37 iLIBRRY
PAME MSNTRTER . j
CHECK AGAIN ST DELIVEY EMiA' RGGO D UNBA 1. 30 p.
Aucust 1983
SPEBCH py PH ' IP . I f'I11N IT1 E, AUJSPRALI A-JA'P AN
CO-C PE> RATITON COMM iTTi& E, CANEERRA__
I AM VERY PLEASED TO HAVE BEEN INVITED TO ADDRESS
THIS GATHERING OF THE AUSTRALIA JAPAN BUSINESS CO-OPERAi TION
COMMITTEE " ND THE AUSTRALIAN NTIONAL COMMITTEE OF THE
PACIFIC BASIN EcoNcMic COUNCIL. I DO SO AT A TIME WHEN
THE FOCUS OF NATIONAL ATTENTION IS ON THE BUDGET AND WHEN,
INTERNATIONALLY, THE COUNTRIES OF THE VAST PACIFIC REGION
ARE MOVING TO TAKE ADVANTAGE OF THE ECONOMIC RECOVERY NOW
UNDER WAYFOR AUSTRALIA, THE EMERGING GLOBAL ECONOM1IC
RECOVERY LED BY A SHARP RESURGENCE OF DEMAND AND ACTIVITY
IN THE UNITED STATES, AND PICKING UP AT A FASTER RATE THAN
EVEN THE MOST OPTIMISTIC FORECASTS, IS ESPECIALLY TIMELY.
WE AIM TO EXPLOIT FULLY THE OPORTUN'lITIES IT PRESENTSIN
THIS RESPECT THE BUDGET' WE HAVE JUST BROUGHT
DOWN MUST BE SEEN AS A NEW BEGINNING FOR AUSTRALIA.
IMPORTANTLY IT AIMS TO RESTORE CONFIDENCE-IT HAS DONE SO
BY ESTABLISHING AN I-4TEGrATED SET OF POLICIES FOR STEADY
GRCWTH IN OUTPUT AND EMPLOYMENT, ACCOMPANIED BY A FURTHER
MODERATION I N INFLATION*
THE PROSPECT mr 1983-84 IS FOR A GOOD RECOVERY IN
ECONOMIC ACTIVITY, GATHERING PACE ' THROUGH THE FINANCIAL
YEAR:--EMPLOYMENT SHOULD GROW THROUGH THE COURSE OF THE
YEAR AS ACTIVITY PICKS UP. INDEED THERE IS
EVIDENCE THAT THIS PROCESS HAS ALREADY B3EGUN, WITH
THREE CONSECUTIVE MONTHLY INCREASES, IN EMPLOYMENTINFLATION
SHOULD COME DOWN SIGNIFICANTLY FROM ! TS
PRESENT UNACCEPTABLE LEVEL OF 11%. OUR PRICES AND
INCOMES POLICY IS DESIGNED TO HELP KEEP INFLATION
ON A DOWNWARD PATH DOWN AS THE RECOVERY GEFS UNDER
WAYMy GOVERNMENT'S OVERRIDING CONCERN HAS BEEN TO
ESTABLISH THE BASIS OF SUSTAINED ECONOMIC RECOVERY-WE HAVE
AIMED TO LAY FIRM . FOUNDATIONS FOR THE'ACHIEVEMENT OF THE
OBJECTIVES WE SET OURSELVES FOR THE FIRST TERM OF THIS
GOVERNMENT AND BEYOND.
CENTRAL TO THIS STRATEGY HAS. BEEN THE SIMULTANEOUS
ATTACK ON THE TWIN EVILS OF UNEMPLOYMENT AND INFLATION-WE
HAVE ALWAYS STRESSED THAT THERE WERE 140 OVERNIGHT SOLUTIONS
FOR THE IMMEDIATE PROBLEMS WE FACE NO MIRACLE CURES. THE
BUDGET MUST BE SEEN PART OF THE CONTINUING PROCESS OF
PUTTING AUSTRALIA BACK ON ITS FEET-
3.
