SPEECH BY THE PRIME MINISTER, THE RT.
HON. R. G. MENZIES AT THE LIBE3E. L PARTY
COUNCIL iMEETING IN CANBE RA, ON MONDAY
14-TH NOVE3EK 1i60-. 2
Mr. President and ladies and gentlemen,
Before I begin I just want to say in amplification
of what the President said about Mr. Holt, that he's not late
just because he's late; he's late because the planCis
delayed. Otherwise he was looking forward very keenly to
being with us at the beginning of this meeting.
. This meeting is, of course, so I gather, the last
one that will occur before Election year. I don't know when
the Election will be, but I do know it : rill be next year.
And if we have our council meeting a little earlier than the
usual :. ime, we will be at that stage, all taken up, no doubt,
with clection ideas. Anyhow elections are a kind of fever
that is inclined to grow for about t; welve months before the
event. And, therefore, perhaps, this is a convenient time
for taking stock, a little, of our policy I kno, th. re is
going to be a good deal of discussion about the Platform a
very convenient opportunity for looking around us and
identifying, so far as we can, clearly, what lines we are
following. And I want, as usual, to do that by taking up two
broad topics: the first of them, naturally, the external
position of Australia in the iorld; and the second, the
domestic position. Because I venture to believe that on each
of these matters something may be said which I hope ;. ill be of
advantage to us.
In the first place, talking about the external
position. There is a problem which is constantly with us
you see it occasionally reflected in various commentaries.
And that is the problem of reconciling a good neighbour policy
with our friends in asia, particularly, a good neighbour policy
which we resolutely pursuereconciling that with our national
duty to ourselves to strengthen our co-operative associations
with the great powers of the Jestorn world.
It is foolish for anybody to say that one . should be
pursued to the extinction of the other. Jhat ie have to do is
to keep them both in existunce and strengthen both of them as
much as we can.
Now, Sir, recently I went to the United N-tions.
It is a strange expe..: ience, I confess. I had always escaped
going there in the past, so that I was having my maiden effort.
And the General Assembly of the United Nations is a very
strange body 98 nations there, each ~ rith the same vote a
country with half a million people having the same voting
power as the United States of America; two countries of half
a million each, able to out-vote the United States of America.
Quite all right so long as the Genercl Assembly is a debating
body, which it wacs designed to be,
But as the new nations come into existence and
there wero about 15 this year so it becomes very tempting to
some people to throw the emphasis . away from the Security
Council, which has some executive function, and into the
General assembly, ihich was designed to have none, but in which
votes, perhaps, may be more easily collected, than in the
smaller body of the Security Council.
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And therefore you may frequently find some Jestern
powers voting on wvay, and some anothor, on almost any
question that comes before the Assombly. To make a comparison
between the utter monolithic solidarity of the Communists
with the scattercd views of the democracios, is to compare
utterly unlike things,
Then in the third plac, it is a dangerous fallacy to
talk about the " neutral" powers Many of then are uncommEittod,
I agree. But neutral? lords can be used in a very loose
fashion. India, for example, is supposed to have a doctrine
of neutrality. In reality it is a doctrine of non-alignont.
They won't enter into specific t-r atios with people they
wouldn't cone in on the South-East Asian Treaty for exaple.
But th; y are faithful nonbors of the United Ntions. And if
the United Nations on sono occasion, were to pursue , war-like
action to enforce sonathing, then I've not the slightost
doubt that India would play India's part as a eombeu of the
United Nations. Just as she sent troops to Korea in the
Korean incident. So that that is one form of noutr: lisn, if you care
so to describe it.
There are other places in the world, not quite so
conscious of the importance or comnanding significance of the
United Nations, Xho ar neutral in the strict sense. That is
to say, they say: " le will not fight anybody, except in
defence of our own innediate frontiors. Apart from that, 1we
accopt no obligation; we enter into no agruement"
So there are two diffreiont kinds of noutralisi, you
see. One is what I call a " participating" noutr-lism, under
the United Nations Chartor; and the other is an " absolute"
noutralism. Now it is very important that we should have these
things in our ninds, because this movement to divide the
United Nations up into three allogeod . roups, so that they any
balance each other, can have enormously dangorous implications
for . the iorld. First of all it would destroy the United NItions as a
body possessing any cohesion. And in the second place it
would tend to create hostilities and senses of difference,
when perhaps tnhere was no occasion for either; tend to make
us look at all the new African countries as if they were the
sane kind of countries, the sarc kind of people, all to be
put in a basket to ' thor and treated as the " nutral"
countries, or the " unconnitted" countries of Africa.
