ANNUAL CONFERENCE OF THE GRAZIERS' ASSOCIATION
HELD IN SYDNEY ON 9TH MARCH, 1964
Speech by the Prir. e Miniter. the Rt, Hon. Sir Robert Menzies
Sir and Ladies and Gentlemen
You know, Mr. McMaster is quite right I said I
would be very pleased to be here, and then a little bit later on,
somebody said, " Well, the Queen Mother is not able to come out to
Adelaide to open the'Fostival, They would like you to open it",
and I said, " Oh, yes, I would be very pleased to do that", not
looking at the dates, Then somebody else said, " We'd like you to
make a powerful speech for about an hour on Sunday night to an
Administrative Staff College in Victoria" and once more, not looking
at dates, I said, " Yes, I would be delighted," Then somebody
said, " We would like you to make a great speech at the College of
Surgeons and lay a foundation stone on Friday," and I said, " Yes,
I would be very pleased to do it", and so here I am, pleased for
the fourth time in the third State ( Laughter) in one weekend.
But I must say, Sir. that I really am pleased to be
here not only because I have happy memories of the last time I
spoke hero but also because I think that there are one or two
matters that the Graziers' Association and the Prime Minister,
whoever he may be, ought to discuss together from time to time
because this is, in a sense and I don't need to say it to you,
the age of slogans0 Somebody coins a phrase, somebody prints it,
somebody quotes it and before long I am hearing it on all sides,
The fact that it is wrong doesn't seem to matter very much. Among
The ptvrases that have been enjoying some currency in Australia in
the last few years is one that I just want to say a few words about
because I won't detain you unduly,
It has been put on a variety of occasions to me and
to other people that there is an inevitable conflict between
stability and growth, These are the very words in which it was
last put to me and I raised an interrogative eyebrow and demanded
some evidence of the truth of this proposition and because the
fact that I questioned it seem. d to be regarded as rather
remarkable, I would like to question it now with you, and give my
reasons, What they say is that there is an inevitable conflict
between stability and growth. Now, of course, this statement
begins by being hopeless because you are dealing with two utterly
different matters. Growth in Australia is a physical matter
growth because we will have more land under cultivation growth
because we will produce more wool growth because we will have
more minerals discovered and developed and used growth because
we will have greater and better water supply growth because we
will have more roads, more basic industries established on'which
to build a superstructure, Growth, yes, we are all in favour of
growth and so have our predecessors been in Australia because few
countries in the history of tho world have grown as much or as fast
as our owno But growth is a physical matter. You may measure it
in that senseo Stability, in the sense in which we all employ it,
is a monetary mattor, When you say you want stability with growth,
you say we want stability of monetary values in other words, we
want to avoid inflation and, at the scnoe time, we want to develop
and develop and develop the material resources of the country, I
am at a loss to understand why it is thought that these two things
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are incompatible, They are not, The best evidence of that is
that vwe have had two or ih. roo years now in A. stralia of the most
enormous physical growth and dovelopment and we have had practically
a dead level in the consumor price indo-, We have had, so long
as we keep it, stability in a nonetary sense and growth in a
developmental sense, Now, Sir, I mention this because time after time,
people think that when you talk about stability, you moan stagnation
in physical growth, forgetting that you are talking about a
monetary conception and that when you talk about growth, some
people will say, " Oh, you must be very careful" under the impression
that you are talking about an inflation of the currency. The two
things are utterly different. The two things are entirely
reconcilable and in my opinion, it is one of the great businesses
of statesmanship in this country to do all that we can to reconcile
them, to prevent the cost level from rising, to prevent inflation
from wrecking the foundations of growth and at the samo time to
have all the development, all the growth, all the added productivity
that we can achieve, Now this seems to Sir, to be so sinple
as to be almost elementary, to be alrost a truism, and yet I am
perfectly certain that before long I will walk down the street and
I will encounter some very well known man in the business world
who will say to me, " Of course, my dear fellow, growth and
stability are incompatible," Now, I hope ; hat I have said will indicate to you
I don't believe that to be true. Apply it to the businesses in
which you as graziors are engaged. Woll, you have a vested
interest haven't you, in avoiding inflation. So have I as the
head of the nation, Don't let us forget tt tt there are many many
people in Australia who have a vested interest in inflation, to
whom some degree of inflation represents positive advantages and,
forx all I know Sir, there are more of those than there are of you.
