CHEC AGANSTDEULNITEIRLYE MDBEALRIGVOE0REYD
ADDRESS TO PRIME MINISTER'S LUNCHEON
NEWCASTLE CITY HALL 12 APRIL 1984
I am very pleased to he with you today on this; my first
visit to Newcastle as Prime Minister.
I'm especially pleased because I understand this is the
first visit to your city by any Prime Mini: 3ter for nearly
years. But let me assure you you won't have to wait another
years. When Paul Keating was here recently he was the thirteenth
Minister to visit Newcastle since the election.
I'm the fourteenth.
Lionel Bowen, the Deputy Prime Minister, a: rives here
tomorrow making it 1.5 Ministers.
Over half the Federal Ministry has visited Newcastle in
li'Ctle over a year.
That's more Ministers t-han came here during the entire seven
years of the previous Government seven years when
Newcastle was all but forgotten.
Of course, such neglect from the previous Government was
for it perfectly normal.
Even so, it did constitute a blindness to the role of
Newcastle and this region in Australia that was
extraordinary even by its standards.
You can't ignore a region of nearly 500,0001 people with
Australia's sixth largest city.
You can't ignore a critical centre of Australia's heavy
industry.
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You can't ignore a city which apart from West Australia's
iron ore ports, Dampier and Port Hedland is Australia's
number one export port.
And we won't ignore you.
The Federal Labor Government is giving Newcastle a new deal.
That's clear from the initiatives we've already taken for
Newcastle over the past year, initiatives such as:
the decision to establish a regional taxation office in
Newcastle which will ultimately employ over 700 people;
the new Federal office block we will begin building
later this year at a cost of $ 10 million; ' 4
the new $ 180 million highway development strategy for
the Hunter region which will provide a complete bypass
west of Newcastle and Maitland for national traffic by
1990;
the appointment for the first time of a permanent family
court judge for the Newcastle 7egion; and
the establishment of a regional office of the Department
of Trade in Newcastle which Lionel Bowen will open
tomorrow.
Vie recognise Newcastle for what it is one of Australia's
key industrial centres.
The decisions we've taken will help upgrade the status of
Newcastle and broaden your infrastructure and industries.
Our initiatives also offer a challenge to other
organisations with a stake in Newcastle to follow our lead
to upgrade and expand their representation here and to allow
more local decision making.
I urge the private sector to consider the implications of
the Federal Government's commitment to this region and to
take advantage of the opportunities that are opening up.
And those opportunities are all the brighter because of the
dramatically improved outlook for the Australian steel
industry. The last time I was i~ n Newcastle was in October 1982 to
address that huge public meeting held in this City Hall to
consider the crisis in the steel industry.
At that time you were facing the appalling prospect of the
steel industry disappearing altogether from Australia and,
with that, the effective destruction of Ne3wcastle as a
community.
You'll recall that at that public meeting, called at a time
of absolute crisis, the previous Governmen't didn't even
bother to send a representative.
That's something the people of Newcastle should never
forget.
But fortunately that Government has passed away.
Labor was elected and we moved as quickly as we could to
rescue the steel industry.
The result was our historic Steel Industry Plan.
Through the Steel Plan we saved the steel industry.
And in saving the steel industry we saved Newcastle.
The Steel Industry Plan is a breakthrough for Australia.
It's the first serious case in our history of cooperative
industrial reconstruction.
The Steel Plan is in effect a contract, a contract between
the Federal Government, BHP and the unions.
The three parties have each given vital commitments.
By collectively observing those commitments, the parties
have ensured that A6stralia retains a viable, efficient
steel industry.
The Federal Government's commitments are for a steel bounty
of up to $ 72 million a year.
The unions' commitments relate to wages, productivity and
observing grievance settlement procedures.
BHP's commitments are for job security, new investment and
the continued operation of three separate steel centres.
The Steel Plan is an integrated package.
