PRIME MINISTER THURSDAY, 20 AUGUST, 1981
ADDRESS AT AUSTRALIA-JAPAN BUSINESS
CO-OPERATION COMMITTEE LUNCHEON
CANBERRA
( As Delivered)
I welcome very much the opportunity to be with you today, ; and
I am glad to see that both organisations are growing in health
and strength, in membership, and in the width of your activities.
Both organisations are important. We recognised long ago, when
the Australia-Japan trade treaty was first signed and negotiated
on Australia's side by Doug Anthony's predecessor, John McEwan,
in about 1955 or 1956, that it was not only to be a trade
relationsh; iD. It needed to be a much broader one that that.
Therefore, there had to be be interconnections between companies,
between people from many different walks of life from both Japan
and from Australia. Much has been achieved in the years since then,
I believe probably much more than the signatories of that treaty
envisaged in 1956.
Your members represent many companies and statutory bodies wit~ h
a very significant involvement in economic and trade relationships
between Japan and Australia. The Committee has made a very valuable
contribution in streng--hei'ing ties between our two countries over
what is.-very nearly 20 years.
There is no need to emphasise to anyone here the importance of the
relationship between our countries. Japan is Australia's larqfest
export market. Australia is certainly one of Japan's fastest
growing export markets. But one thing which is particularly
welcome; new Japanese investment in this country has grown from
a little under $ 200 million two or three years ago to nearly
$ 500 million in the year to March. This is something that we have
sought to encourage. We are very glad indeed to see that it has
taken place. Traditional investment in this country I suppose has
mostly been from the United Kingdom and from the United States
but one of' the features of the last 10 to 15 years is the broadening
of other countries' interest in Australia as a place in which
to invest. We welcome very much the growth of Japanese investment
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One of the very important principles which was established
early in the life of this Government between Japan and Australia,
is that there needs to be certainty and stability in trade in both
directions. There can be no sound trade relationship if that is
subject to undue, sudden, unforseen disruptions, embargoes, OnEt
way or the other. The strength of the relationship between Japan
and Australia has improved ver-y greatly with the broad, and as I
understand, absolute recognition that that principle must be
maintained.. It is an important, indeed an essential foundation,
for a sensible and growing trade relationship and one which leads
to an improved understanding between the countries involved.
There are other areas where Japan and Australia stand together..
Wle both have strong and growing economies. That is not somethiLng
that can be said about many advanced industrial countries around
the world at the present time. In that context, I would like to0
say one or two things about the Budget that John Howard introduced
a couple of nights ago. I strongly believe that that Budget's
priorities are right. It needs to be seen, as the case with a. ll
our Budgets, in the broadest perspective, maintaining balance*
between different sections and groups within the Australian community
but driving in a determined way towards objectives which will
advance the living standards of all Australian families.
The Budget with a domestic surplus, which on a comparative basis
wi-th last year because there is an extra pay day in this year
for the Corni. onwealth which costs something over $ 400 million, so.
on a comparative basis with last year the domestic surplus rather
-than the $ 1., 540 million the Treasurer announced, nearer $ 2,000 millic!:
The overall. balance in the Budget must, for a considerable period,
very nearly be a first again amongst advanced industrial countries.
Getting rid of a domestic deficit that has to be funded by Governmen:
borrowings or in some cases even by just plain straight printing
money only does enormous damage. Having got rid of that situation
I regard as a very significant achievement.
I noted one of the editori-als which said that this was still big
Government spending, or a big Government spending Budget. Well, if
it is I do not know what words would be used for most other Budgets
in most other counftkies around the world, because if you take out
that extra pay day and it is. legitimate to do so expenditures
have increased by less than one per cent in real terms over last
year. Have in mind that within that there is a 5% to 6% 0 real
increase in defence expenditure, over 14% increase in welfare
expenditure which some people say is not enough but others say is
too much. That increase is not insignificantly influenced by
indexation of pensions but also by the fact-that there are more people
in this community of pensionable age. So that again, is a very real
area of increase.
