EM4BARGOED UNTIL DELIVERY
VCHECK AGAINST DELIVERY
ADDRESS BY PRIME MINISTER TO BUSINESS
PERSONS' LUNCH
ADELAIDE FESTIVAL CENTRE 18 APRIL 1984
When the Federal Labor Government was elected a little over
a year ago, the central challenge vie faced was the challenge
of economic recovery.
Looking back over the past year, tie are clearly entitled to
claim that outstanding progress has already been made.
But to appreciate fully that progress you have to cast your
minds back to the appalling economic legacy we inherited.
Twelve months ago Australia was in a grip of what can only
be described as an economic crisis.
Unemployment had risen by a quarter of a million in the
previous year.
The economy was experiencing negative economic growth for
the first time in 30 years.
Australia was in the grip of the worst recession for
y ea rs
That was our legacy.
But now, twelve months later, there has been an
extraordinary turnaround by any Standards.
The economic recovery
The national economy, which contracted in the first half of
last year, grew remarkably in the s3econd half of 1983.
This resurgence of economic growth has brought with it
renewed growth in job opportunitie! 3.
Indeed employment levels have risen by 210,0010 since April
last year, compared with a fall of nearly 200,000 over the
previous year.
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The unemployment rate has dropped from its peak level of
10.4 per cent to 9.3 per cent in March.
Inflation is falling, profits are picking up and business
confidence is returning.
The economic recovery has begun.
And that's not just the Government's view.
It is now the consensus right around Australia..
What is also clear is that South Australia has performed
particularly well in the national recovery.
South Australia has seen a welcome lift in consumer
confidence and retail sales, a much needed recovery in the
State's rural sector and the strongest recovery in the
housing industry of any State.
The economic recovery, both here in South Australia and
nationally, has been due to a combination of factors.
The improvement in the United States' economy and the
breaking of the drought have played a part.
But no reasonable person now doubts3 the contribution to the
recovery made by the economic policies of the Federal
Government. Our budgetary policies have given -the Australian economy a
much needed, but carefully controlled, economic stimulus.
Our wages policy, centred on the Prices and Incomes Accord,
has given business the firm prospect of long term wages
moderation. Our housing policies have played a major role in the housing
recovery. And we have brought back to economic policy the vital
ingredients of stability and continuity ingredients so
lacking under our predecessors.
But it is one thing to get the economic recovery underway.
It is quite another to sustain it and to sustain it not
just for 6 or 12 months but year after year.
The Government does not for a moment underestimate how
difficult that task is going to be.
All our policies will be directed, above all, to that
o b jec t ive
A balanced, responsible fiscal policy is g] oing to be very
important.
So too will be a coherent, workable wages policy.
In fact wages policy will be critical.
The last thing Australia needs is a wages surge that will
choke off the economic recovery.
However, that's what the Opposition has effectively proposed
for Australia with their wages policy released on Monday.
That wages policy would promote a wages explosion led by the
best organised sections of the labour movement and at the
same time threaten the living standards of more, vulnerable
workers. The Opposition's wages policy would divide Australia.
It would return this country to the politics of
confrontation, the politics of division which they inflicted
on the people of Australia in government.
If you need any proof of this, you only have to consider Mr
Macphee's admission on Monday that initially their wages
policy could provoke an increase in industrial strife in
Australia. Is there anything more ridiculous than an Industrial
Relations Shadow Minister proclaiming policies that could
provoke more strikes, especially at a time when we are
seeking to develop a stable framework for medium and
longer-term growth?
Last year under this Government Australia had the lowest
level of strikes for 16 years.
But the Opposition want to throw all that away.
For * years we heard Liberal and National Party Ministers call
upon the unions to accept the umpire's decision.
Now they want to mug the umpire.
They want to abolish the Arbitration Commission.
They want to undermine the Arbitration system.
They want to throw consensus and cooperation out the window.
And they're prepared to attack the very fabric of our
society to do it.
This country has had enough of confrontation.
It's had enough of divisiveness.
What Australia needs is what we've given it a wages policy
that puts the mistakes of the past behind US and looks to
the future.
Our wages policy has put Australia on the path of recovery.
This recovery simply could not survive the wages explosion
and industrial disputation that would inevitably follow any
attempt to implement the Opposition's policies.
The IndustrialChallenge
There is a further matter of policy that in the long term is
going to be as vital as any other.
That is the requirement for a rational, forward-looking
industry policy.
For a decade there has been widespread concern about
deep-seated problems in Australia's manufocturing industry.
The general economic recovery is taking pressure off much of
Australian manufacturing industry but underlying weaknesses
remain.
Manufacturing is not providing the growith opportunities that
it should.
It is not providing the export opportunities that it should.
It is not providing the job opportunities that it should.
But if that is particularly true of manufacturing it is also
true to a greater or lesser extent of the rest of the
economy as well.