4o do :' avC some funny ideas in the ! orld. Nobody
looking at Europe ever supposed that an Italian, and a
Frenchman, and a German, and a Dutchman wore the sallo; that
you could put thom : All into one neat package and say that they
all possessed the European mind, or that they all possussed
common interests in Europe. Th y do, I know, 3ut it has
taken centurs to bring then to a point where, in the economic
field, they co-operato, one with tho other, But nobody wrould
droain of making that kind of error about Lurope
But when we look at Africa with a dozen or twenty
now nations in it, people are very m-uch inclined to lump them: i
all tog. ther and say: " J11 there you aro; now all these
people have just cono! e to . ndependonce. They are bound to havo
4
the sane kind of ideas; you can put thrn together in a neat
parcel and take it for granted that they will make a
natural logical bloc, or group".
Jell, I just don't believe it. The best speech, the
greatest speech, that was delivered at the United Nations
General Assembly in my hearing was that made by Sir Abubakar
Balewa, the Prime Minister of Nigeria.
Nigeria is the biggest single nation in Africa. It
is four times the size of Ghana, its neighbour, though we've
heard a good deal more about Ghana. The Prime iMinister of
Nigeria is a man of quiet strength and authority and great
wisdom and great experience. His balanced, measured
utterance was so utterly inconsistent with any idea of forming
a bloc, or of falling into the orbit of somebody else: it was
indopeindnt, yet intelligent; it recognised the obligations
to the world, and yet he was obviously setting out, loading
his country in a proud destiny, friendly to the British,
because the British had brought them to independence; an
inheritor of all the best ideas in our own form of selfgovernment.
A wise, strong, thoughtful man.
Not all leaders are like that. Not all the
countries in Africa produced i. mn of that type. There are
some countries in Africa well advanced in the art and practice
of Government like Nigeria. There are others who are just
beginning in a very, very ' prentice fashion. They all
deserve our interest; they all deserve our help. But don't
lot us fall into the . rror of thinking that they are all the
same. Because they are not,
And that is why I believe that this mischievous
proposal to divide the United N-tions, a proposal of which we
have not yet heard the end, must be borne in mind by us so
that we may resist it while we can.
Now while I still believe, and believe without any
reluctance, that we must pursue in Austr-lia our good
neighbour policies with our Aisian friends, we must be willing
to contribute to the oconomic advanceeont of these countries
through the Colombo Plan, or South-, jast Asian freaty, or by
whatever mechanism may exist. I believe all that. It
doesn't need to be iade a matter of persuasion with this
audience, that that is of very, very great importance.
But I still you may call it antiquated, if you
like, I don't mind but I still believe that the very
foundation of our foreign policy, and of our defence policy is
close cor. munion, close co-operation with the Commonwealth,
and, of course, outstandingly, with the United Kingdom, close
co-operation with the United States of America; and the
making and maintenance of defensive arrangements such as those
cohtained in the iNZUS pact, end the South-East Asian Treaty.
These are the groat practical things which affect
the security of Australia. Friendship with your neighbours
that's good; that must be cultivatcd. Je must at all times
look for ways and means of elimin-ting points of difference,
so far as we can and there re not many points of
difference. inust be helpful. m-Jues t be neighbourly.
But in a practical world, it is essential that we
should never forgot that it is upon the rock of the Coimmonwealth,
and of the Com;: onwealth's association with the United
States of ; America that our national security is built.
All I need add on that is that as the ANZUS Pact
was negotiated by your present Government, and the South-Fast
a. sian Treaty also, I think we can claim that in the field
that I have just been discussing re have a respectable,
concrete, constructive policy and achievement
Now I just want to turn from that to the ever
present domestic problem. And I'm going to say something
about this, ; which is designed, I hope, to help you to meet
certain criticism which I know commonly spring up.