and that is why it is very important politically not just to coun6
the heads but to calculate the ideas, to work out with some sense
of justice what ought to be done. I would nerely begin always
by saying to myself, " Well, recognise that you have very many
people who have a vested interest in inflation, who cro not
exercised by it." Sir, I have even heard economists and one speaks
with immense respect for economists ( Laughter) if only because they
present such an infinite variety of opinions, but I hWve heard
economists, well-known if nIt oeinent, at any rate well known
who have said about 2% inflation a year is a pretty good idea,
This will be the proof that the country is moving. And when I
occasionally say, " Well, that's a splendid idea. That means that
when we go out to raise moncy for public works for the developnent
of this country we ought to be saying, if you are right, to the
investors, ' Well, I understand that you will write off your investnent
at the rate of 2 per cent, a year'", When the last groat
inflation was on in Australia, the Loan market used to fail, the
Commonwealth Goverment had the somewhat dubious advantage of
having to supplement the Loan market in order that these public
works progra-mes could go on and it used to cost us, on the
average, about œ 60M or œ 70M. a year out of the Budget and that
meant that the taxes either didn't come down or went up. My
experience was that when we had performed this act of singular
magnanimity without any obligation we wore able to go out at the
next State election and hoar -urselves being attacked for our
taxation policy by the very fellows who had collected œ 60M, or
a year out of us to maintain their works programme, These
are just the ironies of life, ( Laughter) So long as one doesn't
become sleepless over them, one survives themn
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But the fact is that every time wo had an inflationary
process the Loan narket has been advers ely affected for the nost
obvious reasons. Yet I an perfectly certain that there are very
few people loft in Australia who don't realise that any development,
whether it is in primary industry or secondary industry or tertiary
industry, any development is conditioned upon an adequate supply
of funds for governent works. It doesn't natter whether they
are the Snowy for electric power or whether they are some water
storage with the consequent reticulation of water for irrigation,
whether they are for roads with consequent inprovenmnt upon
transportation it doesn't natter what they are, all these basic
services we look to the governent or governnents to provide and
we all want then to provide then if they can out of Loan noney
because this business of providing then out of revenue means that
today's taxpayer is unduly loaded to supply his sonsl uses and
purposes in twenty years' tine. And so we would like to have then
done out of Loan money, and today we are increasingly getting then
done out of Loan noney.
Today we have a Loan nmrket which is nost renarkably
successful, and one of the reasons for its success is not that
they go hone and say their prayers you know, these financiers
say their prayers and say " Isn't it wonderful to have the Menzies
Governnent" I think nost of them doubt it ( Laughter) but it
is because there has been stability in the currency, because
inflation has been checked and therefore one of the by-products
is that the Loan markets have been well supplied and therefore the
works progranes of Australia have been able to go on apnceo
Nov you as I said, have a vested interest in avoiding
inflation, After all, you neot the local costs if there is
inflation, if there is a steep step up in the wage ratq and if the
techniques of production haven't kept step with then, you will
find that your costs, whatever they ray be for, are rising and that
your price still remains, as I daresay it always will one way or
another, at the mercy of the buyer. Now, it is quite true that
prices have been healthy of late, We have known periods, haven't
we, in which they have been very bad. We have known one or two
periods in which they have been embarrassingly good. I won't go
back on it, ( Laughter). But above all things you do represent a
great industry which cannot afford to be, and which we cannot
afford to have, priced out of the world market or priced out of
existence, and therefore you have a vested interest in some
stability of costs, or at any rate in a cost level which is
supportable if you are to continue your industry at a reasonable
profit and sell your commodity on the world's market at a reasonable
advantage. This is all perfectly true.
