Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Speech by the Honourable John Dawkins MP Minister for Employment Education and Training to a forum on Australia's economic and industrial future



Download PDFDownload PDF

CHECK AGAINST DELIVERY

SPEECH

BY

THE HONOURABLE JOHN DAWKINS MP

MINISTER FOR EMPLOYMENT, EDUCATION AND TRAINING

TO A FORUM ON AUSTRALIA'S ECONOMIC AND INDUSTRIAL FUTURE

MELBOURNE

6 MARCH 1991

COMMONWEALTH PARLIAMENTARY LIBRARY MIC AH

2

INTRODUCTION

THE RADICAL FRENCH PRIME MINISTER OF THE 1950'S, MENDES-FRANCE,

ONCE OBSERVED "THAT TO GOVERN IS TO CHOOSE".

HOWEVER, THE CHARACTERISTIC OF AUSTRALIAN GOVERNMENTS IN THE

POST-WAR ERA - INDEED, FOR THE MOST PART OF OUR FEDERAL HISTORY

- HAS BEEN TO CHOOSE TO DITHER OR DO NOTHING MUCH AT ALL IN THE

FACE OF OPPORTUNITY AND CHALLENGE. IT IS A MISFORTUNE FOR OUR

NATION THAT AS A RESULT OF THE INTERNAL FEUDING WITHIN THE

AUSTRALIAN LABOR PARTY IN THE FIFTIES AND SIXTIES, AUSTRALIA

WAS GOVERNED BY MEN AND WOMEN OF LIMITED VISION AND TIMOROUS

HEARTS. THEY PREFERRED TO LET EVENTS TAKE THEIR OWN COURSE

UNLESS THE PROXIMITY OF AN ELECTION REQUIRED THAT THEY BE "SEEN

TO BE DOING SOMETHING".

IF THE LABOR GOVERNMENT HAS ANY FAULTS - AND AFTER EIGHT YEARS,

THERE IS CERTAINLY NO SHORTAGE OF ACCUSERS - WE CAN AT LEAST

AVOID THE CHARGE OF BEING TIMID DITHERERS.

3

THE MARCH INDUSTRY STATEMENT TYPIFIES THE FORTITUDE OF THIS

LABOR GOVERNMENT IN ITS APPROACH TO PUBLIC POLICY. IT BREAKS

DECISIVELY WITH A SIGNIFICANT ASPECT OF OUR PAST AND FINALLY

PUTS TO BED A CENTURY OR MORE OF DEBATE IN THIS COUNTRY ON THE

"TARIFF QUESTION". AND IT SETS A POLICY AGENDA FOR THE NEAR

AND MEDIUM FUTURE, AN AGENDA THAT IS FIRMLY FOCUSSED ON

PRESERVING AUSTRALIA'S CURRENTLY TENUOUS POSITION AS A FIRST

WORLD ECONOMY.

I THINK WE CAN BE QUITE SPECIFIC ABOUT THE BROAD DIRECTION

WHICH WE MUST TAKE IN THE NEXT DECADE. TO ADDRESS OUR CURRENT

ACCOUNT PROBLEMS WITHOUT AT THE SAME TIME REDUCING LIVING

STANDARDS, AS A NATION WE MUST, AT LEAST :

. INCREASE SAVINGS;

. INCREASE INVESTMENT IN THE TRADED SECTOR; AND

. INCREASE PRODUCTIVITY GROWTH.

THE ANATOMY OF THE ECONOMIC CHALLENGE BEFORE US IS EASY ENOUGH

TO DISSECT : WE KNOW WHAT OUR GOALS MUST BE.

IT IS THE POSSIBILITIES OF A COMPREHENSIVE RESPONSE TO THIS

CHALLENGE WHICH I WISH TO EXPLORE WITH YOU TODAY : HOW WILL WE

ACHIEVE OUR GOALS?

THE BASIC PROPOSITION THAT I WILL BE PUTTING IS BASED ON A

SIMPLE EMPIRICAL OBSERVATION AND THAT IS

4

ALL PROSPEROUS ECONOMIES IN THE WORLD TODAY ARE MIXED

ECONOMIES. THE MOST SUCCESSFUL AMONGST THEM ARE THOSE WHICH

HAVE BEEN ABLE TO ADAPT THEIR OWN ECONOMIC INSTITUTIONS TO

THEIR OWN CIRCUMSTANCES AND TO THE EVOLVING INTERNATIONAL

PATTERNS OF PRODUCTION AND FINANCE.

BY A MIXED ECONOMY I MEAN, OF COURSE, ONE THAT IS SUBJECT TO

THE RIGOUR AND DISCIPLINE OF THE MARKET PLACE YET ACCEPTS A

LEGITIMATE ROLE FOR GOVERNMENT IN MODERATING MARKET OUTCOMES

WHERE THIS IS PERCEIVED TO BE IN THE NATIONAL AND/OR PUBLIC

INTEREST.

UNFORTUNATELY, I THINK IT IS THE CASE IN AUSTRALIA TODAY THAT

THE PREVAILING ECONOMIC ORTHODOXY, WHILE PAYING SOME REGARD TO

THE VIRTUES OF A MIXED ECONOMY, TENDS TO OVEREMPHASISE MARKET

RIGOUR AND DEEMPHASISE THE ROLE OF GOVERNMENT. IN THE

DEMONOLOGY OF THE SEERS OF ECONOMIC ORTHODOXY "GOVERNMENT

INTERVENTION" LOOMS LARGE AND SINISTER.

THIS ATTITUDE IS, I MUST SAY, SOMEWHAT CURIOUS : IT CONFERS

WISDOM AND PURITY ON THE PART OF THE ORTHODOX, WHILE DISMISSING

THE NON-ORTHODOX AS FOLLY AND HERESY.

BUT THE TRULY WISE KNOW THAT THE LAWS OF NO SCIENCE ARE

INSCRIBED IN STONE - LEAST OF ALL THE QUASI-SCIENCE OF

ECONOMICS. AS LORD BALOGH OBSERVED, ECONOMICS IS MORE A METHOD

OF REASONING BASED ON CERTAIN POLITICAL VALUES AND PREJUDICES,

"AN INTUITIVE ART OF EVALUATING RELATIONSHIPS WHICH ARE HIGHLY

UNSTABLE

5

THE TENDENCY OF THE AUSTRALIAN RIGHT TO STRUCTURE THE DEBATE IN

TERMS OF THE CRUDE DICHOTOMIES BETWEEN 'INTERVENTION' AND 'FREE

MARKETS' MIGHT BE SEEN AS PART OF OUR CULTURAL CRINGE TOWARD

THE ECONOMIC PREDILECTIONS (AND FASHIONS) IN OTHER

ENGLISH-SPEAKING COUNTRIES.

