PRIME MINISTER4
SPEECH BY THE PRIME MINISTER BUSINESS LUNCH
MENZIES HOTEL, SYDNEY, 19 MARCH 1984
THE PAST YEAR HAS BEEN A MOMENTOUS ONE FOR AUSTRALIA AND, FOR
ITS MOST POPULOUS STATE, NEW SOUTH WALES. IN PARTICULAR WE HAVE
WITNESSED A MARKED CHANGE IN OUR ECONOMIC FORTUNES,. REFLECTED
PARTICULARLY IN A LARGE INCREASE IN THE NUMBER OF AUSTRALIANS
WHO HAVE JOBS.
IN THIS, THE WRAN LABOR GOVERNMENT OF NEW SOUTH WALES,
THE PEOPLE OF NEW SOUTH WALES, THE BUSINESS COMMUNITY OF
NEW SOUTH WALES, AND THE UNION MOVEMENT OF NEW SOUTH WALES
HAVE MADE A VITAL CONTRIBUTIONS
WE ARE NOW BEGINNING THE SECOND YEAR OF OUR ECONOMIC RECOVERY.
A YEAR AGO THE ECONOMY WAS IN THE GRIP OF THE WORST RECESSION
IN FIFTY YEARS. DROUGHT BLIGHTED THE RURAL SECTOR.
PRIVATE SPENDING-WAS WEAK. REAL DOMESTIC PRODUCT DECLINED
BY SOME 2 PER CENT IN 1982-83, THE FIRST SUCH FALL SEEN
IN 3-0 YEARS AND THE HIGHEST SINCE 1946-47.
UNEMPLOYMENT HAD RISEN BY OVER 250,000 DURING THE PRECEDING
YEAR, SO THAT NEARLY THREE QUARTERS OF A MILLION AUSTRALIANS
WERE OUT OF WORK. TNFLATION STOOD AT 11,5 PER CENT,. MORE
THAN DOUBLE THE OECD AVERAGE. INTEREST RATES WERE EXCESSIVELY
NEW SOUTH WALES SHARED IN THE DOWNTURN, INDEED, BECAUSE
OF THE STATE'S HIGH CONCENTRATION OF MANUFACTURING
INDUSTRIES AND THE EXTREME SEVERITY OF THE DROUGHT IN
THIS STATE, CONTRACTION IN THE PERIOD BEFORE WE TOOK
OFFICE WAS PARTICULARLY SEVERE IN NEW SOUTH WALES,
UNEMPLOYMENT INCREASED BY OVER 100,000 OR 68 PER CENT
OVER THE COURSE OF 1982-83,
BUT TODAY THERE IS A BASIS FOR MUCH GREATER OPTIMISM,
THE BREAKING OF THE DROUGHT HAS SEEN A MAJOR AND MUCH
NEEDED REVIVAL IN THE RURAL SECTOR, BECAUSE THE DROUGHT
WAS MORE SEVERE IN NEW SOUTH WALES, THE RECOVERY IN
RURAL ACTIVITY IS SIGNIFICANTLY MORE PRONOUNCED THAN
ELSEWHERE,
THE ECONOMIC RECOVERY WHICH IS NOW UNDERWAY EXTENDS
WELL BEYOND THE UPTURN IN THE RURAL SECTOR, NEW SOUTH
WALES IS PARTICIPATING STRONGLY IN THE MORE GENERAL
IMPROVEMENT IN THE AUSTRALIAN ECONOMIC ENVIRONMENT,
THERE WAS STRONG EVIDENCE OF THE BREADTH OF NATIONAL
ECONOMIC RECOVERY IN THE SEPTEMBER QUARTER NATIONAL
ACCOUNTS,
THESE SHOW THAT NON-FARM PRODUCTION HAD RECOVERED
THE GROUND LOST OVER THE PREVIOUS YEAR, HAVING RISEN BY
2.3 PER CENT IN THE QUARTER.
THE PATTERN OF THE TURNAROUND IN THE SEPTEMBER QUARTER
WAS MUCH AS EXPECTED, THOUGH THE PACE OF THE IMPROVEMENT
WAS MUCH STRONGER THAN ECONOMIC FORECASTERS HAD
ANTICIPATED. THE STIMULUS TO GROWTH CAME FROM AN IMPROVEMENT IN
PRIVATE SECTOR INTEREST IN HOLDING INVENTORIES, PUBLIC
SECTOR DEMAND, PRIVATE CONSUMPTION, DWELLING INVESTMENT,
AND A STRENGTHENING OF OUR INTERNATIONAL TRADING SITUATION.