How do we meet this kind of thing? How do you meet
it? Well, you meet it of course in one sense by constantly
aiming at more efficient production, I mean by constantly aiming
at a bigger clip per sheep, let's put it that way. By constantly
aiming, as I hope everybody will, at maintaining wherever possible
the quality of our wool. These things represent better methods,
better grazing methods, better ways of handling the various
problems of classifying wool, all this kind of thing these are
matters that you, in a managerial sense can look after. You are
not the mantors of what you will pay but you are, in a sense, the
masters of how you will handle your business,
But in the long run, you know and I know that if
we were to have an acute inflation in this country not all the
skill, not all the enterprise not all the applicaion of art and
science to your industry could prevent you from having your costs
rise against you and perhaps at a time when the world's demand was
sustaining one of those occasional falls that it does. Therefore,
I say to you and I say it with warm approval, you have a vested ./ 4
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interest in avoiding inflation. I don't mean to say, Sir, that any
government can sit down and guarantee that there never will be a fall
in the value of money, That would be an absurdity because there are
many instruments of policy in this country which don't belong to
governments at all and there are many circumstances which bear upon
the value of money which exercise a pressure. This is a vastly
complex thing. Somebody tells me the central bank, the Reserve Bank,
under Government persuasion if necessary has ample power to avoid
this. Of course that is not true. The Reserve Bank has great power
to do a great number of matters and every time it does one of them
in the normal fashion I am pleased about it, I don't mind saying,
because I prefer the occasional nudge to the economy to the sudden
hit by some large emergency scheme on the part of a government.
But give all the powers the Reserve Bank has in and they are not
by any means all the powers the financial powers in the country
give in what the Commonwealth may do with its limited powers, it is
still true that there are many agencies in the country which affect
the supply of money, the price of money, the value of money which
at the moment, are not under compulsive authority in Australia. But
that doesn't mean that the Government of the country indeed the
governments of the country should not constantly have in their
mind the great truth that stability in the value of money, stability
in the value of savings, stability in the value of investments is one
of the great conditions which enables growth to occur.
S There is an argument that goes on, and I don't want to
enter into it, about overseas investment in Australia. We have had a
very great deal. It goes on. I, myself, believe that it is not
unrelated to the remarkable stability of this country. Political
stability I don't mean by that that I an Prime Minister or something,
but I mean by political stability that this is not a country that
changes its government by revolutions or assassinations. I have
been Leader of the Opposition myself and still alive which is a
romarkable thing ( Laughter) in our country. But stability, stability
of government stability in broad economic ideas, a steady growth,
the possibility of immonso resources these are the things that
induce people overseas to put their money into Australia and they put
it in for growth, not as a hiding-place, but for future growth. They
put it in for future growth because they believe as I do that growth
in the country depends entirely or primarily upon the fertility of
S the soil from which you are going to grow and the fertility of the
soil depends a great deal on the stability of the countryj the sort
of stability that means that people are not going to lose their
investment in a wild inflation or lose their investment in some wild
political " bouleversenent", some revolution.
We ought to remember these natters and remenber them with
very great pride, but we will do best, Sir, on all these mntters if
we don't become the victins of slogans. What I have said to you
today was designed primarily to dispose of the slogan which seems
to me to be so false that you can't have stability and growth at the
sane tine. I an happy to say that if I an relieved by God or nan
from my responsibilities in a reasonable time in the future, I should
like to have enough time off before my ultinate departure to look
back and say, well, we did show, with the help of the people of
Australia that you can be stable and that you can be fast-growing
at the sane time. To Australia this is tremendous. To Australia's
greatest industry, this is vital and so I therefore have given nyself
the great pleasure of coming here, wishing you well in all your
undertakings in the course of this conference and saying to you, if
I may, that you are not to be beguiled by the siren voices that will
occasionally be hoard. You just stick to the good old rules of being
sound, sensiblo, forward looking, skilful and responsible. That's
all I ask of you ( Laughter) and I daresay that in your turn, you
would say, " Well, if you would even live up to that, old boy, we
would be a lot better off than we are."
Sir, I declare the Conference open.