JAUSTRALIA
PRIME MINISTER
FOR MEDIA 12 March 1984
Today's EPAC meeting focussed on longer-term economic policy,
as agreed in the December meeting.
I reported in some detail on the! issues of industry and
trade policy that had arisen in relation to my recent visit
to five Asian countries. There was strong support for the
approach outlined in my statements prior to and during the
Asian visit, in particular in my speech in Osaka on February 3.
I explained that I had asked Senator Button to co-ordinate the
work of a range of Ministers in areas relevant to structural
change in the economy. Senator Button attended the EPAC
meeting during discussion of longer term policy.
There was a highly constructive discussion of industry policy,
which fully justifies the government's high expectations of
the usefulness of EPAC. This led to the development of an
agreed statement on medium to longer-term economic policy,
which is attached.
In this context, the Council agreed that the Office should
prepare annually a detailed medium-term assessment of the
Australian economy and that this assessment be released after
consideration at the December EPAC meeting. The assessment.
should be broadly based and should include:
An analysis of overseas economic conditions as they
are likely to affect Australia during the next few
years. An analysis of the sectoral structure of the economy
and of the changing industrial composition of
production and employment.
An evaluation of prospective develIopments in capital
and labour markets and of the outlook for prices.
A review of the trends in size and composition of the
Australian population and of the economic implications
of such changes.
An analysis of the prospective siLze, composition and
financing of the public sector.
The likely rate of growth in and distribution of
national income.
Council agreed that the office should develop and use such models
as are appropriate in preparing the assessment, but that
extensive use be made of other source materials and the results
of research undertaken elsewhere. / 2
-2-
An opportunity should also be given for community views to be
taken into account in developing this assessment.
There was also discussion of papers by EPAC members on taxation,
directed to longer-term policy formulation.
I am grateful to EPAC members for the productive effort that.
they have put into the work on taxation policy for this meeting.
EPAC agreed that
it is clear from these contributions that there are
shortcomings in the present taxation structure, whether
viewed from the standpoint of the efficient long-term
growth of the Australian economy, or of the building of a
more equitable Australian society.
It is also clear that taxation reform must consist
of an overall package. Single elements of taxation
reform cannot properly be judged in isolation.
For community discussion of these matters, and in the end
government decision, to be productive, it should focus on
inter-related packages of measures. This makes the matter
highly complex, and it will take considerable time for
informed community attitudes to emerge.
Reform of the taxation structure is a long-term matte:-,
with large implications for the g~ rowth and structure of the
Australian economy. Different se ctors of the economy
have put very different views to EPAC.
Consistent with the government's approach to building
community consensus on complex issues, the government
will not take positions on these matters until there ' has
been wide community discussion and until informed
attitudes to alternative packages have emerged.
It was accepted that the government's -immediate priorities on
taxation reform are to support the Prices and Incomes Accord and to
everything to strengthimn and broaden and to do nothing to weaken
the economic recovery which is now underway. To this end, the
government has made it clear that it will provide some relief on
personal income taxation * for low and middle income earners
in the coming budget if threoverall budgetary situation allows
it to do so.
Papers on medium and longer-term. economic policy, taxation
and other matters, which were presented to the meeting have been
declassified to facilitate public discussion. A list of available
papers is attached. / 3
EPAC STATEMENT ON MEDIUM TO LONGER-TEMI ECONOMIC POLICY
1. In its last two meetings, EPAC has deliberated on
longer-term problems of economic growth and employmen,:..
This will be a central focus of the work of EPAC.
To guide this work, the EPAC today recognised that
the medium to longer-term problems demand an approach of:
A. Generating and maintaining high growth rates
B. Influencing the participation rates to assist
in reducing the level of unemployment.
2. High growth rates are essential to meeting Australia'S
employment and wider national ambitions. In sustaining
high and continuing growth rates it is recognised thai:
A. Australian industry needs to be internationally
competitive
B. Australia has advantages in natural and human resources
which need to be further developed
C. Growth must be broadly based across the economy
D. Growth will require high levels of investment
from home and abroad
E. There must be stability in government policy over long
periods of time to allow implementation of plans for
high levels of investment
F. A more co-operative less combative pattern of
industrial relations should continue to be developed
G. Growth policy must work within constraints imposed
by the availability of productive resources and
capacities, and by the reqjuiremnents of stability
in the balance of payments and in domestic financial
markets
3. In the development strategy for maintaining high and
continuing growth rates it is recognised that
A. The Government and the A. C. T. U. are committed
to the Prices and Incomes Accord to provide:
Wage and Price stability,
opportunity for business to plan new investment
in a more certain economic environment
B. Fiscal and monetary policy should continue to be
based on providing stimulus without accommodating
any reversal in the downward trend in inflation
4. It is recognised that the incomes policies and the
monetary and fiscal policies taken together cannot alone
create the circumstances to satisfy the objective of
continuing high growth rates.
It is recognised that we need to develop integrated
and dynamic policies across all sectors.
If we are to develop such policies we need to manage
change constructively rather than simply to respond
to change. In doing so we need to accept and plan for
faster rates of change, which are consistent with our
objectives. In particular on protection, consistent with
the shared understanding that change must occur if grcwth
is to ensue, policy must be applied in a manner which
facilitates change while minimising the hardship associated
with such change.
An active industry development strategy should be
developed in which:
A. Encouragement and opportunities to plan and invdst
enterprises
are given to industries or/ involved in expansion
of competitive production.
B. The infrastructure for industry development is
improved and provided more efficiently.
C. Industry and the workers in them are given the
opportunity to adjust to change within stable
programs that are known in advance of their application.
D. There is a limit on artificial and bureaucratic
regulation, and there is reduction in regulation which
encourages neither economic efficiency nor social
equity.
6. It is generally recognised that the labor demand side
measures are the primary method of generating employment
opportunities. However, there are a range of options
relating to labor supply policies, affecting labour force
participation, which can be developed on an agreed basis.
These include:
raising the proportion of young people who experience
higher levels of formal education
facilitating voluntary earlier retirement
reducing the cost penalties associated with employment
of additional persons compared with increasing overtime
distributing national productivity increases in a
manner which increases employment opportunities
carefully and strictly controlled introduction of
part time work.
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P'inc iple( s for iax' uvrI or HI
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I I. TonwarVd s a Ne(' w T'ax Bas foIr I All ira i I
An Outliie Overview of Some Key Issues
N UG ii bbons
17. Iowairds Assessmenl of the Austia Iii Tax Systemi:
A Local Gove rnment View
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1 8I iixaI uii NeIo
Is. Taxat on Her r
19. ( ommeis on hI Australian a x System Paper
Thle Han. T. Gray
Some ComflIn I s on RefI ormIiI of the Taxation
Sys temI
SouthN Au st1 r al ian Gover inen t.
21 Collnts on the Auist ra i jal lax SystmIII Pper
The Hon. N. K. Wran
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Conp it veness"
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The lHon. R. T. Gray
2d a x atIi o Ianad Soci al Welf are M1e a sul s A rfe ct irIg
F a mni i e s
Womllen' s Act ion lIlI iuaiicfP
The AustralIi ana As sociat ed ew Slbm iSSi ot1 1 h
Lconomiiic Planning Advisory Cuoncil
Thie Australian Associated Blruwei's
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