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PRESS PLEASE ADDRESS TO NATIONAL PRIVATE ENTERPRISE CONVENTION 4 JUNE 1976
This national private enterprise convention has set itself an important
task to consider ways of improving understanding between business and
government. But cooperation between business and government is only part of. the
total approach. Equally important is understanding, cooperation and
communication between business and unions, between business and
employers. These other areas of communication and understanding are perhaps
more difficult, but they are equally as important.
Cooperation and understanding between all those engaged in decisions
V affecting the economy is essential if Australia is to return'to
sound economic growth.
Cooperation and understanding has to exist between business and
government, unions and government, and between unions and business.
All of these relationships are important. None of them can be neglected
without imperilling our chance of returning to a stable and
pro'sperous economy.
The principal economic task we face is bringing inflation down.
That is not only a task for the Government. It is a task that all
Australians have to face; That places a special responsibility on
both the major organised seztions of the economy, business and
trade unions.
The main priority must be to bring inflation under control. The
reason for this should need no repetition. Unless inflation is
controlled there can be no return to soundly based economic growth,
no long-term solution to unemployment and no return to prosperity
on which the realisation of private and public goals depends.
The Government has had a consistent strategy to achieve. these
objectives. It is strategy developed in opposition and constantly
reiter~ ated. since.
The main elements of this strategy have been to bring Government
spending under control; to free resources to the private seCtor
and to individuals; to pursue a responsible monetary policy with
clearly announced goals, and to generate a climate of national
responsibility in which wage and salary restraint will be Possibl~ e
and in which both business and unions will act with a principal
regard for the national interest.
Immediately after coming to office we took steps to being
implementing this strategy. We made a large number of immediate
economies in administrative expenses and spending programmes,
starting with the spending of Ministers and other Members of
Parliament. We halted the growth of the Federal Public Service. 0
There will be over 17,000 fewer people employed in the federal
bureaucracy by the end of June than under ceilings set by the
previous Government. We took a number of steps to help investmeni@
and ease the cash crisis for many businesses. These included
a 40% investment allowance; suspension of quarterly tax instalments;
inquiry into operation of restrictive practices legislation and
we stated our intentions for the long term growth of the money supply.
The Treasurer's statement two weeks ago was a further key step
in implementing this strategy.
The measures announced by the Treasurer included savings to the
Budget amounting to almost $ 2600 million; full personal income tax
indexation; a new scheme of family allowances and a number of reforms
in Medibank.
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Let me now state briefly where these measures fit into our
overall strategy. The expenditure restraints mean that, for
the first time in several years, there can be a soundly based
confidence in the community that Government spending has at last
been brought under control.
In recent years excessive Government spending has been the
principal force fuelling excessive inflation and unemployment.
The Government's need for resources has led to a heavy and
growing tax burden on both individuals and companies. Along
with other factors this has encouraged excessive wage and salary
demands and has diverted to Government resources business needed
to expand.
When we came to Government we found public spending rising almost
out of control.
Reimposing responsibility on the public sector means that resources
can be freed to the private sector and to individuals.
The various measures we have taken to assist business, and full
personal income tax indexation, are only possible in the con~ text,-
of restraint in public sector spending. Further, such restraint
means that we can now plan for a responsible deficit in the
August Budget a deficit consistent with a responsible monetary
policy. The Government is not seeking to bring about a sudden upsurge
in economic activity. Sudden shifts of course, would only create
new risk~ s.
The Government is, however, confident that the course of the economic
recovery which is now occurring is entirely consistent with the
Government's strategy. The strategy was not designed to achieve shorttime
miracles. It was designed to-asset a new direction for
Government policy which would secure a soundly based steady return
to prosperity. There is now a growing amount of evidence that the@
Australian economy is moving forward on the path to recovery.
major indicators of production are moving in a favourable directio*
Production of 80% of the items surveyed by the A. B. S. increased in
the three months to April. The A. N. Z. index of factory production
rose 4h% in the three months to April. The index is 10% higher than
a year ago. Stocks in the March quarter increased for the first time
since 1974.
These trends resulted in a rise in gross non-farm product of 3.1%
for the March quarter. A very encouraging turnabout.
Demand is also strengthening. Retail sales firmed late in the
March quarter and motor vehicle registration have increased strong. LO
in the three consecutive months to April. Whilst capital expenditure
in non-dwelling building and construction was depressed other
expenditure, mainly plant equipment, rose 8% to offset this.
overtime worked in recent . months' was the highest since late 1974.