SADLY, IT IS THIS APPROACH THAT HAS CHARACTERISED THE RIGHT

WING CONTRIBUTION TO POLITICAL ECONOMY IN THE ENGLISH-SPEAKING

COUNTRIES SINCE THE DECLINE OF BURKE’S TRADITION OF PRINCIPLED

AND RELATIVELY BENEVOLENT CONSERVATISM AND THE RISE OF THE

LIBERTARIAN ZEALOTS OF THE THATCHERITE AND REAGANITE RIGHT.

GIVEN THE FAILURE OF THE ENGLISH-SPEAKING COUNTRIES TO MATCH

THE ECONOMIC GROWTH OF THE BEST IN EUROPE AND ASIA, ONE MIGHT

SEE THIS CRUDE RELIANCE ON THE MARKET AS A REFLECTION OF

PROVINCIALISM AND NARROW-MINDEDNESS THE ENGLISH-SPEAKING WORLD

ITSELF.

WHILE THE BEST OF THE WESTERN EUROPEANS AND ASIAN COUNTRIES GET

ON WITH THE MANAGEMENT OF THEIR MIXED ECONOMIES AND THE

ORCHESTRATION OF ECONOMIC DEVELOPMENT, THE CITIZENS OF

ENGLISH-SPEAKING NATIONS ARE SPECTATORS AT A SEEMINGLY

INTELLECTUAL JOUST BETWEEN 'INTERVENTIONISTS' AND 'FREE

MARKETEERS'. IT IS, IN REALITY, A JOUST THAT IS NOT ONLY

LARGELY STERILE BUT SOCIALLY AND ECONOMICALLY DESTRUCTIVE.

6

IN TERMS OF ECONOMIC POLICY, IT IS INSTRUCTIVE TO RECALL THAT,

IN THE EARLY POST-WAR PERIOD, THERE WAS NO SHORTAGE OF

ECONOMISTS ADVISING THE JAPANESE GOVERNMENT TO TAKE THEIR

'HANDS OFF' THE ECONOMY. JAPANESE POLICY-MAKERS POLITELY

DECLINED TO FOLLOW SUCH ADVICE.

INSTEAD, AT THE NATIONAL LEVEL THE JAPANESE CONCENTRATED ON

DEVELOPING BROADLY AGREED UPON ECONOMIC GOALS. THEY THEN

SOUGHT TO MEET THOSE OBJECTIVES THROUGH A COMPLEX SYSTEM IN

WHICH PRIVATE FIRMS COMPETED WITH ONE ANOTHER, BUT AT THE SAME

TIME PARTICIPATED IN CONSULTATIVE DIALOGUE WITHIN AN EXTENSIVE

NETWORK OF INDUSTRY BODIES, EMPLOYEES, INDUSTRIES AND THE STATE.

IT WAS JAPANESE BUREAUCRATS, ALBEIT IN LIAISON WITH JAPANESE

FIRMS, WHO SWITCHED THE FOCUS OF POLICY FROM IMPORT REPLACEMENT

TO EXPORT PROMOTION. TWO DECADES LATER, THE SUPERIORITY OF

EXPORT PROMOTION OVER IMPORT REPLACEMENT IS ONE OF THE FEW

THINGS UPON WHICH MOST ECONOMISTS AGREE.

AT THE FIRM LEVEL, THE JAPANESE PIONEERED "POST-FORDISM" - THAT

IS, THE ORGANISATION OF WORK TASKS IN A MORE DIGNIFIED AND

AMENABLE WAY FOR HUMAN BEINGS THAN HENRY FORD'S DEHUMANISING

ASSEMBLY LINE METHODS. PRODUCTIVITY IMPROVED AT A PRODIGIOUS

RATE ONCE PRODUCTION WAS BUILT UPON THE PROPOSITION THAT WAGE

EARNERS ARE NOT AUTOMATONS, THAT THEY ACTUALLY PREFER TO WORK

PRODUCTIVELY AND INVENTIVELY

7

TODAY THE JAPANESE MODEL IS BEING APPLIED WITH SPECTACULAR

SUCCESS TO DEVELOPMENT THROUGHOUT ASIA. RAPIDLY DEVELOPING

ECONOMIES SUCH AS SINGAPORE, MALAYSIA AND KOREA HAVE MADE .

EXPLICIT THE EXTENT TO WHICH JAPAN'S EXPERIENCE HAS INFLUENCED

THEIR OWN STRATEGIES.

LIKEWISE, THE CONTINENTAL EUROPEANS HAVE PURSUED ECONOMIC

STRATEGIES IN WHICH THE PUBLIC AND PRIVATE SECTOR ARE SEEN AS

PARTNERS IN A CO-OPERATIVE PROCESS OF ECONOMIC DEVELOPMENT.

NOTWITHSTANDING THE DEMONSTRABLE SUCCESS OF THIS TYPE OF

APPROACH, ORTHODOXY IN THE ENGLISH-SPEAKING WORLD HOLDS SUCH

CO-OPERATIVE PROCESSES IN CONTEMPT : EFFORTS TO FOSTER ECONOMIC

COOPERATION IN AUSTRALIA ARE USUALLY LABELLED AS "CORPORATIST",

AN APPELLATION WHICH HAS PEJORATIVE - IF NOT SINISTER -

CONNOTATIONS.

ECONOMIC RATIONALISM AND MARKET FETISHISM

THERE IS PROFOUND DIFFERENCE BETWEEN ECONOMIC RATIONALISM - THE

PRACTICE OF DELIBERATING UPON ECONOMIC POLICY MATTERS AS

RATIONALLY AS ECONOMIC ANALYSIS AND EMPIRICAL EVIDENCE PERMIT -AND A FETISH FOR MARKET-BASED SOLUTIONS

8

THE DEBATE WITHIN THE GOVERNMENT ON MATTERS OF ECONOMIC POLICY

- AND, YES, THERE IS A DYNAMIC, CONSTRUCTIVE DEBATE ON SUCH

MATTERS, AS THERE HAS BEEN FOR THE PAST 8 YEARS - IS NOT A

DEBATE BETWEEN OPPOSING ECONOMIC FACTIONS ABOUT THE RELATIVE

MERITS OF ECONOMIC RATIONALISM VERSUS "NEW PROTECTIONISM" /

"INTERVENTIONISM". IT IS, IN FACT, A DEBATE AMONG ECONOMIC

RATIONALISTS AND IT IS ABOUT WHAT IS ECONOMICALLY RATIONAL.

IN THIS GOVERNMENT, WE UNDERSTAND THAT 'LET 'ER RIP' MARKET

ECONOMICS DOES NOT ALWAYS - OR VERY OFTEN, FOR THAT MATTER -

PRODUCE RATIONAL ECONOMIC OUTCOMES.

