ADDRESS BY THE PRIME MINISTER, HON R, J, HAWKE, AC, MiP,
TO THE NATIONAL PRESS CLUB, CANBERRA
27 JUNE 1983
THE PRESIDENT'S INVITATION TO ADDRESS THE CLUB
ON THIS OCCASION WAS PUT IN TERMS OF THE FIRST HUNDRED DAYS
OF THE NEW GOVERNMENT. BUT ANYTHING I HAVE TO SAY ABOUT THE WORK OF
THE FIRST HUNDRED DAYS SHOULD BE PLACED FIRMLY IN THE CONTEXT
OF THE FIRST THOUSAND DAYS THAT ISj THE LONGER TERM
OBJECTIVES THIS LABOR GOVERNMENT SEEKS TO ACHIEVE.
BECAUSE OUR MANDATE AND OUR COMMITMENT IS NOT
ABOUT SOME SUPERFICIAL FLURRY OF ACTIVITY IN THE SHORT TERM,
IT IS A LONG TERM COMMITMENT TO RESTORING GROWTH
TO OUR NATION'IS ECONOMY, A COMMITMENT TO INCREASING EMPLOYMENT,
TO TURNING THE TIDE OF UNEMPLOYMENT, AND A COMMITMENT TO
ENSURING BOTH THAT THE BENEFITS OF RECOVERY ARE FAIRLY
SHARED AND THAT THEY ARE NOT LOST IN A NEW BOUT OF INFLATION.
IT IS A COMMITMENT INTERNATIONALLY TO THE
PURSUIT OF AN INDEPENDENT, REALISTIC, CONSTRUCTIVE AND
COHERENT FOREIGN POLICY WITHIN THE FRAMEWORK OF OUR POSITION
AS AN ALIGNED NATION. 12
AND ABOVE ALL, IT IS A COMMITMENT
AN UNSHAKEABLE COMMITMENT TO THE PURSUIT OF THE GREAT
LABOR PRINCIPLES OF SOCIAL JUSTICE, SOCIAL,, POLITICAL AND
ECONOMIC EQUITY, EQUALITY OF OPPORTUNITY, AND IN TIMES
OF CRISIS LIKE THE PRESENT, EQUALITY OF SACRIFICE,
AND ALL THAT WE HAVE DONE IN THIS FIRST
HUNDRED DAYS, HAS BEEN DIRECTED TO THE LAYING OF THE FIRM
FOUNDATIONS AND MAKING THE RIGHT DECISIONSi TO ENABLE
THOSE COMMITMENTS TO BE FULFILLED IN THE NEXT THOUSAND DAYS,
AND BEYOND. AND JUST AS OUR WORK SINCE THE FIFTH OF MARCH
MUST BE PLACED IN THE FORWARD CONTEXT OF THE MONTHS AND
YEARS TO COME, EQUALLY IT HAS TO BE JUDGED IN RELATION TO
ALL THAT HAD HAPPENED IN THE MONTHS AND YEARS BEFOREIN
TERMS OF OUR GRIM INHERITANCE OF AUSTRALIA'S WORST
ECONOMIC CRISIS FOR FIFTY YEARS.
WE DIDN'T START WITH A CLEAN SLATE ON THE
FIFTH OF MARCH, OR THE ELEVENTH OF MARCH WHEN WE WERE
SWORN IN. ON THE CONTRARY, WE INHERITED THE WORST
UNEMPLOYMENT, THE HIGHEST INTEREST RATES, ALMOST THE
HIGHEST INFLATION ON RECORD, AND A GROSSLY IRRESPONSIBLE
FISCAL SITUATION, AS REFLECTED IN THE PROJECTED BUDGET
DEFICIT FOR 18-4
-3-
AND TO IGNORE THESE REALITIES THE REALITIES
OF THE PROBLEMS WE HAVE INHERITED, THE REALITIES WHICH
WERE CONCEALED FROM THE PUBLIC BY OUR PREDECESSORS BEFORE
AND DURING THE ELECTION CAMPAIGN) AND THE REALITIES OF THE
DIMENSIONS OF THE TASK AHEAD WOULD NOT ONLY HAVE
JEOPARDISED AUSTRALIA'S CHANCES OF OVERCOMING ITS PROBLEMS,
BUT WOULD HAVE COMPLETELY UNDERMINED OUR CAPACITY TO IMPLEMENT
ANY OF THE MAJOR SOCIAL AND ECONOMIC REFORMS TO WHICH
WE OF THE LABOR PARTY AND MOVEMENT, AND CERTAINLY THIS
LABOR GOVERNMENT, ARE SO DEEPLY COMMITTED.
IN STRESSING THE BURDEN OF THE LIBERAL LEGACY
AND THE CONSTRAINTS IT IMPOSES ON OUR DECISIONS, I DO NOT
SEEK IN ANY WAY TO RETREAT FROM THE BASIC COMMITMENTS
I MADE ON BEHALF OF THE AUSTRALIAN LABOR PARTY FOUR MONTHS
AGO. ON THE CONTRARY, THE VERY SIZE OF THE PROBLEM, AS
REVEALED WHEN WE TOOK OFFICE, MAKES ALL THE MORE URGENT AND
RELEVANT OUR CALL FOR NEW DIRECTIONS, NEW ATTITUDES AND
NEW POLICIES AS ENCAPSULATED IN OUR THEME OF NATIONAL
RECONCILIATION, NATIONAL RECOVERY AND NATIONAL RECONSTRUCTION.
BUT, IN ESTABLISHING OUR NEW DIRECTIONS, WE
HAVE HAD TO ENSURE THAT THE PROCESSES OF CHANGE AND REFORM
ARE NOT DISRUPTIVE AND INDEED, COUNTERPRODUCTIVE.