To judge whether or not a Budget is a big spending Budget or Wheth~ er
it is a restrained Budget, as I am certain in my own mind that this
is, it is important to look on the total claims that the Budget
puts upon the resources of the community. When we came into office
tho Federal Government was claiming nearly 31t of the total resources
produced by the community. W,. e have that down to 27.6%. If you make
so): Re adjustments for different accounting and different policies in
one or two areas, the difference would be even more marked but again,
with a continuation of policies, ' there is not the slightest doubt
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that the proportion of resources t-aken by the Budget will
fall further, but having reduced it from a little under 31%
to 27.6% over four or five years is a very significant
achievement indeed.
The Budget obviously has to balance a variety of important factors.
It obviously needs to achieve economic and employment growth.
If the economy does not continue to grow as it has, then that
upsets . business plans of. industry, it makes it diffi6ult if not
impossible to achieve rising living standards for Australian
families. At the same time,. while we have maintained balance,
improved the domestic surplus, we have increased defence spending
very greatly and greater.-assistance in somte special areas of need.
One of the greatest contributions of this Budget ought to be
relieve pressure in the markets on interest rates. That is something
that not only affects businesses, it affects Australian families,
home builders and it is important that those pressures be reduced.
It is not possible to reduce those pressures unless demand is reduced.
If we want to make room, as we do, for continuing expansion and
growth in the private sector, then it is important that Governments
and not just the Federal Government be as restrained as possible
in their demands on the nation's resources. So the Budget, as we
believe, will continue to strengthen Australia's growing but still
recovering economy. You cannot go through the trauma and the
difficulties of the middle 1970s without it taking some considerable
time finally to leave the legacy ' of that behind. The Budget will
very significantly contribute to our primary aim of establishing
the circumstances in which there will be rising living standards
for Australians.
There are obviously several issues of concern: industrial relations
and unions using great militancy, seeking unreasonable wage increases
is something-that must concern all of us. I believe that we might
be approaching a period where there is a little more sense in that
particular environment. Tlhte discussions that we have been having in
recent mn-ths with the new membership and leadership of the
Australian Council of Trade Unions has established a basis of trust
and understanding wh~ ich I believe is and will work to the benefit
of this country. It is worth noting that in all the discussions
that we have had, there has never been any attempt by anyone from
either side to try and score points or make political capital out
of the discussions and the negotiations tha * t have taken place.
I certainly appreciate the relationship that has been established
with the leadership of the Australian Council 6f Trade Unions, and
I believe they also appreciate the access that they have to Government
as a consequence of that.
It might have been noticed that we have been adopting a slightly
different approach in our own areas of employment. Ian Sinclair and
other Ministers have demonstrated that approach. It is one of
policy. In our own areas of employment if people want to be paid
they are going to h ave to do the work they are asked to do and
expected to do, otherwise they are suspended or stood down for
whatever period is necessary and that happens forthwith in the
first instance. I do not know how many people understand that about
10: 30 one morning the air traffic controllers announced that thiey
were going to ban all aircraft between Australia and the United States.
On 11: 30 of that same morning, Ralph Hunt announced that anyone
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participating in that ban would immediately be suspended from
duty. At about 2: 00 on the sa-me day, the union lifted the bans.
That I believe, is an example of the way in which employers and
especially Government employers ought to be responding when there
is a difficult circumstance.
One thing where I really th ' ink there was a great deal of
unnecessary hysteria for-a week or two I think it has now settled
down but when the Arbitration Commission indicated the abandonment
of wage indexation instead of a lot of people saying there is a
vacuum, this is going to be disaster, the sky is the limit, I would
have thought there should have been and would have been many people
saying this is the best-thing that has happened in the wage fixing
area for five or six years, because all indexation did was to
establish a higher limit from which people then set out to negotiate
for more. We all know that that is what occurred. There was a
4% or 5% real increase in wages last year. Without indexation
there is no vacuum. The Commission is there. All State Governments
tell me that they support the centralised wage fixation system, and
the ACTU also say the same thing'. There will be industry cases that
will establish guidelines. There will be a National Wage Case in
February that will establish guidelines. People will have to argue
their-cases with a sense of reason and firmness and strength if' they
want a result. With indexation of course, everythi4ng automatically
jacked up onto a higher plateau every year or every six months.
