STATEMENT BY THE PRIME MINISTER
THE RIGHT HONOURABLE R. G. MENZIES, C. H. Q. C.
N A T 1I OKA LE C 0 HI 0 M Y
WEDNESDAY. '/ TH FEBRUARY'. 6.
NATIONAL ECONOMY
Statement by the Prime Minister, Rt. Hon. R. G. Menzies
Wednesday, 7th February, 1962.
Cabinet has, after valuable consultations with a wide range of
industries and interests, reviewed the present state of the Australian economy.
It has closely considered policy and appropriate action.
There are certain very important matters which should not be forgotten.
The base of our economy has been significantly strengthened. Great
and indeed dramatic improvements have been effected in our trade balances. In
consequence, our overseas reserves, which were running down a year ago, are now
sound. The internal price level, as reflected in the Consumer Price Index,
has been brought to a remarkable stability. The Loan Market is buoyant.
This buoyancy is of great significance for the public works programmes, and
will result in a smaller call upon the Commonwealth Budget for the supplementing
of Loan funds.
These highly satisfactory results have increased the capacity of
the Commonwealth to play an effective part in dealing with current circumstances.
We acknowledge that the promise of recovery which appeared late last year has
not been realised sufficiently in practical results, and that it must now be
promoted with greater speed. We find ourselves confronted by two problems
which are, we believe, closely associated. They are:
1. The existence of a level of unemployment which represents a serious
human problem for thousands of people and a material economic waste
through the existence of unused resources of men, materials and
installed industrial capacity.
2. A weakness of confidence; an uncertainty about the future which
is limiting buying and production. We are in particular conscious
of the fact that the manufacturing industries, in which employment
can rise or fall quite substantially, and whose prosperity is so
significant to the migration programme, have expressed a feeling of
uncertainty as to whether the Government will protect their
activities and give reasonable assurances of their future. This
presents a problem to which we, as strong supporters of Australian
manufacturing, have directed close attention. It is common ground
that the business problem is to-day not one of financial or credit
stringency, for the money holdings of the public and of the business
community, and the liquid assets of the banks, are, in general, high,
but one of reluctance on the part of many to spend on commodities or
to invest in expanded enterprise and production.
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I propose, on behalf of the Government, to set out, as clearly as
possible: the national objectives to which we will direct ourselves;
the measures by which we will seek quick results in an attack
upon the unemployment problem, and
some longer-range measures which are designed to encourage a
strengthening of confidence.
Before doing so, I want to emphasise that we are not attempting
at this stage to anticipate the nature of the 1962-63 Budget, or such longrange
problems as will fall for decision hereafter.
OUR NATIONAL OBJECTIVES:
Upon the present solid foundations of the Australian economy, we
aim to build a great nation, with expanding production and trade and rising
standards of living. We must promote and achieve growth at a rate which will
provide employment and a stimulating future for a constantly growing work
force. We must maintain a constant stream of migration so that those engaged
in the planning and execution of productive and business enterprise shall see
before them expanding horizons and a growing demand for what they produce or
sell. We look to private enterprise to play the major part in our expansion.
As the essential condition of such growth and expansion, we must
develop our basic national resources of land, water, power, minerals, science,
and skill. The achievement of these objectives will require a sense of
dedication, a wide realisation of their vital importance, and a high degree
of co-operation from all sections of our community.
None of those who interviewed us wished to generate anything in
the nature of another inflationary boom; nor do we. But we make it clear
that, so far from desiring stagnation, we are determined upon growth. We
believe that this can be reconciled with a reasonable stability of the
Australian cost and price structure, and with a strong external position.
IMMEDIATE MEASURES: It is true that, as usual in the past, the number of those
registered for employment rose sharply in December. They will rise further
again during January ( the figures for which will be shortly known). This
is the time of the year when scores of thousands of boys and girls leaving
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school register for employment. It is also a time when seasonal unemployment
is considerable. But we must all do what we can to see that succeeding
figures come down as fast as we can make them. In short, we have looked for
measures producing the quickest possible results, putting into a second category
( which I will deal with later in this statement) those measures which
will carry forward and enhance these results.