LET ME PROVIDE A SIMPLE AND VERY CLEAR ILLUSTRATION OF THIS

POINT.

IN 1988 FREE COMPETITION BETWEEN THE UNITES STATES TELEVISION

NETWORKS SAW THEM PAY $309 MILLION FOR THE RIGHTS TO TELEVISE

THE WINTER OLYMPICS IN CALGARY. AUSTRALIAN NETWORKS ALSO

COMPETED FIERCELY AND THE 'WINNER' PAID HANDSOMELY FOR THE

HONOUR. THE EUROPEANS, ON THE OTHER HAND, KEPT THEIR FREE

MARKET AT HOME, THEY BID AS ONE CONSORTIUM AND PAID JUST $5.7

MILLION.

WE NEED NOT LURCH TOWARD GROSS 'INTERVENTIONISM' TO BE

CONSCIOUSLY DESIGNING OUR ECONOMIC INSTITUTIONS TO HARMONISE

THE BENEFITS OF COMPETITION AND CO-ORDINATION.

9

AN EXAMPLE FROM RECENT INDUSTRY POLICY

AN IMPORTANT AND VERY GRAPHIC EXAMPLE COMES FROM RECENT

AUTOMOTIVE INDUSTRY POLICY WHICH REPRESENTS AN INTERNATIONAL

FIRST.

IN ITS RECENT REPORT THE INDUSTRY COMMISSION (IC) DEVIATED FROM

ITS PREVIOUS POSITION, TO RECOMMEND THAT THE GOVERNMENT

CONTINUE TO REDUCE PROTECTION FOR THE AUTOMOTIVE INDUSTRY AND

AT THE SAME TIME EXTEND EXPORT ASSISTANCE.

THE ARGUMENTS FOR THE NEW APPROACH CAN BE OUTLINED SO SIMPLY

THAT IT IS SOMETHING OF AN EMBARRASSMENT THAT IT HAS TAKEN SO

LONG FOR AUSTRALIAN ECONOMIC POLICY ADVISERS TO ADDRESS THEM

COHERENTLY.

WHILE TARIFFS REMAIN, THEY DISTORT PRODUCTION TOWARDS THE

DOMESTIC MARKET. FOR THAT REASON THE AMOUNT OF ASSISTANCE

SHOULD DECLINE AS FAST AS POSSIBLE, AND AT THE SAME TIME THE

NATURE OF THAT ASSISTANCE SHOULD BE CHANGED (WITH EXPORT

ASSISTANCE) TO REMOVE THE DISCRIMINATION AGAINST EXPORTS.

THAT WAS PART OF THE BURDEN OF MY REMARKS TO THE NATIONAL PRESS

CLUB IN NOVEMBER LAST YEAR.

10

ONE 'LESSON' FROM THIS EPISODE IS THAT WHERE THE POLICY-MAKING

BATTLE LINES ARE DRAWN BETWEEN * INTERVENTION' AND 'FREE

MARKETS', THE QUALITY OF PARTICULAR INTERVENTIONS WILL NOT BE

ADDRESSED. THE RHETORIC FLOWS EASILY FROM THE WORD PROCESSOR

PROGRAMMED ACCORDING TO THE FREE MARKET FETISM : "EXPORT

ASSISTANCE IS SIMPLY 'OLD PROTECTION' IN ANOTHER GUISE".

THE PRACTICAL BENEFITS OF EXPORT FACILITATION BECOME HIGHLY

VISIBLE NOT UPON EMBRACING 'INTERVENTIONISM', BUT UPON

DELIBERATING UPON THE PARTICULAR PROBLEMS FACED BY THE INDUSTRY.

DESPITE BEING CURRENTLY OVER ASSISTED, OUR AUTOMOTIVE INDUSTRY

WAS BOTH COMPETITIVE AND EXPORT-ORIENTED AS RECENTLY AS THE

EARLY 1970'S. THE NEED FOR INDUSTRY RESTRUCTURING GREW IN THE

1970'S AS THE INDUSTRY RETREATED BEHIND PROTECTIVE WALLS.

EXPORT FACILITATION ALLOWS FIRMS ACCESS TO IMPORTS TO THE

EXTENT OF THEIR EXPORTS. IT IS THE LEAST 'DIRECTIVE' MEANS OF

RECONSTRUCTING INCENTIVES TO ENABLE RESTRUCTURING WITHIN THE

INDUSTRY.

IT ENABLES MITSUBISHI, FOR INSTANCE, TO EXPORT MORE MAGNAS AND

ENGINES IN ORDER TO IMPORT MORE COLTS. IN THE PROCESS

MITSUBISHI AUSTRALIA HAS BECOME A WORLD 'BASE' FOR THE

MANUFACTURE AND CO-DESIGN OF THE VEHICLE AND ENGINE VARIANTS

WHICH IT EXPORTS.

BECAUSE ITS ADJUSTMENT PATH IS MORE EFFICIENT, PROTECTION CAN

BE REDUCED FASTER THAN IT COULD BE OTHERWISE.

11

I MIGHT POINT OUT THIS IS THE FIRST TIME THAT A GOVERNMENT HAS

SUCCESSFULLY IMPLEMENTED TARIFF RECOMMENDATIONS FROM THE IAC OR

ITS SUCCESSOR, THE INDUSTRY COMMISSION. AND EXPORT

FACILITATION IS ONE OF THE THINGS WHICH MADE THIS POSSIBLE.

THE INEVITABILITY OF POLICY CHOICE AND COMPROMISE

ANOTHER MORAL FROM THE STORY IS THAT IN A COMPLEX SITUATION,

CHOICES AFFECTING RESOURCE FLOWS ARE FREQUENTLY INEVITABLE.

HERE THE POSSIBILITY OF 'LEAVING IT TO THE MARKET' IS ILLUSORY.

THE TARIFF-ONLY PATH, WHICH WAS, I MIGHT REMIND YOU, THE

ORTHODOX PREFERENCE, MADE A CHOICE WITHOUT ACKNOWLEDGING IT.

IT CHOSE TO IGNORE THE INWARD ORIENTATION OF TARIFFS UNTIL THE

DISTANT DAY THEY DISAPPEAR ALTOGETHER. _

FOR THOSE ASPIRING TO ECONOMIC RATIONALISM, THESE CHOICES MUST

BE ACKNOWLEDGED. ONE OF THE BEST WAYS OF DOING SO IS TO AVOID

BEING SEDUCED BY STORIES WHICH CONCENTRATE TOO HEAVILY ON WHAT

WILL SUPPOSEDLY EMERGE 'IN THE LONG RUN'.

