SPEECH BY TIE PRIME MINISTER, THE RT. HON.
R. G. MENZIES, -AT THE C012, ONtWE LTH CLUB,
ADELAIDE, onI3TH FEBRUARY, 1961
Mr. Chairman, Mr. Premier and ladies and gentlemen:
That last remark ' You are just as welcome as you were
27 years ago' is one of the greatest masterpieces that I have
ever listened to. Because, you seel 27 years ago it didn't
matter what I did, so far as you were concerned I was acting
Premier of Victoria. ( Laughter) The Chairman conceals the
intervening period except for the time when I came as Leader
of the Opposition. But there are one or two other preliminary
remarks that I would like to make.
First of all, when I was standing out in the lobby
seeing the " great" go by I was delighted to encounter Stanley
Skipper. ( Applause) He looked to me to be almost exactly as he
was whon I first knew him a mere matter of 32 or 33 years ago.
And he said to me " I have been practising at the Bar for
years." ' Jell if he had been a politician I would have said,
" You're a liar!( Laughter) But you don't talk like that to
distinguished lawyers. However I am delighted to know that he
is hereoand fascinated to think that this Club, now so we-. ll
known ail over Australia, was established by him what
years ago? It seems almost unbelievable.
Now you said, Sir, that I must have forgotten what it
was like to be Leader of the Opposition. On the contrary I
remember it very well. And I remember some of the rules for
getting out of Opposition and getting into Government. But I
am keeping them to myself. ( Laughter) Why should I egg on my
friend Mr. Walsh? ( Laughter) Vhy should I give the priceless
secrets of the art of Opposition to my friend, Mr. Calwoll?
Certainly not! Some day I will write a chapter in a book about
it. That will be, I think, rather helpful to whoever is leading
the Opposition then. And who knows who that will be?
Now I know that this is not a political gathering in a
Party sense and I don't propose to make any Party observations.
But I would like to say a little to you about one of our
domestic problems, our national domestic problems, which has an
international flav~ ur; and something about the international
problem itself. Perhaps I might say something about the second first,
because I was reminded of it when the Chairman was introducing
various people and we were applauding then. I have the bad old
habit, if my loft hand is otherwise engaged, of smacking the
table by way of applause. I had to go to the General Assembly
of the United Nations to discover that that is not done any
longer. Because the first time at the General Assembly that
somebody made a speech that I agreed with and that didn't
happen for a couple of days ( Laughter) I beat on the table in
front of me, only to find myself checked by my colleagues who
said, " No, no; no, no. When you smack the table, that's
disapproval. Look at K. and his colleagues along there."
( Laughter) And of course when your disapproval is exceptionally
violent the drill is to take your shoe off and hit the table
with your shoe. ( Laughter)
But I couldn't help thinking at that Assembly what a
strange world it is that we live in twelve or thirteen new
members of the United Nations last year, most of them from
Africa in particular. New nations, the very names of some of
which most of us had never heard. And they are members of the
United Nations. In round figures now a hundred nations in the
United Nations; and people making a play for their support, Ai
particularly our distinguished friend Mr. Khrushchev. Everything
directed to propaganda; to either terrorising people or
persuading people or demonstrating the weakness of the effete
Western powers. It means that we have entered into a phase of
international affairs that is almost infinitely difficult.
We are a little bit inclined ourselves, aren't we
most of us I think are to assume that when a country wins
independence, all you have to do is to say to it, " Very well
now, you just have a Parliament, and elect a Parliament, and
get a Government and everything in the garden is lovely?". It
is quite untrue. Most of the now nations will go through
periods of practical dictatorship before they ever achieve
what we would understand to be a systen of self-government.
You can take the whole of the African countries, with the
possible exception of Nigeria, which has been brought to selfgovernment
by splendid decrees by the British authorities and
which has, incidentally, a magnificent Prime Minister but
with that exception you may take then right across ana you will
find that almost inevitably the head of the Government will do
things that no head of a Government in Australia would dream of
doing except perhaps the Premier of South Australia.
( Laughter) ( Applause)
True, there is a Parliament. But as I said to one of
my distinguished friends from one of these countries only last
year, " Tell re, is your Opposition Leader still in gaol?"
( Laughter) And the answer was, " Yes".
Well these things are slightly different from the
circumstances that we understand. And they mean that there are
a great number of these new countries, particularly in the
north of Africa and the centre of Africa whose constitutional
future, if I may put it in that way, remains uncertain or, at
any rate, experimental. Now this throws a great responsibility
on the rest of us: not to be in too much of a hurry to think
that our system of government is necessarily the right one for
then, but to develop an attitude of sympathy and helpfulness.
I know there are some people who say that " charity
begins at hone" and who have some reluctance about the
substantial suns of money that Australia finds under the
Colombo Plan under various aids of an international kind. I
want to say to you that what has been done before must be vastly
increased in all the Jestern world in the future if we are not
to permit such economic disorder to arise in these countries as
will make them readily responsive to the Communist pressure.
