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Transcripts from the Prime Ministers of Australia

Transcript 2369


Photo of Gorton, John

Gorton, John

Period of Service: 10/01/1968 to 10/03/1971

More information about Gorton, John on The National Archive website.

Release Date: 15/02/1971

Release Type: Speech

Transcript ID: 2369

Speech by the Prime Minister, Mr. John Gorton
Thank you, Mr. Chairman, for giving me the opportunity-of making a short
apetoch , nt the beginning of the Convention.
It is greatly hea rtening to a Party to see 200 delegates of Young Liberal
organisations from all over Australia coming here to Canberra to discuss those matters
which they feel are of importance to the Party now, and which they believe will be of
importance to the Party in the future. They are matters which, in the short term
comparatively short term they believe, as I do, will lead to a Liberal victory in
1972, and in the longer term, will be of great benefit to the people of Australia in
the decade ahead.
So it is significant and important that this meeting chould be taking place.
But having said that, Sir, I confess to a little disappointment at some of the motions
which are to be discussed by this gathering from all over Australia perhaps more
disappointment at what is not down on the Conference agenda than at what is.
There are many suggestions that taxation in one form or another should be
reduced, that death duties should be abolished, that other taxes should be , looked at, but
there are few constructive suggestions I hope you will forgive me for saying this thetare
few constructive suggestions for really tackling the major problem which faces
Australia now, and yet this is that which above all else I thin:: should be engaging the
minds of Young Liberals.
There can be no doubt that what Australia must do first is to beat the threat
of inflation which now faces it. I don't think that it faces us in a stark way as yet, but
as I said when speaking to the nation, the underlying rate of growth shown in the
last Consumer Price Index, coupled with the large wage and salary increases we can
expect as a result of Arbitration Court and State Wages Tribunal decisions and
over-award payments, make it necessary to ensure that the underlying threat does not
become a real threat. For if it does, then we inside Australia will be the poorer, all
of us. We will not be able to build the number of schools, the number of hospitals, the
number of public amenities which we otherwise would be able to build.
-For if you have a school which is estimated to cost let us say, half a million
dollars and because of direct wage costs and because of indirect costs then the same
school, the same size, the same quality, turns out to cost $ 700, 000, we wilt not be
able to build the same number of school and tht is self-evident. Unlress, of
course, we so mulct, we so ax iL.-private sector in Australia that it loses all incentive
to produce those things on which ultimately the public sector depends. So this inside
Australia is an immense threat to u3; outside it threatens . hat export programme
which is now so well under way in manufactured go. Ils. It poses ' ragc choices to the
primary producer and it bears down immediately and heavily on the pensioner, on the
retired man who is not a pensioner and who is too ofaen thought about too little. / 2

So this, I believe, is one of the significant the most significant first task
which we have before us. I hope you will discuss this, and I hope you will put your
views as to how this should best be attacked at the root.
There are some things which one can do which ameliorate, which take away
some off the causes, some of the causes in some of the areas where the pressure of
demand is growing most. But what we need is a community agreement of those who
earn wages, who earn salaries, who pay wages, who pay salaries, who consume that
while there is a need and a requirement to increase the living standards of all by
increasing the true wages of all, and that while that must and will be the requirement
of a Liberal Government, yet if one seelks to go too fast and raise wages at a greater
rate than production, then one is self-defeating and doing no good to anybody in
Australia. Well, as you know, we are talking steps in this direction, not the least
being steps let us call them self-denying steps in reducing tile public sector
expenditure that the Commonwealth is to make, And we are also taking steps to see
that State expenditure also does not grow and is reduced.
You often hear this is by way of a parenthesis you often hear attacks
on Commonwealth spending. You read it in leading articles ( Interjection It is
on the agenda:) Well when the matter on the agenda is being discussed, I do hope
that there will be many here who realise that Commonwealth spending at least as
to approximately one-third of the total is not Commonwealth spending at all but State
spending, because it is reflected in the grants, the reimbursemnent grants made to
the States and by the direct purpose grants made to the States.
Too often, and this is really the only point I wish to make, people forget
when talking of the volume of Commonwealth spending, and how it has grown, that in
fact a third of it is not actually Commonwealth spending at all, but the sort of spending
that so many State branches so often say should be increased. The figures, no doubt,
you will all have at your fingertips: But in both these areas, steps are being taken
now. And on the question of reducig the amount which the Commonwealth would
otherwise have spent for its own purposes not for State purposes in this year, there
will be an announcement very shortly showing a significant reduction in what would
otherwvise have been spent. I emphasise " in what would otherwise have been spent"
b ecause while we brought in a Budget at the beginning of this year, we have since
been faced with an increase-of approximately $ 110 million as a result of wage and
salary determinations by the Arbitration Court and by the Commonwealth Public
Service Board. We have been faced with the decision of one of the Houses of Parliament
that during this year the money for the States Receipts Tax should be made available
to the States without there being a tax, and various other costs rising as a result of
increases in costs of materials. / 3

