J~ AUSTIRALI A
CHECK AGAINST DELIVERY EMBARGOED UNTIL DELIVERY
SPEECH BY THE PRIME MINISTER HON. R. J. L. HAWKE, AC, MP
STAN KELLY MEMORIAL LECTURE
ECONOMIC SOCIETY OF AUSTRALIA VICTORIAN BRANCH
MELBOURNE 5 SEPTEMBER 1985
I know of Stan Kelly from a mutual friend between our
two generations, John Crawford. Sir John's Inaugural
Stan Kelly Memorial Lecture in 1977 laid out some ideas
on which we later worked together in the Study Group on
Structural Adjustment.
I like what I know of W~ elly a farmer who gave much of
his life to public administration, including on the
Tariff Board in those terrible years from 1929 to 1940,
and as an adviser to the Commonwealth Prices
Commissioner during and immediately after the war. I
like the way that Stan Kelly recognised the dangers of
excessive protection in a protectionist era, but sought
the moderate and gradual curbing of excesses rather than
impractical, radical changes.
There are many ways in which the steady progress we are
making today in building a more dynamic Australian
economy through increasing its international orientation
is indebted to the work of kelly and a small number of
others, who questioned the role of high protection when
its tide was still rising in Australian political
thought.
One of Stan Kelly's legacies to Australia was, of course
his son Bert. Bert Kelly occupied the tragic place in
Australian history of a farmer who understood the
economic effects of protection, from 1958 sitting on the
back bench of a conservative Government whose trade and
industry policies were run by Jack McEwen. That he
stuck to his guns through all those years with rarely a
ray of hope says a great deal for his strength of
character or, as Mavis would probably say, for his sheer
farm-bred obstinacyl
C
A gathering like this, organised3 by the Victorian Branch of
the Economic Society, is not an occasion for partisan
comment. The only political comment that I will make will be
of ai scientific kind, involving, for example, the testing of
political forecasts.
Five weeks ago I presented the annual forecasting prizes to
the New South Wales Branch of the Economic Society. The New
South Wales Branch was discreet enough to withhold
information on the content of forecasts, but from
conversations with participants it seems that the best
exchange rate predictions a year ago were those which had our
dollar rising by the smallest amounts.
Political forecasting is a bit more accurate. Early this
year I predicted that the ideological tensions within the
Liberal Party would soon erupt into open disputation about
the Leadership. As we all know that prediction, which I
shared with others, has been dramatically proven correct
today. It will be of immense interest now to those of us concerned
with economic policy to see how the ideological forces which
gave rise to today's events manifest themselves in the
opposition's approach to fundamental economic issues.
Over the past few months we have seen the current Opposition
support needs-based welfare then oppose the Assets Test;
support the introduction of more international market
discipline into highly protected Australian industry and then
use its numbers in the Senate to defeat the Kerin Dairy Plan;
support the free play of market forces and then block
legislation designed to take the allocation of petroleum
exploration licences out of the hands of bureaucrats into a
competitive market; and support lower deficits but oppose
attempts to reduce expenditure where it has no strong
justification in economic efficiency or equity, such as with
the Senate's rejection of our amendments to some
more-than-intended Veterans' entitlements resulting from
judicial decisions.
These are the sorts of issues which will test the rhetoric of
the new Opposition leadership. No doubt we will all watch to
see how it acts. Whatever happens in these matters, it has
been the policies of this Government which have turned around
the economy and restored sustained economic growth. I
believe that I am entitled to claim on this record that
Australia's hopes of building a new era of sustained economic
growth depend on the present Labor Government.
This is a heavy responsibility, and one that we accept as the
core of our mandate from the Australian people. Australia can
be a successful society only in the context of sustained
economic growth. The Labor Government is committed to
progress towards ideals that can be broadly described as
social democratic ideals that include equality of
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opportunity, the removal of poverty, the raising of
living standards for ordinary Australian families, all
within a political framework of individual freedom and
Parliamentary democracy.
None of this can be advanced far without sustained
economic growth.
Only sustained, strong economic growth can reduce
unemployment to acceptable levels.
Only sustained economic growth can support adequate
provision for Australians who, but for the intervention
of Government in directing community resources to them,
would live in intolerable poverty.
And only sustained economic growth can deliver rising
living standards over time for ordinary Australian
families whether through higher pay, or the provision
of the better education, health and social
infrastructure that are essential ingredients of genuine
equality of opportunity.
