PRIME MINISTER
EMBARGOED UNTIL DELIVERY CHECK AGAINST DELIVERY
LABOR BUSINESS FORUM
ADELAIDE 27 AUGUST 1986
THAN'.( YOU FOR THIS OPPORTUNITY TO EXPLAIN DIRECTLY TO YOU
JUST N-OW THE BUDGET MEETS AUSTRALIA'S CURRENT ECONOMIC
CIRCUPS7TANCES. BECAUSE IT IS UNQUESTIONABLY THE RIGHT
BUDGET FOR AUSTRALIA TODAY.
IT IS IMPORTANT TO RESTATE AT THE OUTSET, BECAUSE SOME IN
THE OPPOSITION NOW SEEK TO DENY IT, THAT THE VERY CONDITION
FOR AUSTRALIA'S CAPACITY TO MEET THE CHALLENGES WE NOW FACE
TOGETHER IS THE CO-OPERATION OF ALL SECTIONS OF THE
COMMUNITY BUT ESPECIALLY BETWEEN GOVERNMENTS, BUSINESS AND
UNIONS. THIS IS NO LESS TRUE NOW THAN IT HAS BEEN FOR THE
PAST THREE AND A HALF-YEARS. IN FACT, IF ANYTHING, THE NEED
FOR THA. T CO-OPERATION IS NOW ALL THE GREATER.
THROUGHOUT THE PAST WEEK, PAUL KEATING AND I, TOGETHER WITH
OUR SENIOR COLLEAGUES, HAVE UNDERTAKEN THE RESPONSIBILITY' OF
EXPLifkXNING TO THE PEOPLE 0F AUSTRALIA THE NATURE OF OUR
PRESE2NT PROBLEMS, AND THE ECONOMIC STRATEGY NEEDED TO MEET
AND OVERCOME THOSE PROBLEM~ S.
THE BUDGET, CRUCIAL AS IT IS, IS ONLY PART OF THAT STRATEGY.
LET HE SAY EMPHATICALLY, THAT THE TASK MY COLLEAGUES AND I
HAVE UNDERTAKEN IS NOT SOME SORT OF POLITICAL EXERCISE TO
" SELL" THE BUDGET. WE SEEK TO PUT TO THE NATION FAIRLY
AND SQUARELY THE ECONOMIC REALITIES WE NOW FACE. BUT
HAVING DONE THAT, WE SEEK ALSO TO M4AKE PLAIN THAT NOT ONLY
DO WE RECOGNISE THE NATURE OF THE TASK BUT ALSO THAT WE HAVE
THE POLICIES TO SEE US THROUGH.
AND, CERTAINLY AS FAR AS THE PEOPLE OF AUSTRALIA ARE
CONCERNED, WE HAVE BEEN HEARTENED BY THE NATURE OF THEIR
RESPONSE. IN A~ LL THE RESPONSIBLE SECTIONS OF THE COMMUNITY OVER AND
BEYOND THE PREDICTABLE REACTION OF THE OFFICIAL OPPOSITION
AND ThE SELECTIVE CRITICISMS OF PARTICULAR INTEREST GROUPSTHAT
RESPONSE HAS BEEN OVERWHELMINGLY POSITIVE.
IT HAS BEEN THE RESPONSE OF A MATURE AND INTELLIGENT PEOPLE.
IT HAS BEEN A RESPONSE BASED UPON A CLEAR RECOGNITION OF THE
REALITIES. IT HAS BEEN A RESPONSE BASED UPON A REALISATION OF THE
IRRELEVANCE TO USE THE KINDEST TERM OF THE ALTERNATIVE
OFFERED BY THE OFFICIAL OPPOSITION.
AND ABOVE ALL, IT HAS BEEN THE RESPONSE OF A PEOPLE WILLING
TO ACCEPT THE POSTPONEMENT OF SHORT-TERM BUT ILLUSORY
BENEFITS FOR TIIE SAKE OF LONGER-TERM AND ENDURING GAIN NOT
JUST FOR THEMSELVES, BUT FOR THEIR COUNTRY AS A WHOLE AND
FOR THE NEXT GENERATION OF AUSTRALIANS.
I AM CONVINCED MORE THAN EVER OVER THE PAST WEEK THAT
THE AUSTRALIAN PEOPLE WILL ALWAYS RESPOND IN THIS WAY: BUT
ON ONE CONDITION, AND ONLY ON ONE CONDITION.
AND THAT CONDITION IS THIS: THE PEOPLE OF AUSTRALIA nUST BE
ABLE TO BELIEVE, AFTER ALL THE RELEVANT M4ATTERS ARE PUT TO
THEM, FAIRLY AND SQUARELY, THAT THE TOUGH DECISIONS THEY ARE
CALLED UPON TO ACCEPT ARE THE DECISIONS OF A GOVERNMENT ON
THE RIGHT TRACK. AT THE END OF THE DAY, THEY 14UST BE
CONVINCED THANT PRESENT SACRIFICES ARE THE PRICE WE MUST ALL
PAY FOR HOPE AND CONFIDENCE IN A STRONGER, BETTER FUTURE.
