EMBARGO: AGAINST DELIVERY
CHECK AGAINST DELIVERY
" IjI AL A,
PRIME MINISTER
FOR MEDIA THURSDAY, 28 AUGUST, 1-94! 0
SPEECH IN THE DEBATE ON THE 1980/ 81 BUDGET
Mr. Speaker, twelve months ago the Leader of the Opposition
described the 1979/ 80 Budget as " without doubt the most
contractionary in the 18 years I have been a member of this
Parliament". Perhaps the first thing I should do is to welcome
his declaration that the 1980/ 81 Budget is also a contractionary
Budget. If he is as wrong about this year's Budget as he clearly
was about last year's, we can look forward to another very good
year. His outdated and discredited diagnosis of Tuesday evening
ignores the fact that, in circumstances of continued inflation,
the key elements of the Government's Budget, limiti ' ng the growth
of the Commonwealth Budget outlays and, through the further
substantial reduction in our deficit, reining i~ n the public
sector borrowing requirement not only allow the expansion of.
the private sector, but also they offer the only chance for
sustainable economic growth in the 80s. And that is the choice
before us.
Do we want sustainable-economic growth, through the containment
of inflation, that has been secured by. Liberal/ National Country
Party Government? Or do we squander our hard won gains through
big spending, big deficits and high inflation which Labor
guaranteed us on Tuesday evening?
1979/ 80 brought Australia further along the road to national
economic recovery with a Budget which, by the Leader of the
Opposition's standards, was much more " contractionary" than
this year's. Yet for the second year in a row, in 1979/ 80,
growth accelerated, notwithstanding the adverse effects of
industrial disputes on output in the second half of the year.
And the public sector contributed less than one-quarter of to
the growth in non-farm product of over Even that cartoon
figure Blind Freddie a character not unknown to the Leader of
the Opposition could not have failed to see the strengthening
of the economy last year.
Let me remind the Leader of the Opposition that, at the time
of last year's Budget, he said: " If my assessment of economic
growth is correct it was last year there will be less than
2% growth for the year in the non-farm sector". / 2
-2
How does what the Leader of the Opposition said then tally with
the facts today: the increase of 3.1% in non-farm G. D. P. ( not
the predicted by the doom-mongers of the-Labor Party), was
one percentage point more than i n 1978/ 79; employment in the
12 months to July this year rose by 212,000, the highest annual
increase for 10 years; real private investment in dwellings
was over 10% higher than in 1978/ 79; consumer spending 0
strengthened over the course of the year, rising in real terms
at an annual rate of 2.9% in the second half; exports increased
in real terms by no less than 14-2/% for the year as a whole; and
private sector external transactions recorded the largest
surplus since 1972/ 73. Just as important as this strengthening
year-on-year, was the streng~ thening within the course of the
year, when internally-generated demand took over from exports as
the major impetus to growth. These are unchallengeable
achievements. What Mr. Hayden didn't say on Tuesday evening was that the
I. D. C. on economic strategy recorded that, "... there is general
agreement about the appropriateness of the overall ( economic)
strategy. It is agreed that no substantially different
alternatives are available.. As a nation, we have come a
long way since 1975, the Hayden days, when total economic
disorder and investment decay were-created through the same
economic prescription that was paraded before us on Tuesday
evening. Labor in the 80s is merely. Labor in the 70s recycled.
This Government has laid sound foundations for the economy in
the face of a difficult and demanding legacy. As a result, we
are on the verge of what is potenclially one of the most_ exciting
eras of economic development in our history. Certainly, there
will be difficulties in realising, our potential. Above all,
we shall need a continuation of the right policies. In
particular we shall need the continuation of a firm policy stance
from Government to make sure that inflationary pressures are
contained. For the containment of inflation must continue to
remain the principal economic priority of Government if the
well-being of all Australians is to be secured.
The Labor years taught us bitterly what many economies throughout
the world are now learning: that inflation has the capacity
to destroy our living standards; that inflation will destroy
national confidence, national capacity, and national will; that
inflation strikes at those least able to defend themselves from
it the old, the sick, the disadvantaged, and the low income
earner; Lihat inflation, as it did in the mid 70s, cripples
investment, development and business expansion on which our
national wealth depends; and the I. D. C. report further confirms
our strategy when it says: " realisation of the investment
potential depends most importantly on maintenance of a stable
economic environment through firm anti-inflationary policies
conducive to foreign as well as domestic investment".