THE WAY TO THE LONG RUN IS NOT VIA SUPPOSED DOCTRINAL 'PURITY'

AND EXCLUSIVELY 'FIRST BEST' SOLUTIONS. IT IS VIA THE MEDIUM

TERM.

12

RATIONAL ECONOMIC MANAGEMENT WILL OFTEN CONCEIVE ITS TASK AS

ONE OF EFFECTIVELY MANAGING A MEDIUM TERM ECONOMIC TRANSITION,

RATHER THAN SEEKING THE MEANS TO LAND THE ECONOMY IN A LONG RUN

OPTIMUM.

THERE IS ALWAYS A TEMPTATION, REINFORCED BY TOO 'ACADEMIC' AN

ECONOMIC TRAINING, AND INSTITUTIONAL TUNNEL VISION, TO FOCUS ON

A PARTICULAR AGENDA BY HOLDING 'ALL OTHER THINGS EQUAL'.

IT IS UNFORTUNATE THAT THE IAC STUCK SO DOGGEDLY TO A NARROW

TARIFF BASED MICRO-ECONOMIC AGENDA, WHERE IT COULD HAVE OFFERED

US A MORE COMPREHENSIVE MICRO-ECONOMIC AGENDA AS WELL AS SOME

SUSTAINED DISCUSSION OF MACRO-ECONOMIC STRATEGIES WHICH WOULD

BEST DOVETAIL WITH TARIFF REFORM.

YET THIS WAS DURING THE PERIOD WHEN EXCHANGE RATES BECAME

INCREASINGLY VOLATILE, AND SO, AN INCREASINGLY IMPORTANT

DETERMINANT IN THE ALLOCATION OF RESOURCES IN THE AUSTRALIAN

ECONOMY.

13

THE PARTIES TO ECONOMIC POLICY FORMATION: COMPLEMENTATION OR

ANTAGONISM

MARKET FETISHISM PROVIDES AN ATTRACTIVE SELF IMAGE FOR

PARTICIPANTS IN THE ECONOMIC DEBATE.

THOSE IN THE PRIVATE SECTOR SEE THEMSELVES AS REPRESENTING THE

FORCES OF PRODUCTION, BATTLING STATE INTERFERENCE AND THE DEAD

HAND OF THE BUREAUCRACY. BUT MARKET-ORIENTED BUREAUCRATIC

ADVISERS SEE THEMSELVES REPRESENTING THE PUBLIC INTEREST AS

THEY FIGHT OFF PROPOSALS FROM RENT-SEEKING INTEREST GROUPS.

THEIR ANALYSIS OF PROPOSALS FROM OUTSIDE THEIR OWN RANKS IS NOT

JUST SCEPTICAL, AS IT SHOULD BE, BUT ALL TOO OFTEN, HOSTILE AND

COMPLACENT.

THIS MUTUAL ANTAGONISM PROVIDES A STRIKING CONTRAST WITH THE

WAY IN WHICH REPRESENTATIVES OF THE PRIVATE AND PUBLIC SECTORS

STRIVE FOR A COMPLEMENTARY RELATIONSHIP IN THE SUCCESSFUL

EUROPEAN AND ASIAN COUNTRIES.

IT IS WORTH RECALLING THAT EXPORT FACILITATION HAD ITS ORIGIN

OUTSIDE THE ECONOMIC PROFESSION AND THE FEDERAL BUREAUCRACY.

IN 1974 THE FEDERAL BUREAUCRACY REJECTED A REPORT FROM MARTEC,

A PRIVATE CONSULTANT IN THE AUTOMOTIVE INDUSTRY. WHATEVER ITS

MERITS AS A TECHNICAL DOCUMENT, IT WAS WRITTEN BY PEOPLE WHO

WERE CLOSE TO THE INDUSTRY.

14

MARTEC ENDORSED PRECISELY THE KIND OF RE-STRUCTURING WHICH HAS

NOW BEEN ENDORSED BY THE IC AND THE GOVERNMENT. YET THEIR

PROPOSALS WERE BRUSHED ASIDE BY ADVISERS WHEN THEY WERE FIRST

OFFERED IN 1974. AND IN 1981 THE IAC DOGGEDLY OPPOSED EXPORT

FACILITATION.

AS MICHAEL STUTCHBURY OF THE FINANCIAL REVIEW HAS POINTED OUT:

THE GREAT TRAGEDY IS THAT NO ONE ACTED ON THIS MUCH

EARLIER, PARTICULARLY WHEN FORTRESS AUSTRALIA RETREATED

FURTHER BEHIND HIGHER MANUFACTURING IMPORT PROTECTION WALLS

IN RESPONSE TO THE ASIAN CHALLENGE ... IF EXPORT

FACILITATION HAD BEEN USED INSTEAD .... BY NOW WE WOULD

HAVE HAD A MUCH MORE EFFICIENT AND EXPORT ORIENTED ECONOMY.

WHEN GMH LOBBIED FOR EXPORT FACILITATION IN THE LATE 1970'S, IT

WAS UNDENIABLY AN INTERESTED PARTY. BUT IT WAS ALSO A SOURCE

OF VALUABLE INFORMATION ABOUT THE NATURE OF THE INDUSTRY AND

THE COST OF ASSISTANCE WHICH WAS INWARDLY ORIENTED.

WITH SUFFICIENT OPEN-MINDEDNESS, THE BUREAUCRACY COULD HAVE

DEVELOPED A COHERENT ANALYSIS OF THE POLICY IT WAS OPPOSING A

DECADE BEFORE SUCH AN ANALYSIS WAS FINALLY PRODUCED - FROM

OUTSIDE THE BUREAUCRACY.

15

WITHER AUSTRALIAN ECONOMICS?

ONE FURTHER COMMENT WITH WHICH TO DRAW THE DISTINCTION BETWEEN

ECONOMIC RATIONALISM AND SIMPLE MARKET FETISHISM, IS THE NEED

FOR SOLUTIONS TO PROBLEMS WHICH ARE SUITED TO OUR OWN

ATTITUDES, INSTITUTIONS AND ECONOMIC CIRCUMSTANCES.

IN A RECENT BOOK, THE HISTORY OF AUSTRALIAN ECONOMIC THOUGHT.

PETER GROENEWEGEN AND BRUCE MCFARLANE LAMENT THE PASSING OF A

SCHOOL OF AUSTRALIAN ECONOMIC THOUGHT WHICH WAS "PRAGMATIC AND

POLICY ORIENTED" AND DEVOTED TO THE ANALYSIS OF PARTICULAR

AUSTRALIAN POLICY PROBLEMS.