AND I BELIEVE THAT THIS IS NOW THE UNDERSTANDING AND
CONVICTION OF THE VAST MAJORITY OF THE PEOPLE OF AUSTRALIA.
IN PARTICULAR, I BELIEVE THEY HAVE COME TO UNDERSTAND, EVEN
MORE CLEARLY THAN BEFORE, THAT AUSTRALIA IS NOW BETTER ABLE
TO DEAL WITH OUR PRESENT STRAITENED TRADING CONDITIONS ONLY
BECAUSE THEIR GOVERNMENT WAS SO EARLY COMMITTED TO
DEVELOPING AND IMPLEMENTING-. ECONOMIC REFORMS TO MAKE THIS
COUNTRY BETTER EQUIPPED TO COMPETE ON WORLD MARKETS. IF IT
HAD NOT BEEN FOR THIS VISION, AUSTRALIA WOULD NOW BE FACING
A VERY REAL PROSPECT OF A PROLONGED AND DEEP ECONOMIC
RECESSION. INSTEAD, WE ARE IN A POSITION TO FACE UP TO
THESE CHANGED CIRCUMSTANCES WITH GROWING CONFIDENCE.
THAT IS THE REAL MESSAGE OF THE BUDGET. THAT IS OUR MESSAGE
OF THE PAST WEEK. IT IS MY MESSAGE TO YOU TODAY.
OF COURSE, THIS IS NOT A NEW MESSAGE TO THE PEOPLE OF SOUTH
AUSTRALIA. JUST TWO WEENS AGO I CAME TO THIS CITY AND HAD THE PLEASURE
OF OUTLINING JUST THIS MESSAGE TO A SEMINAR CONDUCTED BY THE
SOUTH AUSTRALIAN EXPORTERS ASSOCIATION. THE PARTICIPANTS AT
THE SEMINAR WERE EXPORTERS WHO WERE KEENLY AWARE OF THE
TRADING ENVIRONMENT THAT WE NOW FACE.
THEY ARE PEOLE WHO HAVE TO CONFRONT EVERY DAY OF THEIR
LIVES THE REALITY THAT THE PRICES THAT WE ARE RECEIVING FOR
THE GOODS WHICN WE EXPORT ARE PITIFULLY LOW.
MEASURED AGAINST A BASKET OF WORLD CURRENCIES, METALS PRICES
FELL BY ABOUT 17 PER CENT, ON AVERAGE, OVER THE COURSE OF
1985-86.
NON-FOOD AGRICULTURAL PRODUCTS PRICES DECLINED BY 15 PER
CENT. IN JUST THE JUNE QUARTER WHEAT PRICES FELL 23 PER
CENT IN $ US TERMS AND THE DECLINE HAS CONTINUED SINCE.
THE DECLINE IN WHEAT PRICES IS A PARTICULARLY HARD PILL FOR
AUSTRALIANNS TO SWALLOW. IT REFLECTS NOT ONLY THE CONDITION
OF WORLD EXCESS SUPPLY IN WHEAT. IT REFLECTS ALSO AN
UNFORTUNATE AND, FOR ALL CONCERNED, A VERY COSTLY CHANGE IN
THE TRADING PRACTICES OF OUR CLOSEST ALLY, THE UNITED
STATES. THIS CHANGE WAS IN TURN A REACTION TO THE DISASTROUS
POLICIES OF THE EUROPEANS. FIRST, THE EUROPEANS SOUGHT SELF
SUFFICIENCY BUT WENT FAR BEYOND THAT GOAL. IN THE PROCESS
THEY CONSTRUCTED AN EDIFICE OF AGRICULTURAL PRICE SUPPORT
WHICH RISKS UNDERMINING WORLD TRADE IN AGRICULTURAL
PRODUCTS. THE COSTS OF THESE POLICIES ARE NOW BEING SHEETED
HOME DRAFIATICALLY TO EFFICIENT SUPPLIERS SUCH AS AUSTRALIA.
THEY ARE ALSO TELLING HUGELY AGAINST THE COUNTRIES WHICH
INITIATED THEM. THE CITIZENS OF THE SUBSIDISING COUNTRIES
ARE PAYING VIA MASSIVELY BLOATED BUDGETS, HUGELY
MISALLOCATED RESOURCES, AND, IN THE CASE OF THE EUROPEANS,
TRAGICALLY SWOLLEN UNEMPLOYMENT QUEUES.