While growth is essential for progress towards the goals
of Australian social democrats, it is not a goal that
divides Australians politically. Our common interest in
growth allows us to seek consensus on many issues of
economic policy, through analysis of the effectiveness
of policies in promoting growth.
While economic growth is a platform upon which we can
all stand, in a democratic society like Australia, many
interest groups, and coalitions within the electorate,
have the power to determine what is possible in the way
oqf policy innovation legitimately, if often
inconveniently, and sometimes outrageously, to the
detriment of economic growth.
I believe that a social democratic Government in
Australia, a Labor Government is better able to appeal
to the broad national interest in fairness, as well as
the national interest in economic growth, to defeat
vested interests and other barriers to progress.
Various groups in society will use their democratic
powers and rights to veto change that is essential for
growth unless there is widespread acceptance and
understanding that the benefits of growth are
distributed equitably.
For this condition to be met, there must be mechanismsoften
fiscal and other mechanisms directed by Government
to distribute equitably the benefits of growth. And
there must also be mechanisms for community discussion
and consultation within which widespread community
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support if you like, consensus can be built for
growth-oriented policies.
So far, the Government's record stands up pretty well.
This looks set to be the third successive year during
which non-farm economic activity has expanded by 5 per
cent or more. Non-farm growth did not reach 5 per cent
during any one of our Liberal National Party
predecessors' years in office. By the end of this year,
the economy will have expanded more in three years than
in seven and a half years under our predecessors.
So far so good.
But the real test is whether strong growth can be
sustained over the long period necessary permanently to
cut the evil of unemployment down to manageable
proportions, and to give all Australians the higher
living standards that our resources and skills have
placed within our reach.
Tonight I will describe some of our thinking about
policies for growth; where we have got to in
implementing new policies; and something of the agenda
for future action. But first I would like to say
something about where we have come from.
Past Performance
Even during what now seem to have been halcyon days of
economic prosperity betweeen the end of the Second World
War and the early 1970s, Australia's growth in real GDP
per capita was unimpressive on a world scale.
During the 1970s Australia's economic performance
deteriorated markedly. Growth in real GDP per capita
averaged only 1.3 per cent for the period 1973 to 1979
and then a bare 0.1 per cent per annum between 1979 and
1982. Simultaneously our inflation and unemployment
rose sharply, proportionately more than in most OECD
countries.
The economic environment in Australia in the postwar
period, and particularly since the early 1970s, has not
been conducive to strong and sustained growth in our
capital stock, employment and productivity.
It is now clear that even the relatively modest growth
performance of the 1950s and 1960s was purchased partly
at the expense of future growth potential. A
significant part of our growth in the early postwar
decades derived from investment to supply protected
domestic markets. The adverse consequences of this were
not evident while the investment itself was taking
place. But it locked much of Australian industry into
fragmented production, high costs, and insulation from
competitive pressures.
In other industrial countries, liberalisation of
manufactured goods trade in the 1960s made these
industries more sensitive to opportunities for expansion
based on exports, for application of superior
technology, and for managerial improvement more
generally.
We can all now see that the inward-looking postwar
development strategies were a mistake.
One of the lessons of the past decade is that we can no
longer carry the costs of mistakes of this kind.
The era of steady strong expansion of total world demand
for the output of our most productive industries, for
example in agriculture and mining, is long past.
There are still opportunities for us in the
international economy which, if utilised effectively,
can support sustained strong growth at home.
But we cannot rely on a rapidly growing world economy or
the discovery of new natural resources to lift our
performance sufficiently to make concerted inroads into
unemployment while, at the same time, maintaining the
living standards of the employed. If ever we were " The
Lucky Country", we cannot afford to remain the
Happy-go-. Lucky Country that Donald Homne described two
decades ago. We must work to create our own success.
Improving Australia's Performance
Sustained strong growth requires consistent and mutually
supportive macro-economic and resource allocation
policies. Both are essential. Weakness in one can
destroy any achievements in the other.
Macroeconomic Environment
The Labor Government set out to lift Australia's
long-term performance at a time when there were major
macro-economic imbalances in the economy.
We deliberately turned our backs on prescriptions that
depended on first correcting these imbalances. We
deliberately rejected fighting inflation first.
As the Treasurer likes to say, we set our sails for
growth, believing that we could best address the
structural imbalances in the process of on-going growth.
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But we never did kid ourselves that the structural
imbalances were unimportant.
First, there was the huge prospective budget deficit
amounting to about 5 per cent of prospective GDP for
1983-84.
