I AM DELIGHTED TO HAVE THIS OPPORTUNITY TO ADDRESS
SO DISTINGUISHED AND REPRESENTATIVE A GROUP FROM THE
AUSTRALIAN MINING INDUSTRY EARLY IN THE LIFE OF MY GOVERNMENT.
SOME OF YOU MADE IMPORTANT CONTRIBUTIONS AT THE NATIONAL
ECONOMIC SUJVIT AND FOR THAT, ONCE AGAIN, ALLOW ME TO
THANK YOU ON BEHALF OF THE GOVERNMENT AND PEOPLE OF
AUSTRALIA, OTHERS HAVE MADE REPRESENTATIONS ON
POLICY ISSUES THROUGH MY MINISTERS. AND WHILE THIS
DINNER ITSELF IS AN ANNUAL AND RELATIVELY FORMAL AFFAIR,
LET ME SAY THAT OCCASIONS LIKE THIS CAN BE USED TO FURTHER
THE PROCESS OF COMMUNICATION, CO-OPERATION AND INFORMATIONSHARING
WHICH IS BASIC TO THE APPROACH OF MY GOVERNMENT
TO THE GREAT TASK ENTRUSTED TO US BY THE PEOPLE OF
AUSTRALIA, THE MINING INDUSTRY HAS BEEN IMPORTANT TO
AUSTRALIAN PROGRESS AND PROSPERITY VIRTUALLY FROM THE VERY
BEGINNINGS OF SETTLEMENT. INDEED, OUR FIRST COMMERCIAL
EXPORT WAS NOT WOOL BUT COAL TO INDIA IN 1801.
AND OF COURSE, TODAYj MINING IS CRITICALLY IMPORTANT,
I CANNOT IMAGINE AUSTRALIA FINDING ITS WAY OUT OF THE
ECONOMIC CRISIS WITHOUT A PROSPEROUS'AND EXPANDING MINING
INDUSTRY. SIMILARLY, AS WAS MADE CLEAR BY MINING INDUSTRY
REPRESENTATIVES AT THE SUMMIT, THE PROFITABILITY OF THE
MINING INDUSTRY DEPENDS CRITICALLY ON THE ECONOMIC HEALTH OF THE
WHOLE AUSTRALIAN COMMUNITY
B Y T E P R J.. 11 S-1 E ON HA KE AC MP
TO THE AUSTRALIAN fNi[ NI NG INDUSTRY COUCIL DINNER
CA,, BERRA
12 MAY 1983
AND THOSE RENiARKS SERVE TO INTRODUCE THE THEME
I W'ANT TO STRESS TONIGHT -THE INTERDEPENDENCE OF OUR
SOCIETY AND OUR ECONOiMY -AN INTERDEPENDENCE WHICH IS BOTH
NATION4AL AND INTERNATIONAL,
THIS INTERDEPENDENCE WITH THE WIDER NATIONAL ECONOMY
AND SOCIETY IS A UNIVERSAL FEATURE OF MODERN ECONOMIC LIFE.
INTERDEPENDENCE IS ALSO AN IMPORTANT FEATURE OF
INTERNATIONAL ECONOMIC LIFE AS YOU HAVE BEEN DISCUSSING
TODAY, AND OF COURSE, A CENTRAL THEME OF THE SUMMIT WAS
THE INTERDEPENDENCE OF ALL SECTIONS OF OUR COMMUNITY,
IT WAS THE UNANIMOUS WELL, ALMOST UNANIMOUS RECOGNITION
OF THAT INDEPENDENCE WHICH LAY AT THE ROOT OF THE SUCCESS
OF THE SUMMIT. AND ITS CONTINUING RECOGNITION, AS A
PERMANENT FEATURE OF OUR NATIONAL APPROACH, WILL BE
ESSENTIAL IF THE WORK OF THE CONFERENCE IS TO BEAR ITS
FULL FRUIT, THERE CAN BE NO DOUBT THAT THE INTERNATIONAL ECONOMIC
ENVIRONMENT HAS BEEN GENERALLY UNFAVOURABLE FOR DOMESTIC
ECONOMIC GROWTH FOR MUCH OF THE PAST DECADE. YET THE
REALITY IS THAT OUR DOMESTIC PERFORMANCE HAS BEEN WORSE
THAN THAT OF OTHER DEVELOPED ECONOMIES, AND THEREFORE WORSE
THAN AUSTRALIANS MIGHT REASONABLY HAVE EXPECTED, EVEN IN
CONDITIONS OF ADVERSE INTERNATIONAL CONDITIONS. IN THE YEAR
OR SO BEFORE my GOVERNMENT TOOK OFFICE, AUSTRALIAN INFLATION
HAD BEEN TWICE THE OECD AVERAGE, OUR CURRENT ACCOUNT DEFICIT
WAS LARGER AS A PROPORTION OF GDP THAN ANY OTHER'OECD COUNTRY,
AND OUR PERFORMANCE ON GROWTH IN OUTPUT AND EMPLOYMENT WAS
AMONGST THE WORST OF DEYELOPED' COUNTRIES.