ACHIEVING A SOUNDLY BASED RECOVERY IN ECONOMIC
ACTIVITY MEANS ENSURING A STRONG PRIVATE SECTOR RESURGENCE
IN ACTIVITY, WHILE RESTRAINING INFLATION AND THEREBY
ACHIEVING RISING LIVING STANDARDS AND CREATING THE
OPPORTUNITIES NECESSARY TO REDUCE UNEMPLOYMENTWE
HAVE TAKEN AS A MATTER OF FUNDAMENTAL PRINCIPLE
THAT THE MAIN BURDEN FOR ACHIEVING THIS OBJECTIVE MUCT BE
SHARED BY THOSE PEOPLE RELATIVELY WELL PLACED TO BEAR ITBOTH
THE 19 MAY STATEMENT AND THE 1983-84 BUDGET REFLECT
T H I S THUS: OUR INCREASED SPENDING OF $ 315 MILLION ON
EMPLOYMENT CREATION SCHEMES AND EXPANSION OF
GOVERNMENT CAPITAL EXPENDITURE BOTH DIRECTLY VIA
COMMONWEALTH SPENDING AND THROUGH THE STATES;
ADDITIONAL SOCIAL WELFARE PAYMENTS TOTALLING $ 224
MILL ION CONCENTRATED ON THE SINGLE UNEMPLOYED AND
PENSIONERS WITH CHILDREN;
A FAIRER FINANCING OF THE HEALTH SYSTEM BASED ON
ABILITY TO PAY;
REFORMS IN THE ASSISTANCE PROVIDED TO HOME BUYERS
BOTH TO IMPROVE EQUITY AND STIMULATE HIGHER
ACTIVITY;
INCREASES IN EDUCATION4 ALLOWANCES AND FUNDING, WITH
A MORE EQUiTAF1LE DISTRIB3UTION OF RESOURCES
ACCORDING TO INEED; AIND FINALLY,
ABOLITION OR REDUCTION OF SOME OF THE MORE BLATANT
HAND-OUTS AND TAXATION IN4EQUITIES INTRODUCED OR
IGNORED BY OUR PREDECESSORS. THUS WE HAVE TAKEN
LONG-NEEDED ACTION ON SUPERANNUATION TAXATION, ON
ASSET TESTING OF PENSIONS, ON RESTRICTED
ELIGIBILITY FOR THE' OVER 70' s PENSION TO THOSE IN
MOST NEED, ON TIGHTENED TAX AVOIDANCE LEGISLATION,
ON STRENGTHENING SECTION 26( A) SO AS TO IMPROVE THE
CAPACITY TO TAX CAPITAL GAINS, AND IN REDUCING A
NUMBER OF OTHER SECTIONAL TAX OR SPENDING
CONCESSIONS. THESE MEASURES ALL REFLECT THE COMMITMENT OF THIS
GOVERNMENT TO MAKING AUSTRALIA A MORE EQUITABLE SOCIETYIT
IS CRUCIAL TO THIS STRATEGY T-HAT1 WE SUCCESSFULLY
ESTABLISH THE FOUNDATIONS FOR FUTURE' GROWTH. WE ARE
DETERMINED TO AVOID AN4 ATMOSPHERE OF UNPREDICTABILITY AND
INSTABILITY. THE BUDGET HAS THEREFO* RE CONTINUED THE PROCESS
OF ENSURING AN ADEQUATE, BUT NOT EXCESSIVE, STIMULUS TO
ACTIVITY. AT THE SAME TIME IT HAS LAID THE BASIS FOR
REINING IN THE BUDGET DEFICIT IN4 FUTURE YEARS IN SUCH A WAY
AS TO ENSURE THAT RISING PRIVATE SECTOR ACTIVITY WILL NOT BE
FACED WITH EXCESSIVE COMPETITION FROM THE GOVERNMENT SECTOR
IN FINANCIAL MARKETS. PRESSURES OF 1HIS KIND MUST BE'
CO0N TA IN ED. THE BUDGET PROVIDES FOR SUBSTANTIAL GROWTH IN
GOVERNMENT OUTLAYS OF 15.8%, ONLY A FEW PEIRCEN4TAGE POINTS
BELOW THE INCREASE OF 18.5% i~ 1982-83. WE BELIEVE SUCH
GROWTH IN OUTLAYS IS APPROPR! ATE IN A SITUATION OF LOW
DEMAND AND CAPACITY UTILISATION-BUT THE RATE OF INCREASE
IN OUTLAYS WILL CLEARLY NEED TO BE REDUCED AS THE RECOVERY
GATHERS STRENGTHTHE GOVERNMENT ALSO SOUGHT TO AVOID LARGE INCREASES
IN TAXATION. THIS HAS PARTICULAR RELEVANCE TO OUR INTEREST
IN ESTABLISHING A STABLE ECONOMIC ENVIRONMENT. SUCH AN
ENVIRONMENT IS VITAL IF BUSINESS IS TO INVEST AND CREATE JOB
OPPORTUNITIES. ACCORDINGLY, AND SO AS TO REDUCE THE DEFICIT
TO ACCEPTABLE LEVELS, WE HAVE CONCENTRATED ON CL. OSING THE
LOOPHOLES AND ON CORRECTING ANOMALIES IN-THE INCIDENCE OF
BOTH EXCISE DUTIES AND SALES TAXES. THIS FOLLOWED SIMILAR
MEASURES IN RELATION TO CORPORATE AND PERSONAL INCOME IIN THE
MAY STATEMENTISHOULD PERHAPS BE MORE SPECIFIC-WE HAVE SOUGHT
TO MAINTAIN THE REAL LEVEL OF EXCISE RATES ! N FUTURE YEARS
WITHOUT THE DESTABILISING JUMPS IN RATES THAT HAVE OCCURRED
IN THE PAST.