That is why the first priority of economic management in the
ignored on Tuesday evening by the Leader of the Opposition,
must remain the containment of inflation. A political party
which does not attack the source of inflation is little better
than a political party which ignores breaches of law..
For inflation robs people of their freedom and their security.
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our success in the fight against inflation, in absolute
and relative terms, is the cornerstone of the economic
recovery that is now under way in Australia. The last thing
we need, in the period ahead, is the so-called " stimulatory"
policies of the Opposition which could only lead to a disastrous
acceleration of inflation.
The Leader of the Opposition has forgotten that, in his own
Budget as Treasurer in 1975, he firmly declared that " it is
inflation itself which is the central policy problem. more
inflation simply leads to more unemployment". That was precisely
the result of tabor's disastrous years in office.
And m4r. Hayden demonstrated on Tuesday evening that he does not
even believe now what was written for him then. During his
reply to the Budget, he boasted that " the cost of ( his)
programmes has been hidden from no-one". And Mr. Hayden
announced that five of the Labor programmes, and a tax cut,
in the one year, would cost no less than*$ 1435 million on his
own costings.
But what he had hidden from everyone was the commitment he
made on " AM" on 20 August to raise pensions to 25% of average
weekly earnings, with a further commitment in the long term,
to increase them to 30% of average weekly earnings. The total
immediate cost to taxpayers of this, about $ 500 million, was
hidden from us in the Budget reply speech. So that on the most
conservative estimates, Mr. Hayden should have been-talking last
Tuesday evening of $ 2,000 million. And, of course, that hides
from us the cost of all the other Labor-programmes over
250 of them.
Yet yesterday morning on radio, Mr.. Hayden announced that " the
cost of the progrartm-es would be $ 835 million". of course, thi. s
is sheer myth. The man who said that the cost of his programmes
would be hidden from no-one, conveniently hid from a national
radio audience the cost of the tax cut, the cost of the commitment
to increased pensions, and the cost of more than 250 other
Labor programmnes.
So which Mr. Hayden are we to believe? Can the Labor Party
believe that he is still committed to the 250 programmes?
Even without these do we believe the August 20 Mr. Hayden,
the $ 2,000 million dollar-man? Or do we believe the last
Tuesday evening Mr. Hayden, the $ 1435 million dollar man?
Or do we believe the last Wednesday morning Mr. Hayden, the
$ 835 million dollar man? Which is the real Mr. Hayden? Which
Mr. Hayden are we being asked to afford? What confusion will
the Labor Party try next? What deception will next be tried on
the Australian taxpayer? Let us take the figure of $ 1435 million
which can be deduced from his speech in the House last Tuesday
evening. One of the items listed in Mr. Hayden's speech was
"$ 180 million for new jobs". / 14
-4
Yet Labor's job opportunities programme announced in March
this year contains the following statements: " The community
service corps when fully operational will cost $ 200 million
a year"; " The work programme when fully operational,
$ 110 million a year"; " Private sector employment and training
programme $ 20 million". A total of $ 330 million a year.
Which Mr. Hayden do we believe? The March $ 330 million dollar
Mr. Hayden, or the last Tuesday evening $ 180 million dollar
Mr. Hayden?
But there is another Mr. Hayden -the August 1977 Hayden.
For on -the 11th August 1977, the now Leader of the opposition
in company with Mr. Whitlam. announced a plan to " place more
than 50,000 in work in a full year". 50,000, not 100,000 as
is being promised now. And Mr. Hayden gave us some selections
of cost in 1977. Gross, $ 800 million in a full year; net
$ 550 million in a full year. And that is for 50,000 jobs.
Yet in March this year, Mr. Hayden was going to create 100,000
for $ 330 million, and Tuesday night he was going to do it for
$ 180 million. No wonder one of his colleagues in the Party in
Queensland was prompted to remark recently, " Bill Hayden I think
is a confused man". He is allowed his confusion.