AVAILABLE INDICATORS SUGGEST THAT THIS PATTERN OF GROWTH
HAS CONTINUED SINCE THE SEPTEMBER QUARTER:
RETAIL SALES HAVE BEEN STRONG
MOTOR VEHICLES REGISTRATIONS ARE E, RPLY
HIGHER HOUSING STARTS AND LENDING FOR HOUSING ARE
PROCEEDING APACE
WE INHERITED AN INFLATION RATE OF 11.5 PER CENT. SINCE
THEN THE TREND HAS CLEARLY BEEN DOWNWARD. THE ACCORD
WILL HELP TO KEEP THE TREND DOWNWARD FOR AT LEAST THE
REMAINDER OF THE FINANCIAL YEAR.
EMPLOYMENT HAS BEEN GROWING MUCH MORE STRONGLY THAN
EXPECTED IN THE BUDGET FORECASTS, EMPLOYMENT HAS ALREADY
GROWN BY MORE THAN THE BUDGET TIME FORECAST FOR THE
WHOLE FINANCIAL YEAR, THE UNEMPLOYMENT RATE HAS FALLEN
FROM 10.3 PER CENT TO 9,4 PER CENT,
THE TURNAROUND IN NEW SOUTH WALES HAS BEEN PARTICULARLY
STRONG, THE MOST RECENT INDICATORS SUGGEST THAT THE
RECOVERY IN HOUSING ACTIVITY IS PROCEEDING FASTEST IN
NEW SOUTH WALES, MOTOR VEHICLE REGISTRATIONS HAVE RISEN
MARKEDLY OVER THE PAST YEAR, NEW SOUTH WALES HAD THE
LOWEST INFLATION RATE ( 7.7 PER CENT) OF ANY STATE OVER
THE COURSE OF 1983.
EMPLOYMENT IN NEW SOUTH WALES HAS RISEN SUBSTANTIALLY.
OVER THE FIRST EIGHT MONTHS OF THE CURRENT FINANCIAL YEAR
EMPLOYMENT IN NEW SOUTH WALES INCREASED BY NEARLY 19,000
OR 1 PER CENT, OVER THE YEAR ENDING FEBRUARY THIS YEAR
THE UNEMPLOYMENT RATE FELL BY 0.4 PERCENTAGE POINTS, A
SLIGHTLY LARGER DECLINE THAN EXPERIENCED BY THE ECONOMY
OVERALL, WHAT ABOUT THE OUTLOOK FOR THE NATIONAL ECONOMY OVER
THE COMING FINANCIAL YEAR?
IT IS THE GOVERNMENT'S BELIEF THAT THE STRONG RECOVERY
IN THE CURRENT FINANCIAL YEAR CAN AND SHOULD BE FOLLOWED
BY SUSTAINED GROWTH IN 1984-85 AND BEYOND, GOVERNMENT
POLICY IS DIRECTED AT ENSURING SUCH AN OUTCOME,
As THE TREASURER AND I HAVE BOTH BEEN STRESSING RECENTLY,
BUSINESS INVESTMENT HAS A CRITICAL ROLE TO PLAY, BOTH
IN MAINTAINING THE MOMENTUM OF RECOVERY THROUGH 1984-85
AND IN ENSURING THAT RECOVERY ENDURES,
THE GOVERNMENT'S POLICIES ARE SET TO ENCOURAGE AND SUPPORT
AN EARLY REVIVAL IN INVESTMENT,
THE ACCORD IS PLAYING A MAJOR PART IN KEEPING WAGE AND
PRICE PRESSURES AS LOW AS POSSIBLE, IT HAS USHERED IN
A NEW ERA OF INDUSTRIAL HARMONY AND PROVIDES BUSINESS
WITH A MORE CERTAIN BASIS ON WHICH TO PLAN,
WITHIN THE ACCORD, AFTER THE WAGE INCREASE ARISING OUT
OF THE CURRENT CASE BEFORE THE ARBITRATION COMMISSION,
THERE WILL BE VIRTUALLY NO INCREASE IN WAGES UNTIL THE
FIRST HALF OF 1985, THE BENEFICIAL EFFECTS OF MEDICARE
ON THE C. PI, WILL KEEP ANY WAGE INCREASE IN THE SECOND
HALF OF THIS YEAR DOWN TO ONE PER CENT OR SO,
THE COMBINATION OF WAGE RESTRAINT AND STRONG GROWTH IN
OUTPUT HAS BEEN REDUCING UNIT LABOUR COSTS AND RAISING
THE SHARE OF PROFITS IN INCOME,
THE SAME ACCORD WHICH IS DELIVERING A SIGNIFICANT DEGREE
OF WAGE RESTRAINT IN THE PROCESS OF ECONOMIC RECOVERY IS
ALSO DELIVERING A REMARKABLE IMPROVEMENT IN INDUSTRIAL
RELATIONS. LAST WEEK THE STATISTICIAN TOLD US THAT
DAYS LOST PER THOUSAND WORKERS IN 1983 WAS 40 PER CENT
BELOW THE PREVIOUS YEAR, AND THE LOWEST SINCE 1967.