IT WILL. TAKE MANY YEARS FOR THESE WRONGS TO BE UNDONE, EVEN
IF WE TIERE TO START PURPOSEFULLY TOMORROW. IT IS FOR THAT
REASON THAT THE CURRENT MEETING OF AGRICULTURE MINISTERS IN
CAIRNS A\ ND THE FORTHCOMING NEGOTIATIONS ABOUT THE RULES
WHICH GOVERN WORLD TRADE UNDER THE GATT, ARE VITAL. BUT WE
SHOULD NOT HAVE UNREALISTIC EXPECTATIONS ABOUT EARLY
SUCCESS. IN THE NEANTINE, OF COURSE, AUSTRALIA HAS TO COPE WITH THE
SITUATION AS IT IS. IT IS NOT JUST AGRICULTURAL PRODUCTS
WHICH AR'S BRINGING DEPRESSED PRICES. AS I SAID EARLIER,
MANY METALS, MINERALS AND FUELS ARE ALSO SUFFERING. THE
CONSEQUENCE IS THAT AUSTRALIA'S TERMS OF TRADE AN OVERALL
MEASURE OF THE PURCHASING POWER OF OUR EXPORTS, AND THUS OF
OUR LIVING STANDARDS HAVE FALLEN BY SOME 15 PER CENT SINCE
THE END OF 1984.
IF THE FURTHER DECLINE IN THE TERMS OF TRADE WHICH IS
FORECAST IN THE BUDGET FOR 1986-87 EVENTUATES, AUSTRALIA'S
TERMS OF TRADE WILL SINK TO THEIR LOWEST SINCE THE 19301S.
INITIALLY THE BURDEN IS BEING BORNE BY OUR EXPORTERS. BUT
IT CANNOT ULTIMATELY BE BORNE ONLY BY THEM.
THE DECLINE IN OUR TERMS OF TRADE TO DATE IS CURRENTLY
COSTING AUSTRALIA $ 6 BILLION PER ANNUM. IT IS A LOSS IN OUR
NATIONAL ECONOM4IC CAPACITY WHICH WE CAN IGNORE ONLY TO OUR
COST. ONE WAY OR ANOTHER, THE ECONOMY WILL ADJUST. WE CAN CHOOSE
HOW WE COPE WITH THE NEW ENVIRONMENT WE CANNOT CHOOSE
WHETHER WE WILL ADJUST FOR ADJUST WE MUST.
THIS BUDGET REFLECTS THE CHOICE OF THIS GOVERNMENT TO OPT
FOR THE ADJUSTMENT PATH WHICH WILL GIVE US THE BEST PROSPECT
OF AVOIDING MASSIVE, PROLONGED RECESSION AND MASSIVE,
PROLONGED UNEMPLOYMENT.
INDEED THE DECLINE IN OUR TERMS OF TRADE HAS HIGHLIGHTED
ANOTHER QUITE FUNDAMENTAL LONG-TERM DEVELOPMENT.
THAT is THAT WHILE AUSTRALIA HAS BEEN ABLE TO MAINTAIN A
HIGH LEVEL OF CURRENT CONSUMPTION IT HAS ONLY BEEN ABLE TO
DO SO BY BORROWING MORE FROM ABROAD. LAST YEAR WE SPENT, AS
A NATION, 6 PER CENT MORE THAN WE EARNED. o
WE CANNOT CONTINUE TO DRAW ON OTHER PEOPLE's SAVINGS TO THAT
EXTENT TC FINANCE OUR OWN LIVING STANDARDS. WE NEED TO
BEGIN NOW BY TAKING A TEMPORARY CUT IN THOSE STANDARDS AND
TO BOOST OUR DOMESTIC SAVING EFFORT.
WE NEED, ALSO, OVER THE LONGER-TERM TO RAISE THE LEVEL OF
OUR EARNINGS FROM ABROAD. INDEED THE ONLY WAY THAT WE CAN
REGAIN OUR FORMER GROWTH IN STANDARDS IS TO TRADE OUR WAY
OUT I. E. TO EXPORT MORE AND TO SWITCH AWAY FROM IMPORTED
GOODS TO ' COST COMPETITIVE DOMESTICALLY CRAFTED ALTERNATIVES.
THIS UNAVOIDABLE REALITY HAS CLEARLY BEEN RECOGNISED BY THE
FOREIGN r-. XCHANGE MARKET AND IS REFLECTED IN THE 40 PER CENT
FALL IN 4' TE VALUE OUR CURRENCY AGAINST THE AVERAGE OF OUR
TRADING PARTNERS AND, INDEED, A 50 PER CENT FALL AGAINST
THE YEN. I
THESE DEVELOPMENTS HAVE UNLEASHED THE MOST POWERFUL
INSTRUME'T OF ECONOMIC ADJUSTMENT WHICH IS AVAILABLE IN
INTERNATIONAL FINANCE: A DRAMATIC CHANGE IN OUR
INTERNATIONAL COMPETITIVENESS.
THE QUESTION FOR US IS:-WHAT WE DO ABOUT THE CHALLENGES
THESE FACTORS PRESENT US WITH? AND HOW DO WE MAKE THE MOST
OF THE OPPORTUNITIES WHICH THEY PROVIDE?
THE RESPONSE FROM THE AUSTRALIAN PEOPLE NEEDS TO COME AT
SEVERAL LEVELS. IN RECOGNITION OF THAT REALITY, GOVERNMENT
POLICY IS DIRECTED AT SEVERAL LEVELS.