IN THIS RESPECT GROENEWEGEN AND MCFARLANE SUGGEST THE NEED FOR

ECONOMIC TRAINING WHICH SEEKS TO AVOID SINGLE AND

SIMPLE-MINDEDNESS IN ECONOMICS. THEY RECOMMEND:

CRITICAL TEACHING OF THE (NEO-CLASSICAL) THEOREMS WITH

STUDENTS (OF ECONOMICS) ADVISED OF THEIR LIMITATIONS FROM

THE START: CRITICISM BY ACADEMICS OF THE POPULIST

DEMAGOGUES SELLING THE PANACEAS AND 'SNAKE OIL REMEDIES' OF

THE LATEST AMERICAN FADS WHETHER IT BE MULTILATERAL FREE

TRADE, PRIVATISATION, SUPPLY SIDE ECONOMICS (REMEMBER THE

AUSTRALIAN MARKETING OF THE LAFFER CURVE?), EXTREME

16

VERSIONS OF MONETARISM OF THE RATIONAL EXPECTATIONS

MOVEMENT. IT ALSO MEANS TOLERANCE OF UNCONVENTIONAL IDEAS

... AUSTRALIAN ECONOMICS IN THE PAST HAD A FAIRLY GOOD

RECORD IN ITS WILLINGNESS TO TEST NEW IDEAS WITH CRITICAL

SCRUTINY AND TO EMBRACE AT LEAST SOME OF THE VIEWS OF THE

NON-SPECIALIST.

THE ACCORD IS PERHAPS THE SINGLE GREATEST ECONOMIC ACHIEVEMENT

OF THIS GOVERNMENT. IT IS THE ENVY OF MANY COUNTRIES. IT IS A

HOME GROWN INSTITUTION, PARTICULARLY SUITED TO THE ECONOMIC

EXIGENCIES OF ITS TIME AND ITS PLACE. IN IT, PARTIES NEGOTIATE

SOLUTIONS ACCORDING TO THEIR RESPECTIVE PRIORITIES.

THE MARKET FETISHISTS WOULD DO AWAY WITH THE ACCORD. I BELIEVE

THAT IT AND MECHANISMS LIKE IT SHOULD AND WILL HAVE A GREATER

ROLE IN PRODUCING AN ECONOMICALLY RATIONAL RESPONSE TO THE

CHALLENGES WHICH FACE US.

THE CHALLENGES OF THE FUTURE

THERE IS NO DIFFICULTY SETTING OUT THE BROAD OUTLINES OF A

NATIONAL STRATEGY. I OUTLINED ITS BARE BONES EARLIER. THEY

INCLUDE INCREASED SAVINGS, PRODUCTIVITY GROWTH AND INVESTMENT

IN THE TRADED SECTOR.

17

WE SHOULD NOT UNDERESTIMATE THE TASK WHICH WE FACE IN MEETING

THE CHALLENGE OF OUR FOREIGN DEBT. THE IDEA THAT WE DEAL WITH

IT VIA AN AGGREGATION OF PRIVATE AND UNCO-ORDINATED PROFIT

SEEKING ACTIVITY WOULD STRIKE THE JAPANESE AS ABSURD. THEY

WOULD, AS WE SHOULD, NOT SEEK TO RESIST THE MARKET, BUT TO

REINFORCE IT, AND TO HELP CO-ORDINATE IT.

AN APPROACH WHICH BRINGS TO BEAR ALL THE POWERS AT OUR COMMAND,

THE POWERS OF A MIXED ECONOMY, WILL BE VASTLY MORE EFFECTIVE

THAN THE SOCIALLY AND ECONOMICALLY CHAOTIC VISION TO WHICH OUR

OPPONENTS ARE COMMITTED.

INCREASING SAVINGS

OF COURSE WE SHOULD SEEK TO REMOVE WHATEVER ’DISTORTIONS’ THERE

MIGHT BE IN THE RELATIVE INCENTIVES TO SAVE AND CONSUME. BUT

THIS WILL BE NO PANACEA. PRIVATE HOUSEHOLDS ARE FAIRLY

UNRESPONSIVE TO CHANGED INCENTIVES TO SAVE.

IN THE MEANTIME THIS GOVERNMENT HAS DEVELOPED A MUCH MORE

DIRECT SAVINGS POLICY. THE ACCORD HAS BEEN USED TO DIRECT A

GROWING PROPORTION OF WAGES INTO SUPERANNUATION, AND SO INTO

SAVINGS.

THIS HAS BEEN NOT JUST MORE EQUITABLE, BUT VASTLY MORE

EFFICIENT THAN A SOLELY MARKET-BASED SOLUTION. THE GOVERNMENT

APPROACH SEEKS TO DIRECTLY NEGOTIATE INCREASES IN COLLECTIVE

WORK-FORCE SAVINGS AND SO OPERATES AT THE MARGIN.

18

MARKET-BASED APPROACHES ARE LESS DIRECT AS SOLUTIONS BECAUSE

MOST OF THE INCREASED REWARDS GO TO SAVINGS WHICH WOULD HAVE

BEEN MADE IN ANY CASE. AND THEY GO TO THOSE WHO ALREADY HAVE A

LARGE POOL OF SAVING - THE RICH.

WE NEED TO SAVE ABOUT 10% OF INCOMES TO PROVIDE RETIREES WITH

INCOMES IN EXCESS OF THE CURRENT AGE PENSION. WE ARE WELL

BELOW THAT FIGURE.

IT MAY BE APPROPRIATE TO EXTEND THE ACCORD MORE EXPLICITLY INTO

SAVINGS POLICY. WAGES HAVE RECENTLY BEEN AT AN HISTORIC LOW AS

A PROPORTION OF NATIONAL INCOME. WHATEVER POSITION THE

GOVERNMENT ADOPTS ON WAGES, THE MORE EMPLOYEES AGREE TO TAKE

THEIR INCOMES AS SUPERANNUATION, THE MORE THE GOVERNMENT CAN

AFFORD TO BE GENEROUS WITH REGARD TO TOTAL WAGE LEVELS.

IT WILL BE SOME TIME BEFORE REAL CONSUMPTION CAN BE EXPANDED.

BUT REAL INCOMES CAN BE MAINTAINED, OR INCREASED WHERE SAVINGS

INCREASE SUFFICIENTLY. SUCH CONSIDERATIONS CAN BE BUILT INTO

WAGE NEGOTIATIONS ON AN ON-GOING BASIS RATHER THAN ON THE

CURRENT OCCASIONAL BASIS. OUR OPPONENTS CAN OFFER NOTHING

SIMILAR IN ITS PLACE.

PRODUCTIVITY GROWTH AND THE ACCORD

PRODUCTIVITY GROWTH IS NOT ONLY THE PROVINCE OF PRIVATE FIRMS

ACTING ALONE. THERE ARE ALL SORTS OF WAYS IN WHICH NON PRIVATE

ECONOMIC INSTITUTIONS CONTRIBUTE.

