EMBARGO: AG NST DELIVERY
CHECK AINST DELIVERY
FOR MEDIA 2 APRIL 1979
AUSTRALIAN MINING INDUSTRY COUNCIL
It is a great pleasure to bc addressing the Australian Mining
Industry Council tonight. As you know there is a national strike
of certain transport workers. It is having a serious effect
on Australian industry. The irresponsibility of the Transport
Workers' Union leadership which is prepared to cut off
essential food supplies to the cities knows no bounds. As
a result of their action the Department of Industrial Relations
is preparing a case to go before the Federal Court for
deregistration of the Union.
The trade union leaders seem incapable of grasping the fact
that they and their members are part of the community that
they are injuring by their actions. There are processes by
which the Union's case can be properly heard. The Government
will not tolerate -, the community will not tolerate the
situation in which as a first step in the bargaining process
trade unions inconvenience and harm the public in this
case including hospital patients, families, and small children.
There is no way that a trade union leadership can prevail
against the resolution of Government and the determination of
citizens. But it's an ill wind that doesn't blow some good.
The strike also restricts the mobility of politicians.
They cannot attend as many speaking engagements. Fortunately,
your meeting was in Canberra and I still remember how to drive.
I am happy that I made it and can speak to you at a time when
economic and business conditions are improving.
We have had to negotiate a difficult path to reach this point.
In any complex economy there is a long lead time between
initiating correct economic policies and their producing the
desired results. We have had to deal with Labor's economic
legacy and overcome it. This has taken effort and determination
but now many people can see that our policies are working.
No doubt you would like me to tell you what the future holds
which reminds me of the qualifications required of an economist.
It is the ability to foretell what will happen tomorrow, next
month, next year, and to explain afterward why it did not happen.
What has happened is that the Government has set the conditions
for economic recovery in Australia and business is taking
advantage of this. / 2
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Confidence in our country's growth prospects has increased
with the release of major economic Surveys. The February
Metal Trades Industry survey found three quarters of the
respondents expecting improvement in general business and
employment conditions in 1979. The March Confederation of
Australian Industry and the Bank of New South Wales survey
found a majority of respondents predicting an improvement in
the general business situation. Your own Council survey suggests
that mining companies expect to increase their investment in
1979 by 32 percent, and this is on top of an increase of
51 percent in 1978.
A succession of economic statistics show that this confidence
is well based. The National Accounts released on Thursday show
that real GDP in the December Quarter 1978 was 5.5 percent
above the previous December Quarter and real non-farm GDP grew
by 4.3 percent for the samer period. While the National Account
figures are always subject to revision, this result is the
best for a long time. It confirms the thrust of economic surveys,
and the general mood of confidence.
The growth in GDP for 1978-79 is expected to be the highest
for some years. Private investment grew by 24 percent in 1978
and reamins at a high level. A number of industries are
reporting that order books are filling up. Moreover, BLIP's sales
within Australia rose 17 percent in the six months to November 1978.
As a result of our sales tax reductions and the introduction of
world class models, the motor vehicle industry is showing signs
of renewed strength with February registrations seasonally
adjusted growing by 13 percent over January.
The February seasonally adjusted private new dwelling approvals
were 14 percent higher than in February 1978. Our rural industries
are having their best year for a very long time. Company profits
are rising and a number of major companies have reported
increases in interim after tax profits of over 20 percent.
Australia is now more competitive than it has been for seven
years. Australian industries are again a force to be reckoned
with here and abroad. In the three months ended February 1979,
total exports seasonally adjusted were 13 percent higher than in
the previous three months.
In the employment area, seasonally adjusted civilian employment
has increased for each of the last seven months the first time
this has occurred for five years and seasonally adjusted
overtime and vacancies are rising..
Our policies have brought inflation down dramatically. Under our
predecessors it was 17.5 percent in the year to March 1975.
It is now about 8 percent. We are determined to maintain the
policies that have made this progress possible. We will keep
up the fight against inflation. .3
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We will maintain the policy of expenditure restraint. We
will continue to keep the growth of the money supply within
sensible bounds, which will allow the economy to grow in real
terms while continuing to bear down on inflation. We will
continue to argue in the strongest possible terms for wage
restraint. Because of our policies, business can look to the future with
confidence and plan with certainty. Steady responsible
economic management and good long-term prospects for Australia
are important for all businesses. They are crucial for the mining
industry where planning horizons are long, and financial
requirements large.
Bearing in mind the economic disarray that we faced on coming
to office, the progress that has been made over the last three
years is outstanding. We have put behind us Labor's policies
and Australia's development is going ahead again. By June we
expect capital expenditure in resource development projects to
have approximately doubled in two years.
On the trade scene there is a much brighter outlook for metal
prices and markets. New markets are emerging for our iron ore
and coking coal. The expanding markets in the Asian region
such as Korea are particularly promising. The modernisation
and expansion of the steel industry in China has opened up an
important new market for Australian iron ore. This is good news
for Australia because mining is a vital sector of our economy.
In 1969-70 mining accounted for less than 30 percent of our
exports. Today mining accounts for nearly 40 percent of
Australia's export earnings.
The Government has provided special incentives to the mining
and petroleum industries because we are confident in your future.
