ADDRESS BY THE PRIME MINISTER, THE HON. E. G. r4HITLAM, M. P.
COMMITTEE FOR. ECONOMIC DEVELOPMENT OF AUSTRALIA
MENZIES HOTEL, SYDNEY
FRIDAY, 7 MARCH, 1975
This is the second successive Friday Luncheon
I've spoken to representatives of the Sydney business
community. If there are any here who were also at the
Sydney Chamber of Commerce Luncheon I hope they will bear
with any repetitiousness on my pa . rt because I do think
that my theme itself bears some repetition.
I emphasised there my Government's long-term
commitment to the prosperity of tJ-le private sector.
I was at some pains to refute the-assertion that there is
anything phoney about this commitment that it represents
some sort of panic response to present difficulties. I
concede that there have been failures of communication in
the past and I concede that some prejudices and
pre-conceptions on both sides have raised needless
difficulties. I do detect, however, in the business
community generally a new willingness to co-operate, born
of a mutual recognition that we share so many of the
difficulties for so many of the same reasons. I think
on both sides there is a willingness to end futile
recriminations which of course, is not to say that we
should not have plenty of constructive criticism. If
I am right in this assessment that there is a healthier
spirit emerging then I assure business that the Government
is ready to go more than half way to foster it.
Last Friday I drew attention to the way in which
economic circumstances here and throughout the world
were now subject to rapid change never experienced in
our life-times. The business cycle which used to take
five to seven years for its completion now appears to
take about two years. This imposes unprecedented
pressures on both Government and business and requires
very great flexibility in policy planning for business
and Government alike. In this situation one has to be
extremely careful in making predictions based on the
latest set of economic indicators. We have seen too
many false dawns. Nonetheless, there are grounds for
some cautious optimism. When I announced the new
economic measures of 12 November 1974 and in subsequent
statements to the nation, I emphasised the figures,
particularly on unemployment and inflation, would not
be good for many months to come. This remains true.
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The situation at present, however, is that some of the
more serious aspects of decline in activity are now
behind us. Liquidity is freely available and the
demand for funds, particularly for housing, is high.
Imports are declining and the balance of payments
situation particularly on current account is
strengthening. We are seeking the first real signs that
unemployment and inflation may have peaked. With the
large personal tax cuts, including the housing interest
deductability scheme now being reflected in pay packets,
disposable incomes are rising strongly. By past
standards the Government has given a massive expansionary
boost to the economy in the measures taken since the
budget. These are, of course, not normal times and we
cannot be absolutely assured of normal reactions. The
response of the private sector is the key ingredient in
economic revival in 1975. You can be assured that the
Government will do all in its power. to stimulate that
revival, consistent with our overall goals of social
advance and economic management.
At the recent conference of the Australian Labor
Party we inserted in the platform a specific recognition
of the role of the private sector and a specific
commitment to the development of a healthy mixed economy.
I think it should be recognised, however, that the present
Australian Government itself has from its inception
tried to establish machinery and set in train measures
to give practical expression to the formal commitment
now contained in the Party's platform. In December 1972
we established the Department of Manufacturing Industry.
The first Minister was the present Treasurer and he set
about establishing a network of industrial panels to
provide channels for closer co-operation and consultation.
Against much opposition we have sought to develop the
role of the Australian Industry Development Corporation.
In our first budget we provided funds to establish the
National Management School within the University of New
South Wales. We have set up the Small Business Bureau
to provide advice and assistance for this very important
but long neglected sector. We have sought to enhance
profitability by 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 paid by companies. The report of the
Mathews Committee is expected soon and actions on its
recommendations will be prompt. We recognise the
extraordinary impact of rapid inflation on corporate tax
rules, particularly with respect to stock valuation and
appreciation. / 3.
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Perhaps most important of all in its long term
implications will be the report of the Committee of
Inquiry under the Chairmanship of Mr Gordon Jackson,
General Manager of C. S. R. The Jackson Committee's
terms of reference are to advise on the future role of
manufacturing industry, the role of foreign companies
in the Australian economy, the long term balance between
exports and imports, better communication between
Government, industry, the States and employees'
organisations. I am quite determined that the report
of the Jackson Committee will not suffer the fate of
the Vernon Committee. We will not stall it or pigeon-hole
it and we will not set out deliberately to rubbish it or
bucket it. One of the sorriest aspects of the Vernon Report
was that the treatment meted out to it acted as a
discouragement to highly qualified, busy and public spirited
persons in serving the nation in similar roles. One of
the most gratifying experiences I have had as Prime Minister
has been the readiness of distinguished Australians, in
business, the professions and the Universities to serve on
the many commissions and committees of inquiry which we
have established. I believe that a big factor contributing
to this readiness to serve has been the positive acceptance
by the Government of their work. Men and women called upon
to serve Australia in this way know that they are not
wasting their time.
our major piece of current legislation concerning
the private sector is, of course, the Corporations and
Securities Industry Bill. I am sure that members of
C. E. D. A. are too sophisticated to give the Pavlovian
response we ' ye had from some quarters that this is an
attack on freedom of private enterprise. The fact is
that without the establishment of the Corporations and
Exchange Commission as the National Regulatory Authority
to supervise the securities industry in Australia, the
future prosperity of Australia cannot be assured because
the economic development of any nation is directly
determined by its efficiency in raising new capital.
During the mining boom, vast sums of money were raised
which was wasted and never found its way into mining.
The efficient mobilization and allocation of
capital through the medium of the stock exchanges can only be
optimised if the exchanges provide and, just as significantly
are seen to provide, a fair and orderly market. The market
must be one in which both the financially sophisticated
investor and also the unsophisticated investor with the
aid of his investment adviser can invest his capital.