THE SMALL DISCRETE RISE IN PETROLEUM EXCISE LEAVES
OUR FUEL PRICES WELL BELOW THOSE IN MOST COUNTRIES. I{ is
AND I BELIEVE YOU WILL AGREE PREFERABLE TO A FURTHER RISE
IN THE PROPORTION OF REVENUE RAISED BY PERSONAL OR COMPANY
INCOME TAX. WE CON4SIDERED A NUMBER OF POSSIBLE ALTERNATIVE
TAXATION MEASURES, BUT CONCLUDED THAT THIS WAS AN AREA WHERE
IS WAS PREFERABLE TO PROCEED FIRST WITH A CAREFUL
EXAMINATION OF ALTERNATIVE METHODS OF IMPROVING AUSTRALIA'S
TAXATION4 SYSTEM AND OF WIDENING THE REVENUE BASE.
IN THE MEANTIME WE FELT COMPELLED TO TAKE SOME
IMMEDIATE STEPS TO IMPROVE THE EQUITY OF THE PRESENT SYSTEMHENCE
OUR MEASURES IN THE FIELDS OF SUPERANNUATION, TAX
AVOIDANCE, SECTION 26( A), AND IN THE EXCISE AND SALES TAX
AREASWE HAVE 1NOT HELD BACK FROM UNPOPULAR DECISIONS
WHERE WE CONSIDERED THEM NECESSARY EITHER FOR NATIONAL
ECONOMIC RECOVERY OR FOR ACHIEVIN4G A MORE EQUITABLE AND
EFFICIENT AUSTRALIAN ECONOMY IN THE LONGER TERM-ONE IS
THE ASSETS TEST.-WANT, HOWEVER, TO. ASSURE PEOPLE,
PARTICULARLY ELDERLY PEOPLE, THAT ON4LY PENSIONERS WITH
SUBSTANTIAL ASSETS, WHO ARE ARTIFICIALLY AVOIDING THE
CURRENT INCOME TEST FOR PENSIONS, WILL BE AFFECTED IN4 ANY
LARGE WAY-STRESS: WE WILL NOT BE COUNTING AS ASSETS THE
PENSIONER'S HOME, CAR, BOAT, CARAVAN,. JEWELLERY, FURNITURE
AND OTHER PERSONAL EFFECTS-
As TO OTHER ASSETS, A S! NGLE PENSIONER CAN HAVE
$ 17,000 AND STILL RECEIVE THE FULL PENSION AND UP TO
$ 106,000 AND STILL RECEIVE A PART-PENSION. A MARRIED COUPLE
CAN HAVE $ 28,000 AND STILL. RECEIVE THE FULL PENSION AND UP
TO $ 177,000 AND STILL RECEIVE PART-PENSIONAND
I REPEAT: THE ASSETS TEST WILL TOTALLY EXCLUDE
THE PENSIONER S HOME, CAR, BOAT, CARAVAN, JEWELLERY,
FURNITUkE AND OTHER PERSONAL. EFFECTS.
IN FACT MOST PENSIONERS WILL NOT BE AFFECTED AT
ALL-ON OUR BEST CALCULATIONS ONLY ABOUT ONE-QUARTER OF ALL
PENSIONERS WILL BE AFFECTED, AND PERHAPS ONE-THIRD OF THEM
WILL BE BETTER OFF.
THE ASSETS TEST WILL NOT BE INTRODUCED UNTIL, AT
THE EARLIEST, NOVEMBER 1984. I ASK THE OPPOSITION TO STOP
PLAYING POLITICS WITH THIS ISSUE, AND N'EEDLESSLY CAUSING
ANXIETY TO PENSIONERS IN AUSTRALIA.
NEVERTHELESS FURTHER HARD CHOICES AND DECISIONS CAN
BE EXPECTED IN SOME AREAS EVEN AS THE RECOVERY PROCEEDS.