Surveys of capacity utilisation show early
signs of recovery.
Meanwhile, private dwelling activity remains a strong point in the
economy, April approvals were the highest since January 1974.
Loan approvals from banks and building societies continued at high
levels 13% up the March quarter compared with a year earlier.
Ot her strong points are registrations of new non-passenger motor
vehicles up 18% in the Aril three months. Finance company business
for newly leased equipment March 76 was double the previous March.
Despite all these positive signs, there remain some warnings against
-complAacency. Unemployment is still far too high. Non-dwelling
building and construction is still suffering from the low level of
new work approvals last year. The rural economy labors under
depressed world markets.
Too much weight cannot be placed on individual indicators but an
objective assessment of the picture across the board suggests that
the measures the goveznrhent has taken are having their intended effect.
This brings me bhck to the subject of national cooperation and to
the requirement for mutual understanding between business, trade unions
and government.
It became very obvious over the last few years, that prosperity was
being harmed by the lack of adequate consultation between government
and business. In Opposition, we undertook to establish greatly
improved procedures of consultation. Since the election, we moved
rapidly to establish the economic consultative group. This group is
chaired by the Treasurer. It includes the Minister for Industry and
Commerce as Deputy Chairman, and leading business figures and trade
unionists. The government's objective in forming the economic consultative
group was to ensure that the government is kept informed about the
state of affairs in the private sector.-At the same time, the group
allows the government to present its assessment of economic
conditions to the members of the group and receive their views upon it.
A further move to improve consultation was made by Senator Cotton's
announcement of industry advisory councils. The councils will provide
a forum for government, parliamentarians, firms, unions, consumers
and other interested groups, to discuss government policies of
importance to the industry sectors concerned.
In addition to the discussions that are arranged between government
and industry on a formal and regular basis, there are of course,
frequent informal meetings between myself, the Treasurer or relevant
industry ministers and industry representatives. Similar informal
meetings occur between government officials and industry representatives
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There has been a long tradition of consultations between s& enior
ministers and industry representatives prior to the Budget.
I would expect the discussions this year to cover a wide range of
matters. The government has initiated preparation of a white paper
taking up the themes of the Jackson Report. One of * its main themes
was-the need for improved government-industry cooperation.
The government has called for submissions from industry and other
interested parties. These will be of paramount importance to the
formulation of government policy in this area.
Theimportance of consultation between business and government is
matched by the importance of consultations with the trade union
movement. One consistent theme of the government's strategy has been the enorious
importance of wage restraint. The government has sought to foster a
climate in which people recognise the absolute need for wage and
salary restraint if inflation is to be beaten. We have done thisS
through our submissions to the Arbitration Commission, through our
statements of strategy, and through.-the measures we-have introduced.
Three months ago, we knew that we had to act. There had to be an
unambiguous declaration of the importance the government placed on
wage and salary restraint.
I believe the climate we have sought to encourage is emerging.
The recognition of a joint responsibility is growing. I also believe
that there is also emerging a joint commitment to fulfil this
responsibility. Great numbersof employees are recognising that
if their wage and-salary increase is beyond a responsible point,
the people who pay for it are their workmates.
The costs of excessive wage increases are inflation, the loss of
existing jobs, and the sacrifice of opportunities to create new jobs.
The Treasurer's statement had a signfiicant role in the government's
strategy in the area also. A guarantee that wages will be protected
from unlegislated increases in taxation has been, of course, a major
concern of the trade union movement.
The trade union movement has taken a consistent view that the certainty
provided by tax indexation would be a major factor in wage restraint.
The pr otection afforded by the family allowances to wage earners near
the minimum income with large families, has also been a long-standing
concern of the trade union movement.
Full personal tax indexation at last provides an assurance to all
wage, salary and income earners that there will be no increase in the
tax burden without deliberate and public decision. The family
allowances scheme shows the government's determinationto work in the
interest of all Australians.
These two measures establish the circumstances in which real wage
restraint is possible. Full personal income tax ind~ xation and
family allowances were major elements of the context for the
Arbitration Commission's recent judgement. It was a judgement which
certainly improves our capacity as a nation to bring inflation under
control.-Throughout our term . of -office, the government has consulted
extensively with the union movement. Legislation concerning
organisations registered under the Conciliation and Arbitration Act,
including proposals for secret ballots for trade unions was discussed
with them on May 5. The trade union movement raised some very reasonablE
points about the proposed legislation. Cabinet considered these points
and amended the proposed legislation.