f's' GOVERNMENT IS SEEKING TO BRIDGE THE ENORMOUS GAP
BE TW( E EN AUSTRALIAN ECONOMIC OPPORTUNITIES AND PERFORiMANCE
THROUGH RECOGNITION OF THE IMPORTANCE OF INTERDEPENDENCE
IN ECONOMIC LIFE, MIANY OF OUR FAILURES AS A NATION HAVE
RESULTED FROM ARTIFICIAL DIVISIONS IN OUR SOCIETY,
WE HAVE FAILED TO GRASP OPPORTUNITIES TO IMPROVE THE
ECONOMIC CONDITION OF AUSTRALIA AS A WHOLE BECAUSE ON
OCCAS4ONS. J THERE HAS BEEN A SHORTSIGHTED INSISTENCE THAT
SHORT-TERM SECTIONAL INTERESTS SHOULD COME FIRST.
CLEARLY, OUR FAILURES IN RECENT YEARS HAVE NO SINGLE OR
SIMPLE CAUSE; AND IT IS FUTILE FOR ONE SECTION TO SEEK
TO CAST ALL THE BLAME ON SOME OTHER SECTION.
BUT I DO BELIEVE IT IS BEYOND DISPUTE THAT MANY OF
OUR CURRENT PROBLEMS ARISE FROM THIS BASIC FAILURE TO GRASP
FULLY THE BASIC INTERDEPENDENCE OF ALL SECTIONS UPON THE
OTHERS. THIS MAY SEEM TOO SIMPLE A POINT TO HOLD THE KEY TO
RESTORATION OF OUR NATIONAL FORTUNES. BUT SIMPLE THOUGH
IT IS, IT HAS BEEN TOO LITTLE UNDERSTOOD, AND INSUFFICIENTLY
ACTED UPON.
I.
AN* D AN IMPORTANT PART OF THE CONCEPT OF THE SUbMMIT
AND ITS ACTUAL W-, ORK WAS TO PROMOTE A WIDER AN4D BETTER
UNDERSTANDING OF THAT FUNDAMENTAL FACT.
HISTORICALLY, ECONOMIC GROWTH AND PROSPERITY HAVE
BEEN ASSOCIATED WITH A HIGH DEGREE OF SOCIAL COHESION,
A HIGH DEGREE OF AGREEMENT WITHIN AUSTRALIAN SOCIETY
ABOUT NATIONAL GOALS. ABROAD, THE SOCIETIES WHICH HAVE
PERFORMED BEST IN PRESENT CONDITIONS HAVE BEEN CHARACTERISED
BY A HIGH DEGREE OF INTERNAL AGREEMENT ON CRITICAL
NATIONAL GOALS.
ITHINK IT IS CLEAR, FROM ALL OUR EXPERIENCE,
THAT AUSTRALIA AS A WHOLE WILL BE LESS SUCCESSFUL, AND MOST
IF NOT ALL OF ITS PARTS WILL BE DISADVANTAGED, IF
INDIVIDUALS AND SECTIONAL INTERESTS ARE UNABLE TO ACT
OUT OF MOTIVES BEYOND THEIR OWN IMMEDIATE PECUNIARY ADVANTAGE.