Second, there was a lack of international
competitiveness across large parts of our export and
import-competing industries, reflecting the combined
effects of entrenched high inflation, deliberate
over-valuation of the Australian dollar ( as acknowledged
by former Prime Minister Malcolm Fraser), and mediocre
productivity performance.
And reflecting all of these factors, there was a huge
current account deficit, at 3.9 per cent of GDP in
1982-83, one of the highest in the OECD, even when
demand was exceptionally weak in the depths of
recession. The large current account deficit was
associated with increases in foriegn debt which
threatened sooner or later to become unsustainable.
Closely related to these structural weaknesses were high
interest rates and high real unit labour costs,
contributing to historically low rates of investment.
All of these factors were in the minds of Paul Keating
and myself, alongside the short-term foreign exchange
crisis, when the dollar was devalued by 10 per cent two
days afte ' r our election to office. Starting with a
large current account deficit, our competitiveness had
to improve if we were to get the economy moving with
expansionary policies.
Under the managed exchange rate system that we
inherited, the initial depreciation did not hold. That
pointed to a weakness in that system, which was removed
decisively with the floating of the dollar in December
1983.
The floating dollar has facilitated the adjustments in
competitiveness that were necessary to support sustained
growth in the Australian economy at rates faster than in
the rest of the world.
Of course, dollar depreciation only converts a balance
of payments problem into both a balance of payments and
an inflation problem, without any sustained improvement
in competitiveness, unless it is supported by moderate
wages growth.
The agreement announced yesterday between the A. C. T. tJ.
and the Government provides the basis for the necessary
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wage moderation, including through discounting the 1985
C. P. I. increases for indexation purposes by two
percentage points, and delaying and moderating the
claims made in the national productivity case.
Moderate wages growth along these lines is absolutely
necessary to the maintenance of strong growth in our
current circumstances.
Moderate wages growth along these lines is good for all
Australians, but especially those who benefit directly
from the creation of half a million jobs in three years
and continued strong employment growth after that an
economic benefit unrivalled in our history.
Moderate wage growth along these lines represents an
outcome that would be impossible under any alternative
aproach to economic policy in Australia, without the
Prices and Incomes Accord.
The improvements in competitiveness resulting from
depreciation and wage moderation should allow continued
strengthening of the current account of the balance of
payments in the course of strong growth.
It was our confidence in the Accord that permitted us to
embark on expansionary, growth-oriented fiscal and
monetary policies when we came to office.
But from the beginning, it was recognised that the large
fiscal stimulus would need to be hauled in as recovery
strengthened and broadened to the private sector. This
is reflected in the progress we have made in reducing
the budget deficit, by over half to little more than 2
per cent of GDP in the two years to 1985-86.
This progress on the Commonwealth deficit has been
supported by co-operation with the States in the
Premiers' Conference and Loan Council, to reduce the
total public sector borrowing requirement as a
proportion of GDP by over two and a half percentage
points in two years.
Monetary policy has been designed consistently to
support strong growth but not any acceleration of
inflation. The floating dollar has greatly assisted the
implementation of monetary policy towards these
objectives.
Some doubts were expressed earlier this year about
whether monetary policy really was consistent with our
anti-inflationary objectives. The doubts derived
mainly from the distortions that financial deregulation
has introduced into measurement of the monetary
aggregates. The Treasurer and I have put some effort
into explaining our firm monetary policy in recent
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times, and the doubts have diminished.
Events are vindicating our decision to address
structural imbalances in the course of growth rather
than as a precondition for expansionary policies.
This is evident in the gains that have already been made
on the Budget deficit and competitiveness. Real unit
labour costs are back to the levels of one and a half
decades ago. Interest rates remain high, but at least
the pressures exerted by Government borrowing are
diminishing. The framework of macro-economic policy that has been
established, incorporating the Accord, the floating
dollar and the Trilogy of fiscal commitments, are
delivering settings of wages, monetary and fiscal policy
that are consistent with sustained growth.
It has also removed major areas of uncertainty and
arbitrariness from crucial areas of macro-economic
policy, and thus contributed to a more stable
environment for investment and production decisions.
Private investment remains too low, but is responding to
the improved business environment.
Micro-economic Environment
In addition to the more stable macro-economic conditions
to which I have already referred, there is no doubt that
the low levels of disputation in the context of the
Prices and Incomes Accord have allowed underlying
economic realities to play their proper role in
investment and production decisions.
Most importantly of all, the dramatic recent
improvements in international competitiveness provide
Australia with a unique historical opportunity to lift
its manufacturing and service sectors out of
inward-looking production into the international
economy.
