PROVPhE UUNISTER
FOR MEDIA 16 JUNE 1979
QUEENSLAND STATE COUNCIL
The past few days in Queensland have been exciting for me
because this State is very much on the move in the great
new mining areas. The Government's policies of the last
three or four years gave given confidence to investors
and provided markets for products of Queensland mines.
The problems are the problems of growth and problems of
development. And they are the kind of problems we want.
In Queensland, moving out into the pastoral areas in the
West of this State, those people who three or four years
ago had no hope for the future, who despaired at what the
next year might bring, now have confidence for the 19801s.
Rebuilding their assets, receiving good prices, with the
policies of the Government working for their advantage,
and for Australia's advantage, is again an exciting thing.
Queensland is coming alive under the combined policies of
the State and Commonwealth Government.
I would like to look at the objectives we have for Australia.
In the daily application of policy and in the decisions
that have to be made we can lose sight of the major
objectives. We can lose sight of our broad purpose.
We can lose sight of what it is all about.
But we need to kecall 1975: with an economy destroyed;
with unemployment up by almost 200,000 in one year alone;
with manufacturing industry in despair; people on the farms
in the pastoral areas had no hope for the future, because
of iuif-llation, and because markets had been lost. At a time
of growing oil crisis throughout the world, oil search in
Australia stopped dead in its tracks. This was because of
the deliberate policies of the previous Government.
The dollar was in difficulty, again because of the policies
of that Government.
Now in 1979, a great many things have been changed for the
better. Great progress has been made in this State and in
other parts of Australia. There has been remarkable recovery
in many industries. Private employment has grown for the
first time for seven or eight months that is the best record
for many, many years. Manufacturing industry is experiencing / 2
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a great move forward and investmnent has risen. In the home
market our manufacturing industries are getting a better
share of the market. A recent survey of the Metal Trades
Industry has shown that employment, on their surveys, was up
nearly five per cent in M-arch, compared to a year earlier.
In manufacturing industry, employment has started to grow again.
There have been great iiew developments in the petrochemical
industry, and engine plant developments of great size in the
motor industry.
In export markets, manufacturing exports were up by nearly
percent in the December quarter 1978, over the same
quarter of the previous year. That is because of the improved
comoetitive base of Australian industry, which is now able
to get out and sell, able to capture markets that had earlier
been lost.
Following the decline in the rural industries, there has been
great resurgence in the beef industry. This means so much
to the State of Queensland, and to the small country towns,
after the depression of recent years. Why did we have that
Depression? In 1974 we lost all our market in Japan. A market
of 120,000 tonnes was cut to nothing in the next year because
of policies that had been pursued in Austrlaia. At the same
time, markets in Europe were lost. The Government of the day
sat with that loss, and did nothing about it. Now, because
markets have been regained, because inflation is much lower
than it was, there is a great resurgence in the beef industry.
This affects large parts of Australia, giving confidence for
the years ahead.
The wheat industry has had a good year. The wool industry is
strong, and we have been increasing the floor price. Reserve
stocks are lower than they have been some people are even
saying they are too low. Prices have been moving strongly.
Remember, when the industry needed help in 1973 and 1974, the
then Government sought to reduce the reserve price by 50 cents,
a great contrast with today's policies which are now building
confidence in that industry.
There have been. difficulties in the sugar industry because of
duinoping by Europe** on world markets. At the same time, as we
move to improve the logistics of that situation, we have been
given the first indications in recent days that the European
commnunity may well consider joining the International Sugar
Agr-emet, provided the U. S. A. also does. That is the first
tizea there has been a prospect of a sensible,-world-wide
agreement for many,. many years.
Many other parts of the rural industry are also doing better
than for a very, very long time. I am not going to say that
the rural industries have never had it so good. Somebody else
said that, and he said it at a time of a very real depression.
But we can say with complete accuracy that rural industries are
very much better than they were. The prospects for the future
can give people in the beef, sheep, sugar and in other elements
of the rural industry cause for confidence as we move into the
1980' 1S. / 13
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The great mining industry is also coming alive after the dismal
years from 1972 to 1975, when there was hardly a new project
started in this State or in any other part of Australia. Now
we have $ 2 billion dollars of investment in the coal industry.
Over the last two or three days, with Senator Kathy Martin,
Senator David McCubbin and Dr. Llew Edwards, we saw what was
happening great new developments, new investments, which
are going to add to the jobs in this State, going to add -to
the capacity of rural towns, going to add enormously to the
export wealth of Queensland and of Australia. They result
from policies pursued over the past three or four years.