For years indeed decades the Australian economy has not
been able to take advantage of the opportunities for
sustained, high level growth that have been open to us.
And Australia has been very much the worse: for it.
Over the last two or three decades Australia's per capita
economic growth has been significantly below the average of
OECD countries.
In 1960 Australia was in 7th place among OECD countries in
terms of per capita GDP.
In 1975 we were in 10th Place.
By 1980 we were fifteenth.
Our relative economic performance has not been impressive.
This is despite our enormous natural resources, despite our
highly skilled labour force and despite the adva2ntages of
our geographic location in the Western Pacific region, the
most dynamic part of the world trading system.
The OECD has estimated that economic grovith in 1984 in
Australia will be stronger than in any other OECD country.
Wie have begun to reverse the slide but what is needed is an
improved performance over a long period.
Clearly we as a nation have not been good at seizing
opportunities. We have not been good at managing the future.
And nowhere is this clearer than in the type of industrial
structures that we have allowed to develop over.-the years.
With notable exceptions much Australian industry, including
manufacturing industry, has been passive, defensive,
inwiard-looking and generally not attuned to the
opportunities for growth that have been opening up around
US. However, this legacy of the past is also a challenge for the
future.
That challenge is:
to transform our industrial structures over the
coming years and decades and
to make Australian industry, including
manufacturing industry, more dynamic, flexible and
o u tward -1001 n g.
Rather than turning our backs on change and clinging to the
past, we as a nation need to face up to change and make our
own future.
And Australia's future lies very much in this part of the
worl~ d the Asia Pacific Region, the most economically
dynamic, fastest-growing part of the world.
We need to progressively open up our naticinaleconomy and to
link ourselves more and more with the dynamic economic
growth that is occurring around us.
We also need an industry policy framework that will help
achieve this, that will foster an expanding, competitive,
export-orientated industrial base.
The First Steps
Australia, Of Course, cannot switch paths overnight.
The Federal Government sees its initial task as fostering a
dialogue on change and creating a climate for a new approach
to industry policy.
The community as a whole needs to be part of this ongoing
dialogue. As the community comes to appreciate the reed for change the
Government will be able to move more quickly to manage
change. The Federal Government has already begun the task of
redirecting industry policy.
The Government has established a Special Group of Ministers
to coordinate work in areas relevant to structural change in
the economy.
These areas include trade, education, training, science and
technology, employment and industrial relations and defence
support. The Group is chaired b~ y the Minister for Industry and
Commerce, Senator Button. Other Ministers are Mr Bowen, Mr
Willis, Senator Ryan, Mr Jones and Mr Howe.
The Group is receiving strong backing from a study group of
senior officials established to facilitate its work.
These officials have been chosen not as dejartmental
representatives but because of their special skills and
experience. I envisage the work of the Group of Minist3rs will form an
important element in policies to revitalize Australian
industry. The Government has also initiated highly constructive
discussions of industry policy in the Economic Planning
Advisory Council ( EPAC).
Following its meeting on 12 March this year, EPAC issued a
statement on medium to long-term economic policy.
In that statement EPAC called for an active industry
development strategy for Australia.
That strategy, EPAC said, should:
give encouragement and opportunities to plan and
invest to industries or enterprises involved in
expansion of competitive production
improve and provide more efficiently the
infrastructure for industry development and
give workers and business the opportunity to adjust
to change within stable programs that are known in
advance.
EPAC stated: 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
growth is to ensue, policy must be applied in a
manner which facilitates change while minimising
the hardship associated with such change".
The Federal Government, of course, totally agrees with this.
EPAC has also decided to prepare annually detailed
medium-term assessments of the economy.
Those assessments will aid consideration of industry policy
and structural adjustment.
The first such assessment will be released within the next
ye ar
W! hen I was in Japan in February I held very useful talks on
Japan's industry policy experience with Mr Amaya, a former
Vice-Minister of the Ministry for International Trade and
Industry.
Mr Amaya has now come to Australia at my invitation to meet
with representatives of the unions, business, government and
the media.
Yesterday he participated in an extremely valuable meeting
of EPAC.
Mr Amaya is also addressing meetings and seminars in
Canberra, Melbourne and Sydney.
I believe his visit is a welcome international contribution
to discussion of approaches to industry policy in Australia.
The Federal Government believes greater Australian
participation in world trade must form part of an active
industry development strategy.
Last November in Bangkok I proposed that the countries of
this region develop a concerted approach to a new round of
global trade negotiations.
This proposal drew a warm response overseas.
All the countries we have approached in our region,
including all the ASEAN countries have agreed to participate
in a senior officials' meeting in Bali at the end of this
month
This meeting will help identify regional interests in a new
round and consider how best to focus attention on those
interests. But the Federal Government has gone beyond promoting a
dialogue on change, gone beyond simply advocating change.