THERE IS NO EASY WAY TO REMOVE THE DIST. ORTIONS OF THE KIND
THAT HAVE DRAGGED DOWN THE AUSTRALIAN ECONOMY AND SOCIETY IN
RECENT YEARS. THE BALANCE HAS TO BE STRUCK BETWEEN REDUCING
THE BUDGET DEFICIT TO AN ACCEPTABLE LEVEL, AND PROVIDING A
STIMULUS TO THE ECONOMY, WHILE HELPING . THE LESS WELL-OFF IN
THE COMMUNITY.
THE BUDGET AIMS TO REDUCE PRESSURE ON INTEREST
RATES AND IS SUPPORTED BY A NON-INFLAT IONARY MONETARY
POLICY. THE MONEY GROWTH TARGET ADOP-rED MAINTAINS
SUFF ICIE[ NT MONETARY GROWTH TO ALLOW THE -ECONOMY TO REAL ISE
ITS FULL POTENTIAL FOR GROWTH IN OUTPUT, WHILE ALLOWING FOR
THE MINIMUM FEASIBLE RATE OF PRICE INCREASEOUR
APPROACH TO THE MANAGEMENT OF THE ECONOMY IS
BASED ON OUR CONVICTION THAT STRONGER PRIVATE SECTOR
ACTIVITY IS CRUCIAL TO LONG-TERM GROWTH-PUBLIC SECTOR
SPENDING FIN4ANCED BY LARGE DEFICITS IS NOT A SUSTAINABLE
LONG-TERM BASIS FOR GROWTH, ALTHOUGH IT WILL BE IMPORTANT IN
THE SHORT TERM IN SUPPORTING ACTIVITY AND HELPING IN THE
TURNAROUND TO RECOVERY.
IF WE ARE TO MAKE SUBSTANTIAL INROADS INTO
UNEMPLOYMENT IN AUSTRALIA, RECOVERY MUST BE UNDERPINNED BY
STRONG GROWTH IN. PRIVATE SECTOR INVESTMENT.
THAT WILL TAKE TIME TO ESTABLISH, IT IS AN
IMPORTANT OBJECTIVE STILL TO BE ACHIEVED. BUSINESS
INVESTMENT HAS BEEN FALLING-WHILE INVESTMENT IN DWELLINGS
IS SET TO RISE STRONGLY THROUGH THE' COMING YEAR, PRIVATE
SECTOR DEMAND OVERALL IS EXPECTED TO REMAIN WEAK IN THE
SHORT TERM WITH BUSINESS FIXED INVESTMENT LIKELY TO RECORD A
FURTHER FALL. AS AGAINST THIS THERE SEEMS LITTLE DOUBT THAT
OUTPUT THIS FINANCIAL YEAR WILL BE SUBSTANTIALLY HIGHER
THAN LAST YEAR, EVEN IT ITS GROWTH WILL BE SOMEWHAT PATCHY
AND UNEVEN.
MOST IMPORTANTLY, THE GROUND HAS BEEN PREPARED BY
OUR NEW APPROACH TO POLICY-MAKING TO ALLOW CONFIDENT
LONG-TERM PLANNING BY THE PRIVATE SECTOR-CONSULTATION AND
CO-OPERAT ION MUST CONT INUE ALONG THE LI NES ESTABLI SHED BY
THE NATIONAL Ecor~ omic SUMMIT CONFERENCE. ACCORDINGLY THE
BASE FROM WHICH NATIONAL ECONOMIC RECOVERY CAN BE LAUNCHED
HAS NOW BEEN FIRMLY ESTABLISHEDWE
HAVE BEEN ABLE TO CONTEMPLATE EXPANSIONARY
FISCAL AND ACCOMMODATING MONETARY POLICIES ONLY IN THE
CONTEXT OF THE ACCORD WITH THE TRADE UNION MOVEMENT ON
PRICES AND INCOMES. THIS IS A KEY PART OF THE VERY REAL
CHANGE my GOVERNMENT HAS WROUGHT IN POLICY MAKING lN
AUSTRALIA. WE SEE THE REPLACEMENT OF THE CONFRONTATION WICH
HAS MARRED AUSTRALIAN SOCIETY ! N RECEVJT YEARS WITH
CO-OPERATION AS BEING INDISPENSIBLE FOR THE RESTORATION OF
SUSTAINED ECONOMIC GROWTH, AND FULL EMPLOYMENT WITHOUT
INFLATIONOUR RECOMMENDATION TO THE ARBITRATION COMMISSION
FOR A 4.3 PER CENT COST OF LIVING ' ADJUSTMENT IN THE SECOND
HALF OF 1983 SHOULD BE SEEN AS INVESTMENT IN THE RETURN TO A
CENTRALISED WAGE FIXATION SYSTEM AND TO FUTURE WAGE
MODERATION-MAKE NO MISTAKE: IT IS A TWO-WAY ACCORD. MY
GOVERNMENT EXPECTS THAT, IF ITS RECOMMENDATION IS ACCEPTED
BY THE COMMISSION, THE QUID PRO QUJO OF THAT INCREASE WILL BE