19

THE PROCESS OF AWARD RESTRUCTURING LAYS ONE OF THE FOUNDATIONS

FOR MICRO-ECONOMIC REFORM. MICRO-ECONOMIC REFORM IS NOT THE

SIMPLE * DE-REGULATION' OF ANYTHING AND EVERYTHING IN SIGHT.

'DE-REGULATION' PLAYS ITS PART. BUT OUR MICRO-ECONOMIC REFORM

WILL NOT BE A SIMPLE EXERCISE IN ABANDONING LABOUR TO MARKET

FORCES.

MICRO-ECONOMIC REFORM IN THE LABOUR MARKET, AS INITIATED BY

THIS GOVERNMENT, IS A RESPONSE TO THE COMING OF 'POST-FORDISM",

A CONCERN TO PROVIDE WORKING ENVIRONMENTS OF DIGNITY AND HIGH

MORALE WHICH HARNESS THE INITIATIVE OF PEOPLE AT ALL LEVELS IN

THE PRODUCTION STRUCTURE TO IMPROVE PRODUCTIVITY.

IN ADDITION, I SUGGEST IT MAY BE POSSIBLE TO STEER THE ACCORD

TOWARDS A HYBRID WAGES/BONUS SYSTEM. INSTEAD OF THE

TRADITIONAL INCREMENTS WHICH REFLECT COSTS OF LIVING, A BONUS

PAYMENT OF A PROPORTION OF FIRMS’ ANNUAL PROFIT COULD BE

NEGOTIATED WHICH WOULD BE DESIGNED TO RETURN APPROXIMATELY THE

SAME AMOUNT TO EMPLOYEES AS A NOMINAL WAGE RISE.

AS WELL AS MAINTAINING OR IMPROVING INCOMES, A BONUS SYSTEM

WOULD REFLECT MORE DIRECTLY THE COMMONALITY OF INTEREST WHICH

EMPLOYEES AND EMPLOYERS SHARE IN PARTICULAR FIRMS. THIS COULD

BE EXPECTED TO LEAD TO PRODUCTIVITY GAINS WITHIN FIRMS AND LEAD

TO GREATER PREPAREDNESS TO FIND ΝΟΝ-DISRUPTIVE SOLUTIONS TO

DISAGREEMENTS

20

SUCH A SYSTEM WOULD ALSO GIVE THE ECONOMY GREATER

MACRO-ECONOMIC RESILIENCE. LOSSES AND GAINS IN NATIONAL INCOME

WOULD BE DISTRIBUTED MORE WIDELY, AND SO MORE EQUITABLY AND .

EFFICIENTLY. FALLING NATIONAL INCOME WOULD REDUCE PROFITS AND

SO REDUCE INCOMES AND SPENDING. RISING INCOMES WOULD DO THE

OPPOSITE.

THIS WOULD HELP ENTRENCH INTO THE INSTITUTIONAL FABRIC OF THE

AUSTRALIAN ECONOMY THE VALUES WHICH HAVE SUSTAINED THIS

GOVERNMENT IN POWER, AND ENTRENCH THEM IN A WAY WHICH FUTURE

GOVERNMENTS WOULD FIND HARD TO UNDO. THOSE VALUES ARE THAT

AUSTRALIANS SHOULD SHARE THE BURDENS OF SACRIFICE AND THE

SPOILS OF SUCCESS AS EQUALLY AS POSSIBLE.

PRODUCTIVITY AND INFRASTRUCTURE

THE GOVERNMENT MUST ALSO MEET ITS RESPONSIBILITIES TO PROVIDE

EFFICIENT INFRASTRUCTURE.

ECONOMIST DAVID ASCHAUER HAS SHOWN A DIRECT LINK BETWEEN

AMERICAN INVESTMENT IN INFRASTRUCTURE AND NATIONAL

PRODUCTIVITY. HE CITES CONVINCING EVIDENCE THAT REDUCED

GOVERNMENT INVESTMENT SIGNIFICANTLY REDUCES LABOUR PRODUCTIVITY

AND LONGER RUN ECONOMIC GROWTH.

21

INCIDENTALLY, R J BARRO, ONE OF THE LEADING LIGHTS OF THE 'NEW

CLASSICAL' SCHOOL OF AMERICAN MACRO-ECONOMISTS GENERALLY

ASSOCIATED WITH THE 'NEW RIGHT', HAS COMPARED THE GROWTH

PERFORMANCE OF SEVENTY TWO COUNTRIES SINCE WWII. HE FOUND THAT

THE SHARE OF PUBLIC INVESTMENT WAS STRONGLY ASSOCIATED WITH

GROWTH PEFORMANCE.

INVESTMENT IN THE TRADED SECTOR AND DIVERSIFYING THE INDUSTRIAL

BASE

IN ORDER TO ADDRESS OUR DEBT PROBLEM, WE NEED NOT JUST TO SAVE

MORE BUT TO DIRECT A GREATER PROPORTION OF INVESTMENT TOWARDS

PRODUCING TRADED GOODS AND SERVICES.

THE PROPORTION OF INVESTMENT GOING TO FUND TRADED ACTIVITIES

APPEARS TO HAVE BEEN DECLINING. THIS WILL HAVE TO BE REVERSED.

UNDER-INVESTMENT IN THE TRADED SECTOR CAN BE EXPLAINED BY AN

EXCHANGE RATE WHICH IS EITHER WRONGLY VALUED OR TOO VOLATILE.

OUR EARLY EXPERIENCE WITH FLOATING EXCHANGE RATES WAS AN

UNHAPPY AND VOLATILE ONE. NOT SURPRISINGLY THEN, VARIOUS

REPORTS - INCLUDING THE HUGHES AND GARNAUT REPORTS - HAVE

RECOMMENDED THAT WE DEVELOP POLICIES AND INSTRUMENTS WHICH CAN

REDUCE VOLATILITY AND DELIVER APPROPRIATE EXCHANGE RATE VALUES.

22

EXCHANGE RATE VOLATILITY HAS DECLINED RECENTLY. BUT WE ARE NOT

OUT OF THE WOODS YET. WHILE THE DOLLAR'S VALUE HAS BECOME LESS

VOLATILE, WE NEED ALSO BE CONFIDENT THAT IT IS NOT INCORRECTLY

VALUED. INTERNATIONAL AUTHORITY PAUL KRUGMAN HAS ARGUED THAT

EVEN IF GOVERNMENTS GET THEIR POLICIES RIGHT, THE EXCHANGE RATE

MAY NOT "TAKE CARE OF ITSELF".