But that is no justification for perpetrating this kind of
deception on the working men and women of Australia, at their
expense. An expense which on our castings is $ 2., 300 million
in only six areas; with the cost of the tax cut to be thrown in
on -top of that; and t%-he cost of: over 250 other progra,=-es.
The statement by the Leader of the Opposition last Tuesday evening.
was a statement of selective omission. For there is no mention
of more than 250 programmes to which the Labor Party is committed.
And that commitment has been clearly enunciated by the Leader
of the Opposition himself. In June this year, Mr. Hayden was.
unapologetic when he said, " What I do say is that we have the
sanction of our platform to devise policies and we are prepared
to implement them as a Government". Well, the platform and
subsequent policy releases for over 250 programmes involve
massive spending of taxpayers' money. But aware of the
overwhelming electoral opposition by taxpayers to having their
money wasted on socialist planning, Mr. Hayden, in a tape to
A. L. P. members in March this year, said, " We have to present
our policies in an attractive and digestible form now this
requires us to be selective". Does this mean tChat Mr. Hayden
is going to hide some of his commitments from the electorate
because they are not popular? Commitments like: the Australian
Hydra-Carbon Corporation, where big money is involved; the
Fuel and Energy Commission, more big money involved; a national
superannuation scheme, more big money; the restoration of
Medibank; and a national investment fund. Where have we been
given the costs of these?
Does this mean that, because Mr. Hayden is afraid of losing
votes, certain policies will be ignored in an attempt to deceive.
the electorate?
Does this mean Mr. Hayden is aware that, if he announced all
his spending programmes together, he would lose massive
electoral support? Does this mean he recognises the
impossibility, the recklessness and the irresponsibility of the
total Labor package. Is that what Mr. Hayden means when he
says he must be selective?
The simple truth is Mr. Hayden has not costed the programmes;
he cannot cost the programmes; arnd, because of his fear of
the electoral reaction, he will not cost them. Well, this
Government and this Parliament will not allow Mr. Hayden or
his Party the latitude of such selectivity. Let them stand
up anrd be, costed. But the backdowns and the omissions in
the Opposition Leader's statement do not end there.
Less than two weeks ago, on 13 August, Mr. Hayden was reported
as saying quite categorically, " A Federal Labor Government would.
offer cheaper health insurance and lower petrol prices and
sales " Labor would also consider lowering income tax".
And in the ultimate flight of fancy, the Opposition Leader said,
these aims could be achieved in a ' trade-off" with the union
movement. Well what happened on Tuesday evening? The commitment of 13 August
had evaporated. We were given no commitment, only options.
And then only one of the three that had been promised only
13 days before. Mr. Hayden has no doubt awoken to the opposition
within the electorate to his big spending proposals, but he.-is
bound bv the left wing of his Party and the resolutions of his
conference. He may seek to avoid mentioning A. L. P. commitmentsbut
he will not be allowed to ignore them, by his back bench,
his Shadow Ministry, the rank and file or the union movement.
And the consequences for Australia must not be taken lightly
by this Parliament or the Australian people.
The economic prescription outlined by the Opposition Leader
on Tuesday evening is: rejected by major industrialised
countries; rejected by academics; rejected b y the metropolitan
press; rejected by businessmen; rejected by the O. E. C. D.;
rejected by the rejected even by the Democratic Party
of the and,. as Mr. Hayden should now know, rejected by
the report of the Interdepartmental Committee on Economic Strategy.
And it was once rejected by Mr. Hayden himself when he said:
" Some might argue that a large deficit could be offset by a
tough monetary policy but this would mean greatly increased
interest rates, disruption in financial markets, further.
depression of business confidence and serious company failures.
That is an-unacceptable option". Or again,." It is not possible
to provide more and more Government services or transfer
payments from the Budget without ultimately having to pay for them
through cutting back after tax earnings via increased taxes. It
is not possible to get quarts out of pint pots".
Yet now Mr. Hayden says he can increase expenditure and reduce
taxes.. And how is going to manage this? / 6
-6
He told us on " AM" on Wednesday morning that deficits can be
funded, " by an increase in the money supply"; by the use, that
is, of the printing presses. What great self-confessed economic
wizardry is that? It is no wonder Clem Jones, the former
Lord Mayor of Brisbane, and one of the more successful Labor
Party administrators in recent years, remarked, " It is recognised
that Bill Hayden has admitted he cannot read a balance sheet".
