PM Transcripts

Transcripts from the Prime Ministers of Australia

Transcript 4713


Photo of Fraser, Malcolm

Fraser, Malcolm

Period of Service: 11/11/1975 to 11/03/1983

More information about Fraser, Malcolm on The National Archive website.

Release Date: 16/05/1978

Release Type: Media Release

Transcript ID: 4713

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I was delighted to be invited to be patron of this joint
conference, but the challenging task you have set yourselves,
and your speakers' depth of expertise, deny anyone, even the
patron, the opportunity to be patronising.
Australia's history has been inextricably linked with the
fortunes of our great mining industry. That link will remain.
Just as the gold rushes of the last century, and the discoveries
at Kalgoorlie arnd Broken Hill changed the lives oE generations,
so the more recent development activity in iron ore, bauxite,
nickel, coal and uranium are having a significant impact on the
lives of Australians today.
The minerals industry has contributed to Australia's jobs and
prosperity. Mining is not free of problems, but so long as
safeguards are strong and appropriate the net benefits the mining
industry brings Australia will continue to be enormous.
We rely on our mining industry to find, prove, develop and
sell our minerals profitably, and my Government is committed
to maintaining a healthy mining industry.
In the past year there have been positive signs of a resurgence
in exploration and development. The North-West Shelf ventures
are spending $ 50 million on a feasibility study to work out the
extent of future investment in that project; exploration expenditure
for minerals other than petroleum increased by 34% in 1976-77
to $ 134 million; petroleum exploration increased dramatically last
year almost doubling to $ 94 million this year it is projected
to reach $ 125 million.
Much of this new exploration is occurring in Western Australia,
a State lucky enough to have a rare diamond amongst its mineral.
wealth. It's called Charlie Court, it's the only one of its
type in the world, and that's our good fortune.
Other major developments, such as the proposal to establish a
large-scale aluminium smelter at Gladstone, have been announced.
To a significant degree, these developments have been a produce
of Government policies. We have created a healthier environment
for investment in the mining industry. An environment in which,
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investors both here and overseas will find it profitable to
invest in Australia.
We have rich and abundant mineral resources. Their development
depends on stability of costs and investment conditions in
Australia and the availability of profitable markets overseas.
The Government can influence costs and therefore the investment
arithmetic by taking effective action to control inflation so
that business can plan with confidence.
We have succeeded and we shall keep going. We have improved
the climate of industrial relations another element of
uncertainty in investment plans.
We believe economic growth is best fostered by private enterprise
and we have acted to curb the massive increases in public spending
which occurred between 1973-1975. A stable policy environment,
so necessary to encourage investment, has been re-instated.
our policies have met with considerable success.. In the past
two years inflation has been halved. The O. E. C. D. acknowledged
this achievement in its latest review. Even blind Freddy and
his dog must now concede this to be true.
The Consumer Price Index increased by only 1.3% in the March
quarter the smallest March quarter increase since 1972.
This compares favourably with the U. S. Wholesale Price Index,
which increased 1.3% last month alone.
our anti-inflation policy has enabled official and private
sector interest rates to move down, with every prospect of
falling further as inflation falls. Lower inflation strengthens
our currency and international competitive position.-both of
vital concern to the overseas investor. Recent figures showing
strong private capital inflow $ 676 million in the last two
months are in line with these developments.
We welcome foreign investment in Australia. The Foreign
Investment Guidelines are administered with flexibility. Each
proposal is considered on its merits. The guidelines are
being monitored. They were revised in April 1976, and certain
aspects of the guidelines, as well as the Reserve Bank's
administrative controls, are again being reviewed to see if thley
in any way unreasonably impede investment.
our aim is to preserve, wherever possible, 50% Australian
equity in mining projects. But I want to make the point clear
if it is demonstrated that this objective cannot be reasonably
achieved, projects will not be held up.
The mining industry has benefitted from a wide range of tax
and duty concessions. Investment allowances, which allow for a
fast tax write-off of capital spending ara available; exploration
incentives in the mining industry have been restored, depreciation
allowances have been extended; and the coal export levy introduced
by the previous government is being phased out. / 3

A realistic energy pricing policy has been introduced. This
will allow petroleum products to be sold at world parity prices.
Federal and State administrative and licensing arrangements have
been clarified, and relevant Federal and State Ministers now
meet regularly at the Australian Minerals and Energy Council.
The Government has also simplified procedures applying to
mineral export controls. our anti-inflation policies and
incentives for minerals exploration and development are proving
effective. They will continue.
Although I know that not all the mining industry's problems
have been solved, I am confident that Australia is in the
forefront of those few countries in the world where overseas
businessmen can invest their capital and use their technology
and management skills, with profit and confidence.
We are particularly keen to see greater processing of Australian
raw materials in Australia. For example, while Australia is
the major alumina exporter we produce only 2% of the world's
aluminium. The announcement of the new Gladstone development is accordingly
most welcome.
There are sound economic reasons why more energy-intensive
mineral processing should be carried out in Australia, close
to ample sources of relatively cheap energy.
I should say that we are at present consulting with the States
on the steps that we can take to influence the amount of raw
materials processing conducted in Australia.
Australia's ability to supply increasing quantities of energy
and of other vital minerals will bring added rposperity both to
Australia and to our trading partners. But for this promise
of prosperity to be fully realised, there is a need for growth
in the world economy and an expansion in world markets.
Government leaders everywhere are currently concerned about
the slow rate of world economic expansion. It has been
estimated that 5% annual growth rate in total world output
is needed if unemployment is to fall internationally.
Although there has been a tentative recovery in the economies
of the major western countries, world growth has certainly not
reached this rate, and will in all probability fall short of
it in 1978.
Expansion-in world trade last year was also sluggish, and on
present indications the same will be true this year. The world
is suffering from under-utilization of its resources. Factories,
farms and mines working at less than capacity, and of course the
greatest waste of resources of all, the unemployment of so many
of our young.
What is required is a revitalization of world trade an
expansion of world markets.