THAT WORKERS FOREGO THE OPPORTUNITY TO CLAIM ADDITIONAL WAGE
I NCREASES-
THE STRONG POLITICAL POSITION OF my GOVERNMENT
PROVIDES A BASIS FOR GREATER POLICY CONTINUITY THAN
AUSTRALIA HAS KNOWN FOR blrNY YEARS. AND OUR SEARCH FOR
CO-OPERATIVE SOLUTIONS 1ro AUS~ TRALIAN NATIONAL PROBLEMS,
SYMBOLISED IN THE PRICES AND INCOMES ACCORD, THE SUMMIT, AND
THE PREMIERS' CONFE. RENCE, SHOULD REDUCE THE HUGE COSTS TO
LONG-TERM GROWTH OF THE DEBILITATING CONFLICTS IN INDUSTRIAL
RELATIONS AND THE FEDERAL-STATE AND INTER-STATE RIVALRIES
THAT HAVE IMPEDED AUSTRALIAN NATIONAL GROWTH IN THE PASTIHAVE
SAID BEFORE THAT IT is NOT POSSIBLE TO
EXAGGERATE THE COST OF THE CONFRONTATION AND CONFLICT OF THE
KIND WHICH CHARACTERISED OUR SOCIETY FOR MUCH OF THE PAST
DECADE-THE COST, NOT JUST I MATERIAL TERMSNTEM
OF N4ATIONAL COHESION AND PURPOSE-BELIEVE IT WAS
RECOGNITION OF THE COST OF AVOIDABLE CONFLICT AND
EMPHASISE AVOIDABLE CONFLICT -THAT MOTIVATED THE
OVERWHELMING MAJORIJY OF THE PARTICIPA NTS AT THE SUMMIT. I
THINK THIS IS A POINT WHICH WOULD BE WELL UNDERSTOOD I1N
-JAPAN, WHICH ALREADY HAS A SECURE TRADITION OF CONSULTATION
IN ECONOMIC DECISION-MAKINGTHE
WORK OF THE SUMMIT WILL CONTINUE THROUGH EPACTHE
ECONOMIC PLANNING AND ADVISORY COUNCIL. As IT DEVELOPS,
EPAC's GENUINE ADVISORY ROLE WILL REINFORCE, AS PART OF THE
NORMAL PROCES OF ECONOMIC DECISION-MAKING IN THIS COUNTRYTHE
TWO ELEMENTS WHICH WERE THE KEY TO THE SUCCESS OF THE
SUMMIT CONSULTATION AND KNOWLEDGE-SHARING. EPAC WILL
ENSURE THAT THESE PROCESSES OF CONSULTATION AND
iNFORMATIONSHARING WILL BE PLACED ON A CONTINUING BASIS,
FOR THE FIRST TIME IN AUSTRALIA'S HISTORYWHAT
WE HAVE DONE AND IT IS UNPRECEDENTED INAUSTRALIA
IS TO ESTABLISH A COMPREHENSIVE AND INTEGRATED
BASIS FIJR CONSISTENT, LONG-TERM ECONOMIC PLANNING-IN
ESTABLISHING THAT ALL-EMBRACING FRAMEWORK, WE HAVE SOUGHT TO
INVOLVE, ON A CONTINUING BASIS, THE RELEVANT SECTIONS OF THE
COMMUNITY OTHER GOVERNMENTS, BUSINESS, INCLUDING SMALL
BUSINESS, THE UNIONS, THE RURAL SECTOR, COMMUNITY GROUPSALL
OF WHICH HAVE SUCH A HIGH STAKE IN THE SUCCESS OF OUR
POLICIES, IN BOTH THE SHORT AND LONGER TERMMR
CHAIRMAN, FOR AUSTRALIA, INTERNATIONAL F INANCIAL DEV'ELOPMENTS
ARE IMPORTANT DETERMINANTS OF LONG-TERM ECONOMIC GROWTH AS
WELL AS SHORT-TERM ECONOMIC CONDITIONSWE
CAN EXPECT THAT A SUSTAINED AMERICAN RECOVERY,
REINFORCED AND REFLECTED IN OTHER GREAT INDUSTRIAL ECONOMIES
SUCH AS JAPAN, WILL PROVIDE A SIGNIFICANT BOOST TO WORLD
TRADE, COMMODITY PRICES AND, ULTIMATELY INVESTMENT FLOWSEVENTUALLY
THIS WILL F: LOW ON DIRECTLY INTO THE AUSTRALIAN
ECONOMY, PRINCIPALLY BY WAY OF STRONGER DEMAND FOR OUR
EXPORTS AND REDUCED INTERNAL PRESSURE ON OUR IMPORT
COMPETING SECTORS-
IT IS THEREFORE IMPORTANT To AUSTRALIA THAT THE
STRENGTHENING OF THE UN ITED STATES ECONOMY AND THE
INTERNATIONAL ECONOMIC RESURGANCE TO FOLLOW IN COUNTRIES
SUCH AS JAPAN BE MAINTAINED.