We have decided as follows
1. We will put before the meeting of Premiers next week an offer to
provide forthwith a special non-repayable grant of œ ElOi. for employment-
giving activities, mainly in the works field. The detailed
application of this sum, as a supplement in the current financial
year, will be discussed with the Premiers. It is our intention
that it should be supplied and allocated mainly on the basis of
meeting employment needs.
2. We will, over the balance of the current financial year, advance an
additional œ 5m. to the States for housing. This allocation will be
discussed with the Premiers mainly on the basis of meeting employment
needs in the building and associated industries.
3. We will propose to the States that semi-government and local government
borrowing authorisation for this financial year be at once
substantially increased. Much quick employment could be provided
in this way.
4. The problems created by the recent Census in relation to financial
assistance grants to the States will be approached by us in a helpful
fashion. We estimate that the acceptance of these proposals will, over the
next four to five months, add some 125m. to the spending resources
of the States and their subsidiary bodies. Concentrated as they
will be into a short period, these expenditures should give, directly
and Indirectly, a quite powerful stimulus to employment and to
business.
6. Recognising the personal and family problems of those compelled to
rely upon Unemployment Benefits, we propose to make certain increases
as follows-. Present Rate New Rate
Weekly Weekly
Adult or Married Minor 13.15. 2. 6
Wife œ 92.12. 6 œ E3.
First Child 12. 6 15.
Subsequent Children Nil 15. each ch il1d.
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All of these payments for children are additional to the normal
child endowment payments.
We will introduce, in the first session, legislation to provide
that these increases will operate as from March 1st. The provision
for children after the first is new, and will give added
material family assistance.
7. We will introduce a measure to provide a rebate of 5% in personal
income tax for the income year 1961-62. This will be made effective
( in reality retrospectively) by reduced P. A. Y. E. deductions as from
March 1st, 1962, appropriate adjustments being made in relation to
provisional tax payments. In the case of P. A. Y. E. taxpayers, for
example, this will mean that the deductions to be made in the concluding
four months of the current financial year will be reduced
to an extent which will make the overall 5% rebate effective.
To provide an overall 1961-62 rebate of in the of tax,
the rebate would, in the four months March 1st June 30th, be 3/-
in the of tax). The effect of this measure will be to add
to the disposable income of the community over these four months.
8. A review has been made of the Commonwealth's own works programme
to see what further scope there may be for accelerating works now
in progress or bringing forward projects on which an early start
could be made. This has disclosed some useful, if limited,
possibilities for such action in fields like Defence, the Post
Office and civil works generally and these are being put into
operation urgently.
9. Sales tax on motor cars and station wagons and other motor vehicles
now taxable at 30% will, as from the date of this announcement, be
taxable at the reduced rate of 226.
On commercial motor vehicles, motor cycles, and motor vehicle parts
and accessories, the present rate of 162/ 3% will be reduced to 1206.
In the field of Housing, and additional to what I have said about
advances to the States, we have made the following new decisions
War Service Homes. We will propose to Parliament that
the maximum advance be increased in all categories from
œ 2,750 to œ 3,500. Applications for loans on the new
basis will be received from the date of this announcement.
The actual making of the loans will of course await amending
legislation in the forthcoming session.
Steps are being taken to promote further increased lending
for housing by the Commonwealth Savings Bank and other
financial institutions.
LONGER TERM MEASURES: The measures I now announce are not to be taken as covering the
whole field of future action. For instance, we are putting in hand a complete
review of tariff policy and the functions of the Tariff Board. In the case of
the rural industries, so vulnerable to costs, further encouragement of productivity,
already notably increasing, is essential. We are investigating
such problems with all speed.
But in the meantime, and to assist in a restoration of confidence
and therefore employment, we have made the following significant decisions:
1. We have decided to introduce, for manufacturing activities, a system
of Investment Allowances at a rate of These allowances are to
apply to new plant and equipment used in manufacturing production.