THE BUDGET IS QUITE FUNDAMENTAL IN EACH CASE.
WHEN I LAST SPOKE IN THIS CITY, I SAID THAT THE THEN
FORTHCOI-rlIG BUDGET WOULD BE A TOUGH ONE. I CHARACTERISED IT
AS AN INSTRUMENT FOR OUR FUTURE AND THAT OF OUR CHILDREN. I
SAID THAT IT GAVE ME NO JOY TO FORESHADOW A TOUGH BUDGET BUT
THAT NO OTHER COURSE WAS OPEN TO A RESPONSIBLE OR FAIR
GOVERNMENT DEDICATED TO MAXIMISING LONG-TERM JOB PROSPECTS.
THE BUDGET HAS DELIVERED HANDSOMELY ON THOSE PROMISES. THE
CENTRE-PIECE OF THE BUDGET IS ZERO REAL GROWTH IN
COMMONWEALTH OUTLAYS. THAT WAS NOT EASILY ACHIEVED. POLICY
DECISIONS SINCE THE FORWARD ESTIMATES FOR 1986-87 WERE
PREPARED HAVE HAD TO BE TAKEN WHICH YIELD NET SAVINGS OF $ 2
BILLION. BUT JUST AS IMPORTANTLY, THESE DECISIONS WILL
REDUCE OUTLAYS IN NET TERMS BY SOME $ 1.5 BILLION IN 1987-88
IN OTHER WORDS WE HAVE GIVEN OURSELVES A FLYING START IN
PREPARING NEXT YEAR's BUDGET.
IN CONJUNCTION WITH SOME MEASURES TO LIFT COMMONWEALTH
RECEIPTS IN LINE WITH THE NEED TO LIFT OUR DOMESTIC SAVINGS
EFFORT, THIS HAS ENABLED THE BUDGET DEFICIT TO BE CUT BY
MORE THAN $ 2 BILLION TO $ 3.5 BILLION.
I HAVE SOMETIMES HEARD IT SAID OVER THE PAST WEEK OR SO THAT
IT WILL TAN( E MORE THAN JUST ONE GOOD BUDGET TO SOLVE
AUSTRALIA'S ECONOMIC PROBLEMS. I HEARTILY AGREE.
BUT THIS IS NO PAIJLIAN CONVERSION. THE RECOGNITION OF THE
NEED CONSISTENTLY TO PURSUE FISCAL POLICY APPROPRIATE TO THE
TIME HAS UNDER-PINNED THE ENTIRE 3 1/ 2 YEARS OF MY
GOVERNMENT. LET ME REMIND YOU THAT WE INHERITED A PROSPECTIVE DEFICIT OF
$ 9.6 BILLION FROM OUR PREDECESSORS. LET ME REMIND YOU THAT
I SAID AT THE TIME THAT AUSTRALIA REQUIRED A DEGREE OF
FISCAL STIMULUS TO KICK-START THE ECONOMY FROM THE RECESSION
AT THAT TINE, BUT THAT IT WOULD BE OUR AIM TO PROGESSIVELY
REDUCE THlE STIMULUS. AND LET ME REMIND YOU THAT IN FACT WE
QUITE RESPONSIBLY TOOK THE VIEW, EVEN IN THE RECESSIONARY
CONDITIONS WHICH WE INHERITED, THAT A DEFICIT SIGNIFICANTLY
BELOW $ 9.6 BILLION WAS REQUIRED AND WE SET ABOUT PARING IT
BACK. AS I SAY THlE REASON THAT WE BEGAN THAT PROCESS AND
SUSTAINED THE EFFORT IN EACH OF OUR THREE SUCCESSIVE BUDGETS
WAS OUR ACCEPTANCE OF THE FACT THAT AS PRIVATE SECTOR
DEMANDS FOfl CREDIT GROW, THE PUBLIC SECTOR MUST ADJUST. IN
OUR NEW ENMVIRONMENT, IN WHICH THE WORLD VALUE OF OUR
NATIONAL INCOME HAS BEEN CUT, THAT FACT HAS EVEN GREATER
RELEVANCE. TO IGNORE THAT REALITY WOULD SIMPLY BE A RECIPE FOR FURTHER
HIKES IN INTEREST RATES, SUSTAINED CURRENCY INSTABILITY AND
PROLONGED UNEMPLOYMENT. ONE OBJECTIVE OF THIS BUDGET,
THEREFORE, IS TO PERMIT THE BURDEN OF POLICY TO SHIFT AWAY
FROM HIGHER INTEREST RATES. THIS IS THE WAY SIMULTANEOUSLY
TO CREATE THE CONDITIONS FOR A LOWER CURRENT ACCOUNT DEFICIT
AND AN INCREASE IN GROWTH SUSTAINING INVESTMENT.