MINING INDUSTRY LEADERS AT THE SUMMIT WERE
PARTICULARLY CONCERNED TO MAINTAIN AUSTRALIAN COMPETITIVENESS
THROUGH CONTROL OF WAGE COSTS, BUDGET POLICY AND
INTEREST RATES AND TAXATION ON MINING. THESE AREAS
PROVIDE AS GOOD EXAMPLES AS ANY OF THE POINTS I HAVE BEEN
SEEKING TO MAKE. v
ON WAGE COSTS, THERE IS SOME SUPERFICIAL ATTRACTION
IN DEMUANDING THAT EMPLOYED WAGE-EARNERS ACCEPT RESTRAINT,,
WITHOUT HEED OF THE CONTEXT OF THE RESTRAINT. CERTAINLY
OUR ECONOMIC MODELS WILL GENERATE BETTER EMPLOYMENT
GROWTH IN TIMES OF UNEMPLOYMENT IF WE PLUG IN ZERO WAGE
GROW,, TH OVER LONG PERIODS OF TIME. BUT THIS IS AN UNREAL
EXERCISE, UNLESS WE ANALYSE CAREFULLY THE CONDITIONS THAT
ARE NECESSARY TO THIS OR OTHER OUTCOMES THAT ARE FAVOURABLE
TO STRONG EMPLOYMENT GROWTH. WE KNOW THAT IN THIS FREE SOCIETY
WITH ITS MIXED ECONOMY, SOME ORGANISED WORKERS ARE ABLE TO
WIN FOR THEMSELVES SUBSTANTIAL WAGE INCREASES EVEN IN
ADVERSE ECONOMIC CONDITIONS. WE ALSO KNOW THAT THE TRADITIONS
OF THIS ECONOMY GENERATE EXTREMELY STRONG TENDENCIES TO EXTEND
WAGE INCREASES IN SOME INDUSTRIES ACROSS THE WHOLE ECONOMY.
THUS THE RESORT TO DECENTRALISED WAGE-SETTING TWO YEARS AGO
LED TO THE LARGEST WAGE INCREASES SINCE THE EARLY 1970s,
AND WAS ONE OF THE CAUSES OF THE LOSS OF COMPETITIVENESS
AND THE INCREASE IN UNEMPLOYMENT WHICH WE MUST NOW REMEDY,
WE SHOULD TAKE THIS AS A WARNING AGAINST ANY IDEA OF
ANY QUICK FIX" I ON WAGES POLICY OUR REALISTIC HOPE IS THAT
WE CAN BUILD BROAD COMMUNITY AGREEMENT AROUND A PROGRAM OF
MODERATE GROWTH IN WAGES AND OTHER INCOMES. WE ARE AIMING
FOR RATES OF WAGE GROWTH THAT ARE LOW ENOUGH TO SUPPORT A
LONG PERIOD OF EMPLOYMENT AND OUTPUT GROWTH, BUT NOT SO LOW
AS TO BE IMPRACTICABLE. v / 6
r
WE HAVE AlIMED TO STAY WITHIN THE BOUNDS OF WHAT
WILL HAVE WIDESPREAD SUPPORT WITHIN THE COMNMUNITY,
THIS SUPPORT WILL ONLY BE FORTHCOMING, HOWEVER, IF OUR
OTHER POLICIES, FOR EXAMPLE ON TAXES AND SUBSIDIES AND
POLICIES WITH RESPECT TO NON-WAGE INCOMES, ARE SEEN AS
BEING FAIR BY THOSE WHOM WE ARE ASKING TO EXERCISE RESTRAINT.
THE SAME EXERCISE OF RESTRAINT BY POWERFUL GROUPS
IN THE NATIONAL INTEREST IS NECESSARY FOR SUCCESSFUL BUDGET
MANAGEMENT. OUR GOVERNMENT HAS INHERITED A DISASTROUS
BUDGETARY SITUATION WHICH, IF NOT CORRECTED, WOULD PLACE
INTOLERABLE PRESSURES ON FINANCIAL MARKETS AND KILL RECOVERY
AS SOON AS PRIVATE INVESTMENT LIFTED ITS HEAD. THE WHOLE
AUSTRALIAN COMMUNITY HAS A POWERFUL INTEREST TO SEE THAT
THIS SITUATION IS CORRECTED. BUT THE CORRECTION WILL REQUIRE
A LARGE NUMBER OF ACTS OF RESTRAINT, ACROSS THE-BOARD.
