EMBARGO: 7.30 PM
PRIME MINISTER 13 November 1974
NATIONAL BROADCAST
In Parliament last night I outlined a number
of measures which the Government is taking to deal with
some of our current economic difficulties.
The two greatest of these are, of course,
rapid inflation and rising unemployment. In a modern
economy like Australia, in a mixed economy like Australia,
these are now twin problems; they are interlocked. This
is a situation we find throughout the world in all
similar economies, in all comparable countries. It's the
first time in modern history where peoples and governments
have been faced with these two problems at the same time.
We have had unemployment before, we have had
inflation before, but the combination of the two poses
problems not before encountered, to a degree not before
encountered, in modern times, anywhere in the world.
This does not mean that the problems are
insoluble. It doesn't mean that the situation is out
of control. It doesn't mean that we just submit passively
to whatever fate or events beyond our control may decide.
We don't have to, and as far as your Government is concerned,
we are not going to.
But what it does mean is that democratic
governments have to be extraordinarily alert and flexible
in their response to rapidly changing circumstances. This
is what we are dong; and because circumstances are liable
to such rapid change, policies must be especially flexible.
It is a cliche now to say that there is no
simple or easy cure for this world-wide problem. All the
more important, therefore, that governments be unremitting
in their efforts to seek solutions for these problems;
unremitting, earnest and compassionate in their efforts to
protect those who suffer worst and first from the immediate
consequences of these problems. I offer the measures I
announced last night as evidence of your Government's
determination and sincerity in doing just that.
Briefly, the proposals I announced have four
broad aims: / 2
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First, we want to maintain consumer demand
through a substantial reduction in personal income tax.
Secondly, we want to attack inflation by
reducing the pressure for wage increases through a substantial
improvement in after-tax take-home pay next year and
specifically to break the wage-price spiral by giving
business a breathing space in wage demands based on price
increases in this December quarter.
Thirdly, we want to enhance profitability by
a reduction in company tax, by requesting the Prices
Justification Tribunal to give particular consideration to
the adequacy of return on capital and by urgently
investigating the implications of rapid inflation for the
taxation of companies; and
Fourthly, we want to support particular industries
where special problems are emerging housing, cars, textiles,
beef. And those four objectives are summed up in one
overriding objective, and that is to create the conditions
for co-operation with all sections of the community and between
all sections of the community. Without co-operation, without
responsibility, without restraint, we cannot solve our problems.
No Government can do it alone. We are all in
this together, not just as Australians but as members of
a world community all experiencing times of profound difficulty,
together, and at the same time.
Yet how fortunate we still remain amongst all
the members of the world community. Our immediate problems
are certainly not worse than those of our partners and friends
and, of course, are immeasurably less than those facing most
members of the international community.
Of the measures I announced last night, the
one of most immediate interest to most Australians is, naturally
enough, the cut in personal tax. And this is a substantial cut.
For the family man on $ 100 a week it's just as if he got a
8 per cent wage increase. For the family man on $ 150 a week
it's just as if he got a 5-3/ 4 per cent wage increase. I want
everybody really to understand what we are trying to do. By
these tax cuts, we are guaranteeing you an immediate improvement
in your standard of living a protection against the immediate
rises in prices. But this protection will disappear if wage
demands push costs and prices through the ceiling. We have
provided the chance for you to get ahead of prices. Don't
throw away the opportunity. We must break the vicious circle
of wages chasing prices, and prices chasing wages.
I don't co~ nceal that the next few months will be
quite difficult. The figures won't be good. The measures
we have taken any economic measures take time to take their
effect. But behind the headlines, behind the raw figures,
lies the great unchanging truth of the basic strength of the
Australian economy and I deeply believe the basic strength
of the Australian community. These are national assets which
can't be diminished by temporary fluctuations in the statistics
and the indices.
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The measures I outlined last night, combined with
the continuing effect of the measures taken in the Budget,
give every ground for confidence that we shall turn the
corner before the middle of next year.
I am not saying, of course, that all our problems
will be solved, but the important thing is to realise that
we are not powerless to control the course of events. No
Australian no section of the Australian community should
fear that he or she will be left unprotected by the Government,
left to despair, left without hope.
These and other measures will work if they are
given a chance to work and that does require co-operation,
particularly from the most powerful sections of the Australian
community, employers and employees. For both those groups
whose interests are mutual the measures I announced give
good grounds for co-operation with each other and with the
elected Australian Government.
These measures are your Government's response
to our present difficulties. But if they are to work, those
who immediately benefit from them must also respond. We are,
for the first time, offering tax cuts in return for restraint.
If that is to work, it calls for genuine co-operation, genuine
restraint. We can meet and beat these problems together
certainly better than any other people in the world. Last night,
I am confident, we made a good start.