BERNIE FRASER OFFERED A SIMILAR OPINION IN LATE 1988 WHEN HE

OBSERVED THAT THE MARKET, WHETHER SETTING THE PRICE FOR FOREIGN

EXCHANGE OR DETERMINING INVESTMENT PROJECTS, SOMETIMES TURNED

OUT TO BE MYOPIC AND DRIVEN BY A HERD MENTALITY RATHER THAN BY

INCISIVE ANALYSIS OF REALITY. (£RW, 27 DECEMBER 1988).

THE NOBEL PRIZE WINNING AMERICAN ECONOMIST, JAMES TOBIN, HAS

THIS TO SAY

THE RELATIONSHIP (GOVERNING THE DETERMINATION OF FLOATING

EXCHANGE RATES) ... MAKE UP A COMPLEX SYSTEM OF DYNAMIC

INTERDEPENDENCE THAT ECONOMETRICIANS HAVE NOT BEEN ABLE TO

ESTIMATE. I DOUBT THAT TRADERS EVEN TRY. THE SAME

COMPLEXITIES BAFFLE POLICY-MAKERS, WHETHER CO-ORDINATED

(BETWEEN NATIONS) OR NOT. WHILE THESE COMPLEXITIES MAKE

CO-ORDINATION DIFFICULT, THEY ALSO OFFER CONSTRUCTIVE

OPPORTUNITIES TO POLICY-MAKERS TO SHAPE THE EXPECTATIONS

THAT GUIDE THE MARKET, EVEN TO MAKE THEM MORE RATIONAL.

TOBIN, YOU WILL APPRECIATE, IS NQI A MARKET FETISHIST.

23

THE EVIDENCE SUGGESTS THAT NATIONAL GOVERNMENTS CAN FOLLOW

TOBIN'S ADVICE AND INFLUENCE EXCHANGE RATES EVEN WITHOUT

COMPROMISING THE TIGHTNESS OF EXISTING MONETARY POLICY. WE

NEED TO CONTINUE CURRENT GOVERNMENT INVOLVEMENT IN HELPING TO

INFLUENCE PRIVATE EXPECTATIONS OF EXCHANGE RATE VALUES.

WHERE THIS IS NOT ENOUGH TO ACHIEVE DESIRED RESULTS THE

GOVERNMENT SHOULD NOT BE SHY OF DEVELOPING INSTRUMENTS WITH

WHICH IT CAN INFLUENCE MARKET EXPECTATIONS.

FAILING ALL THAT, WE SHOULD BE QUITE CLEAR ABOUT MACRO-ECONOMIC

PRIORITIES. GETTING THE EXCHANGE RATE RIGHT, OR RESISTING

SPECULATIVE PRESSURES WHICH GET IT WRONG, WILL BE IMPORTANT FOR

A NATION WHICH IS IN DEBT AND SEEKING TO EXTRACT BETTER

PERFORMANCE FROM ITS TRADED SECTOR, PARTICULARLY MANUFACTURING

FOR EXPORT.

IF IT BECOMES NECESSARY, TO SOME EXTENT AT LEAST, IT SEEMS TO

ME TO BE ECONOMICALLY RATIONAL FOR A GOVERNMENT TO BE PREPARED

TO SACRIFICE OTHER MACRO-ECONOMIC OBJECTIVES TO ENSURE THAT THE

EXCHANGE RATE IS NOT SERIOUSLY OUT OF ALIGNMENT FOR ANY

SUSTAINED PERIOD OF TIME.

24

MANUFACTURED EXPORTS

TARIFFS PROVIDE US WITH A LEGACY OF INWARD ORIENTATION.

ALTHOUGH THEY ARE BEING SLASHED OVER THE NEXT HALF DECADE, THEY

STILL WILL BE SIGNIFICANT IN 1996, AT 5%.

THERE MUST BE CONTINUED GOVERNMENT VIGILANCE TO ENSURE THAT THE

MANUFACTURING SECTOR MAKES THE TRANSITION TO EXPORT ORIENTATION.

AT IC HEARINGS ON THE AUTOMOTIVE INDUSTRY, THEN IC CHAIR AND

NOW TREASURY SECRETARY TONY COLE SAID :

THE (INDUSTRY) COMMISSION'S POSITION (ON EXPORT

FACILITATION IN THE AUTOMOTIVE INDUSTRY) IS NOT EXACTLY THE

SAME AS IT HAS BEEN TRADITIONALLY ... WHAT WE SAID ... WAS

ADMITTING THE UNAVOIDABILITY OF LOOKING FURTHER AT THIS

ISSUE AND WHETHER IT HAS ANY MORE GENERAL APPLICABILITY

THAN IN THE AUTOMOTIVE INDUSTRY. THAT IS OBVIOUSLY

SOMETHING THAT WE HAVE TO DO.

IT SHOULD BE NOTED IN THIS CONTEXT THAT THE MARCH ECONOMIC

STATEMENT ESTABLISHES A REVIEW OF OVERSEAS EXPORT ENHANCEMENT

MEASURES AND THEIR ECONOMIC IMPLICATIONS FOR AUSTRALIA. THIS

PROVIDES A FORUM IN WHICH THE IC CAN WORK TOWARDS THAT MORE

25

COHERENT POSITION TO WHICH ITS FORMER CHAIRMAN COMMITTED IT.

FOCUSSING AND CO-ORDINATING ECONOMIC DEVELOPMENT

WE SHOULD ALSO SEEK TO DEVELOP INSTITUTIONS WHICH HELP FOCUS

OUR ECONOMIC EFFORT.

AS I OUTLINED EARLIER WITH REGARD TO EXPORT FACILITATION, MANY

WORTHWHILE SUGGESTIONS FOR ECONOMIC POLICY COME FROM OUTSIDE

THE BUREAUCRACY, OFTEN IN THE FORM OF A SPECIAL REQUEST FOR

PARTICULAR FIRMS. IN THESE CIRCUMSTANCES THE MARKET FETISHISTS

CAN EASILY POINT TO OTHER FIRMS WHICH DON'T RECEIVE THIS

TREATMENT.

THAT RELIEVES THEM OF THE TASK OF EXAMINING THE CASE ON ITS

MERITS. THE CHAIN OF REASONING CAN, OF COURSE, GO THE OTHER

WAY. IF OTHER INDUSTRIES DON'T BENEFIT FROM PARTICULAR

ARRANGEMENTS, THEN PERHAPS THEY SHOULD. THIS MUST NOW BE DONE

WITH THE ARGUMENTS FOR EQUALITY OF ASSISTANCE BETWEEN IMPORT

REPLACEMENT AND EXPORTING IN THE MANUFACTURING SECTOR.