Failure by any of the parties to ob3erve their undertakings
means the whole Plan falls apart.
The new Steel Industry Authority is charged with monitoring
the situation to ensure that all the parties honour their
obligations. The Steel Plan is working well.
Bounty payments in the first half of this year are expected
to be significantly below the maximum provided for,
reflecting the improvement in output by the steel industry.
The Plan is certainly helping to improve the industry's
productivity. There is a sense of commitment by all the parties to make
the Plan work.
Because of the devastation suffered by Newcastle and the
other steel centres the Government has also introduced a
package of employment and training initiatives for these
r eg io ns
In particular, we have set aside more than $ 100 million for
projects in the steel regions to improve the economic
infrastructure and provide new job opportunities.
We have already approved projects valued at. $ 23 million for
the Hunter region together with an additional $ 10 million
for tourism developments.
We have also extended the labour adjustment. training
arrangements to cover not only waorkers retrenched in the
steel industry but also workers retrenched from firms
supplying goods or services to the steel industry and those
retrenched in the coal industry in NSW.
The labour adjustment training arrangements aim to upgrade
workers' skills and so make it easier to get a job.
We have provided'over B00 training places in the Hunter
region under these arrangements.
The Government is also providing job opportunities in
Newcastle through our new Community Employment Program.
We have already approved over $ B million for CEP projects in
the Hunter region. These will create more than 800 jobs.
Like the steel industry, the coal industry has been
experiencing extremely severe difficulties.
Overseas contracts are, of course, crucial to the coal
industry's long term prospects.
In my visit earlier this year to Japan, South Korea, China
and Malaysia, I stressed Australia's increased reliability
as a supplier and our improved industrial relations record.
This was seen as being crucially important to reversing the
deterioration that has occurred in Australia's position as a
supplier of steel-making raw materials in recent years.
The steel industry crisis in Australia was exacerbated by
the dramatic downturn in our economy.
This led all those industries which use steel to savagely
cut back their demand for steel with appalling
consequences for steel centres like Newcastle.
Newcastle has a vital interest in the national economic
recovery for all the obvious reasons but also because
expansion in Newcastle's steel industry depends more than
anything else on-rising economic activity and growing.
demand. Novi the simple fact is this: the economic recovery in
Australia is well and truly underway.
Those remaining doubzCing Thomases on this score were
strangely mute late last month when the Bureau of Statistics
released its most recent national accounts figures. V
These showed that the non-farm economy, after contracting in
the first half of last year, rebounded very strongly by an
estimated 5.6 per cent through the second half of last
ye ar
In other words, the economic recovery is underway.
Our official advisers expect that growth in the non-farm
economy through this financial year will be as high as B per
cent. This is the strongest growth for mare than a decade.
The challenge is no longer to reverse the slide into
recession. We have done that.
T~ ie challenge now is to maintain the momentum of the
recovery that is already underway.
This will not be easy.
In particular, it will require creating a sustained recovery
in private sector investment.
Private investment is normally the last component of demand
to pick up in an economic recovery.
There are two requirements as important as any in creating a
recovery in investment.
These are: a balanced fiscal policy and a successful wages
po i cy
The Federal Government has both.
In the case of fiscal policy, last year's Budget is now
generally recognised as an outstanding success.
It provided a substantial stimulus to the Australian economy
but a stimulus that was not excessive given the depth of the
recession that Australia was experiencing.
It struck the right balance.
Furthermore the Budget is on target.
Government spending is expected to exceed the Budget
estimates by less than one half per cent while aggregate
receipts will be very close to the Budget forecasts.
The Government has already begun considering this year's
Budget. 4
We are starting from the basic premise that the economic
circumstances facing Australia now are very different from
what they were 12 months ago.
When we were drawing up last year's Budget Australia was in
the depths of the recession. A substantial economic
stimulus from the Budget was obviously required.
However, the economy is now growing strongly and the private
sector's demand for funds is picking up.