But that being so, there-will stll-be a very considerable. reduction in
Commonwealth spending, and this has., 1 believe-two advantages, I hope you would
agree with me. One, it does show that we are in; earnest when we talk about the
need to tackle this problem, and, two, it does leave for the private sector more
chance-to get labour and materials for the purposes of the private sector which
again and let us not forget it is that sector from which public spending ultimately
must come. So these will be matters for your concern and your recommendation
and your advice. And other ira tters pale into Borne insignifican~ ce until this is dore
But I hope that we will not let ourselves be swayed by what I think is the
entirely fallacious argument put forward by the ACTU. That is, that wages and salaries
have no effect, or very little effect at all on rises in prices. fLaughter). The
only I know it is almost laughable, but it is seriously put. The only way in
which that could ever be true would be if the additional cost to a manufacturer of rises
in prices and salaries were entirely taken out of the profits that manufacturer was
making. That is the only possible way in vii ich this could happen.
Yet manufacturers and our big firms are not making. excessive profits.
We look at a newspaper and we see a profit for BHP, let us say, which is an enormous
aggregate amount of money. But when you check what the returns on the funds invested
are, you will find, in the form of that company, it is about 6_ 2 ner cent. And you
cannot expect people to invest in this kind of growth in this kin~ d of company at much
less than 6 per cent, If they have saved it, then we believe they should get a proper
benefit from investing it. While I wouldn't undertake to say exactly what a proper
benefit is, I am quite sure that if you look at the returns of our major companies
on funds invested, you will not think they are excessive. And, indeed, if some
organisations, some opposition were to seek to attack these further, then I believe
the danger to Australia would be that people would stop investi-ng in such companies,
that they would look for an easier way to earn their money, that they would go into
tertiary industries, service industries, some other way which ira de it easier and less
destructive and less distracting.
So these are again all matters for your consideration. They will be, I have
no doubt, debated at great length in the Parliament when it meets, and I hope wAth some
benefit. But in overcoming, we will do as we have already done, one or two unpopular
things. I hope that all the Liberal Party and all the Young Liberals will realise
the necessity for such unpopular things and will realise that a transient unpopularity is
as rnflhing compared wm the popularity which would flow to a government which
successfully overcame the problems now before it and,, more importantly than t hat,
is as nothing to the benefit which would flow to the country from such action by such
a government. Sir, you told me to speak for ten minutes or so, and this I have done.
You did indicate that you would like me to speak on the Commonwealth Conference
at Singapore, but there is little more to say on that. I think you have all read about
it and heard . aebout it, may have seer. me speaking on TV about it. It would be
rather a rehash, I think, if I were to sliend any time on this other than to say one
thing. / 4

The Commonwealth of Nations, in my view, wilil only survive if all those
in it accept the fact that it is not an organisation which can pass any resolutions
binding on all its members, that it should not try to do this, that it should not claim
a consensus binding on all its members, but should continue to be a loose voluntary
organisation, spending most of its time on those areas in which it can agree, rather
than seeking to become a small United Niations. This 1 have said before, ard this
I think I will not labour now.
So, Sir, having put before the Young Liberals what I think the major
problem in Australia is today, I now leave them to debate. May I make this plea?
If people are to come from as far as you have come, many of you, if you
are to debate motions of significance to Australia's future, then it is essential
that you should debate them with knowledge and with facts and Seek to arrive at
a conclusion through discussion, not seek to impose a conclusioin through having
made up your mind before you start. J say this because,, again, in this agenda, there
are matters such as people saying that Australia has not attempted tozaise an
Army by other than National Service. This is not so. 1 am sure there will be people
here who will know it is not so and will be able to argue about it. And, similarly,
there are other matters of the kind.
But looking at the second point on the agenda
" That his Convention calls u~ ion the Federal Liberal Government
to emulate the policies of the British Conservative Government to
substantially curb public expenditure"
I'm not sure about the social services, I will put that aside,,-
" and limit expenditure to all Government Departments to stop the
uncontrolled growth of bureaucracy"
I can only say, Sir, that I must have had a little prescience before this was put
on the Agenda. This was something likze the prescience I apparently had when I
got a telegram from Bert Kelly saying " We urge you strongly to export the rams"
and they went that night!
Sir, I now declare this Conference of tie Young Liberals to be open.

Transcript 2369