BUT, JUST AS IMPORTANTLY, THE HALLMARK OF OUR APPROACH TO
FISCAL POLICY HAS BEEN TO ACHIEVE THE NECESSARY " BOTTOM
LINES" IN A WAY WHICH IS ALSO CONSISTENT WITH OUR OVERRIDING
OBJECTIVE TO PROMOTE FAIRNESS AND TO SUPPORT THE GENUINELY
NEEDY. AS A GOVERNMENT, WE HAVE CONSISTENTLY SOUGHT TO RE-ORDER OUR
SPENDING PRIORITIES IN FAVOUR OF THE NEEDY. THIS IS
REFLECTED PARTICULARLY IN THE FACT THAT BY END 1986 THIS
GOVERNMENT WILL HAVE INCREASED THE STANDARD RATE OF PENSION
BY 7.3 PER CENT IN REAL TERMS, COMPARED WITH THE MISERLY
PER CENT INCREMENT DELIVERED OVER THE WHOLE PERIOD OF THE
FRASER GOVERNMENT.
ALTHOUGH SEVERELY CONSTRAINED BY THE TIGHT FISCAL DISCIPLINE
WHICH WE HAVE HAD TO ACCEPT WE HAVE NONETHELESS BEEN ABLE TO
INCREASE THE BENEFITS PAID TO THE POOREST OF OUR PENSIONER
FAMILIES WITH CHILDREN, TO INTRODUCE SOME NEW PROGRAMS IN
RESPONSE TO THE MILLER REPORT ON ABORIGINAL TRAINING NEEDS
AND TO BEGIN TO IMPLEMENT POLICIES TO PROVIDE IMPROVED CARE
FOR THE AGED.
IN ADDITION, WE HAVE ALSO CONSISTENTLY SOUGHT TO DELIVER
MORE OF THE WELFARE DOLLAR TO THE RECIPIENTS. WE HAVE DONE
THIS BY MORE EFFICIENT ADMINISTRATIVE PROCEDURES; THE BETTER
TARGETING OF PROGRAMS; AND MEASURES TO ENSURE THAT BENEFITS
ARE DRAWN ONLY BY THOSE ENTITLED TO THEM.
THIS BUDGE1 IS NO EXCEPTION.
IN THE BUDOET WE HAVE INSTITUTED A QUITE FUNDAMENTAL REV IEW
OF THE WAY IN WHICH UNEMPLOYMENT BENEFITS AND SOLE PARENTS
BENEFITS ARE ADMINISTERED. IN BOTH CASES, THERE WILL BE
GREATER SCRUTINY NOT ONLY IN THE INTEREST OF PROVIDING
APPROPRIATE SERVICES TO THE LONG-TERM~ UNEMPLOYED AND THOSE
WITH SPECIAL NEEDS, BUT ALSO TO ENSURE THAT THESE FUNDS ARE
DISPENSED PROPERLY.
BUT EVEN TEOSE MEASURES ON THEIR OWN WERE NOT SUFFICIENT AND
ADDITIONAL SAVINGS HAVE HAD TO BE FOUND.
IN ALL SOPKE $ 500 MILLION HAS BEEN CUT FROM THE EMERGING
SOCIAL SECURITY BILL AND SOME $ 300 MILLION FROM THE HEALTH
AREA. OP COURSE, WE WOULD HAVE MUCH PREFERRED TO AVOID
MAKING TFESE SAVINGS. BUT THE MAGNITUDE OF THE TASK WAS SO
GREAT THsT THERE WAS NO ALTERNATIVE; THE FIGURES JUST WOULD
NOT ADD UP~ IN OUR NEW ECONOMIC CIRCUMSTANCES IN ANY OTHER
FAIR WAY.
ONE PARTICULAR DECISION IN THAT AREA RELATES TO THE
PHARM4ACEUTICAL BENEFITS SCHEME.
IT IS PROPOSED IN THE BUDGET THAT THE COST OF A SCRIPT
SHOULD RISZ FROM ITS PRESENT $ 5 TO A MAXIMUM OF $ 10 FROM 1
NOVEMBER 1986. CURRENT ESTIMATES PUT THE AVERAGE EXPECTED
SCRIPT CHARGE A LITTLE OVER $ 7.
HOWEVER, CONSISTENT WITH OUR WISH TO PROTECT THE NEEDY, THE
RISE FOR HEALTH CARE CARD HOLDERS WILL BE LIMITED TO
CENTS ( BRINGING THEIR TOTAL CHARGE TO $ 2.50) AND PENSIONERS
WILL CONTINUE TO RECEIVE ITEMS ON THE PHARMACEUTICAL
BENEFITS LIST FREE OF ANY CHARGE. MOREOVER WE HAVE TAKEN
SUBSTANTIAL STEPS TO PROTECT THE CHRONICALLY ILL.
NO INDIVIDUAL OR FAMILY WILL BE REQUIRED TO PAY FOR MORE
THAN 25 PRESCRIPTIONS IN A YEAR. IN OTHER WORDS THE
ABSOLUTE MAXIMUM A FAMILY OR INDIVIDUAL WILL PAY PER YEAR
UNDER THE NEW SCHEME IS $ 250 AND FOR CONCESSIONAL USERS
THE MAXIMUM COST PER ANNUM WILL BE $ 62.50.