One of the great criticism that I hear, and that I
read, because strangely enough we don't entirely live in an
ivory tower, is that this Government changes its mind on the
economic field too quickly, that it proceeds by " fits and
starts". This is one of those easy, slick phrases that come
trippingly to the tongue, c'nd therefore have groat currency
" fits and starts". They do something now, and they do
something quite different in six months' time.
It is very odd if you consider that that
criticism has validity that the country appears to have
proceeded vwith such a remarkable degree of stability all
these years; that really, the ship hasn't shown any signs of
foundering. It has encountered storms; it has had its
difficulties. But it goes on; its voyage continues. And
for 99% of the people of Australia it is a very happy and
successful voyage.
Why t; hen is it said that we proceed by " fits and
starts", that -Je change oar mind?
Now the answer to that is, that the people who make
those criticisms fail to understand the difference between an
economic policy and the measures that you take to give effect
to it. Because a policy may be constant; but the measures
taken to give effect to it must vary from time to time
according to the circumstances. To take , mother metaphor: the
strategy remains the same, but the tactics have to
accommodate themselves to the circumstances of the month, or of
the year, or of the day, somletimoes
It would be a very stupid GoveL'nnent, indeed, which
having said " This is our policy: we believe in stabilising so
far as iwe can the value of money. obee lieve in building up
the population as much as we can. Je believe in having
employment to the fullest extent" all this kind of thing
if, having said that, it took no notice of the circumstances
at all and just -went blithely on as if nothing had changed.
Let me give you an exae. mple of that which is
sufficiently detached from the Government to make one
impartial about it.
The Central Bank has an enormous responsibility in
dealing with credit policy, in dealing with monetary supply.
And one of the things that is available to the Central Bank
for its purposes, is a certain instrument vrhich enables it to
affect the liquidity of the trading banks and therofore their
capacity to make advances to creditors. And that is the
procedure of the Special Account, Special oeserve Deposits.
If the Central Bank, desiring to maintain stability
in the liquidity of the bank over a term, finds that the
liquidity is getting too high and that advance policy is
threfore making credit rather infltionary, it can call up
the Special Account. ( I'lL call it " Special Account" because
that was the old nare). It can call up deposits from the
S6
Banks to Special Account. And that moans they take some of
the liquidity out of the structure
In three months' time, pursuant to the same policy,
but dealing with the circumstances as they arise, it may be
releasing money to the banks from Special Account in order to
increase their liquidity. Because the circumstances change,
quarteo' by quarter, You could, quite simply, draw a. graph
showing what the normal movements of liquidity are in the
Banking structure, quarter by quarter
And a sensible Central Bank, it pulls in or it puts
out, according to the circumstances of the time. Because its
objective is to maintain a steady management of the liquidity
position of the banks.
Nobody says that the Central Bank is proceeding by
" fits and starts". Because most people, I think, realise
that that is what a Central Bank is for. A Central Bank
ought to be watching things every weok, and ovury mont.. and
it does and taking whatever adjusting steps are within its
power to achieve its overall purpose, -ind the same is true
about Goveirnmonts, Unless you are prepared to make your policy apply
to changing circumstances, then your policy will co-me to ruin.
Now what is our broad policy? I won't profess to
state it exhaustively, but I will mention eight or nine
aspects of it. You need have no fear that I am going to
elaborate them. Nor do I put them in any order of significance
but just as they come to the mind.
To restrain inflation: Now that is a great
principle of policy. It is not very easy. Certainly not
something that can be done by a singlo stroke, or a single
act not at all. To restrain inflation involves the use of
a variety of weapons, from the Central Banking procedures
outward. And those weapons must be used according to the
circumstances of the time. You may tighten up on credit today;
you may loosen up on credit in throo months' ti~ u. Both will
be pursuant to the same policy.
Recently to take the most up to date example
we announced early this year do you remember? I announced
myself a four-point progranr; e, one of the points being that
we would strongly support the Central Bank in its restraint
upon credit. And we still continue to say that.