Not long ago the Communists of the Soviet Union and
the Communists of China had a great Conference in Moscow. It
must have been a pretty lively one judging by the echoes that
have reached my own ears, because there are material
differences between them. But in the long run what they appear
to have emerged with was this: " We are not going to seek to
achieve our aim by overt military action because that involves
too great a risk of destruction. But we still will seek to
achieve our aims of Communist propaganda by means of
persuasion, pressure, threat and economic penetration."
You nay take it, that as I talk here today the
economic penetration goes on in all these new countries in
Africa and in all the countries of South-East Asia which stand
between Conrmunist China and ourselves, the pressure goes on.
If this is to be met it will be met not merely by military
means, because the other side exist on internal lines of
cormmunication and are, in a military sense, much more compact
than the . lestorn world can be, but must be net by encouraging
0 3.
nutual understanding, by extending oconorlic and technical
assistance to the very limit of our capacity. If we don't if
we say " What has that got to do with us?" then we will, some
day, we or our sons and daughters, have a very rude awakening.
It used to be said about us in Australia and not so
long ago that we didn't care a hoot about international
affairs; they didn't concern us. There was a certain amount of
truth in that charge. I think we take a vastly greater
anount of interest today in international affairs than we did.
And I hope that is true, because disaster for us won't be the
product of internal events; it could be the product of events
engendered in countries outside Australia altogether.
Therefore we must play our part;
It is one of the tragedies, I think, of modern
thinking that the United States of Aerica which has done out
of its wealth so much to help new countries, so much to help
underdeveloped countries, should have received not many thanks,
a good deal of abuse a good deal of nisunderstanding. And I
warn you, as I warned the General Assembly when I spoke there,
that the great stroke of propaganda that is being engaged in is
an attempt to persuade ordinary men and wonen, particularly in
the uncommitted countries, that the whole argument in the world
is an arguent between . American capitalism and Soviet communism,
with all the rest of us, presumably, just onlookers. This is a
ruinous alternative. It isn't a case of the United States
against the Soviet Union. It is a case of free countries, with
free institutions, against countries with slave institutions
not lAerica versus the Soviet Union, but Communism against all
the rest of us.
I turn away from that subject although those things
cane prominently into mind in looking at the representatives of
99 different nations at the United Nations last November.
Now I want to say something about one of our own
problems which has an international flavour. Every now and
then some Govermnent it happens to be mine at present sets
out to do something about our balance of payments, about the
state of our overseas reserves. And a lot of people very
naturally, I don't blame then at all say " But why couldn't
these things have been fixed up once a year, or once in two
years; why don't we have some steady consistent, unchanging
approach to these matters?". I want to say a word about that.
Why do we have balance of payments problems in
Australia? Why is it that the balance ofpayments problem for
Australia is probably rore acute, more changeable, more subject
to violent fluctuations than is the case in any other country
that I know of? We need to start by understanding this. You
see the great bulk of our exports to the world consists of
primary products wool and wheat and meat and butter and so
on. And the price that we get for these things varies very
sharply. If there is a rise in the price of wool our export
income is up œ 80 million, a œ 100 nillion; everybody is happy.
If the price of wool declines by œ 80 or œ 100 million then
exactly the opposite state of mind is produced. And apart
altogether from the state of mind, you can see the export
income of Australia going up and down, year by year, like a
yo-yo. This is one of the remarkable things that applies to
our export earnings.
But while our export inco. e rises and falls very
sharply our demand for imports doesn't fall very sharply because
the demand for imports depends so much on the internal
purchasing power that we have in the country. And as we have
been going through a quite remarkable boor in Australia the
local purchasing power is high, and so the do-and for imports
is high. In spite of all recent neasures the import bill in
January was considerably higher than the import bill in
December or November or October. ed have an alost insatiable
appetite for imports. When we have bought all that we can buy
here we buy imports. And the result is that you tend to have a
high line on the import side, and a fluctuating line on the
export side. And therefore your reserves go up and down, and
measures have to be taken from tine to time to arrest the fall
lest the fall should become inveterate and involve you in
serious international troubles. In other words most of the
time, internationally speaking, we live beyond our means we
use capital, as a nation, to pay for our purchases on current
account. No business man would do that and no Government
ought to do it. Therefore, constantly Governments I don't
care what Government it may be find themselves compelled to do
something about this marked fluctuation in our balances of
trade. You may say to me, " Well, why doesn't that trouble
other countries?". Let me point out to you that in actual
total figures, not per capit t. Australia is one of the eight
great traing nations of the Wrild. In the first eight! It is
a remarkable thing for a little country of ten million people
in the first eight trading nations in the world. And so
constituted is our economy that our international trade is a
far greater proportion of our total trade than is the case in
the United States of America, or even in the case of Japan
though we think of Japan, don't we, as a formidable and
aggressive international trader. A greater proportion of our
business crosses the seas than is the case in either of these
very great trading nations. And so we are more vulnerable.