In my address to the nation, I stated that the government would seek
top level discussions with . the-union. ' movement about the economic
situation. The ACTU agreed to these meetings and we will be having
wide-ranging economic discussions with the trade union movement
0 on 11/ 12th June. The government will have equivalent discussions
with business. We have introduced the legislation concerning the
Conciliation and Arbitration Act into the Parliament.
In line with the government's determination to consult the trade union
movement on legislation involving it, the legislation will not be
proclaimed until the ACTU has an opportunity to make known its
attitude on it.
The trade union movement will thus have a further opportunity to put
any further proposed amendments to the government before it becomes law.
I do not need to emphasise before this audience how critical
industrial relations are to bringing inflation under control.
There can be no stronger foundation for good industrial relations
than widespread understanding of the true nature of the problems
that face us.
Talking about the need for anational cooperative effort has to
be matched by cooperative action.
Effective cooperation action has to be based on frank discussion,
mutual consultations.
Some Companies have very good procedures for discussing matters
with employees.
This is a time morethan ever, when the example of the best should'be
followed by everyone.,
If employees can get a clear picture of the impact of their wage
and salary demands on their-own firm, I have no doubt that people
will wish of-their own account, to act with great responsibility. 0
Employees should not have to read in a newspaper the fate of the
firm for which they work.
You cannot treat the Australia~ n workman-like a piece of equipment.
What chance can there be for good relations if management does not
bother to inform employees about the condition of the business for
which they work.
This is where a major effort must be made.
These are not new or radical ideas.
They are practices which have been accepted by the best firms for
a generation.
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For many years now, those who believe that the free enterprise
system is best for all Australians have been-less active than we
should in putting the case.
That is one reason why we have suffered the experience of the
last three years.
It is good to see that an increasing number of people are
taking action to see that there is a growing appreciation of the
common interests of everyone in a profitable and efficient private
sector. I believe it is important to remember that understanding is advanced
not only by the availability of high quality objective material
but even more importantly by relations within the particular firm
and by the effort that management makes there.
How can I explain to people that private enterprise is the best
system for the average Australian if managements cannot be bothered
explaining it to their own employees.
Ask yourselves -where should the effort most be made.
-To a government committed to the free enterprise system, or to employees
who are often sceptical, and who often do not have a clear understanding
of the benefits they derive from productive free enterprise.
It needs to be explained even more clearly that new plant, new
equipment, new jobs, are created out of profits.
That in a country like Australia, profits are very widely distributeddirectly
to shareholders and indirectly to the millions of holders
of insurance and superannuation polic-ies.
There needs to be a much clearer understanding of the central role
of private enterprise in providing through taxation, the resources for
Government to spend on suzh'-th'--ings as social welfare, education
roads, defence, and so on.
Real expansion in social programmes which is not financed
simply by transferring resources from some other group in the
community must be financed out of growth.
Real growth depends on healthy and vital private enterprise.
Private enterprise does not merely provide the resources which
Government can use to impro've its provision.
A healthy private enterprise is an essential part of the life
Australians value.
Private enterprise provides the greatest opportunities: choice of
rewarding jobs, choice of products and choice of services.
It is the system which gives the man in the street the greatest
control over what is produced. In this sense, it is the most
democratic system the system which is most compatible with the
freedom Australians value.
No organisation whether it be a political party, a business
organisation or a trade union, has an inherent right to survive. 0
The justification of any of these organisations is whether they
serve the people who belong to and support them.
The private enterprise system achieves its ultimate justification
in one fact alone it is the system which best serves the interests
of the Australian people which is best able to provide the
conditions and the resources for a better life for all Australians.
Under the Labor Government, the survival of private enterprise
was endangered. We were well on the way to a conformist,
centralised society in which the real wealth of Australia, the productive
energies and initiative of t-he Australian people were suppressed.
The strategy the Government hraas adopted, the measures we have
already announced, and will a= ounce in the coming months, will
ensure that that does not happen.
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I am confident that our approach is already providing a solid
basis for the revival of prosperity in Australia, and for the
development in Australia of a society in which the interests
of all Australians are truly served.
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