CA12E1^ A-:.
FOR PRESS 25 JUNE 1978
ELECTORATE TALK
What the Federal Government put before Premiers this week
is the result of deliberate judgement of the Government as
to what is necessary for continuous and sustained economic
recovery in Australia.
Inflation was 8.2 percent for the twelve months to March.
It is now on a downward trend. It will stay on that trend.
Management of the Australian economy still requires the
most'rigorous expenditure control by the states as well
as the Commonwealth. This control is a prerequisite to
a responsible economic management and essential if we are
to return to full economic health.
The states know we will continue to maintain the utmost
restraint on all components of our spending this coming
financial year. Every state has the potential and capacity
to make a contribution to recovery in Australia by following
this lead.
States can help us lower inflation and inflationary
expectations by contributing to cutting the size of Government
and the Budget deficit.
, It is time to re-emphasise the strong gains we have made in
the economy and not to risk going back to the mad " helter-skelter"
years of Labor.
My Government is going to make certain that expenditure is
controlled and the creeping growth in Government is halted.
We are going to do this so that private industry again has
room to move forward and so that interest rates will
keep coming down.
I was surprised that the Premiers failed to focus in any way
on the importance of low interest rates to Australia's economic
recovery. A continuing reduction in interest rates would be the
best possible news for every small business in Australia, for
every farmer, for every homeowner.
We have a clear policy of creating conditions where interest
rates will fall. We will not take advice or pursue policies
which reverse that trend. That downward trend has started
because of our policies and it will continue.
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If we had taken the advice to spend money given to us over
the last two and a half years by the Premiers I have not
the slightest doubt that inflation in this country would
be raging again as it did in the Whitlam years.
It is not only Australia's experience which draws us to that
conclusion. It is the experience of country after country
which has been seduced into an easy path and which has
thought it can get out of its problems by re-inflating at
the wrcn-; z time. That kind of approach is no way to economic
recoveryv, to re-investment and to creating new jobs that
will last. That kind of approach would be disastrous.
Premiers have often called for cuts in taxation and cuts in
interest -rates. These goals are both incompatible with their
calls for i--creased government expenditure. It is our
policies of restraint and reduced government spending that have
allowed us to cut taxes and have interest rates and
mortgage rates fall.
The Australian people have twice rejected the notion that
Governments can go on spending a larger proportion of gross
national product year after year.
Australians kn~ ow the damage that excessive government
expenditure causes to small business, to farms, to investment.
It is easy for governments to have big spending programmes.
It is easy introduce new programmes, but that does not
necessarily m2ea n they will advance Australia's cause.
Spending taxpayer's money to put people on the Government
payroll cannot, and will not, solve unemployment. It will,
however, affectL the confidence that investors have'in
Australia's economic management and it can lead to more
overall unemployment as a result.
Experience here and overseas has shown the utter folly of
undisciplined expenditure and the unrealistic expectations
that creates. As we know from the past, this inevitably
means printing money which leads to high inflation and high
interest rates. It is the kind of policy that hits families
in all circumstances and in all walks of life. Printing
money is a short way to disaster. It is not a path my
Government will entertain.
What will get Australia moving again is a revival in private
industry, a revival in investment, and confidence in this
country from within and from overseas. To maintain this
confidence we are now re-establishing, we have to be certain
that inflation keeps coming down. To do this, expenditure
must remain under tight control.
In the months ahead, the healing process now underway in the
economy will be confirmed and strengthened. We are determined
not to throw away what we have already gained through a
relaxing in our economic management policies. ./ 3
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We have some rare opportunities in Australia because we have
great natural resources. The-world will want access to those
resources. They will therefore be interested in investing
in Australia, in partnership with Australians.
By making ourselves more attractive, by running a sterner
economy, by making sure inflation comes down and therefore
that interest rates come down, we will attract that investment
and beable to better withstand the difficulties faced by
the tr-adiing world and at the same time take advantage of
whatever opport-unities may be open to us.
My Goverment will not be side-tracked from firm economic
management. We will not be pushed off course. Our strong
stand was right for Australia. We certainly make no
apology -for it. 000---