Naturally there are many details to be settled matters of technical
definition and the like and the Treasurer will make a comprehensive
statement on this at an early date. Subject to this, all I shall
say here is that we intend the concession to be available on plant
delivered and installed after the date of this announcement.
Legislation will be brought down in the forthcoming session of
Parliament. We have thought it right and timely for several reasons to introduce
a measure of this kind just now. One is to provide a general
encouragement to investment in manufacturing industry to which we
must look, perhaps more than to any other industry, for increased
employment opportunities, not only in the months ahead of us but in
the longer term. A second is that we see a vital need to assist
and encourage the pursuit of higher efficiency in this great sector
of our economy so that it may produce what we ourselves need at lower
costs and in greater volume. It is also most important that our
manufacturing industries should be, in this way, helped to meet on at
least equal terms the industries of other countries in the markets
where we are trying to win a foothold.
The third reason is that we want to make it plain to manufacturing
industry that it has not only our confidence but also our practical
backing in the great expansion it must undertake if our national
growth is to go on at the rate we want to see.
2. Confidence is important, for while Australian industry can be affected
by import competition, it can be affected even more by a falling off
in general customer demand in Australia. Should it, at any future
time, become necessary to impose any check upon such demand, imports
must take a due share of restriction.
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We have no intention to re-introduce import licensing as we have
k~ nown it. But recent experience has suggested that in some
industries,, or some sections of some industries, an inrush of
imports has done real damage. Where any such case is established,
special and temporary measures are justified, pending the operation
of the machinery we propose. Certain motor vehicle components,
certain chemicals, textiles, paper products and categories of timber
may be examples.
A competent independent Special Adviser on whose advice we will consider
imposition of temporary Quantitative Restrictions upon a
particular commodity will be appointed.
The intention would be to make Legislative provision to bring this
Special Adviser within the Tariff Board framework. We will take
legislative steps to make it clear that in future the Tariff Board
may, in the special circumstances of any particular case before it,
recommend a Quantitative Restriction if it thinks fit, where such a
recommendation would not conflict with the The Minister
for Trade will take an early opportunity of elaborating these ideas.
3. We had a valuable discussion with the Trading Banks about various
important matters which affect their operations. We are examining
these in a sympathetic way. Further discussions will be needed
before we reach finality. The Treasurer has since carried on these
discussions with the representatives of the Trading Banks and the
Governor of the Reserve Bank, Special attention is being given in
these talks to the problem of longer term lending particularly for
rural development and for certain classes of export sales. Meanwhile,
I want to emphasise that we want these Banks to be able to
play an increasingly important role in our progress.
4. At the time of our last Budget the Government considered the position
of the Commonwealth Development Bank, which has shown itself to be a
useful supplement to other sources of finance for primary and secondary
industry, and said that it wished the Bank to be able to maintain its
important functions. An amount of œ Sm. was provided in the Budget
by way of additional capital for the Bank, It undertook then to
keep the funds position of the Bank under close review and it has now
decided that, to ensure that the Bank will be able to maintain its
current volume of lending to industry, a further amount of œ 5m. should
be provided for it in the current financial year.
The measures which the Government has decided upon, and which I
have now announced, are far-reaching. They proceed from our unqualified faith
in the future of Australia, and from our desire to give tangible reasons why
this faith should be shared and acted upon by Australian industries and people.
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Our emphasis is upon national growth. A vigorous policy of
expansion with migration can, of course, create challenging problems. But
it is part of our policy and firm intention that should there arise in future
symptoms of undue pressure upon our resources of manpower and materials, we
should be in a position to deal with such matters by specifically designed
measures. To facilitate the taking of any such action at an appropriate
time, we intend to engage in periodical consultation with those engaged in
practical production and business.
We live in a great country. It is our task to see that it becomes
better and stronger as the years go on.
Canberra, 7th February, 1962.