But we know perfectly well that a restraint upon
credit, which may have to be particularly powerful in a
particular time of the year, for a variety of reasons, , ay
ultimately have to be eased out so that you don't get too
acute a deflationary effect.
And so it is quite possible to be restraining credit
hard in December, and letting credit out in June:
These are not inconsistencies-, these are merely the
sensible applications of the one policy, the policy being to
restrain inflation. And, of course, under our current
circumstances something intimately associated with . it to
protect agcinst undue run-down our oversas reserves.
! eo have a policy a second item in our policy to
maintain employment. This is treendously important,
socially 2-nd htumanly, in the country.
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But full employment sometimes becomos, as at present,
in at least Now South Jales and Victoria, over full employment,
with all the consequent troubles of increased turnover, loss
of efficiency, increased costs. And a Government must watch
that kind of thing, ready, occasionally to help, whore there
is some unemployment developing, by making provision for loan
money and so on, as we have from time to time in the course of
the last few years; ready, on other occasions, to put some
pressure on the economic system to reduce the liquidity of the
banks, to reduce, or control, advances of credit, partly so
that over-full employment nay not exist or be continued, with
all its evil, econoic consequences.
, Jc have a policy to build up population. And, in
fact, that has been maintained, I think, remarkably, when one
considers the aspects of this matter which, from year to year,
have m , de us wonder whether the inflationary pressures of
population growing at this rate by migration, were not too
great. But we have in that particular matter accepted the
risk. And I think with the warm approval of the people of
Australia. The result is that the country is far richer, far
more productive, far more solidly based, far nore capable of
resisting depression, than it was 10 years ago, if only because
it has all those hundreds of thousands, and now w ll over a
million, of people who have come from other parts of the world,
and have brought their own skills, and their own contribution
vith them. -o have a policy to develop our basic resources.
hnd we have had the opportunity of giving effect to that in
some rather dramatic ways, the most dramatic, of course, being
the great Snowy Mountains Scheme. Another one in Queensland
on which we have ultimately been able to make most helpful
arrangements, is the Mt. Isa Railway in Quoensland. One could
give other examples. But these are just sufficient to point
out that this is one of our great items of policy; that the
country's basic resources should be developed.
But they won't be developed if we lose control of
the value of monoy, if inflation gets utterly out of hand.
Because unless inflation can be checked, sometimes by stern
measures, always unpopular measures, then we will find that
the money is losing its value so quickly that loans will fail,
we will have to redeem all the war loan that comes in for
conversion, instead of having it converted into new loans,
and the effect of that on the Budget could very well be
disastrous. Therefore while we seek to develop our resources,
don't get the ida into our minds that you just have to think
of something, put it down, and start doing it. Because
whether you can do it at any particular tin will depend, very
largely, on your general view of your economic and particularly
your currency position at any given romnt,
Another item of our policy is to encourage
production. And I venture to say that there has been a very
considerable anount of success in that field, for which
Liberalism all over Australia. Federal and State, I think, can
claim considerable credit-the oncourago. ont of production
primary productions, secondary productions. But that doesn'tmean
you simply say, " Jell that's our policy. Therfore
anybody who wants a protective tariff can have it. Come
along in the . orning and get it". No.
In all these natters there must be judgucnt as to
the merits of the proposal, as to how it fits in with the
general community interest. And if you are going to have
judgient of that kind, then you don't exercise it on January
1st and call it something done for the rest of the year
Because the thing about judgment is that judgment has to be
exurcised every day of the year, as all the circumstances
change or develop or w. hatever may occur to then.
We have a policy to increase our markets overseas.
This is one of the great problems on which I believe
immennsely good work has been done. And I pay tribute to my
colleague, the Minister for Trade, for what he has done in
that field by his terrific energy and enthusiasm. I believe,
and he believes, that we have just scratched the surface, in
effect, so far that there are rmarkets available for
Australia, not just for :. ustralian wool, or whatever it nay
be, bu: for things that we make in Australia, things that we
process in Australia markets available which will surprise
us if we can go about getting them in the right way.