THAT WAS ONE OF THE FUNDAMENTAL CONCEPTS BEHIND
THE NATIONAL ECONOMIC SUMMIT CONFERENCE THE FIRST GREAT STEP
THAT SIGNALLED TO THE PEOPLE OF AUSTRALIA THAT UNDER OUR
GOVERNMENT THERE WOULD BE A NEW APPROACH, NEW POLICIES, NEW
DIRECTIONS, AND A CONSENSUS FOR CHANGE AND REFORM. / 4
C
BUT AS I SAID REPEATEDLY AT THE SUMMIT,
POLICY CANNOT BE MADE IN A VACUUM. IN OUR SOCIETY,
A REFORM GOVERNMENT LIKE OURS WILL ACHIEVE THE BEST
RESULTS IF IN MOVING TO IMPLEMENT THE CHANGES OF
DIRECTION INVOLVED IN OUR POLICIES AS WE ARE WE ALSO
RECOGNISE THE ELEMENTS OF BASIC CONTINUITY WHICH
CHARACTERI'SE OUR SOCIETY AND ITS EXPECTATIONS OF ANY
GOVERNMENT. THAT WAY, THE REFORMS ARE LIKELY TO ENDURE
LONGER. SO IS THE ELECTED GOVERNMENT.
THE THEME OF CHANGE AND CONTINUITY WAS ONEI
SOUGHT TO TAKE UP THROUGHOUT THE MISSION OVERSEAS FROM
WHICH I AND MY COLLEAGUES, AND MANY OF YOURS, HAVE JUST
RETURNED. I WON'T TRESPASS MORE THAN NECESSARY ON YOUR
QUESTION TIME BY GIVING YOU A COUNTRY-BY-COUNTRY ACCOUNT
OF THE PLACES WE VISITED, OR BY SURVEYING MANKIND FROM
CHINA TO PERU, WHICH WE DIDN'T VISIT.
BUT I BELIEVE THE MISSION'S OVERALL ACHIEVEMENTAS
WAS CERTAINLY ITS MAJOR PURPOSE WAS TO ESTABLISH IN
THE CAPITALS I VISITED, AND THE LEADERS WITH WHOM I SPOKE,
THE PRIMACY WHICH THIS GOVERNMENT ATTACHES To AUSTRALIA'S
ROLE AND RELATIONS IN THIS REGION IN WHICH WE ARE PLACED
FOREVER THE WESTERN PACIFIC REGION THE FASTEST-GROWING
ECONOMIC REGION IN THE WORLD,
EVEN, OR RATHER ESPECIALLY, IN THE UNITED STATES
WITH WHICH WE HAVE BILATERAL RELATIONS AND INTERESTS OF
SUCH FUNDAMENTAL IMPORTANCE, I SOUGHT TO GIVE THIS FOCUS
AND PRIMARY PERSPECTIVE TO ALL MY DISCUSSIONS.
LET ME EMPHASISE TWO POINTS.
OUR RELATIONS WITH THE UNITED STATES, WITH ITS
MANY DIMENSIONS, ARE OF FUNDAMENTAL IMPORTANCE,
BUT EQUALLY, I EMPHASISED THAT OUR FOREIGN POLICIES WOULD
INEVITABLY HAVE DIFFERENCES OF EMPHASIS, AND AT TIMES
DIFFERENCES OF VIEWS, AND THAT ON SUCH ISSUES WE WOULD
PUT OUR VIEWS FRANKLY. ON SUCH ISSUES AS INDOCHINA,
CHINA, JAPAN, AND CENTRAL AMERICA I DID SO, INCLUDING IN
MY ADDRESS TO THE NATIONAL PRESS CLUB IN WASHINGTON.
AND SECOND, AS I PUT IT AT THE NATIONAL
PRESS CLUB: .11WE WILL PURSUE A REALISTIC AND RELEVANT FOREIGN
POLICY, ONE WHICH RECOGNISES AND ACCEPTS THE
CONSTRAINTS ON OUR CAPABILITY, AND THE LIMITATIONS
OF OUR INFLUENCE. THAT MEANS, TO BE REALISTIC AND
RELEVANT, THE FIRST PRIORITY SHOULD BE GIVEN TO OUR
RELATIONS WITH OUR NEIGHBOURS OF THE ASIAN AND PACIFIC
REGION, AND TO THE MAJOR INDUSTRIALISED COUNTRIES
WITH WHICH WE SHARE SIGNIFICANT RELATIONSHIPS,
ESPECIALLY THE UNITED STATES AND JAPAN."