To see the new mines of Gregory, Blackwater and Norwich Park
being developed and opened up, to see the great drag-lines
operate, is exciting indeed. It brings to life the cold hard
statistics of investment in Australia, which, just as a
statistic, tend to be slightly meaningless and slightly lifeless.
To talk to the people working in those industries, to see
the growth and development of new towns, to see the port at
Hay Point all of these things bring to light what is
happening in Australia. Exports of black coal in 1975 were
worth $ 830 million. This year they are worth $ 1510 million,
with prospects of great expansion in the future. It is not only
coal. In bauxite alumina and aluminium, there is nearly
$ 2 million of expansion in many different places right around
Australia. By 1985 a ten-fold rise is projected in aluminium
exports again a great story of confidence, great story of
investment, a great vote of confidence in the policies being
pursued by your Government.
In oil, great developments are taking place. In the preceding
period oil search was stopped because of foolish policies
that killed incentive at a very time when we needed to undertake
a much greater search to improve our own self sufficiency.
This year sufficient exploration wells will be drilled to ensure
the best result, even at the lowest end of the estimates, for
seven years or more.
That again means we can point to the 1980' s with confidence.
As a result of our policies, the balance of payments is
improving, strengthening the value of the dollar very greatly
indeed.
Now none of this happened by accident. People sometimes say
that in the rural industry there was a market upturn, that
wou~ ld have happened anyway. But if there had been some market
u; Dzurn overseas, while costs were rising at 30% a year as
occurred in 1974, Australia's pastoralists and farmers would
still have been sent bankrupt. Indeed, those markets overseas
did not just occur. They came about as a result of our deliberate
trade policies.
We have got inflation down and we are going to keep on the
policies that will pursue that path, vigorously and firmly.
We have controlled expenditure. It is very easy for State
governments or organisations right around this Commonwealth
to suggest that we the Commonwealth should spend more, as though
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we are some kind of cargo cult, as if we just have to wave a
wand, and find the resources to meet those requests. They
heed to understand that what we spend as a Federal Government
we have to take from all of you, and from hundreds of thousands
of other people like you, in taxation. Certainly if people
want higher taxation, governments can spend more. But I seem
to detect the view around that people also want lower taxation.
Just as a family has to match its expenditure to its revenue,
to its wages and its earnings, so too does a Nation, or else
it will get into trouble. The longer it spends more than it
earns, the longer it believes it can spend money that it does
not have, that it has not produced, the more it will get into
tro-dole.
We are going to make sure that our expenditure is approximately
matched with what we can collect from revenue. Our public
service is nearly 60,000 less than it would have been had the
policies of our predecessors stayed in force. In absolute
terms the public service is over 12,000 less than when we
took office. I think it is the first time there has been a
continuous and sustained reduction in the public service of
any government of the Commonwealth.
Dr Llew Edwards advises me that there has been a ceiling in the
Queensland Public Service for the last couple of years. But
wit-h that exception I believe that the Public Services of some
States are still growing quite dramatically. And so it may be
that some attention needs to be put in that direction.
What we have done has involved rigorous, difficult and often
tough, and in the short term at least, unpopular decisions.
But we need to understand again that when people ask things of
government, they are asking us to spend something of yours.
There is not much difference between asking us and putting
your head over the fence and asking your neighbour. I believe
people should not ask things of government which they are not
prepared to ask their neighbours to support as well. By asking
us you are only doing so by proxy, and we need to understand
that. As a result of the last three years there is a much
greater understanding throughout the Australian community that
Government expenditure, State, Commonwealth and Local has to
be reasonable and has to be restrained. I am quite convinced
thL-at-Government c n only govern well if it is prepared to
undertake a quite rigorous application of priorities, to make
sure that taxation dollars are spent where they are most needed
in the national interest, and to assist people who are less
fCcr=-= ate tLhan others.
There are still continuing problems. Wle have to work at the
problem of the continuing deficit. That has been reduced
substantially in relation to the size of the economy, but it
is still too high, compared with what we would like. There
are some things which we need to understand, which make it
difficult to reduce all elements of government expenditure.
Ten years ago we had 168 pensioners welfare recipients for
every 1,000 people in the workforce. Today that same 1000
people in the workforce have to support a much greater number
of welfare recipients, about 270 instead of 168, largely
5
because of an ageing Australian Population. The demand for
additional expenditure goes on inexorably as more people go
in-to over-age brackets. In addition to that, when there has
been a slack time in the economy, additions to revenue lag
behind recovery. The lag is perhaps about 18 months to two
years behind the recovery in the economy itself, and that again
puts pressure on a government's deficit.