Recent international discussions have focussed on this central
and all important issue. World leaders are united in the belief
that combined action must be taken to make sure that the world
moves to the kind of growth rates we have previously enjoyed.
What is needed is a greater commitment, a greater determination
to find solutions of lasting benefit to all sections of the
world trading community.
Certain actions are needed if we are to start on this path.
We must continue to reduce inflation inflation is still too
high. We have seen that Go~ vernments can, by determined and
responsible economic policies, reduce inflation substantially
and put their domestic economy on a sound basis.
In many cases, certain fundamental imbalances have been allowed
to arise. In Australia's case amongst others, a surge in wage
rates has far outstripped general inflation and gains in
productivity. By correcting these imbalances each country can
participate effectively in strong and lasting world recovery,,
and indeed contribute to it by pursuing moderate expansionary
policies. This year Australia has been able to introduce significant cuts
in personal income tax without precipitating renewed inflation.
In addition, barriers to trade expansion need to be reduced in
a co-ordinated and equitable manner.
The current multi-lateral trade negotiations have the potential
to increase significantly world trade. These negotiations will
soon be drawing to a close. The decisions which are taken will
set the pattern of international trade relations for years to come.
It is vital to the whole trading world that the result is a
comprehensive and significant reduction in trade barriers.
Regrettably, so far the discussions have not greatly . progressed.
It is not yet clear that agricultural products and other
commodities will be included in the final agreement. Some of the
major industrialised countries are proposing a 40 percent cut
in tariffs on manufactured products, and some claim that this would
constitute'a significant breakthrough.
But when this seemingly attractive proposal is examined, it quickly
becomes evident that by itself it would provide only a very limited
basis for expanding world trade. With average tariffs on manufactured
goods being about 10 percent, the cuts would average as little as
one half of one percent per year, for 8 years starting in 1980
hardly the spark to ignite the engines of world trade expansion.
What is more, the proposed cuts do not affect trade within' the
EEC or trade in non-manufactured goods. They would cover less
than one-fifth of total world trade, and they could be quickly
cancelled out by even minor movements in currency exchange ratE! s.

I imagine the proposed cuts may have some value to the major
developed countries up to 40 percent of exports from Japan, the
EEC and the United States would be covered. But they would cover
not more than five percent of Australia's exports, and no more
than five percent of the exports of many developing countries.
For MTN to be a success, the inclusion of agricultural products and
other commodities is vital. Such wide-ranging trade liberalisation
negotiations as the MTN may not occur again-this century.
The opportunity must be taken and taken now to reduce the protectionisr
which obstructs world trade. The MTN could lead to a new international
compact of historic significance if meaningful reductions in barriers
can be achieved for manutactured and for agricultural products.
It is not enough merely to avoid an increase in protectionism.
Avoiding a negative outcome is not a sign of success.
It may appear to have some limited benefits for the developed world,
it would do nothing for the third world. The interests of the developed
countries would once again have been promoted while the developing
nations interests as commodity producers would have been virtually
ignored. This result would have serious long-term economic implications
for all nations developed and developing alike.
The Second World War was followed by 25 years of economic growth
unparalleled in the world's history. If we, in 1978, stand back
and look again at the dynamics of world growth we can as'k what
will provide the impetus for a renewed expansion in world trade.
We cannot look with certainty to consumer demand in developed
countries providing a sufficient drive to generate the expansion
we need. Any meaningful response'to the problem of
depressed global demand must involve the developing countries
and expand their access to the developed world's markets.
This would help the developing nations to meet more
effectively the basic human needs of their people. Increased
demand from the developing countries would provide additional
growth in the world economy and the expansion in world markets which
is so urgently -required. This would help get our economies operating
to capacity, and provide jobs for our unemployed.
The developing countries view the world trading system as
inherently biased against them. Relying heavily on commodity trade,
they have been severely hurt by falling commodity prices,
adverse movements in exhcange rates, and in some circumstances,
difficulties in obtaining access to markets in the developed
countries. In 1975, the latest year for which figures are available, the
terms of trade for the non-petroleumi exporting developing
were worse than at any time in the preceding 15 years. / 6

Between 1973 and 1976, official aid doubled. It would in fact
have had to increase fourfold that's an additional $ 22 billion
just to compensate for the deterioration in the non-oil developing
nations balance of payments.-a deterioration largely caused
by a worsening in their terms of trade.
In the light of this, it is not surprising that the
developing countries want to stabilise world commodity prices,
through the introduction of a Common Fund for commodity trade.
There are signs that at last all countries are moving away from
inflexible positions on this issue and genuinely want-a conclusion
beneficial to all. Australia is convinced that a Common Fund
can be established, which will help commodity producers avoid
disastrous cyclical price drops, and will help consumers by
avoiding inflationary cyclical price rises.
This belief was reinforced at the Commonwealth Ministeral Meeting
last month in London which broadly endorsed Australia's position
on the Fund. Much of the economic progress since the Second
World War has come from international specialisation
made possible by the great expansion of world trade.
1978 is a crucial year. It is of paramount importance that every
effort be made to get a sustained expansion of world trade. It is
in the interests of both developed and developing nations.
Australia is committed to playing its part in achieving a
strong and lasting expansion in the world economy.
I am confident that the Australian Mining Industry will participate
in this recovery.

Transcript 4713