Beyond these ways in which macro-economic outcomes
affect micro-economic performances, we are taking steps
to: improve the environment for productivity growth,
improve the efficiency and effectiveness of the
public sector, and
develop a more outward looking industry policy.
While each of these may be examined separately there are
a number of strong linkages between them. In the past
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the productivity performance of Australian industry has
been substantially conditioned by an excessively inward
orientation.
The effect of this has been to mute the incentives to
find and exploit world markets which have the greatest
growth potential. It has impeded productivity growth
and led to a decline in competitiveness. It has also
discouraged the development of new products, new
production techniques and new work practices.
Finally it has discouraged flexibility and adaptation in
the organisation of many of our industries.
Introduction of these innovative and dynamic qualities
will provide an impetus to productivity growth.
At the same time industry policy has provided incentives
to pursue profit opportunities by seeking to obtain the
benefits of Government assistance, at the expense of the
creation of new wealth through economically productive
activities. IMPROVING THE ENVIRONMENT FOR PRODUCTIVITY GROWTH
Human Capital Formation and Application
The formation and application of human capital are vital
elements in any strategy to improve and enhance our
economic growth performance. Advances in these areas
are intimately linked to the quality and flexibility of
the labour which is available for use by industry : a
workforce which is highly educated and trained will
facilitate the development, adaptation and diffusion of
more productive techniques and the more flexible and
efficient utilisation of labour and capital by industry.
Changes to our educational and vocational training
systems are necessary. Major reforms initially will
focus on the school sector.
The Karmel Report has emphasised that changes in
curricula, course content, progression and certification
processes are needed if schools are adequately to
fulfill their critical role in the nation's social and
economic development.
The Report acknowledges that a much greater proportion
of young Australians have to complete full secondary
schooling and receive a broad general education, if
young people are to realise their potential and fulfill
their key role in the further social, cultural and
economic development of Australia. A broader school
based education is essential.
The implementation crf Karmel's recommendations for the
school system will complement our traineeship
initiative, announced in the Budget. To complement both
these measures my Government has taken action to reduce
the chances that young people will be precluded for
financial reasons from participating in post compulsory
schooling or training.
Supporting these initiatives, the Government has taken
steps to increase the number of places and improve and
increase the relevance of training within the TAFE
sector and across the range of tertiary institutions.
Innovation, Research and Development
Innovation, technical progress and the development of
export markets depends in large measure on Research and
Development and technology transfer.
Aggregate spending on R& D in Australia is low. While
the Government contribution is commensurate with other
developed countries, industry funding and performance of
R& D is small. The proportion of research funds devoted
to experimental development is low.
Australia has some important advantages in research and
devlopment activity. The education system produces
capable research workers. The cost of R& D in Australia
is not high.
To break down longstanding weaknesses in our applied
research effort, for five years from 1 July this year,
150 per cent of expenditure within Australia will be
deductible for taxation purposes.
We are seeking to improve the manner in which some of
the direct public assistance is provided. Efforts are
being made to increase interaction between industry and
the public research institutions, such as CSIRO and
universities. Remaining weaknesses in our applied technological effort
have much to do with the past development of an inward
looking industrial structure. This has dulled
competitive pressures for adoption of superior
technology. Labour Market
We all agree that adaptable labour markets can assist in
promoting efficient use of capital and labour resources
and their more rapid accommodation to economic change.
The setting of wage differentials has the potential to
influence the efficiency and adaptability of the labour
market. But flexibility in these differentials is less
important the more mobile and flexible is the labour
force itself.
In contemplating labour market reform, we are wise to
recognise that increased wage flexibility contains a
real risk of destabilising aggregate wages and the
conduct of macroeconomic policy. If necessary, we are
prepared to give away the small advantages of marginally
increased relative wage flexibility to preserve the
greater benefit of overall wage moderation.
Taxation and Growth
In the first of my trifecta of Economic Society speeches
this year, to the Canberra Branch in March, I said that
tax reform directed towards improvement in our growth
performance must come to grips with four flaws in the
current taxation system.
To quote from that speech, which was published in the
Economic Record in June:
"[ The tax review] must address the widespread
avoidance and evasion, especially by people with
income well above the Australian average it
must address poverty traps The tax review
must address the unfairness and the associated
effects on work effort of workers on average
incomes paying the current 46 per cent marginal tax
rate on incomes above $ 19,500.
And the review must address the powerful
distortions to resource allocation inherent in a
per cent marginal tax rate cutting in at less than
twice average weekly earnings, within a system that
provides ways for turning taxable income into
untaxed benefits."