But wo will have to find out the circumstances of
every case. W. e may have to adopt methods that are new in
some old countri. s, and m. ethods that are old in some other
countries. Judgeont, judg. ent has to be exercised fron day
to day and from month to month.
But if it turns out that some trade promotion
policy is adopted in Country A and happens to be exactly the
opposite policy to the one employed in Country C, I hope I
won't be told that we don't know our own minds. On the
contrary. It will be the best proof that we do know our own
minds, and know how to deal with individual cases in an
individual way.
I mentioned earlier about our reserves. That is
another great item of policy. Continuity of trade is
essential to Australia. Joe are one of the great trading
nations of the world, in absolute terms.
Some countries have a tiny fraction of their total
trade moving across the seas. We have an enormous fraction of
ours. We are intrinsically one of the groat trading countries
of the world. For the maintenance of our standards of living, so
high, as they are, it is . ssential that we should at all times
be able to ensure the continuity of trade, ensure a reasonable
flow of imports, to match an outflow of exports by maintaining
overseas financial reserves which will act as a buffer against
a sudden decline in export incone, or a sudden onrush of
imports. All this, in a financial sense, is quite ele: entary.
But to maintain reasonable reserves abroad again requires, not
some dogmatic idea that having said something goes in March,
you must continue to do the -same thing in Septoeber, but a
sensible approach which says to you: " You watch your
reserves; if they are building up, then you nay be in a
position even to encourage a further inflow of goods into the
country; if they are not building up, but are running down,
then you must watch that. Because after all, if you get to a
point you nay have to do something rather drastic about
imports" and that is the last thing that I want to have to
do, nor am I contemplating it " but you may have to take
measuros." And, of course, on top of all that, don't forgot
4 0 9,
that the flexible, and yet successful way in which these
things have been handled, has been looked at by the rest of
the world. The most important critics are not those in some
newspaper here. The most important critics are the shrewd
people overseas who have their on. funds to invest and who
:: ako it their business to know exactly what the economy of the
country is in which they propose to make an investnont, Those
arc the people whose opinion may be valued.
And with all our " fits and starts", a few years ago
I was able to say to you that private inflow of capital
anounted to œ 100 millions a year. In the last financial year
it :' a: munted to œ 200 illions.
It is important fron our point of view, not only to
the dcveloplent of our oconory, to the onploynent of our
people, but also to the mnaintonance of adequate reserves
abroad that we should continue to enjoy this inflow of
capital. That is our policy. It is not the policy of our
opponents. But it:. n ours. And because that is our policy, it
becones even more important that we should constantly watch
the novenonts of inflation or deflation; the novenonts of
credit expansion; or of credit contraction; the ! ovenents
of our overseas reserves. Because, it is upon the securing by
flexible judgnent from. month to month of the best results for
stability, that this great inflow of capital will depend.
If the oconony of ustralia " was as jorky, as
uncertain, as sonoe wishful thinkers would have us believe, we
w:.. uldn't be receiving the tangible confidence of the business
world to the extent that we have been receiving it. And it
is vastly i. iportant, thierfore, that all of you who are so
imiportant in this org: nization who carry so n: uch authority
in this organization should find yourselves able to reject
some of these superficial criticisis, and to understand why it
is that a donestic econolic policy which isn't flexible, which
isn't prepared to appear to reverse direction in throe :. nths
or six : onths, would be a dangerous policy,
Jo have another iteo of policy and I will just
iontion it before I co:"., ude, to increase facilities for
higher educ. tion.
Now this is a : atter of . reat contention. The
Conn: onwealth bean, at the tine we ca-o back into office,
apart fron finding sone fees for rehabilitation of trainees
and so on after the war, had no educational obligations in
terns of n onky outside its own turritorios. None. I because
I confess that it all bogan with me said, "! WJe , ust do
son thing about the Universities because the Universities are
going to close unless we do. No State can carry the burden of
University training to the extent that it is going to. be
doeandod in this country".