IREPEAT AND EMPHASISE THE WORDS " REALISTIC
AND RELEVANT" WHAT WE HAVE ALL GOT TO REALISE IS THAT
OUR CONDUCT NOW IN OUR RELATIONS WITH OUR NEIGHBOURHOOD,
WILL DETERMINE OUR ROLE IN OUR REGION FOR THE REST OF
THIS CENTURY AND FAR BEYOND,
AND IF WE CANNOT COME TO TERMS WITH OUR
OWN REGION AS A CONSTRUCTIVE AND CO-OPERATIVE NEIGHBOURi
WE WOULD BE CONDEMNING OURSELVES TO THE WORST OF ALL
POSSIBLE WORLDS. HAVING SHED OUR TRADITIONAL DEPENDENCE
ON THE NORTH ATLANTIC, WE SHOULD HAVE FAILED TO FIND
A TRULY INDEPENDENT, RELEVANT AND CONSTRUCTIVE ROLE IN
THE WESTERN PACIFIC REGION TO WHICH WE BELONG,
LET ME HERE SHARE WITH YOU SOME BASIC ELEMENTS
OF OUR THINKING ON THE QUESTION OF AUSTRALIA'S REGIONAL ROLE,
PARTICULARLY AS THEY AFFECT OUR RELATIONS WITH INDONESIA,
OUR NEAR NEIGHBOUR AND THE FIFTH MOST POPULOUS NATION
ON EARTH. WE HAVE A SPECIAL RESPONSIBILITY FOR PAPUA
NEW GUINEA NONE MORE SO THAN A LABOR GOVERNMENT. THERE
CAN BE NO FOUNDATION FOR SOUND RELATIONS BETWEEN PAPUA NEW
GUINEA AND INDONESIA UNLESS THERE ARE SOUND RELATIONS
BETWEEN AUSTRALIA AND INDONESIA, 17
-6-Y. -pmi w
FURTHER, OUR REGIONAL ROLE ABSOLUTELY
REQUIRES THAT VIE HAVE PRODUCTIVE RELATIONS WITH THE MEMBER
NATIONS OF ASEAN ONE OF THE WORLD' S MOST VALUABLE,
SUCCESSFUL AND VIABLE REGIONAL GROUPINGS. PRODUCTIVE
RELATIONS WITH ASEAN ARE AN UTTER IMPOSSIBILITY WITHOUT
SOUND RELATIONS WITH ITS MOST POWERFUL MEMBER.
WITHOUT SUCH RELATIONS, WE CAN HAVE NO INFLUENCE
WHATSOEVER IN INDOCHINA, OR EFFECTIVENESS IN TRYING TO DO
WHAT WE CAN TO ALLEVIATE THE HUMAN TRAGEDY IN THAT AREA.
* 1 IN SHORT, IF AUSTRALIA CANNOT ESTABLISH
CONSTRUCTIVE RELATIONS ' WITH ITS NEAR AND MOST POPULOUS
NEIGHBOUR, THE CREDIBILITY OF ITS WHOLE FOREIGN POLICY
WOULD BE SERIOUSLY DIMINISHED.
THIS IS THE REALITY; AND IT IS THAT SENSE
; OF REALISM WHICH I SEEK TO ESTABLISH FOR AUSTRALIA BOTH
AT HOME AND ABROAD. BUT WHEN I SAY REALISM, IAM NOT ADVOCATING
SOME SORT OF REALPOLITIK. No-ONE IS BEING ASKED TO SACRIFICE ANY
FUNDAMENTAL PRINCIPLE. BUT REALISM IS JUST ANOTHER WORD FOR LACK OF
HYPOCRISY AND HUMBUG.
IN THE WHOLE FIELD OF OUR INTERNATIONAL
RELATIONSHIPS, I WANT AUSTRALIAN POLICY TO BE FREE OF THE
HYPOCRISY OF THE PAST, ESPECIALLY THE PAST SEVEN YEARS
THE SORT OF HYPOCRISY WHICH CHARACTERISED PREVIOUS LIBERAL
GOVERNMENTS' CONDUCT OVER AFGHANISTAN AND THE SOVIET
UNION, VIETNAM, AND, AT AN EARLIER PERIOD OF OUR HISTORY,
THE PEOPLES REPUBLIC OF CHINA AND WEST IRIAN.
TRUE IT IS THAT THOSE WHO FORGET THE LESSONS
AND ERRORS OF HISTORY ARE CONDEMNED TO REPEAT THEM.
AND IT IS AN ERROR FoR A GovERNIIENI IN FOREIGN
POLICY MAKING, TO LOSE SIGHT OF THE ULTIMATE OBJECTIVES,
OR, IN PURSUIT OF A DOCTRINE, TO FORGET WHAT IS ACTUALLY
SOUGHT TO BE ACHIEVED. AND THE OBJECTIVES SET MUST BE
REALISTIC AND ATTAINABLE.
FOR EXAMPLE, WHAT WE ARE ULTIMATELY CONCERNED
WITH IN EAST TIMOR IS THE HUMANITARIAN INTERESTS OF
THE PEOPLE OF THAT AREA.
WE SINCERELY HOPE THAT THE CURRENT DISCUSSIONS
BETWEEN THE INDONESIAN AUTHORITIES AND FRETILIN, WHICH HAVE
ONLY NOW BEEN REPORTED PUBLICLY, WILL FURTHER IMPROVE
THE SITUATION IN EAST TIMOR,
ON VIETNAM, WE WANT TO ENCOURAGE THAT COUNTRY
TO PARTICIPATE IN THE MAINSTREAM OF THE LIFE OF THE REGION
AND RETURN FROM ISOLATED DEPENDENCE ON THE SOVIET UNION,
INTO THE COMMUNITY OF NATIONS.
AND WE WANT TO HELP BRING AN END TO THE
SUFFERING AND HUMAN TRAGEDY IN CAMBODIA.
THESE ARE THE OBJECTIVES OF THE AUSTRALIAN
LABOR PARTY. THERE WILL BE NO ABROGATION OF THEM.
AND BEYOND THE SPECIFIC CONCERNS OF OUR
NErGHBOURHOOD AND REGION, THERE IS A ROLE WE CAN PLAY
AND SHOULD PLAY IN THE GREAT UNIVERSAL QUESTIONS
ARMS CONTROL AND DISARMAMENT AND THE ULTIMATE
QUESTION OF THE SURVIVAL OF HUMANITY.
1I . I. 1. 1. 1. -I .1 .1
I MADE IT VERY CLEAR IN PARIS AND WASHINGTON
THAT THIS GOVERNMENT UNEQUIVOCALLY OPPOSES FRENCH NUCLEAR
TESTING IN THE SOUTH PACIFIC.