THIS MOST NECESSARY REFORM WILL CLEARLY PROTECT THOSE IN
NEED. BUT IT NONETHELESS ACHIEVES SIGNIFICANT FULL YEAR
SAVINGS OF $ 67 MILLION TO THE BUDGET.
I WOULD ADD THAT SIGNIFICANT NEW MEASURES HAVE ALSO BEEN
INTRODUCED TO CONTAIN, EQUITABLY, THE GROWING COSTS OF
HIGHER EDUCATION. AN ANNUAL ADMINISTRATION CHARGE OF $ 250
IS TO BE XNTRODUCED IN 1987 FOR STUDENTS AT UNIVERSITIES AND
COLLEGES OF ADVANCED EDUCATION. POOR STUDENTS, NOTABLY
THOSE IN RECEIPT. OF TERTIARY ALLOWANCES, WILL NOT BE
DISADVANTAGED BY THE CHARGE.
BUT IN THE CURRENT ENVIRONMENT WE WERE FORCED TO THE VIEW
THAT WE COULD NOT CONTINUE WITH THE SITUATION IN WHICH
STUDENTS MADE NO CONTRIBUTION TO COVER THE COSTS OF THEIR
EDUCATION THE AVERAGE COST FOR A FULL-TIME STUDENT IN
TERTIARY EDUCATION IS $ 8200 PER ANNUM. THE CHARGE IS TO
DEFRAY SOME OF THE ADMINISTRATIVE OVERHEADS FACED BY
INSTITUTIONS. SUGGESTIONS THAT THE CHARGE EQUATES TO A
TERTIARY TUITION FEE ARE CLEARLY LUDICROUS WHEN SET AGAINST
THE AVERAGE COST OF PROVIDING A PLACE.
PART OF THE PROCEEDS, WHICH ARE PUT AT SOME 97 MILLION IN
1986-87, WILL BE RETAINED BY INSTITUTIONS FOR THEIR OWN
PURPOSES. PART WILL BE DEVOTED TO PROVIDING OFFSETTING
BENEFITS TO POOR STUDENTS. AND PART WILL ALSO BE USED TO
PROVIDE AN ADDITIONAL ONE THOUSAND PLACES OVER AND ABOVE THE
ADDITIONAL TWO THOUSAND WHICH IT WAS PREVIOUSLY INTENDED TO
PROVIDE FROM THIS BUDGET.
WHILE SIGNIFICANT SAVINGS OVERALL HAVE BEEN M4ADE IN THE
AREAS OF EDUCATION, HEALTH, SOCIAL SECURITY AND HOUSING AND
COMMUNITY .!-MENITTES, THE SHARE OF TOTAL OUTLAYS DEVOTED TO
THESE PROGRAMS WILL RISE FROM 46.4 PER CENT To 46.7 PER CENT
IN THIS BUDGET. THIS IS THE CLEAR EVIDENCE OF THIE PRIORITY
WHICH WE CONTINUE TO GIVE TO THESE AREAS, EVEN WITHIN THE
TIGHTEST LIMIT ON AGGREGATE SPENDING.
THE BUDGET GIVES EFFECT TO THE NEXT STAGE OF TAX REFORM.
THE REFRM* PACKAGE WILL DELIVER SUBSTANTIAL TAX CUTS TO
PERSONAL TAX PAYERS, BEGINNING ON 1 DECEMBER WITH THE FINAL
INSTALMENT ON 1 JULY 1987. THE BUSINESS SECTOR WILL ALSO
RECEIVE THE BENEFIT OF THE INTRODUCTION OF THE IMPUTATION
SYSTEM TO R~ EMOVE DOUBLE TAXATION OF DIVIDENDS AND A SIMILAR
MEASURE IN RESPECT OF SMALL BUSINESS, THE REMOVAL OF
DIVISION 7. THERE ARE NO NEW DIRECT IMPOSTS ON BUSINESS IN
THIS BUDGET.
THE PACKAGE OVERALL WILL YIELD REVENUE TO THE GOVERNMENT OF
BILLXON IN A FULL YEAR, BUT WILL RETURN TAX BENEFITS TO
THE COMMUNITY OF $ 4.5 BILLION I. E. THREE TIMES THE YIELD
FROM THE NEW MEASURES.
BOTH THE TREASURER AND I HAVE MADE PLAIN ON A NUMBER OF
OCCASIONS OUR WILLINGNESS TO LOOK AT LEGITIMATE COMPLAINTS
ABOUT THE ADMINISTRATION AND TECHNICAL DETAILS OF THE FRINGE
BENEFITS TAX. IN LINE WITH THAT COMMITMENT THE TREASURER
YESTERDAY ANNOUNCED SOME MARGINAL CHANGES TO THE CURRENT
LEGISLATION DESIGNED TO AVOID SOME UNINTENDED CONSEQUENCES
OF THE TAX.