While the Government's preferred option did not survive
the Tax Summit, the tax package to be announced soon
will make substantial progess towards these objectives.
It will significantly improve the environment for
economic growth in Australia.
IMPROVING THE EFFICIENCY AND EFFECTIVENESS OF THE PUBLIC
SECTOR Quite apart from its role in establishing the
macro-economic and regulatory environment, the public
sector is such an important feature of the Australian
economy that the efficiency of its own operations has
significant implications for our overall economic
performance. I believe that this Government has gone further than any
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of its predecessors in scrutinising public expenditures,
with a view to testing their contribution to improved
efficiency in the economy, and improved equity.
The issue of efficiency in public expenditure is
separate from the issue of size. Nevertheless, as a
Government which believes that public expenditure is
necessary for progress towards its key objectives, we
have found the constraints that the trilogy commitments
have imposed on size useful in concentrating attention
on efficiency.
Finance Minister Peter Walsh has made several detailed
statements on our approach so far, and I do not have
time tonight to traverse that ground.
But I believe that I can assert that this year's budget,
with the lowest growth in real outlays for six years,
and reducing the share of Commonwealth expenditure by a
full percentage point, has contributed more to genuine
equity than many more expansive budgets in past years.
The efficiency of public enterprises is also a major
factor in the overall performance of the Australian
economy. Significant progress has been made in rationalising
activites and reducing costs in several major
Commonwealth commercial enterprises. This is the real
task. The issue of " privatisation" is a diversion from
this task.
Commonwealth public enterprises are quantitatively less
important than those of the States.
In recent years the Australian community has been more
critical of charges for electricity, rail and other
services provided by the States, as well as by the
Commonwealth. This is a promising development.
I believe that the Commonwealth Government has
contributed to this change in the climate of community
opinion. We have also made direct representations to
the States on these issues.
One result is a substantially lower rate of increase in
charges, through containment of costs, without increases
in the deficits of State enterprises.
1.3
TOWARDS A MORE DYNAMIC AND OUTWARD LOOKING ECONOMY
It will be clear from what I have already said that I
attach prime importance to increasing the international
orientation of the Australian economy.
Major progress has been made in these last two years,
and the continuation of progress will be a major focus
of our efforts in the years ahead.
our work in this area has many inter-related strands.
One strand is the re-orientation of Australian business,
trade union and community attitudes towards greater
awareness of international opportunities.
I have seen this as one of my special responsibilities
as Prime Minister, and have pursued it in every possible
forum at home and abroad.
It has been assisted by discussion within the Economic
Planning Advisory Council and the Australian
Manufacturing Council.
Community attitudes had begun to change in favourable
ways some years ago, but there has been a major
acceleration under this Government.
A second strand has been the reform of the regulatory
environment which had placed so many inhibitions on
international transactions in the past.
The abolition of exchange controls at the time we
floated the dollar had far-reaching implications for
trade, the full extent of which is poorly understood.
It facilitated the development of new hedging
arrangements, which reduced the risk of specialisation
in production for export.
The floating of the dollar itself reduced uncertainty in
production for export, by providing greater confidence
that any movements in Australian costs that were out of
line with international developments would be
counteracted by currency depreciation.
The entry of new banks with foreign equity, and the
internationalisation of the operations of established
Australian banks, are widening the channels through
which Australian producers are informed of export
opportunities. We have also taken significant steps towards
liberalisation of import trade. Our approach so far has
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been to address issues industry by industry.
The plans for the passenger motor vehicle, textile,
clothing, footwear and steel industries all involve
substantial liberalisation.
The decisions to use bounties, rather than tariffs, to
protect the production of steel, agricultural
harvesters, machine tools and computers improve the form
and visibility of assistance to those activities.
The deregulation, proposed or underway, of the marketing
arrangements for milk and dairy products, eggs and dried
vine fruit will reduce assistance to industries which
have been very highly protected in the past. The
voluntary restraints on the exports of colour television
sets to this country were abolished last year.
In the service sector, our new guidelines for the
provision of education services to overseas students on
a fee-paying basis open the way for the devlopment of a
new export industry.
The progress in some of these areas has been
considerable.
The removal, on 1 January 1984, of the temporary import
quotas imposed on a range of steel products in 1982, was
a major break from the earlier Australian experience
with temporary quotas becoming permanent. Together with
other elements of the industry plan, it has helped to
make steel production in Australia internationally
competitive, and has opened prospects for expansion
through exports.