ON THE QUESTION OF THE SOUTH HEST PACIFIC
NUCLEAR FREE ZONE, WHICH I RAISED IN WASHINGTON, I CAN SAY
THAT, WHILE IT IS AN INITIATIVE THAT THE UNITED STATES
WOULD NOT TAKE ITSELF,, THEY UNDERSTAND IT,
AND RECOGNISE THAT OUR PROMOTION OF THE PROPOSAL IS COMPATIBLE
WITH OUR MUTUAL OBLIGATIONS UNDER ANZUS,
BUT AGAIN, IT HAS TO BE RECOGNISED THAT IF
AUSTRALIA IS TO BE EFFECTIVE IN MATTERS OF GLOBAL IMPORTANCE
LIKE THESE, THEN WE MUST FIRST HAVE CREDIBILITY IN OUR
OWN REGION. I REPEAT: THERE IS TO BE NO SACRIFICE OF
PRINCIPLE BUT THE FOREIGN POLICY OF THIS GOVERNMENT WILL
BE BASED ON REALISM AND RELEVANCE,
AND IT WAS IN THAT CONTEXT THAT I SOUGHT TO
PLACE AUSTRALIA'S INTERNATIONAL ROLE UNDER THE NEW GOVERNMENT
THROUGHOUT MY MISSION. t : p t 17 W
-11
ANOTHER THEME I EXPRESSED WAS THE THEME OF
INTERDEPENDENCE THE BASIC INTERDEPENDENCE OF THE NATIONS,
THEIR ECONOMIES AND THEIR SOCIETIES.
THAT THEME, AGAIN,; I WAS INTENT TO RELATE TO
OUR OWN REGION AND AUSTRALIA'S ROLE IN IT.-
ONE IMPORTANT CONCLUSION FROM ALL MY DISCUSSIONSFROM
PORT MORESBY To HONOLULU WAS THAT THE INTERNATIONAL
ECONOMIC PROBLEMS WHICH ARE MOST DAMAGING TO THE
DEVELOPING COUNTRIES ARE PRECISELY THE SAME PROBLEMS MOST
DAMAGING TO US ALL: PROLONGED INTERNATIONAL RECESSION;
AND PARTLY AS A CAUSE OF RECESSION AND PARTLY AS A PROBLEM
IN ITSELF FOR COUNTRIES WITH FOREIGN DEBT TO SERVICE,
HIGH REAL INTEREST RATES,
NONE OF THE ADVANCED INDUSTRIAL COUNTRIES HAS
FELT THESE PROBLEMS MORE ACUTELY THAN FRANCE. THE
FRENCH EXPERIENCE IS INSTRUCTIVE.
FRANCE VIGOROUSLY IMPLEMENTED HIGHLY EXPANSIONARY
ECONOMIC POLICIES WHEN THE REST OF THE WORLD WAS IN RECESSION.
THERE WAS A MARGINAL AND TEMPORARY IMPROVEMENT IN GROWTH AND
EMPLOYMENT. BUT SOON THERE WAS A MASSIVE CRISIS IN THE
BALANCE OF PAYMENTS, WHICH HAS REQUIRED THE SUDDEN IMPOSITION
OF CONTRACTIONARY POLICIES, WITH A SHARP RISE IN UNEMPLOYMENT.
THE PRICE AND THE INITIAL BENEFIT WAS UNSUSTAINABLE. / 12
-12-
I BELIEVE THAT THE FRENCH SOCIALIST GOVERNMENT,
THROUGH ITS CURRENT ECONOMIC PROGRAM, WILL GET ON TOP OF
ITS DIFFICULTIES. WE SHOULD DRAW IHE RIGHT LESSONS FROM
THE FRENCH EXPERIENCE. WE NEED NOT AND WILL NOT RETREAT
FROM THE USE OF EXPANSIONARY FISCAL POLICIES AS PART OF
OUR RESPONSE TO RECESSION. BUT THE EXPANSION MUST BE
CAREFULLY CALCULATED, TO LIMIT PRESSURES ON FINANCIAL MARKETS
AND THE BALANCE OF PAYMENTS. OTHERWISE ANY SHORT-TERM GAIN
WILL BE WORSE THAN LOST.
AND THE DEGREE OF FISCAL EXPANSION WE PROPOSE
CAN ONLY BE EFFECTIVE IF OUR PRICES AND INCOMES POLICY IS
SUCCESSFUL. ECONOMIC ISSUES WERE A MAJOR FOCUS OF THE VISIT
TO THE UNITED STATES, WHERE I WAS JOINED BY THE TREASURER.
IN OPEN AND INFORMATIVE DISCUSSIONS WITH KEY ECONOMIC
OFFICIALS AND BUSINESS LEADERS WE WERE ABLE TO ASSESS THE
PROSPECTS OF RECOVERY IN THE UNITED STATES AND ALSO EXPLAIN
OUR APPROACH TO MANAGEMENT OF THE AUSTRALIAN ECONOMY.
THE ECONOMIC NEWS WE RECEIVED IN THE U. S. WAS VERY POSITIVE
FOR THE IMMEDIATE FUTURE,
THE RECOVERY IN THE U. S. WHICH FINALLY GOT
UNDER WAY JUST BEFORE THE TURN OF i. AST YEAR HAS GATHERED
STRENGTH MUCH MORE RAPIDLY THAN MOST OBSERVERS IN THE U. S.
OR AUSTRALIA ANTICIPATED. / 13
-13-
THIS HAS SINCE BEEN CONFIRMED BY THE U. S.
DEPARTMENT OF COMMERCE WITH THE ISSUE OF A PRELIMINARY
ESTIMATE THAT REAL GNP WILL GROW AT AN ANNUAL RATE OF
6.6 PERCENT IN THE JUNE QUARTER FOLLOWING A RISE OF
2,6 PERCENT IN THE MARCH QUARTER.