My GOVERNMENT IS DETERMINED TO CORRECT THE STRUCTURAL
WEAKNESS IN AUSTRALIAN BUDGETS, WE WOULD B3E GREATLY ASSISTED
IF EACH SECTION OF THE COMMUNITY WHICH IS BEING ASKED TO BEAR
PART OF THE NECESSARY FISCAL RESTRAINT, IS WILLING TO COUNT
THE WIDE GAINS ON INTEREST RATES AND ECONOMIC STABILITY,
AGAINST THE IMMEDIATE COSTS. As IN WAGES POLICY, WE ARE
AIMING FOR A SET OF CHANGES IN FISCAL POLICY WHICH, TAKEN
AS A WHOLE, ARE ACCEPTED AS BEING FAIR BY THE ENTIRE
AUSTRALIAN COMMUNITY. i / 7
-7-
THE THIRD AREA OF DOMESTIC POLICY WHICH IWOULD
LIKE TO USE AS AN EXAMPLE OF INTERDEPENDENCE BETWEEN
DOMESTIC INTEREST GROUPS IS MINING TAXATION POLICY,
SENATOR W'ALSH HAS OUTLINED THE GOVERNMENT' S PRIORITIES IN
THIS AREA. 1E SEE CONSIDERABLE ADVANTAGES IN REPLACING
THE CRUDE OIL LEVY BY A RESOURCE RENT TAX BY 1984-85.
W4E ALSO SEE ADVANTAGES IN REPLACING THE EXISTING SYSTEM.
OF DISTORTING ROYALTIES) EXPORT TAXES AND OTHER SPECIAL
CHARGES ON OTHER MINING BY A RESOURCE RENT TAX, ESPECIALLY
FOR COAL, WE BELIEVE THAT SUCH A SHI FT WOULD BE GREATLY
BENEFICIAL TO THE AUSTRALIAN COMMUNITY AS A WHOLE, AND TO
AUSTRALIANS INVOLVED IN THE COAL INDUSTRY AS A WHOLE.
BUT THESE CHANGES WOULD BE POSSIBLE ONLY IF INDIVIDUAL GROUPS
WERE ABLE TO RECOGNISE SUCH OVERALL BENEFITS AS WELL AS
NARROW SECTIONAL BENEFITS,
THE CURRENT RECESSION H-AS H-GHLIGHTED THE DAMAGE
THAT DISTORTING TAXES IN THE COAL INDUSTRY HAVE DONE TO THE
AUSTRALIAN ECONOMY. -OVER THE PROSPEROUS YEARS, SPECIFIC
AND AD VA. LOREM ROYALTIES, EXPORT TAXES AND SUPER-ECONOMIC
RAIL CHARGES WERE GRADUALLY RAISED BY THE COMMONWEALTH
AND THE RELEVANT STATES UNTIL THEY REPRESENTED A HIGH
PROPORTION OF THE VALUE OF PRODUCTION. IN THE GOOD TIMES,
THE TOTAL OF THESE CHARGES LEFT THE LOWEST-COST MINES
HIGHLY PROFITABLE, AND MODERATE-COST MINES IN A
COMFORTABLE POSITION. THEY PROBABLY DETERRED THE s a/ 8
DEVELOPCMENT OF SOMiE HI OH--COST 1 I1NES EVEN THEN, T HEY
ALSO DETERRED EXPANSION AT MANY ESTABLISHED MINES.
BUT THE BUOYANT MARKET CONDITIONS DISTRACTED ATTENTION
FROMl SOME OF THE UNDERLYING DIFFICULTIES.
