FOR I-LDIA I October 1980O
ADDRSS TO C. B. D. PA,.
Four years agco, when I delivered the second Coplancd Memorial
Address to _ Q emphasised the importance of restoring
the economic str'ength of Australia, in that address, I set
out our primary economic objective as a governm-ent. I said,
7 mre. s-s. no -way around -the-f v mtalrf'nt
thait resources are scfarce. Ouir policies must
aimn to expand the resources av~ ilable to us,
because only in that w4ay can Auaftraljalls hop1e
t-0 realise SO many of their aspirations. we
have seen only too clearly what happens. when
aspirations run ahead of-. resources."
whe~ n I:. stzitea those principles, four years ago, underlyingq
vihat I said was a confidence that the. prob lems confronting
us were nianageable. I -atrgved th-6ntbat they could ' Anhd would
b6 overconel iand that the successful management of our plolm
was-dependent upon continuation of the Goverrimet": policies.
Witi* ii-r~ i-q~ tC,=.' n aythat, to some extent, we underestimate
5 the severity of the world situation and the entrenched
nature of somne of the difficulties which we have had to face.
As a result, we have had to trim our sails once or twice for
the Vorlek a ha-rsher place than anyone expected five year~ s
Bgu. t we have never lost sigiht of our over-riding objective
of strengthening the Au~ tr-alJ4an ecGQiemfy.
Inceingy, dursing the past four years or so, the goverl-01ents
.". of. rna-rJor induStrial countriesl interrnational . Aagn-, iesanl--
central ban),, s, have swung their support strongly behind our
kind of Policies. Whether viewea from a domestic, or an
international perspective, as a re~ ult of these policies,
Atthe hart of o economitteayb evh as ndcn eietne e.' rnplm
Atthe hertn oor ecoomi stregy cohensi te stenghT
uspaoidn pthoalti citehsi s wihs ichth elo wonerly anwda y croenatla ihgrnoi wnfthla tciaonn be Wse ustaavien eadlw awyist 1-
incrensed employmn~ art'and higher living star~ darde for all
AIfstrtiliajis. HeTnce, We ha-ve continued to stiess the importance
stiltot. contxol of government spending; reauction in the size
of the buadget deficit-, and a responsible monetairy polic'..
2
aprop~ e. r place-at Ithe head of our economic reco0verY. The
lowqering of inflation has played a major role in bringl~ g
about the revival of business optinism. 13ut % qe have arguaed
that at le~ st two other factors-were crucoial; a rice in.
prof3. ts and a governmrent attitude wqhich did not invo ve
It. -Iunnnerdcee rs. a-troy-. hceoan. tsetnr-a tihnets, rPovn-ivean3. t eorfporri e. nu~ re,
1 developed, aid expanded a range of special incentivts-
Our investment allowan~ ce encourag~ es ntew investment
in modern plant and equipment, and thereby assists
compajnies to oompete~ in interna~ tional. Tar} ets and
I in the domestic mnark. et;
For similar reasons we algo proviaed in the last.
bodget for accelerotted depreciation, at a cost of
-P,.$ 250 inillion by the mid-19805;
gr-ants encourAge a hiqh~ er volume of exports and. the
development of new m6r~ o N;
Greatly expAnded goverrnent grants a3' e assigting our
industriev in their research and deve2. op-ment acotivitie-'_--
The benefit to industry this year from these prograin-1es is
over $ 600 million and the. four _ ear total to 1980-81 is over
bi 11. on.
Last nigh. t in my Policy Speech I said that these progjrammvies
_ would-b~ e continued, our -general inidustry policies have also
been complemented by a range of other incentives to encourage,
for-example,~ explorAtion and development in the Tiinerals
* infdustry-1igherV. Xoduction in the rural sector, and increased
investment In touri~ st acconmmodation.
As pArt of our-coi-wntment to ind~ ustry, last night I announced
seve~ nep~ liiesfor the rural industry. Arid, for-tit
touvist industKy, % le propose to extend the investment allowance
to cover plAnt ancf equipment used in the industry.
NumerouB small-scalie. 6riterprises area invo'lved in Auistralianindustry,
directly and indireotly and are being a~ sisted by
these measureo. However, % qe have also sought to encourage small
b'uii~ evse-other waYs. They play an-o r 1 ob creation,
in introducitg entrepreneurial s -Alls, and in devel. oping new
products and technologies. hencs, we inave ep cdth--
In the three years to 1975-76, there was an averaoe annual
growth in real Com~ onwealth outlays of 10%. in the five year ' a
to 1980-81, we have kept that growth to only about 1% a year.