THERE IS GROWING CONFIDENCE THAT THE RECOVERY
WILL BROADEN AND CONTINUE INTO 1984.
NONETHELESS, THERE IS THE NEED FOR A CAVEAT
OR TWO. THERE ARE ALREADY SOME SIGNS OF EMERGING
PRESSURES ON INTEREST RATES.
TO AN EXTENT, THIS IS TO BE EXPECTED IN THE COURSE
OF AN ECONOMIC RECOVERYj PARTICULARLY ONE AS SHARP AS THAT
APPARENT IN THE U. j AND CERTAINLY THE U. S. ECONOMY IS
BETTER PLACED TO HANDLE INTEREST RATE INCREASES NOW THAN
IT HAS BEEN FOR SOME TIME.
BUT THERE IS SOME RISK THAT WITHOUT CHANGES IN
UNITED STATES FISCAL POLICY) LARGE INCREASES IN INTEREST RATES
MIGHT THREATEN RECOVERY IN THE COURSE OF 19384, PRESIDENT
MITTERRANDi PRIME MINISTER TRUDEAU AND THE CHAIRMAN OF THE
FEDERAL RESERVE BANK., PAUL VOLCKER, ALL EMPHASISED THAT
RECOVERY IN OTHER COUNTRIES WAS MORE VULNERABLE TO INTEREST
RATE PRESSURES DERIVING FROM UNITED STATES BUDGET DEFICITS THAN
WAS UNITED STATES RECOVERY ITSELF.
i4l-
OUR OWN VIEW, WHICH I EXPRESSED PUBLICLY
AT THE FOREIGN POLICY ASSOCIATION IN NEW YORK, IS THAT
FINANCIAL PRESSURES ASSOCIATED WITH LARGE STRUCTURAL
BUDGET DEFICITS DO REPRESENT A THREAT TO WORLDWIDE
ECONOMIC RECOVERY IN THE ONE OR TWO YEARS AHEAD, HOWEVER,
WE SEE RESPONSIBILITY FOR THE CORRECTION OF THIS PROBLEM
AS LYING WITH THE WHOLE INTERNATIONAL COMMUNITY, AND NOT
WITH THE UNITED STATES ALONE.
LET ME TURN NOW TO THE IMPLICATIONS OF THESE
DEVELOPMENTS FOR THE AUSTRALIAN ECONOMY.
A SUSTAINED U. S. RECOVERY, PARTICULARLY IF
IT IS REINFORCED BY THE PICK UP IN ACTIVITY NOW EXPECTED
IN A NUMBER OF OTHER INDUSTRIAL COUNTRIES, WILL OF COURSE
PROVIDE A BOOST TO WORLD TRADE VOLUMES, COMMODITY PRICES
AND, ULTIMATELY, FOREIGN INVESTMENT FLOWS.
THAT EVENTUALLY SHOULD PROVIDE SOME ADDITIONAL
DIRECT STIMULUS TO THE AUSTRALIAN ECONOMY, PRINCIPALLY BY
WAY OF STRONGER DEMAND FOR OUR EXPORTS AND REDUCED EXTERNAL
PRESSURE ON OUR IMPORT COMPETING SECTORS.
IN THE COURSE OF 1983-84l, IT CAN BE EXPECTED TO
CONTRIBUTE TO THE INCREASE IN ECONOMIC ACTIVITY AND EMPLOYMENT
ASSOCIATED WITH OUR EXPANSIONARY FISCAL POLICIES, THE ENDING
OF THE DROUGHT AND THE IMPROVEMENT IN CONSUMER AND BUSINESS
CONFIDENCE APPARENT SINCE THE SUMMIT,
ALL THIS STRENGTHENS OUR VIEW THAT THE
FINANCIAL YEAR WHICH BEGINS THIS WEEK WILL MARK A DECISIVE
WATERSHED BETWEEN PAST YEARS OF STAGNATION AND FUTURE
YEARS OF GROWTH IN THE AUSTRALIAN ECONOMY.
IT CONFIRMS OUR CONFIDENCE THAT WE ARE WELL ON
TRACK TOWARDS ACHIEVING OUR KEY ELECTION COMMITMENTS TO
ARREST THE EXPLOSION IN UNEMPLOYMENT; THEN TO REDUCE THE
RATE OF UNEMPLOYMENT OVER THE LIFE OF OUR FIRST GOVERNMENT;
AND ALONG THE WAY, TO CREATE HALF A MILLION NEW JOBS
OVER THE NEXT THREE YEARS.
IN AUSTRALIA, AS IN THE WORLD AS A WHOLE,
THE BIG QUESTION IS WHETHER GROWTH CAN BE SUSTAINED FOR
THE LONG PERIOD NECESSARY TO RESTORE ACCEPTABLE LEVELS
OF EMPLOYMENT. / 116
-16-
OUR PRIVATE INVESTMENT NEXT YEAR IS
EXPECTED TO REPRESENT ONLY ABOUT 13.4 PERCENT OF GDP.
