servicemen who have found it necessary
to obtain finance for their homes under a second mortgage.
There has been a heavy demand for loans to provide additional,
essential a cconodation. In order that this increased demand nay continue to
be dealt with under existing arrangements the Government has
decided to provide an additional œ 2,500,060 to be expended this
financial year. The Government's decision will result in an increase
in the appropriation for Xar Service Homes for the year from
œ 3,000,000 to œ 37,500,000.
More generally, and apart from particular matters
like unemploynent and works expenditure and housing finance, / 3
-3-
it was put to us that there is a need to give the business
community more guidance as to future economic policy so that
forward planning and investment can proceed with all reasonable
confidence. On this view, it may not always be enough to
demonstrate that the economy is currently well situated,
balanced internally and externally and moving forward at a
good rate as it now is, Businessmen hold that if they are
to plan forward securely they need to know, amongst other
things, what the broad trend and content of future economic
policy is likely to be.
The Government understands this viewpoint and is
disposed to meet it as far as it can. Perhaps, at this point
of time, the first thing is to clear away a certain nisapprehension,
There has been comment lately to the effect that
the expansionary measures the Government took last year have
spent themselves and are now having no effect on the economy.
But this is utterly wrong. The Budget for this year continued
all the measures taken earlier the big tax reductions, the
social service increases, the special grants to the States and
it added to then in the shape of large developmental works.
notably in Queensland and Western Australia. Meanwhile, credit
policy has continued to be highly liberal. Nothing of all
that stimulatory action has been withdrawn. It all goes on in
full force. In fact, it is likely that some of the measures
the investment allowance on manufacturing plant for example
are only now starting to exert their full influence. Also,
some of the larger developmental projects have hardly got
properly into their stride as yet,
The chief objectives of Government policy are,
of course, firm and clear full employment, strong and
continuous industrial growth, stable costs and prices, a
balanced external situation and so on. These aims have been
stated again and again and we have spared no effort to make
them really mean something.
But we realise perhaps better than most the need
to keep up the underlying momentum of the economy. As a
dynamic element, probably nothing counts for more than the
migration programme and here again there seems to be a
misapprehension. It is still being said that migration is
lagging. The truth is that immigration is strongly on the
way up and its prospects have rarely looked better than they
do today. Certainly the 1962/ 63 target of 125,000 arrivals
will be exceeded, There has been a tremendous flood of
applications in Great Britain for assisted passages to
Australia. Many of the applicants are skilled people the
key workers upon whom the expansion of our industries depends
so heavily. These skilled workers are being given the highest
priority. Additional shipping and a substantial airlift
have been arranged and it is already clear that the intake
of British migrants in the twelve months ending 30th June
next will be the best for the past ten years. Nothing could
be more likely to impart a renewed drive to the economy or
give assurance of basic expansion in the years ahead of us.
More specifically, the Government has been asked
to give the firmest indications it can as to policy on the
Budget for next year. This, of course, is difficult. We
do not have, and cannot have for some time yet, any precise / 4
idea as to the probable levels of receipts and expenditures in
1963/ 64+ and, in any case, the Budget is not a thing on which
forward undertakings can readily be given,,
It is, of course, certain that expenditure will
rise substantially neXt year, as it has done in all recent
years if only because of existing commitments which must be
carried on. It is likely also that taxation revenues will
benefit from the strong rise in industrial activity and earnings
that have occurred through 1962/ 63 and we have great confidence
that trends like these will carry on into 1963/ 64+. But there
are, and always will be, elements in the Budget whirch defy
precise or dependable forecasting even at short range. it
would certainly be cut of the question for us to indicate here
and now what particular measures the Budget for next year may
or may not contain, It can be said, however, that we do intend to renew
the legislation which provides for certain export incentives
which would otherwise expire in 1964+. It can be taken for
certain too that the investment allowance on manufacturing plant
will continue to be available, It is of the essence of measures
like these0 undertaken to provide special incentives, that
once established they ought to be carried on long enou-L
produce t heir in~ ended results.
CANBERRA,
February 21, 19630