BUT THERE CAN BE NO DOUBTING THE ESSENTIAL VALIDITY OF THIS
MEASURE. BUSINESS CANNOT ON THE ONE HAND ARGUE FOR WAGE
RESTRAINT AND ON THE OTHER CONTINUE TO PAY UNTAXED BENEFITS
TO A SELECT GROUP OF INDIVIDUALS. OTHER TAX PAYERS THE
OVERWHELMING MAJORITY OF TAX PAYERS WOULD HAVE TO BEAR A
HIGHER BURDEN IN ORDER TO PERMIT THAT TO CONTINUE. A
GOVERNMENT COMMITTED TO FAIRNESS AND EQUITY COULD NOT
ACQUIESCE IN THAT.
THE BUDGET HAS ALSO OUTLINED IN UNEQUIVOCAL TERMS THIS
GOVERNMENT'S APPROACH TO WAGES POLICY.
WAGES HAVE UNAMBIGUOUSLY BEEN THE SUCCESS STORY OF THE LAST
THREE YEARS. FEW OTHER COUNTRIES IN THEIR HISTORY HAVE'
MANAGED TO PRODUCE A DEGREE OF WAGES ADJUSTMENT TO MATCH
THAT OF AUSTRALIA.
REAL UNIT KABOUR COSTS HAVE DECLINED BY 7 PER CENT OVER THIS
PERIOD. A MAJOR ELEMENT OF THAT HAS BEEN A FALL OF THE
ORDER OF 5 PER CENT IN REAL WAGES.
THAT HAS OCCURRED IN AUSTRALIA BECAUSE OF THE GOOD SENSE OF
AUSTRALIAN WORKERS. THEY HAVE RECOGNISED THE NEED TO WORK
WITH MANAGEMENT TO BEGIN TO UNDO THE MANIFESTLY
UNCOMPETITIVE COST STRUCTURE OVER WHICH COALITION
CONSERVATNVE GOVERNMENTS HAD PRESIDED FOR SO LONG NOT
JUST, INDEED, PRESIDED OVER BUT WHICH THEY HAD POSITIVELY
FOSTERED.
THAT ACHI1% VEMENT STANDS IN SHARP CONTRAST TO THE UNITED
KINGDOM WHERE THERE WAS A REAL RISE IN EARNINGS OF 10 PER
CENT. THE BUDGET DOCUMENTS MAKE IT CLEAR THAT IT WILL BE NECESSARY
TO SEEK AND OBTAIN YET FURTHER WAGE RESTRAINT IN THE PERIOD
AHEAD. TO THAT END WE WILL BE SEEKING A 2 PER CENT DISCOUNT
AT THE NEXT NATIONAL WAGE CASE. IF NECESSARY, A FURTHER
DOWNWARD ADJUSTMENT TO WAGES WILL BE SOUGHT AT THE FIRST
CASE AFTER THAT IN 1987.
ON THE FIGURES NOW BEFORE US THAT WILL PERMIT A FURTHER
DECLINE IN REAL UNIT LABOUR COSTS IN 1986-87 OF 1 PER CENT.
IT WILL HELP SUBSTANTIALLY TO PRESERVE THE MASSIVE
IMPROVEMENT IN OUR INTERNATIONAL COMPETITIVENESS AN
IMPROVEMENT WHICH BEGAN WITH THE WAGES OUTCOMES DELIVERED
UNDER THE ACCORD AND WAS FURTHERED BY THE SUBSTANTIAL
DEPRECIATION WHICH HAS OCCURRED OVER THE PAST YEAR OR SO.
WE WILL BE SEEKING FURTHER WAGE RESTRAINT NOT BECAUSE WAGES
HAVE BEEN RESPONSIBLE FOR THE DIFFICULTIES WE ARE NOW
FACING. BUT IT IS INESCAPABLE THAT WHEN OUR NATIONAL INCOME
IS UNDER ATTACK, PART OF THE BURDEN OF ADJUSTMENT MUST BE
BORNE BY WAGE AND SALARY EARNERS, WHO RECEIVE OVER AROUND
PER CENT 0? OUR NATIONAL INCOME.
WE WILL BE SEEKING THAT RESULT ALSO BECAUSE IT IS AN
INESCAPABLE FACT THAT THE ONLY WAY THAT WE CAN TRADE OUT OF
OUR EXTERNALLY IMPOSED DIFFICULTIES WILL BE TO PRESERVE OUR
IMPROVED COMPETITIVENESS. PASSING HIGHER IMPORT COSTS INTO
HIGHER WAGES COSTS WORKS DIRECTLY AGAINST THAT REQUIREMENT.
I SAID EARLIER THAT THIS GOVERNMENT RECOGNISES THAT THE
RESOLUTION OF OUR PROBLEMS DOES NOT REST WITH ONE GOOD
BUDGET, NOR EVEN WITH FOUR GOOD BUDGETS IN SUCCESSION AS
WE HAVE PRODUCED SINCE 1983. 1 HAVE NOTED ALSO THAT WE HAVE
PURSUED A WAGES POLICY WHICH HAS DELIVERED RESPONSIBLE
OUTCOMES THE OUTCOMES NEEDED TO GET AUSTRALIA BACK INTO
THE INTERNATIONAL GAME.