The other significant omission of the statement by the
Leader of the Opposition in his Budget speech was the promise
to increase taxes dramatically. In December last year,
Mr. Hayden reminded us that his revenue raising programmes
wiere, " somewhat more radical than had been outlined up to
1972". He warned us then about our taxation future under Labor,
when he said, . I have committed my organisation to a capital
gains tax, a resource rental tax, a levy on domestic oil
producers, a number of initiatives in the tax area and other
measures of that nature..."
In what constitutes an elaboration of the " other measures" the
Opposition's Spokesman on Economic Affairs has said that it
is " wrong" that we don't have " some form of tax on capital, be it
death duties, capital gains tax, wealth tax or perhaps some kind of
combination of those, or all three".
The Labor Party are now enjoying a renewed fascination with the
concept of a capital gains tax. I recall the announcement by
the then Government in its 1974 Budget speech to introduce a
capital gains tax just as I recall the announcement of the
abandonment of that intention five months later.
The fascination with this general topic seems to be based on
an unproven belief that there is a large number of relatively
very wealthy people in the community, so much so that Mr. Willis
believes $ 700 million will accrue annually from this tax.
What is one to make of such illusory revenue sources?
And the so-called social contract promised a Royal Commission
into income and wealth which, " would not be frustrated in its
endeavours by unco-operative attitudes from those with something
to hide". There is no doubt that the fires of envy still burn
very brightly within the Labor Party. But such taxation threats
will not escape the attention of hard working Australians.
For they would sound the death knell of enterprise, initiative,
and reward for effort and risk taking. They would destroy
economic freedom.
To complete Labor's picture of economic incredibility, Mr. Hayden
announced that he and the union movement had achieved, " For the.
first time in this country a political-industrial agreement
on procedures for an effective and economically sound policy
covering prices, wages and non-wage incomes" / 7
-7
His statement to the Parliament was not 24' hours old when
the newspapers carried the details of A. C. T. U. demands made
before the President of the Arbitration Commission demands
which bore no resemblance to restraint.
As reported in the press, they included: demands for regular
automatic wage adjustment based on movements in the Consumer
Price Index; the right to collective bargaining; the use
of national productivity increases to further wage demands;
the pursuit * of the 35 hour week on an industry basis; and
the continuation of work value decisions.
This is presumably what mr. Hayden calls, " effective and
economically sound policy". It is unsurprising to read today
that the A. C. T. U.' s senior Vice-President, Mr. Cliff Dolan,
has said, " there is no social contract on wages between the
A. C. T. U. and the Labor Party".
It is perfectly clear that the union movement will not accept
any limitation on their freedoms for the sake of Bill Hayden's
social agreement. And when to this lack of restraint by the
union movement, we add the provisions of the A. L. P.. platform
which grant immunity to unions from penalties for strike action,
thereby placing the union movement above the law, we have a
clear picture of the nature of the special relationship that
Mr. Hayden says he has with the union movement. It ' was this
relationship which saw award wages for males in the year to
March 1975 rise by almost 35% and for females by over 43%.
It was this relationship that forced unemployment to double
under the previous Labor administration.
The relationship between Mr. Hayden and the union movement
is like the special relationship that exists between a
ventriloquist and his doll a slight twist from the left
wrist and Bill's head nods up and down.
Mr. Speaker, my Government will continue to work to further
reduce both the share of resources by Commonwealth Budget outlays
and the Budget deficit itself, because we remain firmly
committed to winding back inflation. Economic responsibility
will continue to be our watchword. Strengthening private sector
demand and pressure of rising prices from overseas over the
past 18 months, call for firm fiscal and monetary policies in
the period ahead if inflationary pressures are to be contained
and our inflation rate is again to resume its downward trend.
We will be aiming, in particular, to secure a lower growth
in the money supply in 1980/ 81, with monetary policy playing
an enhanced role. The 1980/ 81 Budget, in association with an
appropriate monetary policy, and with the co-operation of the
majority of Australians is directed to ensuring that the nation
can realise the bright economic prospects now before us.
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