These include the extension of tax-depreciable capital expenditure
to cover port development, increases in depreciation rates for
transportation facilities and accelerated depreciation for
allowable capital expenditure on mine or oil field development..
Mining companies are, of course, also eligible for the investment
allowance. The assist the industry, and to help State Governments finance
infrastructure, we supported the Loan Council decision giving
State Government instrumentalities improved access to Australian
and overseas funds. The first infrastructure financing
arrangements will amount to more than $ 1.7 billion. It will
support projects such as the $ 700 million Worsley alumina
project in Western Australia and the $ 620 million coal loading
project at Hay Point in Queensland. These projects are only
some of the new mining and mineral processing developments in
Australia. The impressive list of new announcements includes
the $ 500 million Gladstone aluminium smelter, the $ 200 million
Wagerup alumina project and the Ranger and Narbalek uranium
projects. It is the Government's policy to encourage developments
such as the Gladstone aluminium smelter which involve further
domestic processing of our resources. The realities of economnics
put Australia increasingly in a strong position to process minerals.
/ 4
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We are an energy rich nation. We are about 70 percent
self-sufficient in crude oil. We have extensive resources
of coal suitable for power generation, for energy use and for
export. We have substantial reserves of natural gas and our
reserves of uranium are of world rank. We have appropriate
energy policies designed to encourage the search for and
development of our energy resources, as well as ensuring
that these scarce resources are not squandered.
Of particular importance in this context is our crude oil
pricing policy. For some years oil in Australia was priced
at an unrealistically low level. The Commonwealth's policy
of bringing oil prices to world parity will serve the Government's
fundamental energy objectives of encouraging the exploration
and development of our oil resources,' greater economies in
the use of energy, further use of alternatives to oil, and
intensive research in the development of alternatives to oil.
Some countries have attempted to insulate their econom ies from
movements in international oil prices. This has resulted in
them using an excessive amount of the world's energy. It cannot
stave off the necessity of adjusting to the reality of
international oil prices. It can only make the inevitable
adjustment more painful. Our policies in relation to LP gas
support our oil policies. We give a continuing preferential
excise concession to LPG as against motor spirit. To
provide a substantial incentive to producers to expand their
markets we have also removed the price of naturally occurring
LPG from the ambit of the Prices Justification Tribunal.
Another aspect of our energy policy relates to research
and development. This year the Government has made available
million for a specific energy research and development
programme. This amount is over and above that provided through
norma. funding to such bodies as the CSIRO, the Atomic Energy
Commission and the Bureau of Mineral Resources.
The Government has established the National Energy Research
Development and Demonstration Council to help co-ordinate
energy research in Australia and to advise the Government on
research developments in Australia and overseas. The Government
has also established a coal research programme, financed by
a levy of 5 cents per tonne of coal production. As this
programme develops in coming years the returns to industry
from its activities should be substantial, for instance
by deriving alternative uses for coal.
Our oil policies in conjunction with our taxation and
investment incentives have seen a large addition to our known
reserves and a substantial increase in exploration activity.
Australia's oil reserves have been upgraded by over 600 million
barrels which constitutes about three years additional supply
at current levels of consumption.
Oil exploration activity is at a high and rising level.
According to industry estimates between 83 and 143
exploration wells could be drilled in 1979. Even the lower
end of this forecast would constitute the best result for
seven years. Esso and BHP are committed to investing over
$ 1,000 million in exploration and development activity over
the next five years. By 1985 it is estimated that 30 percent
of Australia's crude oil production will be derived from
fields which have become directly viable as a result of our
energy policies and incentives. This revival is of obvious
importance if we are to maintain an appropriate level of
self-sufficiency towards the turn of the century.
Recent events in Iran and the associated disruption in the
world's oil supplies, combined with last week's announcement
in Geneva of a 9.1 percent rise in official OPEC prices,
have again underlined the importance of the Government's
energy policies. Our comparative advantage in energy will be
of immense advantage to Australian miners an advantage
which will increase with every passing year.
We are a favoured country for international investment because
of our resources, because of our valuable energy supplies and
our labour force, and as importantly because we have a
stable political climate. This is of crucial importance in
developing confidence and the predictability that is essential
to successful economic enterprise. Our political stability
creates confidence in Australia as a reliable economic partn'er.
Recent developments in Asia, the Middle East, and Africa
have underlined the importance of political stability and
have highlighted the risks and uncertainties that have become
a characteristic of thc present international scene. The
strategic environment is changing rapidly and some of the
world's most resource rich regions have become the focus
of political instability, throwing into doubt the access
to resources by the world's industrialised nations.
In a world troubled by instability and uncertainty and
with political unheaval and turmoil in many of the world's
potential resource producing countries, Australia has a major
role to play. We must make the most of the opportunities
which are now emerging.
The economic outlook for Australia is promising. The Commonwealth's
firm and successful policies have been essential to achieving
this, but no less important is the fact that there are companies
with vision, companies which realise that our resource rich
nation has the potential to assume a far more important role
in world trade. Only the private sector can develop our
resources. No Government initiative can replace the private
sector's vital role. We have provided a stable and certain
framework within which companies can operate. We look to
Australian enterprises to succeed in this favourable environment.
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