THAT'S MORE THAN ONE PERCENTAGE POINT BELOW THE AVERAGE
OF THE LAST DECADE. THIS HELPS US TO RUN LARGER
FISCAL DEFICITS THAN NORMAL WITHOUT PLACING UNDUE PRESSURES
ON FINANCIAL MARKETS, 14E HAVE INDICATED THAT WE HAVE
BEEN PREPARED TO CONSIDER A DEFICIT TO ABOUT $ 8.5 BILLION
IN 1983-84. THIS WOULD REPRESENT ABOUT 5 PERCENT OF GDP,
WHICH WOULD BE THE HIGHEST RATIO EVER, THIS HIGH LEVEL
OF COMMONWEALTH BORROWING WOULD COINCIDE WITH UNUSUALLY
HIGH LEVELS OF BORROWING BY THE STATES AND OTHER PUBLIC
AUTHORITIES. WE BELIEVE THAT EXPANSIONARY FISCAL POLICY
ALONG THESE LINES CAN BE CONTEMPLATED WITHOUT DISASTROUS
CONSEQUENCES IN FINANCIAL MARKETS WHILE PRIVATE INVESTMENT
REMAINS SO LOW. BUT THE BUILDING OF STRONG AND DURABLE
RECOVERY THE SORT OF SUSTAINED RECOVERY THAT WILL
DELIVER HALF A MILLION NEW JOBS OVER THREE YEARS IN
AUSTRALIA WILL REQUIRE THE RESTORATION OF HIGH LEVELS
OF PRIVATE INVESTMENT. THAT GROWTH WILL BE DIFFICULT TO ACHIEVE
117l
-17-
IF THERE ARE FURTHER INCREASES IN REAL INTEREST RATES;
AND THIS WILL OCCUR IF BUDGET DEFICITS REMAIN AT PRESENT
LEVELS AS PRIVATE INVESTMENT STRENGTHENS IN RECOVERY,
TiiUS WE BELIEVE THAT SUBSTANTIAL FISCAL STIMULUS IN THE
NEAR FUTURE MUST BE ACCOMPANIED BY MEASURES TO HAUL IN
THE STRUCTURAL BUDGET DFFICIT AS RECOVERY PROCEEDS IN THE
YEARS AHEAD. AUSTRALIA WILL BE AFFECTED BY PRESSURES IN
INTERNATIONAL FINANCIAL MARKETSj WHATEVER HAPPENS AT HOME.
AUSTRALIAN REAL INTEREST RATES WILL TEND TO RISE IF UNITED
STATES REAL INTEREST RATES RISE, BUT CONDITIONS WITHIN
OUR OWN FINANCIAL MARKETS CAN EXACERBATE OR AMELIORATE THE
PRESSURES COMING FROM OVERSEAS. GIVEN THE CONSIDERABLE
PROSPECT THAT INTERNATIONAL DEVELOPMENTS WILL EXERT UPWARD
PRESSURE ON AUSTRALIAN INTEREST RATES OVER THE NEXT ONE OR
TWO YEARS, IT IS IMPORTANT THAT WE DO NOT COMPOUND THE
THREAT TO THE RECOVERY OF PRIVATE INVESTMENT.
THE FISCAL STANCE THAT HAS BEEN DESCRIBED
BY THE TREASURER AND MYSELF IN RECENT MONTHS IS EXPANSIONARY
BY ANY REASONABLE STANDARDS. MORE RAPID FISCAL EXPANSION
MIGHT POSSIBLY LEAD TO SLIGHTLY FASTER GROWTH IN ACTIVITY
AND EMPLOYMENT'IN THE IMMEDIATE FUTURE, BUT WE WOULD BUY
THIS POSSIBLE IMPROVEMENT AT THE COST OF SUBSTANTIAL RISK
TO THE DURABILITY OF RECOVERY.
-18-
WiE OWE IT To AUSTRALIANS WITHOUT JOBS
AND WE OWE IT TO OUR COMMITMENT TO CREATE HALF A MILLION
JOBS OVER THREE YEARS TO REMAIN WITHIN THE BOUNDS
OF RESPONSIBILITY, I MAY SAY THAT IN EUROPE AND THE UNITED
STATES, THE TREASURER'S MAY STATEMENT WAS WIDELY SEEN
AS MAKING A MAJOR EFFORT TOWARDS REDUCING THE STRUCTURAL
BUDGET DEFICIT IN 1984-85 AND 1985-86.
BUT THE MAY STATEMENT DID MUCH MORE THAN ADDRESS
THE STRUCTURAL DEFICIT WE INHERITED, IT PUT INTO EFFECT
MEASURES DESIGNED TO REDUCE UNEMPLOYMENT AND INFLATION
SIMULTANEOUSLY. IT MADE A START TO REVERSE THE SYSTEMATIC
BIAS AGAINST LOWER-INCOME AUSTRALIANS THE FRASER YEARS
HAD INTRODUCED INTO OUR FISCAL SYSTEM. OUR ECONOMIC
CIRCUMSTANCES REQUIRE RESTRAINT; AND THE MAY STATEMENT
PLACED THAT RESTRAINT ON AUSTRALIANS WHO WERE IN A RELATIVELY
GOOD POSITION TO ACCEPT IT. THIS IS WHY WE FOUND IT NECESSARY
TO REMOVE CERTAIN BENEFITS ON HOUSING, PENSIONS AND
SUPERANNUATION FOR RELATIVELY WELL-OFF AUSTRALIANS.
IT IS WHY WE MOVED SO QUICKLY TO IMPLEMENT OUR COMMUNITY
EMPLOYMENT PROGRAM AND HOUSING POLICY. NOT ONLY WERE
WE PREPARED TO TAKE HARD DECISIONS IN THE INTERESTS OF
FINANCIAL STABILITY AND DURABLE ECONOMIC RECOVERY, BUT WE
DID THIS IN A WAY WHICH EXPRESSED LABOR'S COMMITMENT TO
SOCIAL EQUITY.