Since the mid-1970s, the greatest problems of high
protection in Australia have been in the textiles
clothing and footwear and passenger motor vehicle
industries.
In these industries, improvements in Australia's general
competitive position through depreciation, gradual
liberalisation of imports, and major rationalisation and
increased productivity at home have substantially
reduced protection over the last year.
This is reflected in large reductions in the premium
paid on quota sold by tender.
The third strand in our efforts to increase the
international orientation of Australian industry has
been our active trade policy, designed to build a
climate of confidence in which Australian and overseas
enterprises can interact with each other.
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Some of our activities have been defensive, as we have
sought to minimise the damage that the trade policies of
the European Economic Community has imposed on our
efficient rural industries, and to ward off United
States pressures upon Japan to divert imports from
efficient Australian suppliers.
The representations that john Kerin and I made in
Brussels early this year were successful in holding the
line against subsidised European beef in our established
Western Pacific markets. We can be reasonably satisfied
with the way Japan has maintained the international
trade rules against bilateral pressures, although we
would like to have done better with beef.
More positively, we have invested considerable effort in
building confidence in trading relationships within our
own region. I myself have been closely involved in
discussions on trade with Heads of Government in all
major countries in our region.
There has been special progress in our relationship with
China. We have been working to build new layers to our
trading relationship with Japan as Japanese industry's
appetite for raw materials has become less voracious.
Significant steps have been taken to build closer
economic ties with the ASEAN countries, the Republic of
Korea, and the developing countries of the South Pacific
Forum. Like the ASEAN countries, we have had to think
about possible responses to suggestions for new free
trade areas that have emanated from the office of the
Special Trade Representative in the United States.
We have established a firm base from which to use
effectively the new competitiveness conferred by the
depreciation of the dollar and the associated commitment
to wage moderation.
The circumstances have come together for us to make now
a permanent break over these next few years with the
inward-looking policies that have been holding us back.
With a new round of Multilateral Trade Negotiations
( MTN) on the horizon, we need to prepare ourselves to
contribute to its successful progression. Admittedly
the benefits we have obtained from previous MTN rounds
have not been encouraging. But this was due in
considerable measure to our lack of credibility in
arguing for general trade liberalisation while seeking
to maintain our own trade barriers.
One of the ways in which we have been preparing for a
new round of negotiations is through the regional
consultations amongst Western Pacific countries which
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followed suggestions that I made in a speech in Bangkok
in November 1983. The third regional meeting of Senior
Trade officials will take place in Seoul next week.
There is general agreement within the region that these
consultations have been helpful in identifying regional
interests and opportunities for co-operation.
A demonstrated commitment to continue steadily with
domestic liberalisation will greatly add to our
credibility and negotiating position in any MTN round.
Such an approach could be complemented by a preparedness
to pursue trade policy initiatives involving particular
countries or products.
The continuation of domestic liberalisation is in any
case fully justified by the domestic benefits,
independently of the trade policy rewards which it makes
possible. Consistently with our established approach, further
liberalisation, whether it were within a program of
general reductions in assistance or industry by
industry, would be gradual, would be complemented by
appropriate adjustment measures, and might need to be
supported by positive measures to encourage expansion of
more productive activities.
Conclus ions
We have come a long way in these last two and a half
years, but we do not delude ourselves that we are near
the end of our journey.
A new approach to macro-economic policy, based on
fighting inflation and unemployment at the same time
within the framework of the Prices and Incomes Accord,
has brought back strong growth after a decade of
stagnation and decline.
The return of growth has given Australians the heart to
tackle longstanding structural impediments to growth.
We have begun the huge task of reform, guided by our
recognition of the reality that if change is to be
substantial and permanent, it must be gradual, its
consequences must be well understood in the community,
and the whole structure of social and economic policy
must care for Australians who are unable to defend
themselves in the market place.
As I have said, by the end of this year the Australian
economy will have expanded more in three years than in
the preceding eight years.
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Our current forecasts suggest that by the time the Labor
Government has been in office half as long as its
predecessor, it will have presided over the creation of
twice as many jobs.
But we must go further yet.
The Labor Government, and this generation of
Australians, must expect to be judged in history not by
our success in promoting three or five years of economic
growth stronger than the rest of the world.
The final test of our worth is whether we succeed,
gradually but inexorably, in so transforming the
environment of economic life in Australia, that
sustained growth becomes entrenched, even in these
difficult times for the world economy.
On our performance so far, I reckon that Stan Kelly
would expect us to pass this test.