THE CONTRACTION OF OUR TRADITIONAL NORTHEAST ASIAN
MARKETS AND THE REDUCTIONS IN PRICE OVER THE PAST YEAR HAVE
MADE THE DISTORTIONS AND COSTS OF OUR COAL MINING ROYALTIES
MUCH MORE OBVIOUS. HIGH-COST MINES HAVE BEEN PUSHED TO THE
EDGE OF CLOSURE. SOME LOW-COST. MINES STILL EARN GOOD RETURNS, 0
BUT ARE RESTRAINED IN THEIR EXPANSION. THE WHOLE INDUSTRY
IS CONFINED TO TRADITIONAL MARKETS IN OUR REGION, AND KEPT
OUT OF LARGE, DISTANT MARKETS, IN EUROPE AND ELSEWHERE, BY
THE COMBINATION OF SEA TRANSPORT COSTS WHICH ARE BEYOND OUR
CONTROL, AND COST-INCREASING LEVIES OF VARIOUS KINDS THAT
ARE WELL WITHIN OUR CONTROL,
THERE IS NO DOUBT THAT OUR COAL MINING INDUSTRY
COULD EXPAND WELL BEYOND ITS PRESENT LIMITS IF ROYALTIES
WERE APPLIED ONLY IN FORMS THAT DID NOT INCREASE THE COST OF
LESS PROFITABLE MINING OPERATIONS# THIS WOULD BE TO THE
ADVANTAGE OF EMPLOYMENT, PROFITS AND GOVERNMENT REVENUE.
THE COMMONWEALTH'S INTEREST IN REPLACING THE CURRENT
DISTORTING SYSTEM OF CHARGES WITH A SINGLE TAX OR CHARGE
BASED ON PROFITABILITY IS NOT TO INCREASE ITS OWN REVENUE.
I SHOULD ADD THAT IN THE CURRENT BUDGETARY SITUATION WE ARE
IN NO POSITION TO REDUCE OUR REVENUES. OUR INTEREST IS TO
ENSURE THAT THE MINING INDUSTRY IS ABLE TO EXPAND
EFFICIENTLY TO THE LIMITS OF ITS ECONOMIC POTENTIAL, of 19/
-3-
W DO NOT DELUDE OURSELVES THAT IT WILL BE EASY TO
GET STATE GOVERNMENTS OF DIFFERENT POLITICAL PERSUASION,
MINING COMPANIES WITH WIDELY DIFFERING INTERESTS, AND THE
COMMONWEALTH TO AGREE ON AN IMPROVED SYSTEM OF MINING
CHARGES. BUT THE STARTING POINT HERE, AS IN OTHER AREAS
W'HERE MAJOR REFORM IS NECESSARY TO LIFT AUSTRALIAN ECONOMIC
PERFORMANCE, IS THE RECOGNITION OF THE INTERDEPENDENCE OF
THE INTERESTS OF DIFFERENT GROUPS IN AUSTRALIAN SOCIETY.
HERE, AS ELSEWHERE, WE MUST FIND SOLUTIONS THAT MAXIMISE THE
JOINT WELFARE. WE WILL FAIL IN THIS IF INDIVIDUAL
GOVERNMENTS, OR INDIVIDUAL MINING COMPANIES, OR AUSTRALIAN
MINING COMPANIES AS A GROUP, OR MINING UNIONS, SEEK TO
MAXIMISE THEIR OWN SECTIONAL GAINS.
I INVITE YOU TO JOIN US IN SEEKING A MORE EFFICIENT
SYSTEM OF COAL MINING ROYALTIES, THAT PRESERVES THE
LEGITIMATE INTERESTS OF MINE WORKERS IN MAXIMUM LEVELS OF
MINING ACTIVITIES, THE LEGITIMATE-. INTERESTS OF THE-CITIZENS
OF AUSTRALIA AND OF ITS STATES IN RECEIVING A FAIR PRICE FOR
MINERAL DEPOSITS EXPLOITED BY PRIVATE FIRMS, AND THE
LEGITIMATE INTERESTS OF THE MINING INDUSTRIES IN FAIR
REWARDS FOR CAPITAL, RISKS AND SKILL, TOGETHER WITH
INCENTIVES FOR HIGH PERFORMANCE.
I HAVE DRAWN MY EXAMPLES MAINLY FROM AUSTRALIAN
DOMESTIC ECONOMIC MANAGEMENT AND PERFORMANCE, SINCE THESE
HAVE BEEN MY OWN MAIN CONCERNS OVER THE PAST TWO MONTHS.