THE PERSISTANCE OF LARGE STRUCTURAL DEFICITS IN
MANY COUNTRIES POSES THE BIGGEST THREAT TO THIS RECOVERYAs
PRIVATE INVESTMENT PICKS UP, INTE[ REST RATES WILL
INEVITABLY COME UNDER PRESSUREBUT
THE TREND IN REAL INTEREST RATES ELSEWHERE IS
ULTIMATELY OUTSIDE OUR CONTROL. AUSTRALIA BENEFITED FROM A
DECLINE IN UNITED STATES INTEREST RATES DURING THE LAST
YEAR. THAT APPEARS NOW TO HAVE CEASED, DESPITE LOW
INFLATION RATES IN THE UNITED STATES ( BELOW 4% IN THE LAST
YEAR)-INTEREST RATES THERE REMAIN AROUND 10% OR SO A
MARGIN OVER INFLATION OF AS MUCH AS THERE IS THUS A
REAL RISK THAT THE LON4G EXPECTED CLA* SH IN THE UNITED STATES
BETWEEN PRIVATE SECTOR RECOVERY AND : CONTINUING LARGE FISCAL
DEFICITS MAY BRING ABOUT FURTHER RISES IN THE REAL AMERICAN
INTEREST RATES IN THE COMING YEARTHIS
HAS IMPORTANT IMPLICATIONS NOT ONLY FOR
WHETHER RECOVERY IS SUSTAINED IN THE UNITED STATES, BUT ALSO
FOR WHETHER INTEREST RATES IN OTHER INDUSTRALIZED COUNTRIES
WILL PERMI1T A SIGNIFICANT IMPROVEMEN T IN PRIVATE SECTOR
INVESTMENT AND WHETHER DEVELOPING NATIONS WILL HAVE IMPROVED
CAPACITY FOR DEBT SERVICING.
1
THERE IS ALSO THE DIFFICULTY OF ENSURING THE
CONDITIONS FOR GLOBAL ECONOM IC RECOVERY( AND TRADE EXPANS ION
WILL BE MUTUALLY REINFORCING THE MULTITUDE OF BARRIERS TO
INTERNATIONAL TRADE ESTABLISHED DURING THE RECESSION MUST BE
CONFRON4TED IF A STRONG EXPANS ION OF MAJOR I NDUSTR IAL
ECONOMIES IS TO BE ACHIEVEDLONG-
TERM IMPROVEMEN4T IN AUSTRALIAN LIVING
CONDITIONS IS ONLY FEASIBLE IF WE ARE ABLE TO MAINTAIN OPEN
INVESTMENT AND TRADE POLICIES-INDEED THE RECOVERY NOW
STARTING COULD WELL BE THWARTED IF THE SPIRIT QF A4 LIBERAL
MULTILATERAL TRADING SYSTEM CANNOT BE RESTOREDAS
A MAJOR TRADING NATION AUSTRALIA HAS A
PARTICULAR INTEREST IN SUSTAINING AND DEVELOPING CONDITIONS
FOR MUTUALLY BENEFICIAL TRADE. NOWHERE IS THIS MORE
IMPORTANT FOR AUSTRALIAN THAN IN ITS, TRADE RELATIONSHIP WITH
JAPAN. THAT RELATIONSHIP MUST BE REVITALIZED AN D
DIVERS I FIEDACCOUNTING FOR 27% OF OUR TOTAL EXPORTS AND 20% OF
OUR TOTAL IMPORTS, JAPAN MUST BULK ' LARGE IN ANY ASSESSMENT