In these circumstances, the Government believes the only
responsible course is to wind back the degree of stimulus
from the government sector and to reduce the financing
demands the public sector is placing on private capital
markets. Failure to do so would risk upward pressure on interest
rates something that can only harm the prospects for long
term recovery.
Accordingly the Government will reduce significantly the
size of the deficit in the coming Budget.
But the extent of the deficit reduction will not be so large
as to pull the rug from under domestic demand and so
undermine the recovery.
There will be no draconian deficit reduction.
As we did last year, we will strike the right balance.
And in doing so we hope to encompass in the Budget
significant cuts in personal income taxation tax cuts that
the community at large expects from us and tax cuts that
will provide a firm underpinning for continued wage
restraint.
The Government's Fiscal policy is .1ound, it is responsible,
it is balanced.
And therefore it is a total contraSt to t-ie fiscal policy of
the previous Government.
Our predecessors had the dubious distinction of blowing out
the deficit in their last Budget by over $ 2 1/ 2 billion an~
all-time record.
They also left us with a projected Budget deficit for
1983-84 of $ 9.6 billion, a veritabl~ e fiscal crisis and a
crisis about which they deliberately deceived the Australian
people during the election campaign.
But fortunately and I say this particularly to the
business community those days of fiscal mismanagement are
ov er
The failure of the previous Government's fiscal policy was
bad enough.
But that failure was matched by the failure of their wages
policy and I use the term ' wages policy' advisedly.
The previous Government's wages policy, such as it was, was
simply a recipe for a wages explosion.
That's exactly what Australia had.
And the tragedy of that wages explosion was that it
contributed very greatly to the severity of the recession.
For a long term economic recovery Australia needs above all
a wages policy that is coherent, that is equitable, that is
workable. That, I submit, is precisely what the Federal Government has
put in place for Australia a wages policy, centred around
the Prices and Incomes Accord, that will provide a firm
basis for long term wage stability.
The next National Waqe Case decision is expected to be
handed down in late Sepotember or October. It will be based
on the Consumer Price Index rises for the March and June
quarters of this year.
However, the combined CPI rise in these quarters will be
drastically reduced by the impact of Medicare.
In fact Medicare is expected to cut the CPI by about 2 3/ 4
percentage points.
This means the next National Wage Case rise will be
extremely low about I to 2 per cent.
The ACTU has made it clear at the Economic Summit Conference
and on a number of occasions since that they will not seek
compensation for Medicare induced reductions in the CPI.
That is appropriate and responsible.
The Federal Government will totally oppose any claims by
individual unions for compensation for the impact of
Medicare on the CPI.
We are determined that the Medicare-induced CPI reduction
will be transmitted fully into a slowing of wages growth.
The National Wage Case decision after the one later this
year is not expected until March or April of next year.
What this means is that business can look ahead for almost a'
year knowing that wage rises will be mininal.
The next year will see very considerable wage restraint.
This will be a very helpful breathing space for business.
It will help profits to recover further, 4 ' t will help new
investment plans to be followed through and it will help the
creation of new jobs.
The Government believes the coming period of wage restraint
will give Australia a firm base for continuing to build on
the unemployment reductions we have already achieved.
Australia's economic recovery is now underway.
The Government's highest priority is to maintain and broaden
the momentum of that recovery.
We have made a welcome start but there is a very long way to
go. All sections of the community must play their part.
All sections of the Qommunity must exercise restraint.
All sections of the community must co-operate with the
national government.
Provided that co-operation is forthcoming I believe
Australia can look to a brighter future than we've seen for
y ea rs
These are difficult times.
We cannot ignore the deep-seated problems we still face.
9.
But equally we cannot ignore the fact that at long last we
are climbing out of the recession and creating the basis for
a long term economic recovery.
With the support of all of you, that long term recovery,
that return to prosperity is precisely what we will achieve.
And Newcastle will both play a significant role in, and
benefit from, that recovery.