-19-
RECENTLY WE HAVE HEARD SOME EXTRAORDINARY
NONSENSE ABOUT OUR FISCAL POLICIES BEING DOMINATED BY
TREASURY AND INDISTINGUISHABLE FROM THOSE OF OUR
PREDECESSORS. MAY I JUST POINT OUT THE DECISIVE CHANGES
IN AT LEAST FOUR AREAS. FIRST, THE OVERALL STANCE OF
POLICY IS CLEARLY EXPANSIONARY UNLIKE ALL BUT THE
LAST OF THE FRASER YEARS. SECOND, WE HAVE INTRODUCED
FISCAL POLICY CHANGES TO REDISTRIBUTE THE BURDEN OF
RESTRAINT, FROM THE NEEDY IN OUR SOCIETY, TO THOSE WHO
ARE BEST ABLE TO BEAR IT. THIRD, THE TIRED OLD
DOCTRINE OR AT LEAST ITS RHETORICAL FLOURISHESABOUT
FIGHTING INFLATION FIRST HAS BEEN REPLACED BY A
GENUINE AND STRONG COMMITMENT TO FIGHTING INFLATION AND
UNEMPLOYMENT SIMULTANEOUSLY. AND FOURTH, THIS
GOVERNMENT MEANS WHAT IT SAYS: WHEN WE SAY THAT WE
WILL HAUL BACK THE BUDGET DEFICIT IN THE COURSE OF
ECONOMIC RECOVERY WE MEAN EXACTLY THAT.
THE F[ RST OF THESE POINTS SHOULD BE OBVIOUS TO
INTELLIGENT OBSERVERS, LAST FINANCIAL YEAR THE BUDGET DEFICIT
WAS HALF A BILLION DOLLARS, ONE YEAR AGO, IN THE AUGUST
BUDGET, IT WAS ESTIMATED THAT THIS FINANCIAL YEAR IS DEFICIT
WOULD BE $ 1.7 BILLION, THAT FIGURE HAS SINCE BLOWN OUT TO
ABOUT $ 14.6 BILLION, AND YET SOME PEOPLE ARGUE THAT A
FURTHER INCREASE IN THE DEFICIT TO LEVELS SUGGESTED IN SCENARIO
A AT THE SUMMIT, THAT IS TO $ 8.5 BILLION, WOULD NOT BE
EXPANSIONARY. IF THE DEFICIT WERE INCREASED TO $ 8.5 BILLION
NEXT YEAR, THE INCREAS OVER TWO YEARS WOULD REPRESENT ALMOST
PER CENT OF GDP, THIS WOULD BE AN EXTRAORD'TNARY SHIFT
TOWARDS EXPANSIONARY POLICIES. FURTHERMORE, AROUND HALF
OF THE INCREASE IN THE DEFICIT WOULD REPRESENT DISCRETIONARY
ADJUSTMENTS IN FISCAL POLICY, AND NOT MERELY THE CYCLICAL
EFFECTS OF RECESSION ON SOCIAL SECURITY PAYMENTS AND TAXATION
RECEIPTS. DURING THE ELECTION CAMPAIGN THE LIBERAL GOVERNMENT
TOLD THE AUSTRALIAN PEOPLE THAT THE AUSTRALIAN GOVERNMENT WAS
FACING A DEFICIT OF $ 6 BILLION IN 1983-84, ON THAT BASIS, WE
SAID THAT WE COULD SAFELY COTEMPLATE A DEFICIT OF $ 7.5 BILLION,
NO-ONE CONTESTED THAT THIS WOULD BE EXPANSIONARY. As You KNOW,
ON COMING TO OFFICE, WE RECEIVED ADVICE THAT ON UNCHANGED
LIBERAL POLICIES THE DEFICIT WOULD HAVE BEEN $ 9.6 BILLION IN
/ 21
-21-
1983-84, THIS FIGURE REMAINS BROADLY RELEVANT DESPITE
THE INEVITABLE UPWARD AND DOWNWARD ADJUSTMENTS TO THE
ESTI-MATE S. IN RESPONSE TO THIS AND TO FURTHER ASSESSMENT
OF THE ECONOMIC ENVIRONMENT, WE HAVE INDICATED THAT WE
MAY SETTLE FOR A 1983-84 DEFICIT THAT IS HIGHER THAN
BILLION. FACTS DON'T MATTER TO SOME PEOPLE. THROUGH
SOME INTELLECTUAL CONTORTION,. A $ 7.5 BILLION DEFICIT CAN
BE EXPANSIONARY IN MARCH WHILE A HIGHER DEFICIT IS
CONTRACTIONARY IN APRIL. ./ 22
-22-
THIS WEEK OF COURSE, WE ARE HAVING OUR
FIRST PREMIERS' CONFERENCE AND LOAN COUNCIL MEETING.
FOR OUR PART, WE ARE APPROACHING THAT
CONFERENCE WITH A DETERMINATION TO MAKE IT, NOT AS IT HAS
BEEN FOR SO MANY YEARS, AN OCCASION FOR CONFRONTATION AND
CONFLICT, BUT FOR GENUINE CO-OPERATION AND CONSTRUCTIVENESS
TO THE MUTUAL BENEFIT OF THE NATION AND THE STATES
WHICH CONSTITUTE THE NATION,
THE STATES, LIKE THE COMMONWEALTH, ARE
GRAPPLING WITH SEVERE BUDGETARY PROBLEMS, WE WILL DO
OUR BEST TO HELP OUT, WITHIN THE OVERALL LIMITS OF FISCAL
RESPONSIBILITY. WE CERTAINLY DO NOT INTEND TO PASS OUR
OWN BUDGETARY PROBLEMS ON TO THE STATES BY AN UNBALANCED
APPROACH TO THIS WEEK'I S MEETINGS. BUT WE SHOULD ALL
BE CLEAR THAT THE TOTAL RESOURCES AVAILABLE TO US
CANNOT BE INCREASED TO ACCOMMODATE INCREASED PAYMENTS TO
THE STATES. AN EXTRA DOLLAR IN RESOURCES MADE AVAILABLE
TO THE STATES MEANS A DOLLAR LESS FOR OUR OWN PROGRAMS,
OR A DOLLAR INCREASE IN COMMONWEALTH TAXATION. ./ 23
r
-23-
LET ME CONCLUDE IN THIS WAY.