OF AUSTRALIAN ECONOMIC INTEREST. IMPORTANT STRUCTURAL
CHANGES HAVE TAKEN PLACE, HOWEVER, IN THE JAPANESE ECONOMYWE
MUST RECOGNISE AND ADJUST TO0 THE IMPLICATIONS FOR
AUSTRALIA-
LOWER, THOUGH STILL SIGNIFICAI GROWTH RATES IN
JAPAN, AND A REALIGNMENT OF JAPANESE ENERGY AND INDUSTRY
POLICIES ARE OF PARTICULAR IMPORTANCE ro AUSTRALIAMOST
IMPORTANTLY, THE GROWTH PROSPECTS FOR
AUSTRALIAN RAW MATERIAL EXPORTS TO JAPAN, ARE DIMINISHEDALTERNATIVE
SUPPLEMENTARY MARKETS MUST BE SOUGHT AND, WITH
JAPAN, NEW GROWTH SECTORS WE CAN PROFITABLY SUPPLY
IDENTIFIEDMy GOVERNMENT IS KEEN TO BREAK DOWN UNNECESSARY
BARRIERS TO THE EXPANSION OF TRADE. FOR~ EXAMPLE, THE
RATIONALIZATION OF FISCAL ARRANGEMENTS IN THE COAL INDUSTRY,
AND THE IMPROVEMENT OF COAL EXPORT INFRASTRUCTURES, WOULD
HELP AUSTRALIAN PRODUCERS' EFFORTS TO SECURE NEW AND
ADDITIONAL RAW MATERIAL EXPORT OUTLETS-PROGRESS IN THESE
AND MANY OTHER AREAS REQUIRES CO-OPERATION BETWEEN FEDERAL
AND STATE GOVERNIgENTS. THE ATMOSPHERE FOR SUCH CO-OPERATION
HAS IMPROVED RECENTLY, AS SYMBOLIZED IN THE AGREEMENT AT THE
PREMIERS' CONFERENCE. BUT THERE IS-A LONG WAY TO GOTHE
SCOPE FOR AUSTRALIAN PENETRATION OF PREVIOUSLY
UNTESTED JAPANESE HIGH GROWTH SECTORS HAS USEFULLY BEEN4
ENHANCED BY THE RECENT AGREEMENT BETWEEN MR BOWEN AND
JAPANESE MINISTERS TO ESTABLISH A DIALOGUE AIMED AT
EXAMINING CONCRETE WAYS OF ASSISTING AUSTRALIAN MANUFACTURES
AND OTHER EXPORTERS TO IDENTIFY OPPORTUNITIES AND MEANS OF
PENETRATING THE JAPANESE MARKET-.
14.
IN THE FINAL ANALYSIS, HOVEVER, MUCH GREATER
RESOURCEFULNESS AND IMAGINATiON WILL BE NEEDED IF THE
ECONO'MIC AND TRADING REALTIOINSHIP WITH JAPAN IS TO REALIZE
ITS FULL POTENTIALTHE SAME IS TRUE MORE GENERALLY OF OUR TRADING
RELATIONSHIP WITH THE COUNTRIES OF THE PACIFIC Rim. WHILE
THEIR S;. ARE OF AUSTRALIAN EXPORTS HAS RISEN FROM 37% IN
1961/ 62 TO 55% IN 1981/ 82, THE INTENSELY COMPETITIVE
CHARACTER OF THOSE MARKETS COMBINED WITH THE MAJOR
OPPORTUNITIES ASSOCIATED WITH THE RELATIVELY HIGH GROWTH
RATES MANY OF THEM HAVE SUSTAINED, PUTS PARTICULAR PRESSURE
ON THE INGENUITY AND DRIVE QF AUSTRALIAN EXPORTERS.