OUR MONETARY POLICY WILL CONTINUE TO PROVIDE A BASIS FOR
SUSTAINABLE REDUCTIONS IN INTEREST RATES AND A FAVOURABLE
ENVIRONMENT FOR PRIVATE SECTOR SPENDING,
WE HAVE SEEN SIGNIFICANT REDUCTIONS IN INTEREST RATES
THROUGH THE CURRENT FINANCIAL YEAR. DOMESTIC INFLUENCES
WILL BE HELPFUL TO CONTINUED IMPROVEMENTS NEXT YEAR.
CORPORATE PROFITS WILL BE DISTINCTLY HIGHER THAN THIS YEAR'S
IMPROVED LEVELS, SO THAT BUSINESS WILL BE BETTER PLACED TO
FINANCE INVESTMENT OUT OF CASH FLOW. WE EXPECT STATE
AUTHORITIES TO REDUCE THEIR DEMANDS ON FINANCIAL MARKETS,
AS THEY COMPLETE MAJOR INVESTMENT PROGRAMMES AND AS
THEIR REVENUES STRENGTHEN WITH ECONOMIC RECOVERY. HIGHER
INCOMES WILL HOLD UP HOUSEHOLD SAVINGS. AND THE
COMMONWEALTH INTENDS SIGNIFICANTLY TO REDUCE ITS OWN DEMANDS
ON FINANCIAL MARKETS. SUBSTANTIAL INCREASES IN PRIVATE
INVESTMENT NEXT FINANCIAL YEAR ARE CONSISTENT WITH IMPROVED
FINANCIAL CONDITIONS.
THE AUSTRALIAN LABOR GOVERNMENT'S STRATEGY FOR NATIONAL
ECONOMIC RECOVERY IS FIRMLY IN PLACE.
IT NOW SEEMS LIKELY THAT GROWTH THROUGH THE CURRENT
FINANCIAL YEAR WILL BE STRONGER THAN IN ANY YEAR SINCE a.
THE FIRST COLLECTIONS OF NATIONAL ACCOUNTS DATA MORE
THAN TWENTY YEARS AGO,
THERE ARE GOOD PROSPECTS FOR STRONG GROWTH NEXT YEAR AND
INTO THE LONGER TERM FUTURE,
THIS STRONG TURNAROUND IN AUSTRALIA'S ECONOMIC FORTUNES
HAS DEPENDED ON THE CO-OPERATION OF MANY IMPORTANT GROUPS
IN THE AUSTRALIAN COMMUNITY,
IT HAS DEPENDED SIGNIFICANTLY ON THE EXCELLENT RELATIONS
BETWEEN THE AUSTRALIAN AND NEW SOUTH WALES LABOR
GOVERNMENTS, IT HAS DEPENDED ON CO-OPERATION BETWEEN TWO GOVERNMENTS
WHICH UNDERSTAND EACH OTHER AND WHICH TOGETHER WORK WELL
WITH THE TRADE UNION MOVEMENT,
NEVILLE WRAN'S GOVERNMENT HAS MANAGED THE NEW SOUTH WALES
ECONOMY THROUGH THE MOST DIFFICULT OF TIMES,
HIS EFFORTS, AND OURS, ARE BEGINNING TO BEAR THEIR FULL
FRUIT,
r_
8.
To BE CONFIDENT THAT AUSTRALIA AND NEW SOUTH WALES CAN
CONTINUE TOGETHER STEADILY TO GROW, AS I HAVE SAID BEFORE
AND REPEAT NOW
" I NEED NEVILLE WRAN, NEW SOUTH WALES NEEDS
NEVILLE WRAN, AND AUSTRALIA NEEDS NEVILLE WRAN".