BUT THE GOVERNMENT'S APPROACH IS EVEN BROADER THAN THIS.,
FOR THREE YEARS NOW THIS GOVERNMENT HAS PURSUED POLICIES TO
REVITAL! SE AUSTRALIAN INDUSTRY. WE HAVE SOUGHT TO
INTERNATIONALISE AUSTRALIAN MANUFACTURING AND THE AUSTRALIAN
SERVICES SECTOR. WE HAVE IMPLEMENTED POLICIES:
TO ENCOURAGE R& D;
TO R2_. ORM OUR EDUCATION SYSTEM SO AS TO IMPROVE OUR
SKILLS BASE;
TO LIFT THE THE NUMBER AND QUALITY OF TRAINING
OPPORTUNITIES WHICH WE GIVE TO OUR YOUNG POST-SCHOOL
WORt4' ERS; AND
TO IREMOVE THE BARRIERS WHICH WOULD OTHERWISE HAVE
INHI. BITED THE EXPANSION OF EFFICIENT AUSTRALIAN
ENTERPRISES.
THOSE POLICIES ARE OF THREE YEARS STANDING. THOSE POLICIES
HAVE PREPARED AUSTRALIA TO CONFRONT THE CHALLENGE POSED BY
THE FALL IN OUR TERMS OF TRADE.
BUT IN SAYING THAT LET ME MAKE IT CLEAR WHAT IS NEW ABOUT
THAT CHALLENGE. THE NEW ELEMENT OF THE CHALLENGE IS NOT THE
FACT THA~ T WE HAVE TO RESTRUCTURE OUR INDUSTRIAL BASE. THAT
HAS ALWAYS BEEN ON THIS GOVERNMENT'S AGENDA AS IT SHOULD
HAVE BEEN ON ALL PREVIOUS AGENDAS, BUT FREQUENTLY WAS NOT.
THE NEW ELMENT TODAY IS RATHER THAT WE FACE A MUCH SHORTER
TIME-TABLE FOR RECONSTRUCTION THAN COULD HAVE BEEN ENVISAGED
EVEN A YEAR AGO. IT IS THIS RECOGNITION OF URGENCY WHICH
PROVIDES THE POINT OF DEPARTURE FOR THE 1986-87 BUDGET, ON
THE STRONG FOUNDATIONS LAID BY ITS THREE PREDECESSORS.
LADIES AND GENTLEMEN,
THE BUDGET AND ITS ASSOCIATED POLICIES GIVE THE ECONOMY
THE NEW DIRECTIONS IT NEEDS. THEY SET IN TRAIN THE NEW
DEGREE OF ADJUSTMENT NEEDED TO ENSURE THAT THE ECONOMIC
NUMBERS ADD UP ESPECIALLY THE BALANCE BETWEEN DOMESTIC AND
FOREIGN SOURCES OF SAVING. NOW WE NEED, AS A NATION, TO
TAKE ADVANTAGE OF THESE NEW DIRECTIONS TO ENABLE US TO GET
OUR COLLECTIVE ACT TOGETHER.
.0
DESPITE rj. E CHANGE IN THE NATURE OF OUR CURRENT PROBLEMS,
THAT WAS ESSENTIALLY THE TASK AND CHALLENGE FOR US ALL IN
1983. THE AUSTRALIAN COMMUNITY AND ESPECIALLY BUSINESS
AND UNIONS RESPONDED IN A REMARKABLE WAY.
THE SPIRIT OF 1983 LIFTED AUSTRALIA TO THE JOBS PINNACLE OF
1986. IT WAS THE SPIRIT OF CO-OPERATION AND RESTRAINT OF
1983, AS IKUCH AS THE POLICIES WE ADOPTED, WHICH ACHIEVED THE
RECOVERY AND GROWTH IN THE YEARS WHICH FOLLOWED.
THE SPIRIT OF 1983 PRODUCED A COMMONALTY OF PURPOSE AND A
WILLINGNE2SS TO ACCEPT REAL WAGE. CUTS IN ORDER TO MAXIMIZE
THE LIVING STANDARDS OF AUSTRALIANS TODAY AND IN THE FUTURE.
THAT WAS THE SPIRIT OF~ 1983, AS IT REM4AINS THE SPZRIT OF THE
ACCORD. 4' N D THE WORD " SPIRIT" IS NO MERE RHETORICAL
FLOURISH, IT IS NOTHING MORE THAN A READINESS TO RECOGNISE
REALITY. IT IS NOTHING LESS THAN A COMMONSENSE,
DOWN-' TO-YZARTH AUSTRALIAN APPROACH.
IN THE VAP. ST WEEK, I HAVE BEEN STRENGTHENED IN MY FIRM BELIEF
THAT THE SPIRIT OF 1983 WILL EMERGE AS STRONGLY AS EVER, TO
LIFT THE AUSTRALIA OF 1986, AND THAT ONCE AGAIN WE WILL
EMERGE TRIUMPHANT.