IN THIS REGARD SUGGESTIONiS FOR FURTHER ECONOMIC
CO-OPERATION AND EXPANSION OF TRADE AMONG THE COUNTRIES OF
THE PACIFIC REGION ARE RELEVANT. SUCH SUGGESTIONS STEM
FROM: A WISH TO MAXIMISE THE BENEFITS OF THE ECONOMIC
INTERDEPENDENCE BETWEEN THE COUNTRIES OF THE
REGION; RECOGNITION OF IMPLICATIONS FOR THE REGION OF THE
FORMATION AND CONSOLIDATION OF THE EUROPEAN
ECONOMIC COMMUNITY, AND
INTEREST IN PROMOTING THE PACIFIC REGION AS A NEW
u" ENGINE FOR I NTERNAT I ONAL ECONOM IC GROWTH AND
DEVELOPMENT"-
WHILE SPECIFIC IDEAS ABOUT HOW CO-OPERATIONJ MIGHT
BEST BE PROMOTED STILL AWAIT FURTHER REFINEMENT; THE
UNDERLYING THRUST OF THIS INTEREST IS FULLY COMPATIBLE WITH
OUR OWN FOREIGN POLICY AND ECONOMIC GOALS. AN MOVE TOWARDS
CLOSER ECONOMIC CO-OPERATION IN THE PACIFIC WOULD OF COURSE
NEED TO BE NON-DISCRIMINATORY AND THEREFORE CONS ISTENT WITH
OUR WIDER INTERNATIONAL OBJECTIVESYET
IF REGIONAL CO-OPERATIVE ECONOMIC AND TRADING
RELATIONS COULD BE PUT ON A FIRMER FOOTING THE BENEFITS TO
EACH AND EVERY COUNTRY CONCERNED WOULD'SEEM INDISPUTABLETHE
TIMELINESS OF ACTION AIMED AT
INSTITUTIONALISING ANY SUCH INTEREST AND THE RECEPTIVITY OF
KEY PART IC IPANTS TO ARRANGEMENTS OF ANY K IND NEVERTHELESS
SHOULD BE MOST CAREFULLY CONSIDERED-INITIATIVES IU THIS
AREA COULD OTHERWISE PROVE OUITE COUNTERPRODUCTIVE.
THIS IS NOT TO RULE SUCH INITIATIVES OUT OF COURTIN~
AUSTRALIA, WITH my GOVERNMENT'S FIRST BUDGET AND
FOLLOWING THE TREASURER'S MAY 19 STATEMENT WE HAVE ACHIEVED
A TRANSFORMATION A TRANSFORMATION IN POLICY EMPHASIS, IN
THE APPROACH TO ECONOMIIC DE. CISION-MAKINJG, AND IN THE MEANS
AVAILABLE TO THE GOVERNMENTr AND T HE COMMUN ITY FOR BETTER,
MORE SOUNDLY BASED ECONOMIC DFCISIONI1AKING. POLITICALLY
SENSITIVE APPROACHES TO THE DEVELOPMENT -OF MORE
SUBSTANT IALLY CO-OPERATIVE ECONOMIC ANiD TrRAD ING ARRAN; GEMENTS
BETWEEN THE COUNTRI ES OF THE REG ION MUST ALSO STAND SOME
CHANCE OF SUCCESSIT IS CERTAINLY WORTH EXPLORING THE POSSIBILITIESMR
CHAIRMAN, My GOVERNMENT AIMS TO SHAPE AN AUSTRALIA WHICH IS
GOING TO BE OPTIMALLY PLACED TO GROW ! N REAL TERMS AND TO
GIVE ITS CITIZENS THE BEST OPPORTUNITIES FOR THEIR PERSONAL
DEVELOPMENT AND SATISFACTIONACHIEVEMENT OF THIS OBJECTIVE REQUIRES THE RIGHT
SETS OF I NTEGRAT ED-DEC ISI ONS I NTERNAL. LY AND THE CREATION OF
APPROPRIATE PERSPECTIVES AND RELATIONS EXTERNALLYIN
THIS RESPECT I EXPECT THAT MOST OF YOU WOULD
AGREE THE 1983/ 84 BUDGET ACHIEVES THE. RIGHT BALANCE-WHEN
CONSIDERED ALONGSIDE THE CLEAR AND DECISIVE DECISIONS WE
HAVE TAKEN EARLER ON EXCHANGE RATE, FISCAL, MONETARY AND
INCOMES POLICIES, WE HAVE SUCCEEDED IN ESTABLISHING THE MOST
COHERENT AND INTEGRATED FRAMEWORK OF ECONOMIC
DECIS[ ON-MAKING EVER SEEN IN AUSTRALIA-
I. C V.
-V
' C
d
I AUSTRALIA IS, THEREFORE., ESPECIALLY WELL PLACED TO
TAKE FULL ADVANTAGE OF THE INTERNATIONAL ECONOMIC RECOVERY.
THE OPPORTUNITY MUST NOT BE SQUANDERED. AND FOR OUR PART..
AS THE GOVERNMENT OF THIS IA r ION, A NATION W'ITH SUCH CLOSE
LINKS ' WITH THE I N T E RfNAT I CNAL OMMUiN Tl'Y COMPRISINIG THE
PACIFIC BASIN, PARTICULARLY JAPAN AND THE UNITED STATES, WE
ARE DETERMINED TO DO ALL'. IN OUR POWER TO ENSURE THAT THAT
POSSIBILITY IS NOT LOST OR SQUANDERED. 7.