RECENT CABINET DELIBERATIONS ON THE VERY FAST TRAIN PROJECT

PROVIDE AN EXAMPLE OF A GOVERNMENT STRIVING FOR A NEW VIGILANCE

IN ANOTHER AREA. THE REQUESTS WHICH HAVE COME FORWARD FROM THE

CONSORTIUM ARE BEING VIEWED, I CAN REASSURE BOTH THEM AND YOU,

AS SUBMISSIONS FROM SELF-INTERESTED PARTIES.

26

BUT THEIR PROPOSALS ALSO OFFER US SOME IMPORTANT INFORMATION

ABOUT THE POSSIBLE EFFECT OF CERTAIN DISTORTIONS WHICH ACTIVELY

DISCOURAGE INVESTMENT IN LARGE PROJECTS WITH LONG LEAD TIMES.

WE WILL SEEK TO DELIBERATE ON THOSE ISSUES IN AN ECONOMICALLY

RATIONAL WAY.

A MORE SYSTEMATIC WAY OF REVIEWING SUCH MATTERS MAY WELL

EMERGE. IT STRIKES ME AS SELF EVIDENT THAT THE PRIVATE

INTERESTS CAPABLE OF DELIVERING THE KIND OF MASSIVE INJECTION

OF INVESTMENT INTO INFRASTRUCTURAL AND TRADED ACTIVITIES WHICH

THIS COUNTRY NEEDS, SHOULD BE CLOSELY INVOLVED IN THE

DEVELOPMENT OF TAXATION AND OTHER POLICIES WHICH GOVERN THE

VIABILITY OF SUCH VENTURES.

IT IS CRUCIAL THAT SUCH A VENTURE NOT BE CONSIDERED AS SOME

LURCH TOWARD INTERVENTIONISM, OR AN INVITATION ISSUED BY THE

GOVERNMENT TO BECOME A VICTIM OF 'CORPORATE CAPTURE'.

AS IT COMES OUT OF RECESSION, THE PRIVATE SECTOR SHOULD HAVE

PLENTY OF RESOURCES AT ITS COMMAND. BUT THE CONCERN MUST BE

THAT IT NOT SQUANDER THOSE RESOURCES, AND THAT IT NOT BE

ASSISTED IN SQUANDERING THOSE RESOURCES IN THE WRONG KINDS OF

AREAS. IF WE MAKE SOME ACTIVITIES MORE ATTRACTIVE TO INVEST

IN, THAT SHOULD BE BY MAKING OTHER AREAS LESS ATTRACTIVE

INVESTMENTS

27

THE QUESTION BEFORE US WILL BE WHETHER THE PRIVATE SECTOR USES

ITS CONSIDERABLE RESOURCES IN A WAY WHICH IS NATIONALLY

CONSTRUCTIVE AND THE EXTENT TO WHICH GOVERNMENTS EMPLOYEES AND

EMPLOYERS CAN CO-OPERATIVELY (AND COMPETITIVELY!) BRING ABOUT A

FOCUSSED ATTACK ON THE PROBLEMS WHICH ARE BEFORE OUR VERY EYES.

CONCLUSION

WE HAVE TOUCHED ON TODAY A NUMBER OF THE KEY ISSUES IN ECONOMIC

AND INDUSTRY POLICY.

BUT THE POINT OF WHAT I AM GETTING IS THAT WE MUST LOOK TO THE

EXPERIENCES OF THE MOST SUCCESSFUL ECONOMIES IN THE WORLD TODAY

AND DRAW UPON THOSE EXPERIENCES FOR OUR OWN NATIONAL ECONOMIC

BENEFIT.

AND IT APPEARS TO ME TO BE A BLINDING AND INCONTROVERTIBLE FACT

THAT THE ECONOMIC PERFORMANCE OF THE ENGLISH-SPEAKING WORLD IS,

BY COMPARISON TO WESTERN EUROPE, JAPAN AND THE "TIGERS" OF

ASIA, VERY POOR INDEED.

IT IS THE PERFORMANCE OF GERMANY AND JAPAN WE OUGHT TO BE

SEEKING TO EMULATE, NOT BRITAIN AND AMERICA.

28

AND IT SEEMS TO ME THAT WE HAVE IN THE ACCORD A MECHANISM WHICH

IN A NUMBER OF RESPECTS PARALLELS THE INSTITUTIONAL PROCESSES

THAT HAVE BEEN SO CENTRAL TO THE ECONOMIC SUCCESS OF GERMANY .

AND JAPAN.

AS IT HAS DEVELOPED TO DATE, AS A BIPARTITE PROCESS BINDING

GOVERNMENT AND THE LABOUR SIDE OF THE INDUSTRY EQUATION TO THE

SEARCH FOR AND PURSUIT OF COMMON ECONOMIC INTEREST, THE ACCORD

HAS SERVED THIS COUNTRY WELL.

BUT I BELIEVE IT WILL SERVE US BETTER IF WE NOW BROADEN THE

ACCORD TO MAKE IT A TRIPARTITE PROCESS TAKING IN ALSO THE

CAPITAL (OR EMPLOYER) SIDE OF THE INDUSTRY EQUATION.

THE TIMES AND THE CIRCUMSTANCES THAT WE FIND OURSELVES IN AS A

NATION DEMAND THAT THIS IS THE COURSE THAT WE OUGHT TO TAKE.

THE INCLUSION OF EMPLOYERS IN THE ACCORD PROCESS WILL NOT NOW,

AS IT WOULD HAVE EIGHT OR EVEN FOUR YEARS AGO, REQUIRE A

DAMASCENE CONVERSION ON THE PART OF EMPLOYERS (OR LABOUR).

ALREADY IN COUNCILS AND FORUMS THROUGHOUT INDUSTRY, DEALING

WITH MATTERS FROM TRAINING TO OCCUPATIONAL HEALTH AND SAFETY,

GOVERNMENT, EMPLOYEES AND EMPLOYERS WORK CO-OPERATIVELY

TOGETHER IN THE SEARCH FOR COMMON GROUND AND COMMON INTERESTS.

THE FORMAL INCLUSION OF EMPLOYERS IN THE ACCORD WOULD EXTEND

THIS CO-OPERATIVE PROCESS TO THE OVERARCHING CONCERNS OF

ECONOMIC AND INDUSTRY POLICY.

t

29

THERE WILL, OF COURSE, BE PROTESTS FROM THE USUAL QUARTERS AND,

FOR A SHORT PERIOD AT LEAST, THE AIR WILL BE THICK WITH

ACCUSATIONS OF CORPORATISM, BACKSLIDING TO PROTECTIONISM AND

ALL THE REST.

BUT IT IS IMPERATIVE FOR OUR ECONOMIC FUTURE THAT NATIONAL

INTEREST PREVAIL OVER STERILE DOCTRINAIRE IDEOLOGY.

I THANK YOU FOR YOUR TIME THIS MORNING.