However large or small an amount it may be, with the
knowledge that the risk he assumes can be evaluated on
accurate information disclosed to him and that his risk will
be subject only to the usual commercial hazards.
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The self-regulating activities of the Stock
exchanges during the mining boom period were abysmally
lax. Even formal rules, which were and are still
minimal, were as the RAE Report recounts seldom
enforced and were viewed with contempt by some members
who continued with their practices in blatant disregard
of the stock exchange regulations and of their fiduciary
duties, on the assumption that their abuses would go
undetected or unpunished; an assumption by no means
unreasonable in the absence of adequate surveillance
by some independent authority.
The genuine difficulties which have been
encountered by self-regulatory bodies and the State
authorities in dealing with the securities industry have
been partly due to the failure of some of the States to
recognise the national character of the securities markets
and of the securities industry. If one recognises that
each stock echange functions only as part of an Australia-wide
network and that to a very large degree, listed public
companies carry on their businesses on an Australia-wide
or national basis, then it should be obvious that the
problem of attaining effective, coherent and efficient
securities regulation can be solved only if there is one
nationally uniform body 6f law and a national authority
which will eliminate the variation of administrative
practice and interpretation and which will standardise
the quality of administrative action and investigation.
I mentioned the Terrigal Conference's statement
on the mixed economy. Equally important for business
is the decision to express a firmer commitment to economic
planning. Planning is really about institutionalising
foresight. It is a process which tempers expertise
with judgment. We believe that the Australian Government
should contain a department with the prime responsibility
for planning the long term future of the economy. It
should be staffed with experts, but advised by
representatives of various community groups especially
workers, employers and consumers. We considered, but
rejected, the notion of a National Economic Council because
although we believe that the views of community groups
are an essential part of the planning process, we believe
that ultimate power of decision must rest with the
Parliament. The planning machinery we are creating is
therefore advisory.
Market forces, alone, are not good enough as
indicators of the direction in which resources should flow.
The market mechanism is there to be used, but it must not
become the only influence determining how and where we
allocate our resources.
We envisage a broadly based planning mechanism
at its centre, the planning department with its advisory
machinery; around it the other departments, but
especially the industry departments, each with its own
network of advisory bodies and panels. From this
mixture of expertise, judgment, subjective opinion,
and self-interest will come, I believe, the sort of
advise which, when combined with the more objective data
from the planning department, will enable the Government
to appraise its long term goals with more certainty, more
humanity and more efficiency than is possible at present.
Our commitment to planning is not simply based on
ideology not simply due to any mistrust of market forces.
It stems from the interdependent nature of a good deal of
economic decision-making. Much public investment has
long lead time and it is difficult to undertake major
development projects unless there is some certainty about
the continued supply of funds and avoidance of ' stop-go'
economic policies. The private sector, too, needs some clear view of
the Government's long term operations with confidence.
I envisage a fruitful, interactive planning environment
with both public and private sectors playing their part.
When we spekk of Australia's " mixed economy"
let's be clear what we mean. Public and private
sectors are mainly complementary, not competitive with
each other. The aim of the major initiatives my
Government has taken has been to build better structures,
more modern structures upon which the whole community
can propper. The private sector has a definite interest in
the development of public infrastructure and ' the
rational public regulation of private activity.
Important initiatives in public investment will prove
of great advantage to the private sector. I refer to
our assumption of responsibility for national highways
which are of such great importance in facilitating the
movement of goods among our major markets. Another
area of great long term interest for the private sector,
is the improvement of the quality of our education system
as a whole and particular major initiatives in areas of
direct concern to private industry, such as the
development of technical education. The private sector
will also see advantages from the re-organisation of
some major areas of public investment. I refer
particularly to the establishment of two Commissions to
conduct postal and telecommunication services.
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The Government has taken-new initiatives to
facilitate trade relations with other countries. A
large number of new trade agreements lave been sined.
We have extended the charter of the Old Bxport Payments
Insurance Corporation to create the Export Finance
Insurance Corporation and we shall proceed to establish
an Overseas Trade Corporation, to promote trade with
centrally planned economies in particular. We have
established new institutions to assist firms to adjust
to the continuing pressures of change. Our Structural
Adjustment Assistance Scheme is the first systematic
effort to help industry adjust to changes of economic
policy. The NEAT scheme is the first step in our
continuing development of longer-run manpower policy.
In a more specific area of housing, we have established a
Housing Standards Advisory Council to eliminate the
extraordinary cost disabilities of the multiplicity of
housing codes. In all these ways I believe that public
initiative is la)? ing the foundations for the future
balanced development for the private sector.
Far from these programs being antagonistic to
the success of private endeavour or incompatible with
private prosperity they are essential to it. A skilled,
healthy, efficient community that is both our national
goal and an economic necessity. In a speech last
December Mr Gordon Jackson had this to say:
" We should perhaps speculate that in a turbulent
and uncertain world, a principal role of government
should be to articulate a set of values that will find
acceptance in the community. Acceptance will help to
constrain the parts from antisocial and maladaptive
behaviour and will encourage progress towards common
ideals. The role of government also should be to
simplify the business environment enough for people to
understand the situation and the prospects, so they can
plan with confidence." I
I endorse thoserentarks.
Effective planning needs new structures and new
machinery, . We are building them. To articulate a
set of values which will find acceptance in the community
requires consultation. We are eager to have it.
In the present situation of rapid change and uncertainty
it is urgent that we should be able to apply ourselved
all of us, government and business alike to these tasks.
I won't labour the point I'll just leave you with this
thought: In this critical time it would be tragic for Australia
if over the next six months, our national preoccupations
were to be purely political, if the national debate
were to be conducted, not in terms of our greater goals
and long term needs, but were to be forced into the
narrow fcus of yet another election.