The fact that the circumstances have changed is now being much
better understood. We had a meeting last week again, with the ACTLJ,
with employers a nd with Premiers in relation to it. I think that
the decisions that were made then should help to understand that
there is a system and it is up to all * the parties to make that
system work. It is worth no6ting that all Premiers of all polit~ ical
persuasions agreed that they would lend their efforts and energies
to achieving that.
We need also, in looking at the re lationship between Japan and
Australia, to make sure we understand the kind of world that we are
living in. There are grounds for very obvious concern. World trade
is slack. There is no growth in a number of important countries.
In a number of countries inflation is entrenched, unemployment is
high and in a number it is still rising. If we are looking around
the world, I think we would both have to come to the conclusions.
that in a number of places appropriate policies are not in place.
We ought to be very glad therefore, to find a sense of renewal, of
resolve, in the United States. I know it is uncomfortable when their
interest rates rise to high levels, and when that has implications for
other people but a strong and growing United States economy has
great implications-for Japan, for Australia, for Europe, and to
re-establish strength, to destroy inflation in that economy, is of
vast importance to all advanced industrial nations. Indeed, it is of. L
great importance to the whole trading -world. President Reagan's
resolve to achieve this as a first priority of his Government is one
which I believe is to be commnended.
1. It is always possible to argue about particular aspects of
policy, but I have not the slightest doubt that the broad
thrust of what he is about is right for the United States and
in re-establishing the strength of that economy that is good
for us, it is good for Japan, it is good for world trade generally.
It will also have a by-product, because the more the United States'
destroys inflation, the more competitive the United States
becomes, the harder will other countries find it to continue with
policies which are complacent about these particular matters.
In a sense, it will therefore compel other major countries in
Europe to adopt policies that will also return to a healthier
situation than that which they now have. The alternative for them
if they do not would be.--a continuing worsening of their own
situation, a continuing destruction of their own competitivenes; s,
and continuing increase in their own unemployment.
I also think that Japan and Australia, both being wealthy count~ ries
in a somewhat difficult world, and both being placed as we are
one at the North and one at the South of the Western Pacific, need
to understand that we live in a world where $ 800 million people have
an annual income of something less than $ 200 Australian a year.
They have none of the medical services, the water supply, things
which everyone in this country and I would believe most people if not
everyone in Japan, would take'utterly and to-tally for granted.
I think Japan and Australia have a common view that more needs to
be done in this particular area. It is not a question of morality.
It is not a question of humanitarianism. It is a question of our
own self interest. If one looks at the direction of Japan's trade
an enormous amount of it depends upon markets in the Third World.
If we look at our trade, a good deal of it depends upon markets
in the Third World. If there can be rising living standards,
greater economic take-off in more countries, that is going to
create more opportunities for the industries of Australia and the
industries of Japan. There is an enormous self-interest in seeking
to establish the circumstances where world poverty can to some
extent be alleviated. But,-we need to understand also that thereare
two * sides to this coin. It is all very well to say that irore
resource~ s need to go into the World Bank or that the
Monetary Fund need 7 to accommodate itself to
the wishes of the Third World in a way which might not quite bie
so economically pure but a little more humanitarian and our owin
direct aid might also perhaps need to be increased, but thE1se
lead to the circumstance in which people are producing textil. es,
people are producing electronic goods, even people are producing
motor cars. Now, President Mitterand of France agrees with all
the first things which I enunciated, but I then asked him what: happens
when they start to produce these goods and they suggest that t: hey
might want to sell them into the markets of France. That, he said,
was a matter to be considered. Indeed it is a matter to. be
considered, because as people start to produce, as they start to
grow, as their economies start to join in, it is not good enough
to say that the benefits of the market system are there for those
who have arrived dnd are to be denied to those who have not yet
arrived. Now, this involves some difficulty. It can involve some
pain to many of our countries. ASEAN's exports to Australia h-ave
been growing at nearly 40% a year for the last 10 or 12 years.