Sometimes it is necessary to trim the sails to-adjust various
elements in the economy. We need to understand that does not
represent a change of policy. It represents a maintenance of
policy, maintenance of the steady path we have set ourselves
at the outset. Our new mini budget was one of such adjustment.
I make no apology for it, although all of us would have much
Preferred it not to have been necessary. There were many changes
after the August Budget adding to inflationary pressures. The
wheat harvest was great for wheat producers, but bad for the
money supply. Beef prices are good for beef producers, but
again bad for the Consumer Price Index. The disturbances in
Iran were much greater than expected and increased the oil
prices. Capital inflow is something that we want, but again
bad for the money supply. So, while there are many good
effects from these changes, at the same time they have to involve
some counter action by the Commonwealth to maintain its downward
thrust against inflation. It would have been totally irresponsible
to have policies that would have resulted in tax cuts involving
something over a $ 1,000 million applying from the 1 July.
As much as we would have liked that, and much, as I am sure
you and others would have liked that, it would have been an
addition to the inflationary pressures around Australia which
would have damaged confidence, investment and the future of
Australia, which would have done damage to the main thrust
of our policies. That has to remain our first and foremost
obligation to maintain our steady path
One thing that has contributed a great deal to the recovery
over the last two to three years are the trade policies and the
trade offensives sometimes the trade brawls, at least in
terms of negotiation that we have had recently. I can
remember when we first decided to negotiate with the European
Community, when we first decided as a government that it was
just not good enough for Australia to sit back and say we will
tak'e whatever Europe dishes out. It was not good enough to
say that we are not going to argue for access to their markets,
that we are going to accept it, because they are great and
powerful, because they have 260 million people and what can
14~ zmil lion people do about it. When we first decided to take
on Europe, there were people who said " Oh, look we shouldn't
do that. We won't succeed". But Australia has. The critics
said we were a little country. They said we were a country of
no account, that we should ignore the most affluent and the
largest single market that the world has seen. Well, we decided
we could not ignore that market. We decided that we had to
negotiate. I can well remember when I began those negotiations
in Brussels. It took four hours of determined argument even
for them to concede that they would negotiate with us about
the problems. On that occasion, they initially rejected our
right to negotiate, our right to be consulted, our right to
put our point of view. But the point was won. Negotiation / 6
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has continued. There has been an initial agreement between
their priLncipal negot-iater, Dr Gunderlachand Vic Garland,
which indicates a considerable degree of success.
This does not mean that the market suddenly has become
totally open. But the door is ajar. This is a basis from
which we can work to the future, a recognition that we have a
right to challence their market, and a recognition at the
same time of the export subsidies totalling about $ 12 billion
a year, which often compete against our direct interests
in other markets. Sometimes their export subsidy on sugar
was worth more to them than the total price our sugar farmers
getl in Queensland. We had to be concerned with these issues.
However, the agreement that has been negotiated, opens the
door-, and gives us a base to work on. It is accepted that
ther-? e will be continuing consultations into the future. All
in all, the negotiations have been a significant success.
In t -he United States we have won much greater certainty for
our great primary exports, much greater certainty for our
beef exports, than ever before. In Japan, where in 1974
under the previous government a market of 120,000 tonnes was
cut to nothing, there have already been painstaking negotiations.
The final details of the settlement with Japan, when revealed,
will show that that market is also secured into the future.
Wit1-h other markets such as Korea, it means that our great
primary exporters can look to the future. There is more
certainty about the access they need to affluent markets
around the world than I think they have ever had in the
history of Australia. And none of that would have occurred
i-F it hadn't been for the trade offensive by Doug Anthony
and myself, and Vic Garland and their officials arguing for
our interests in many different countries.
We also need to look at the world we live in . Because Australia,
above all countries, is vastly dependent upon world trade and
access to markets, what is happening in the economies of
Europe and North America is important to us.
Sometimes we might have been too optimistic about the way
other major significant countries would be managing their
ow., n economies. We might have been too optimistic for there
being a greater reduction in inflation in the major countries
of ' Europe, the United States, and therefore greater growth
in markets and in world trade than there has been. Since the
es--ai! at'-ion into higher rates of inflation right around the
worldCA in 1973, the normal rate of growth in world trade has
been halved. For the preceding 20 years there was an improvement
of about eight percent a year. Since then it has run at
four percent per year. From that one change alone you can
see much of the problem of unemployment in many advanced
countries. We might have believed that the policies and
rhetoric of past summit conferences, involving the seven
largest economies, would have had more results than in fact
they have had in overcoming inflation. / 7
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But that has not been the result. In North America, in the
United States, inflation is over 10 percent and rising;
in Canada it is over 10 percent and rising; in the United
Kingdom it is nearly 11 percent and as a result of their last
Budget they themselves are predicting over 17 percent.