If somebody could come along and say, " Well here's a
beautiful notion, the world is going to stabilize the price that
it will pay us for our wool", it would be a marvellous episode
as long as it was stabilized on the right level. If these
things happened, so that our export earnings moved very little
in one direction or the other our position in relation to the
whole of our international trade policy would be much easier,
and our balances of payments would present much smaller
problems. But it happens that in the last seven years the terns
of trade have moved steadily against Australia. If you took the
terms of trade at a sort of parity of 100 in 1953, they are now
The terms of trade have moved more sharply against
Australia than they have against any other country whose figures
are recorded. Now that is not the fault of Australia. It
merely means that our exports are not connranding the same price
and that our imports do comrand a high level of price.
Therefore, translating it into the terms of trade we are in an
adverse position. How this matter ought to be solved in the long run is,
of course, a problem for all of us. How it can be dealt with
in the short run is a problem for all of us.
Talking about the short run first we speak, very
properly, about increasing our exports. That is right. But all
the matters that have been discussed about increasing our
exports are in essential terms long range matters. You don't
suddenly increase your export of manufactured goods over night;
you don't suddenly over night increase the export of beef from
the North; you don't attend to any of these things just like
that, hastily they are long range remedies. But in the short
run any Govornment may have to .10 som-) e very difficult things
because, for the reasons that I have rmeintioned to you you can
begin a year with overseas reserves standing at a hanasorlo
figure like œ C500 millions, and end the financial year with them
standing at œ C250I. This is an enormous fluctuation. This
doesn't occur in a country like Great Britain where the oxpozrts
are manufactured commodities and there is, thereforo, a gr'eater
stability of price and production and sale.
Because this fluctuation there are those who say
and I respect their view very much " Well in order to meet
that, in order to keep your reserves at a stable level, since
you can't control the price of your exports, you can't control
that variable line, you must have a variable line of imports by
having a fluctuating series of physical import restrictions".
Now I wonder what the business community in Australia would
think of that, if you had a system of import controls which
varied roughly with the line of our export income so that it was
here today and gone tomorrow, up next month and down a few
months later. I don't think, you know, that that is practical
politics. You may impose restrictions on imports to give you a
sort of average result for a reasonable period of time but you
really can't have your import level, by Government action,
fluctuating with the same degree of rapidity up and down, as
your export earnin,: s.
This, the~ refore, presents a problem which is not to
be solved over a dining table or between two club arm chairs.
It doesn't possess the noble simplicity that so many of us think
it does. The fact is that doing what we can in Australia to
deal with these abnormal short term variations, we miust
increasingly look for the long term solution. ' Ind the long term
solution is that this country should become an exporter not
only of wool and these , great commodities that we have lived on
internationally, but of manufactured commodities. Aind why we
shouldn't I don't know. It won't happen overnight. I have an
infinite belief in the skill and resourcefulness of
Australians, whether they are employees in a factory or
managers or whatever they may be. And I don't think that we
ought to despair, with all this , reat new A1sian world opening
around us of being able to match the United States of America
or m:-atch the United Kingdom in the production of goods for
expert. The great point about it is this. Many of us here
today remember the depression of the early 30' s. That
depression arose from a variety of circumstances, most of which
were entirely outside Australia. But one of the circuastances
was that the price of our export comm-xodities fell to the
gutter almost overnight. The price of wool you remember it?
It seems fantastic to look back on wool at 6d. or 7d. The
price of wheat dear me, nobody would believe it if they
didn't know about it, and you just told then. as a fable that at
that time the price of wheat was getting down to under a
bushel. The result was that with our export income drying up
we becamie no longer an interesting subject for ovarseas
investment; the capital market dried up and we found ourselves
confronting a tremaendous economic crisis. So tremuendous that,
although we now get a little disturbed if unemployment rises
to three quarters of 1% of the work force, by 1939 as I well
r~ juember we were rather content because unemploynent had been
reduced to 10% not three quarters of These days ought
to be remembered for those reasons.
But the great reason for all this was that
economically we stood on one foot at that time. If our export
income fell down, we didn't have the internal economic
structure of manufacturing, primary, secondary and tertiary
industries to enable us to absorb the shock. That kind of
thing couldn't happen to us today because this is now a
powerful industrial country.
You look back to South Australia before the time
when the Premier and I put our heads tog~ ether to move munitions
establishm-ents into this State and begin a great era of
industrialisation. Why if you go back to 1930-31 in South
AIustralia here was a State dependent entirely on primary
production and therefore liable to all the unprotected shocks
of changes in the world market. But today it is a great
industrial State. Australia is a -rge at industrial country.
And therefore we are able to balance ourselves. What I am
saying to you is that in the long run if we are going to avoid
in future having too frequent changes in the application of
monetary and financial policy we must strive to be in a
position where riot only in dom. estic term:, s we stand on two feetprimary,
secondary but in export terms we stand on two feetprimary
and secondary. When we do there will still be some
fluctuations in our export eairnings, there will still be some
movements in our balance of paynents, of course. But they
will be much miore radual when they are composed of a variety
of elements instead of lipending entirely on one.
Now, Sir, I " cm sorry-I told you, you told me that
I was to finish at five to two and at present I am in that
chastened mood in which I am everybody's humble and obedient
servant.