THE EXPERIENCE OF THESE FIRST HUNDRED DAYS,
AND THE EXPERIENCE OF MY FIRST OFFICIAL MISSION OVERSEAS
AS PRIME MINISTER OF AUSTRALIA, HAVE AMPLY REINFORCED
TWO FUNDAMENTAL CONVICTIONS I HELD LONG BEFORE THE
ELECT IONS. THEY BOTH CONCERN THE ROLE AND FUTURE OF
THE AUSTRALIAN LABOR PARTY,
FIRST, I HAVE LONG HELD THE VIEW THAT THE
ELECTIONS FOR THE 33RD PARLIAMENT OF AUSTRALIA THAT
IS, THE ELECTION FOR THIS PRESENT PARLIAMENT, THE
ELECTION SO PRECIPITATELY FORCED ON THE FIFTH OF MARCHWOULD
DETERMINE THE POSSIBILITY OF FORMING A FEDERAL
LABOR GOVERNMENT COMMITTED TO GENUINE SOCIAL, ECONOMIC,
AND POLITICAL REFORM IN AUSTRALIA, FOR LONG, LONG YEARS
TO COME. se/ 2
T~
AND SECOND; AND SURELY RECENT EXPERIENCES
IN BRITAIN AND FRANCE THE ROUT IN BRITAIN AND THE
REVISION OF POLICY IN FRANCE CAN ONLY CONFIRM THIS,
I PROFOUNDLY BELIEVE THAT THE WORK AND EFFORTS,, THE
EXPERIENCE AND THE EXPERIMENTS, THE SUCCESS OR FAILURE
OF THIS AUSTRALIAN LABOR GOVERNMENT, ARE CRITICALLY
IMPORTANT TO THE WHOLE FUTURE OF THE LABOR CAUSE, THE
CAUSE OF SOCIAL DEMOCRACY, THROUGHOUT THE INDUSTRIALISED
WORLD. IDO BELIEVE THAT. IN TERMS OF A CONTEMPORARY PARTY,
GRAPPLING WITH CONTEMPORARY PROBLEMS IN A CONTEMPORARY WAY,
WE REPRESENT, IN A VERY REAL SENSE, THE BEST HOPE OF
SOCIAL DEMOCRACY IN THE WORLD TODAY. THAT IS ANOTHER REASON
Wi-IY* WE DARE NOT FAIL.
THAT AT LEAST IS MY UNDERSTANDING OF THE ROLE
OF THE AUSTRALIAN LABOR PARTY IN THESE CRITICAL 1980s.
IT IS BASED ON MY UNDERSTANDING SUCH AS I HAVE OF THE
LABOR PARTY'S NATURE AND PURPOSE. AND PERHAPS AFTER AN
ACTIVE MEMBERSHIP OF THIRTY-SIX YEARS, AFTER FIVE YEARS AS
NATIONAL PRESIDENT, AND TEN YEARS AS LEADER OF THE INDUSTRIAL
LABOR MOVEMENT IN THIS NATION, IT MAY EVEN BE ACKNOWLEDGED
THAT I HAVE SOME GLIMMER OF UNDERSTANDING OF THE PARTY
AND THE MOVEMENT. Ll
BE THAT AS IT MAY, MY UNDERSTANDING OF THE
PARTY AND ITS ASPIRATIONS CANNOT BE SEPARATED FROM MY
UNDERSTANDING OF THE NATION AND ITS ASPIRATIONS, IT IS
PRECISELY BECAUSE THE AUSTRALIAN LABOR PARTY IS SO
INTEGRAL TO THE WHOLE LIFE AND FABRIC OF THIS NATION,
THAT YOU CANNOT UNDERSTAND THE ONE WITHOUT UNDERSTANDING
THE OTHER. AND WHILE THE HISTORIC ROLE OF THE AUSTRALIAN
LABOR PARTY IN GOVERNMENT OR OPPOSITION HAS BEEN TO
SET THE NATIONAL AGENDA FOR CHANGE AND REFORM, THE PEOPLE
THEMSELVES WILL ALWAYS ASSERT THEIR ULTIMATE RIGHT TO
DETERMINE THE PACE.
AND IT IS UPON THAT UNDERSTANDING OF BOTH THE
PARTY AND THE COUNTRY THAT WE HAVE PROCEEDED IN THESE
FIRST ONE HUNDRED DAYS; AND IT IS ON THAT UNDERSTANDING
WE SHALL CONTINUE TO PROCEED. IBELIEVE IT CAN ALREADY BE
SAID THAT NO PEACE-TIME GOVERNMENT OF AUSTRALIA HAS IN SUCH
A SHORT TEME MORE DEFINITIVELY ESTABLISHED ITS STANCE IN
THE FUNDAMENTAL MATTERS OF NATIONAL ECONOMIC POLICY AND
INTERNATIONAL POLICY.
AND IN MAKING THAT SUSTAINABLE CLAIM I ASSERT
WITH EQUAL CONVINCTION THAT WE HAVE BEEN ASSISTED BY THE FACT
THAT WE HAVE A MINISTRY WHICH IN TERMS OF TALENT AND
APPLICATION MORE THAN MATCHES ANY OTHER IN THAT PERIOD. / 26
-26-
I BELIEVE WE HAVE ESTABLISHED STRONG FOUNDATIONS
TO ENABLE THE GOVERNMENT TO FULFIL THE GREAT RESPONSIBILITIES
ENTRUSTED TO IT BY THE PEOPLE OF AUSTRALIA ON THE FIFTH OF
MARCH 1983,
I
I'-i: * 1
I ' I
i \ r
I . i
*: 3