AS*_.; proportion... of G7DP., co == walth-budget spending Is.
showing a significant reduction on the 1975-76 level. Moreover,
as a proportion of G. D. P, the Cor:' zonwealth budget deficit
has fallen from 4.9% in 1975-76 to. only 1.2i._ And1 lastf
inancial year, we achieved the, largest ever recorded. reduction
in the budget dificit-41.5 billion. This year's budget
elin inates the domestic d~ eficit al. together.
Complementing this strategy has been our emphasis On regenerating
3-
charter of the Cormnonwealth tlevelopeMent-Banlk to lend to these
organisations3.
-Most importantly, we have altered th e tax lawsg to make it
easier for small companies to build up reserves, thereby
widening the scope for self -f inancing and investmnent and
exansion.
ru ImTportant-thougUW h tshrt eoasses, x ttehnasti vteh e raonvgeer -roOf caslpge cibaeln t incen0ti-ves
business in Austr~ lia has comoe from the steady success of
the general economic strategy.
Of paramount krtportance has been the full restoration of
Ausatralia's international com'petitiveness. Since the
mid 1970st this competitivess has improved by about 145,, and
we are back.* to where we were at the beginning of the. 1970s.
There are many individual firm~ s which have gained from~ our
enhanced. trading position; and naturally, the overall benefit
se i-the--expfnsi-onrofv exporte, -arid.. geneta-abl i-y
p to compete more effectively against imports,
After-a difficult pariod ii the midd 1970s of weakness in
our. external trading position, we have re-establishe8 a
poition of Ptrength. Last.. y~ e a the-al-anue -oL-trade was the
best f or a decade. There wa-s a more than 30% i-iiarease in -the
value-of manufactured exports; and there slas a 179 increasie in
real terms in total exports,
This return of ' competitiveness hjacs been fundamentally dependent
u upon our holdipg inf lation down to a level less than that in the
indu~ trialised countries. In the 12 go -hs to-3. uly,
the O. E. C. D inflation rate was 12.8%
the U. S. A. inflation rate was 13.2t
the U. K. inflation rate was 16.9%.
Through the last financial year, our inflation rate was
10.7%, and we ae continuing to hold it sign-if icantly beloo
~ 1 * the O. E. C. D. leve).. jmajo.... irnptus t. 0 our growth and the current
recovory has come f rom net exports. This boost to clemand has
flowed through into domestic activity and has been an essential
tvw'-~ owbth -in-annual erqployment of over 210, JOO was the larcijest
' KrothIn-emp-loyment for
In i-he rural industry, the increase of over 15,000 in
employment was the highest for at least thirty years.
This year, tChe main factor in our growth is forecast to
__-eoniegtiddemnand, including an expected real increase busin~ ess
inftim~ tnent ' 6df Here i* clear expression~ of the success
aOrfe Oiinlrv esstrthinteg ' ayn d-4. tahkpii. g ' jfqa ctt-etrhniattr e. 0phr0enneu wriiat lI ne* rres cisionls upoVnn-c Adi. te
* which so mnuch of the-adaptability and dynamism of our societ~ y
[ I
Tlhe recent business survey by the Confeaeration of Australian
Industry and the BanY. of New South Wale. 9 shows tha4t this
confidence is continuing to gather pace. Two clear
financial indicatora of this atri1linc recoviary are:
the continuing buoyancy In Aus-t. a ian sh tie
and the massive inorgase ill share apital raisings.
During the five years of this Government, share prices have
risen over l which is strik~ ing evidence of iriproved
prof4t--prospet'ts, and the enhanced value of Aust-ral. ia's
productive assets. This is in stark contrast to the painful
experience of the Labor years when share prices fell 27t.
Accompanying the buoyAncy of shar. e Values has: beer% a surge
in. share capital raisings, totalling more than $ 1 billion
14st year,
It is evezN more piciniflunt tb:= T--he confidence in Nustralia
should. 7-7. hg~
goesasIvsos. ~ t
forigninvestment in enterprises in Australia was more than
$ 2,500 tillidp . a huge-vise 6-n-t-he average annual inflow
of about $ 650 million, from 1972-3, to 1974-5.