In the case of Australia's vitally important steel industry
we have acted.
The historic Steel Industry Plan, which this Government put
in place last year, is a model for how Aus~ tralia should be
going about industry change.
The Steel Plan is a co-. operative effort.
All parties government, unions, business -have given
undertakings to make the plan work.
All the parties have a sense of commitment to make the plan
work.
And it is working.
The Steel Plan has put the industry firmly on the path of
higher productivity, lower protection and improved
international competitiveness.
And this has been done in a way that enhances the viability
of the industry and promotes job security not the reverse.
When I visited Newcastle last week I was struck by the
extremely positive reaction of both employees and employers
to the Plan.
It was not simply their support for the Plan but their
over~ whelming determination to work together to make the Plan
work. This spirit of co-operation, this new attitude is indeed
welcome. The success of the Steel Plan augurs well for the prospects
of adjustment in other industries.
Like the steel industry, the motor vehicle industry is an
area requiring careful attention.
The previous Government announced the assistance
arrangements it proposed to apply to the industry after 1984
when the present arrangements expire.
The Federal Government accepts many elements of our
predecessors' proposals.
However, we believe other elements nre not consistent with
the type of motor vehicle industry Austral ia should he
fostering over the coming years and decades.
Accordingly the Government is reviewing assistance
arrangements for the industry after 1984.
This review will be assisted by the report of the Car
Industry Council and the IAC Report on Assistance for Light
Commercial Vehicle Production.
We expect to announce revised arrangements for the industry
next month.
In making our decisions we will take account of the views of
all parties.
We will be guided by our desire to foster a via~ ile,
efficient, outward-looking motor vehicle industry.
Vie will be seeking gradual but consistent changes within a
stated policy environment that will allow all parties to
plan for the future with confidence.
We belive that there are opportunities fo: 7 substantially
reducing the costs of producing motor vehicles in Australia.
These, if utilised effectively, can make gradual reductions
in protection over the longer term consistent with the
emergence of a stronger, more dynamic industry, offering
more secure investment and employment opportunities to
Australians. Coping with Change
Successive Australian Governments have failed to come to
terms with the whole area of industry policy.
They have put these problems in the too-hard basket.
This is not surprising.
For a start the pressures on any Government tackling the
question of long term industrial reconstruction can be
formidable.
But it is absolutely clear that we will not achieve
sustained economic growth over the remainder of this Century
without substantial structural changes in the Australian
economy and Australian industry.
Failure to face that reality will mean lower living
standards, fewer jobs and lost opportunities.
We must not turn our back on the enormous potential open to
Australia. And this Government is not about to do go.
Rift in dealing with the question of industry restructuring,
we will be guided] by three vital. considerations.
First, our approach to industry adjustment will be a gradual
one, as it must be.
W1e are not about sudden or precipitous po: licy changes.
W~ hat we are talking about is change over the medium to
long-term and how best to increase job opportunities over
that time.
Second, consultation is crucial in the area of industry
adjustment. Nothing is going to be done simply by government directive.
Vie will be talking very closely with those who may be
affected by government policy decisions.
In doing so we will be recognising that in the end it is not
for the Government to underwrite particular firms and
industries. Rather Australia's industrial structure should emerge from
private decisions within a general policy environment that
favours efficient expansion.
Third, this Government believes you can't consider industry
adjustment in isolation from other policies.
It has to be seen as part of a whole. It has to be
integrated with other policies.
These policies include the right macroeconomic policy
framework. They also include appropriate education, training and
retraining policies so we can have a well-trained, highly
skilled, flexible workforce capable of meeting the demands
of a changing world.
In the tight budgetary environment of 1984-85, these and
other areas of expenditure bearing on our long-term
industrial growth performance will he given high priority,
alongside the desirability of income tax cuts and some
social security improvement for Australians in greatest
n ee d.
The central point about the Government's approach to
industry restructuring is this: if' the chan ges needed to
the structure of Australia's industry are to occur, then
they must be accepted and, ultimately, supported by the
community. They cannot simply be imposed on people.
This Government accepts its responsibility to persuade the
community as clearly as we can why change is needed and, in
addition, to lay the groundwork for that change to occur.
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I believe we can make no greater contribution to creating a
more receptive climate for change than in addressing the
central challenge of economic recovery.
The Australian people will be much more receptive to change:
if the economy is growing
if business confidence is returning and
if new job opportunities are opening up again.
That's the challenge this Government is facing.
And I believe we are meeting that challenge.
We have, to a considerable degree, been able to do this
because within our policy of dialogue and consultation, we
have received the constructive support of you people in
industry and the trade union movement.
I thank you for the spirit and fact of that co-operation.
Together we can continue to meet thlis challenge for South
Australia and for the nation as a whole.