Dea: r no. e Every figure that the Murray Com r: ission
set down by way of prophecy of University population has been
falsified. Before we are ten years older we will have a
hundred thousand people qualified for, and deoanding University
education. The capital expenditure, the whole vista, even
as one could see it eight years ago, was quite appalling, and
to my nind, something that no State, within the normal
reasonable liiits of its 2udoet, could hope to accomplish.
The only alternative then, would be enorrous
increases in fees, sonething which would frustrate University
develop: ont, or so; ething that me waits for rather in vain in
a country where ther are rich people, a nuch nore
enlightened outlook on the responsibility of the rich for their
Universities, than we have seen so far,
I mention that just for good measure. Because if
one goes to America one sees exactly the opposite so
remarkably deoonstrated.
Now we have taken it on. Je had the Murray
Colmi. ttee's report. Je adopted it. It cost the Commionwealth
over a three-year period, œ 20 nillion. This, as we looked at
it at that tin, was a fabulous sun of money. We have just
had the first report of the Universities Commission for the
second three years and the Commonwealth contribution goos from
to œ 39 million, and the States even greater.
Now why an I mentioning that to you? Just to say,
"!" hat a good boy". No, not at all. But to point out to you
that the people who are constantly coning along and saying,
" If you can do it for the Universities, you can do it for
everybody else, for every other kind of school" have no
conception of the financial implications of these matters.
WJhen this thing be an eight years ago, nine years
ago, whenever it was, one or two of my colleagues said. to no,
very sensibly, that " if you once Jet into this field, you will
be told you have to find money for secondary education as such
and primary education as such, and aren't we buying into a
dangerous field?".
Perhaps in my folly I said: " If we can strike a good
blow for the developnont of the Universities, the tertiary
educational places in . ustralia, we will do something that
will have its reaction on all foris of education and training
in Australia, and we will deserve well of the Republic.
So, I tell you about that in order that you nay
understand quite clearly that in this great field we have
voluntarily, with no constitutional obligations whatever,
accepted these phenon. enal financial responsibilities. And we
ought to be busy naking it clear to people, how good this is,
how great this is for a great . ustralia in the future,
instead of succumbing to the rather slick logic of the people
who say, " Well if you can find it for one purpose, you can
find it for another".
The ninth principle of policy is to . aintain
industrial continuity of work on just terms. And there again,
to -n astonishing extent, this has been achieved. oJ have
been flexible. ' o have from time to time rade changes in the
industrial arbitration structure, admittedly one of then
forced on us by a High Court decision, but the others were nade
as an exercise of judS-ecnt from time to time. In the result,
while all stoppages, or threats, are well advertised, the fact
is that there has been a grator cntinuity of work, and
therefore a greater effective contribution to productive
effort in Australia, in the last ten years, than I can ever
rcnober before in the political history of the country.
Now, Sir, all those things are our policy. As I have
said to you, they all require individual treatment: you ust
adapt your tactics to the circumstances of the time your
fiscal action, your credit controls, your import policies. All
these things must be applied with intelligence, with jud. ment.
-e must never be afraid to undo what we have done, when undoing
it was always contemplated at the time we did it, as one of
these flexible instruments of policy. 4 e are not to be
nervous about that. worn't have been changing our policy.
! e will have been giving effect to it.
Now I hope that what I have been saying to you on
that field doesn't strike you as too much of a technical, or
acadeniic exercise2. it isn't. I think there is nothing nero
iipcrtant than that we should into the last year of a
Parlia;:-' nt, not barren of ideas for the futuro, but thiat weo
should go in, feecling, a proper ) rido in what, between us all,
we have been able to do, feecling a. proper confidencoe in the
future of the country.
I don't believe for one riont, havin., rcigarcl to
tho history of our land and its rcent experiences, that the
people of ! Australia are to hand the n--attor over to
people whe have shown a much -re. ator faculty for quarrelling
xd th cach other, than they ever have for understanding-the
sinplost problem of the nationm I don't think t hat is going to
! appon. But we aite no,-t to live enmtirely on the division of
our enemies. it is fa-r better to live with-pride, with
co. ur. cy. e, with co. nfidenco in our ' own faith-and in our
righIt. ( a. pplausc)