To have a new Investment confidence ali'e at a timEe we
world trade is depressed and has been slowing, is a
Piotable achiev~ ement. The O. E. C. D. forecast nil growth in the
O. F.. C. D area as a whole for 1980-1, and expect only slugjgish
inprovement in the early part of-tie ei-qbt~ es, Irr-ciur case,
by comparison, we expect to sea non-farm product rl. sing
by about three and a half per cent this year the third
Biuccetiaive year of steady improvement. Moreover, the outlooR
for the early years of this nea decade is very muzh iore
promising than that confronting the world economy.
in many, areaks of our ecoi~ rry.. paTE~ hiarl1i -nose related
to our rich energy resources, decisions for invesb~. ent
orn an unprecedented scale are being taken. The recent
well-publicised survey of major -nw-invest-; e t projects
conducted by the Department of industry and Comm~ erce puts
a, value of $ 29 billion on projects cormitted or in the final.
stages of feasibility study. That fi'qure is an indication
of the magnititde of the opportuinities for investment and
economic growth. which are opening uip to Australia in the
And unobel -there will be other OrojectsRule
Colig forward. 146table & mongst these is the Rnl_ 12r.. Ject.
What all this suggeaits is a dev'elopment pha~ ve before uis ae
irporta. nt iii its impact on our comi-unity as any period of
re-souz ei vestment tince thl u ' d
that of earlier periods. T. he cdomiiant'influence t-his tine
is in reEpaot of our energy re-saurce---Te shape-of thiS
new era is in part a response to the oil-crises of the
* 1970s and, in part, a reflecation of our recognition of the
I~ fopportunitios itlplicit in that changing situation; anid
L.
and our implementation of Import parity pricing for oil.
The increased price, sicarcity ari,. uncertainty of oil supplies,
are leading not only to a search for new sources of oil bat
also to iftreasing recognition of the value of Piustralia's
other energy re erves of coa3., uranium and iiatural gas.
Our coal is imrportant both as a direct export and as a source
of electricity. The increase in electricity generation
throughout rthe-Os--wtlñ-bp very-nearly equal to the increase
in electricity generating , capacity that occurred over the last
30 years. This offers us an opportunity not previously available
to iincrease substantially the degree of processing of mine
output, arnd t6 enicourag:,,. miaufac. turing industry groeith bas
on competitive and stable energy supplies.
modern new' indu-s-Ules ; re coming -oiT stream with mouern Plant
and equipment involvingq advanced~ technolocgy. This will give
tis a broader range of export products anid a potential to
sell to. a wider market, These new. developments will give___
Australia In the 80s a much stronger internatioinal trading
Large and spectacular projects are the maost visible source
of econov5io development. HIowever, it would be! quite wronU
to see Australia's growth in the 1980s as only invol. ving
-~-s~ 11e-m es or-vast mineral processing pldnts. No less
impoxtant will be the expansion of many thousands of smjaller
firrms Which, while individually less spectacular, collectively
mnke an enormous contribution to national well-being.
What needs to be emrphasisecl is tbe close integration of
the various sectors of the econorty. Developrwent Of theorrajor~
eS0UrCe projec w-111--have important linkage effects
for the rest of the economy, both directly in the f ormr
of d~ emands for materials, plants and services, anrd indiirectly
in the form of the bihr.~ lincomeswcusrain
generally wi'll. have at their disposal.
In the Australi~ n context there is a particular role for
7. government to complement and suppofr sour~ Zt evelopmi'ent
through the provision of essential infrastructure. Throughout
our vast continent, the generation of power, transport,
COMI~ UniGait ofs -arports-are essential features of
deVelopment. The Government has accepted this responsibility,
and has introduced special programm~ es in all th-:. se areas.
Special infrastructure borrowings agreed with 3the States
I'amount to rparly $ 5 billion, of whTich _ 3i~ ost $ 7QODhmillion
II.) appliies to this year. This is a Catalogue of economic
' Vactiv ity which puts paid to the proPhets of cjloom anid dooll.
It represents a vote of confide,-ce in Austral. ia's futuire
and qovernmnent. policies. The beriefit of all this will be
fetnationwide. Butt Imtportant as our endowmrenlts are,
their existence is not sufficient to malKe sure that development
i7i tbe future will take place as it should. Bec ause, without
the right economic enviromment, developmentwi11 fall wa~ ll short
o . toenal as . it did in the 70s. And that is precis~ iey
ijthe . sper~ cription that the Labor Party is off ering f or
the
-6
Labor is proposing what governments of Major countries and
t-heir -central banka, and the leading iinternational economic:
agencies have roundiy rejected. Even the most favourable of
international conditions could not underpin econo: mic growth
if w-, eere + o 1yrch back~ into a periocl of high iiif lation' and
suffer , the negative effects of increased government regulation
of economic development.