In Germany, inflation is still low by our standards, although
at six percent it has doubled. Australian inflation is
around eight percent with pressures to move it up. With this
high rate of inflation the Western system of trade and payments,
upon which the prosperity of Europe and North America and
many other countries including Australia depend, is plainly
unde2r threat. Because with this inflation, there will not
be an adequate market growth to overcome the problems and
difficulties of unemployment.
That therefore places a great deal of importance on the
sur-mmt conference -to be undertaken in Tokyo. I have no
doubt1 that the conference will devote a great deal of time
to energy problems. It might well be called the energy
surimit. But that is still not the most important problem
in front of that conference. Inflation is even more important.
The summit countries are great and powerful. 600 million
people who are the wealthiest and the most powerful, the most
tech. Lnologically advanced that the world has ever seen. What
they do in the management or mismanagement of their own
dcm. estic affairs plainly affects all of us, for good or for ill.
Past summits have produced statements, but there has not
always been action to follow those statements. This summit
needs concerted follow-up action to bear down on world inflation
much more vigorously than has been the case in the past.
So far I believe there have been two countries that have taken
action against inflation Germany and Japan. I am personally
honeful that the United Kingdom might join those two and argue
to strengthen the anti-inflationary courses. This would help
to move all countries to a much more vigorous approach. we will
have to wait and see the results. But what then of Australia
against this environment. Our inflation is lower than much
of Europe. It is lower than North America and it is not moving
up as much as theirs. That means our industries are becoming
more competitive instead of less, as was the case during our
previous period of inflation, when our inflation was above
ofMost other countries. If our inflation is relatively
less then our home export markets will be secured and I believe
expanded. I-e als have other great advantages because of our mineral
wealth coke and coal, iron ore, bauxite and nickel. We are
a great country to attract investment. We have many commodities
that the world nations need and for which they will be looking
to Australia as a source of supply.
Because the world needs energy, and because we have coal and
natural gas, we have the capacity to move through difficult
periods and to improve the Australian economy, even while the
world economy istelf is pretty sluggish, even while it is
not doing well. Because we are a more attractive source of
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supply, and because we are a more reliable source of supply
than many other countries, we are getting there and in fact
receiving more than might otherwise be regarded as Australia's
fair share of world investment. This is because of our
political stability. I believe great world investment will
continue in Australia even if there is relatively low growth
in world trade and in world markets.
For all these reasons Australia has many advantages. We can
weather whatever difficulties there might be in world trade
and the world economy, as long as we keep the wit and the
will and the determination to arrange our affairs well and to
continue with the policies of recent years. In this great
design, I have not got the slightest doubt that we shall
succeed in making Australia an even better and an even greater
nation. But governments cannot do it all. We can set the course, we
can set the rudder fair, but all Australians need to take up
the opportunities that result. We can set the economic
climate for investment and for profit. But it is you who need,
to invest, it is you and other Australians who make the
profits. We can negotiate markets but it is our producers
who have the task of exporting, who must provide the goods
to fill the markets. Wle need to recognise clearly the
li'mits of Government action, the role of governments and
th--e role of private enterprise. Government can open the door
for opportunities, but it is private enterprise that must
exploit and develop them.
Scme things that governments do stimulate and encourage
activity within a country, but if a government goes too
far, it can stifle and destroy. We cannot make all decisions
for all Australians, and we should not try to. Men and women
have to seek their own destiny and make their own futures.
Wle need to recognise the inevitable pressures on government
to spend more and to resist that with a total determination.
Our expenditure must be linked with those things we can
finance responsibly.
And in our philosophy we want to encourage the free spirit and
enterprise of the Australian people, to promote independence
development. So often governments have raised false
expectations. They have led people to believe -that governments
should do it all, with no effort by people themselves. That is
the way I believe that many once vibrant nations have taken,
to' -he-r almost total destruction.
Our task has been to rebuild Australia's strength, to encourage
independence. Our Liberal vision is of a vigorous imaginative
people with pride and achievement, unequalled in achievement,
unequalled in opportunity. We are the custodians of that
freedom, we are the custodians of that opportunity. Our policies
are st-eady, our resolution is firm and our conviction absolute.
With faith in our hearts we shall succeed and boldly advance
Australia.