BUT MANY OF THE SAME ISSUES, INVOLVING INTERDEPENDENCE
OF DIFFERENT INTERESTS AND GROUPS, ARISE IN THE INTERNATIONAL
SPHERE, THESE HAVE BEEN THE MAIN SUBJECT OF YOUR OWN
DELIBERATIONS TODAY,
THE NEW AUSTRALIAN GOVERNMENT HAS NOT YET SETTLED
ITS POSITION ON A NUMBER OF THESE ISSUESi SO THAT YOUR
CONCLUSIONS WILL BE HELPFUL TO US. BUT I WOULD LIKE TO
INDICATE SOME OF THE GENERAL PRINCIPLES THAT WILL GUIDE US
IN FORMULATING POLICY. FIRST, WE MUST LOOK FOR GENUINELY
CO-OPERATIVE SOLUTIONS, THE INTERNATIONAL ECONOMY CAN
FUNCTION EFFECTIVELY ONLY IF INDIVIDUAL NATIONS AND GROUPS
OF NATIONS CONSTRAIN THE PURSUIT OF THEIR INDIVIDUAL INTERESTS
IN THE WIDER INTERNATIONAL INTEREST. IF EACH COUNTRY
THINKS ONLY OF ITS OWN NARROW INTERESTS, WE WILL ALL BE THE
POORER, WHETHER WE ARE TALKING OF PROTECTION, THE LAW OF THE
SEA, OR ANY OTHER OF THE GREAT INTERNATIONAL ECONOMIC ISSUES
OF THE TIME, SECOND, IT MUST BE BUILT AROUND EFFICIENT
SOLUTIONS TO INTERNATIONAL PROBLEMS. CO-OPERATION WILL
BREAK DOWN IN DISSENSION UNLESS THE OBJECT OF CO-OPERATION IS
EFFICIENT IN THE SENSE THAT IT IS CAPABLE OF INCREASING
INTERNATIONAL WELFARE. THIRD, IT WILL NOT PREVAIL UNLESS
IT PROVIDES FOR A DISTRIBUTION OF THE BENEFITS OF CO-OPERATION
THAT IS WIDELY RECOGNISED AS BEING FAIR. WITHIN THE VALUE
SYSTEMS THAT SUSTAIN MOST HUMAN SOCIETIESi THIS REQUIRES
RELATIVELY GREATER CONCERN FOR THE SHARES OF THE POOR AND THE
WEAK,
11-
IN NATIONAL AND INTERNATIONAL ECONOMIC LIFE,
I HOPE THAT THE AUSTRALIAN MINING INDUSTRY WILL JOIN
MY GOVERNMENT IN SEEKING CO-OPERATIVE SOLUTIONS TO OUR
PROBLEMS, TO THE ADVANTAGE OF ALL AUSTRALIANS, AND OF A
WIDER INTERNATIONAL COMMUNITY. AND, I REPEAT, THE KEY
TO THE CO-OPERATION WE SEEK FROM ALL SECTIONS OF THE
COMMUNITY IS A GREATER AND DEEPER RECOGNITION BY ALL OF HOW MUCH:
WE DO REALLY DEPEND UPON EACH OTHER, IN THE TASK OF BUILDING
A BETTER FUTURE FOR ALL, IN THIS GREAT NATION OF OURS
THIS NATION SO RICH IN RESOURCES TO WHICH THE MINING INDUSTRY
MAKES SUCH A VITAL CONTRIBUTION, BUT, ABOVE ALL, RICH IN
THE MOST VITAL RESOURCE OF ALL THE SKILLS, ABILITIES
AND QUALITIES OF OUR PEOPLE,
FINALLY, I AM SURE, MR CHAIRMAN, YOU WILL WISH ME
TO EXTEND OUR CONGRATULATIONS TO YOUR SUCCESSOR, MR LOTON.
BRIAN'S PERSONAL CONTRIBUTION TO-THE WORK AND SUCCESS OF THE
SUMMIT WAS INVALUABLE,-I THANK HIM FOR IT. I LOOK FORWARD
TO CONTINUED CO-OPERATION WITH HIM AS PRESIDENT, AND WITH
THE MINING INDUSTRY COUNCIL AS A WHOLE, FOR THE ADVANCEMENT,
NOT ONLY OF AUSTRALIA', S GREAT MINING INDUSTRY, BUT FOR
THE ADVANCEMENT OF AUSTRALIA ITSELF.