It mus. b be clearly understood thattt-confl-ftnce necessary to
em~ bark on long-termi i-nvestrment projects could not be sustained
in such an environment. knongst many crixticismfs I ha,-ve of
Labor Party policies, there is one over-riding orittiismv.___
They have no policy to contain inflation. Their essc-ntial
programme is a massive progra" te of additional spending.
In only_ six aeas they.. p) ise: to spendl an adiditional
$ 2,500 million of taxpayers' money. These proga! umes
fhlaevp~ e rtbmeaeenn t coofs teFdin abnyc eG. ovTehrnem feingtu rDee poafr tm$ l2e, n5t0s, 0 manidl liobyn l thise aFc iggrr
that -woulet have to go into any Labor budget. But there are
more. than 250 other programes to which the Labor Party is
comm ittea and which have not been costed.
iitoLa beocr onstoilml ic bgreolvieitvhe -a nthd' a4t FcCvoevloeprnmmeennt, t LAectt ivthiteyr e hboel dnsot hd oubot. xtn
This is ' the way to mud~ h higher inflation. it ig the surest
tonte to the -, estruction of our prograps to date, and our
future potential. But it do-rsn't end there. Kr. Hayden niow
proposea a tax cut when the official Labor Party platforM,
and the dfficial policy statemaents of tlyepa year, firmy
commrit him to the expenditure I have mentioned."
jbIndeed, the concept of lower taxation is alien to Mr Hayeten's
philosop. hy. in the F. E. Chamberlain nlem! orial Lecture in MaCrhla
t~ year, he argued that,
"~ IThe chal-ltnge to . Socialism. is the rapid
spread of philosophieB based on lower tax: es
and smaller governmelit.."*
TheralitTg h that ILAbor proposes much higher tax~ esas
those who have read their platform will ), now. They have
promised a wealth tax. Mr Hayden has repeatedly called for
a--cp~ 4-~ istx And the Party is comr~ itted to a resource
rental tax. Again, I remind you of . r Hayden's owni words,
have committed my organisation to a capital gains
tax, a resource rental tax, a levy on dom~ estic
oil producers, a number of initiatives in the tax
area and other measures of that natuxe...
I -Whht Mr IIoyaen conveniently forgets is the essential. role of
profits in leading to higher investmen~ t and hence more jobs
in Australia. The threats to Australian industry,_ anid indeed
Astralia, % qhich are pooed by the Labor Party are not
those of inflation and taxation. For the Labor policies include
removal of the existing incentives for business as well as
intcreaped government interrv i-tion and reguination of incdstrial
deVe loprnent. I
MrHayclen'a ovn words Are,
" we -would terminate the investm'ent alloviance
introduiced by this, Governmrent...
In jkpri this year,. tMr Hayden attacked the Governm~ ent's
poitbies of incentives to iindustry, referringj to them in
scathing terms as having fattened profits and abolished jobs.
The reaaity is of o~ urse, that these iincentiveg have played
an Important role in* Prom~ tinq investment and creating
new employment opportunities. A further threat lie-s~-.
Labor's expressed cormitnrt to increased government.
intervertion. They are com., ittea1 in section 7 of their
pJlatfdrm clocument, to a variety of means of establiahing
more direct governntent iinfluence, from an e~ i~ rt
public enterprise tonationalisation.
13 praotice-during the past year or wore, they have
out specific proposals for. some 50 statutory
authorities, councils, coidsgions amnd corrmittees. These
~ c~ uAe-~ snt r~ i~ hydo~~ hoacorpprAtion anid a
national fuel' and nercy casir. hieoiis.....
that obstructed and stifled business expansion, exlortin
and ' clve lopment In the mid
Labor continues to cling to outdated econoymic dckrgtna which
has-been rejected by mnost advanced Western couintries.
Their proposals ar-being_-4ude at'a-tit~ e when) the advanced
* world is moving the other way. These policies have no
relevanice for Australia in the 80s. This is a time for
in this Vuilding programme.
Prom magenxent, we exp~ ect innovation and the leadership
-s-ñ l~~ hiehenab3a-buisiness to adjust to new conditions
and to seite new opportunities. From the workforce we
responsibility and restraint in recognition of the
fact-that rising living standards for all Australians
can only come from higher productivity.
As a government, we will continue to play our part; to
*-take the necessary. and sornetiries difficti -deci-eetg in order
to mpaintain the overall economic framework and structure Which
are essential for the tichieve-ment of Australia's full
development potential.