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Speech: ALP function, Sydney



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EMBARGOED UNTIL DELIVERY

PRIME MINISTER

FOR MEDIA 27 MAY 1985

SPEECH BY THE PRIME MINISTER FOR ALP FUNCTION, REGENT HOTEL, SYDNEY

CHECK AGAINST DELIVERY

T hank you L i o n e l · L a d i e s and g e n t l e m e n , f r i e n d s :

I t ' s good to be back here i n S y d n e y , and i t ' s good to be

ADDRESSING SUCH A FAMILIAR GATHERING· I t ' s REFRESHING AFTER A RIGOROUS SESSION OF PARLIAMENT TO GET OUT IN THE WORLD AGAIN- THIS IS THE SIXTH OF THESE NEW SOUTH WALES L abor P art y d i n n e r s t ha t I have a d d r e s s e d s i n c e b e c o m i n g

P r i m e M i n i s t e r j u s t over two years a g o · I t ' s b e c o m i n g

SOMETHING OF A REGULAR EVENT FOR ME· .

I t ' s an e s p e c i a l l y p l e a s i n g f e e l i n g to a t t e n d t h e s e

FUNCTIONS, IF ONLY BECAUSE THERE ARE MANY OF YOU HERE TONIGHT WHO ARE NOT NORMALLY THE SORT OF PEOPLE WE WOULD EXPECT TO SEE AT LABOR PARTY GATHERINGS · I BELIEVE IT SAYS A LOT ABOUT THE CHARACTER OF OUR GOVERNMENT THAT

ITS POLICIES DO FIND SUPPORT AMONGST PEOPLE IN AREAS OUTSIDE THOSE TRADITIONALLY CONSIDERED THE DOMAIN OF THE L abor P a r t y · ■ · ·

A nd i t says a lot that so many of you are i n t e r e s t e d

ENOUGH TO TURN OUT FOR US SO REGULARLY·

T here are a number of reasons for t h i s · N ot the l e a s t

OF THEM I BELIEVE IS THE BRAND OF OUR ECONOMIC P O L I CI E S , AND THE CONSISTENCY WITH WHICH WE HAVE APPLIED THEM OVER THE LAST TWO YEARS·

We have adopt ed p o l i c i e s and we have stuck by t h e m . I

BELIEVE WE HAVE BROUGHT AN ORIGINAL APPROACH TO GOVERNMENT IN THAT NOT ONLY HAVE WE APPLIED OUR POLICIES CONSISTENTLY, BUT THEY HAVE BEEN BASED IN A COHERENT, LONG-TERM STRATEGY· THE PLAN SPELT OUT BY THE PRICES AND INCOMES ACCORD AND ELABORATED BY THE ECONOMIC SUMMIT

i n A p r i l 1 9 S 3 , has p r o v i d e d a framework and a c e r t a i n t y ,

AND A VEHICLE FOR HARNESS ING THE CO-OPERATION OF ALL SECTIONS OF THE COMMUNITY·

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W e knew when we came to o f f i c e that the road a he ad was

GOING TO BE HARD· WE CAME IN ACCEPTING THAT MANY UNPOPULAR DECISIONS HAD TO BE MADE- AND WE HAVE MADE THEM· WE HAVE NEVER WALKED AWAY FROM THE ACTION WE CONSIDER IS IN THE LONG TERM INTERESTS OF AUSTRALIA·

NO DOUBT THERE ARE MANY MORE DECISIONS AHEAD OF US· BUT OUR RECORD IN TAKING THE ACTION WE BELIEVE IS IN A u s t r a l i a ' s longer term i n t e r e s t s i s a s i g n i f i c a n t

REASON WHY WE HAVE ENJOYED AND, I BELIEVE, WE WILL CONTINUE TO ENJOY, BROAD COMMUNITY SUPPORT FOR OUR PROGRAMS·

I DON'T HAVE TO TELL YOU THAT GOVERNMENT IS NEVER EASY s a i l i n g · G overnment w i t h i n t e g r i t y and c o n s i s t e n c y ,

THOUGH, IS MUCH MORE DI FFI CULT·

W hen we came to o f f i c e , we p r o m i s e d the p eo p le of

A u s t r a l i a t hre e t h i n g s - R e c o n c i l i a t i o n , R e c o v e r y , and

R e c o n s t r u c t i o n · W e have r e c o n c i l e d A u s t r a l i a n s ·

R ecovery i s under way · A nd now we are b e g i n n i n g the

PHASE OF FUNDAMENTAL, LONG TERM IMPORTANCE OF r e c o n s t r u c t i o n · T hese i n v o l v e f un d a m e n t a l changes to

the A u s t r a l i a n e conomy ·

T here w i l l always be e l e c t o r a l dangers i n major change

TO AREAS OF ECONOMIC AND SOCIAL POLICY· We WERE TOLD THERE WERE DANGERS IN THE FLOAT OF THE DOLLAR· W e WERE TOLD THERE WERE DANGERS ABOUT FREEING UP THE FINANCIAL SYSTEM· B ut i f you take the next s te p from t h a t p o i n t

of a ck no w le d gi n g that the re are dangers i n change and

THEN SHY AWAY FROM THEM, THEN YOU ARE DENYING THE PROPER ROLE AND FUNCTION OF GOVERNMENT·

T he proper role of government is to p e r c e i v e w h a t s i s

HAPPENING IN THE ECONOMY, HOW IT AFFECTS THE ECONOMY, AND HOW'IT AFFECTS SOCIETY· AND IF YOU SEE THAT SOMETHING IS OPERATING BADLY AND IT NEEDS CHANGE, THEN IF YOU ARE SERIOUS ABOUT GOOD GOVERNMENT YOU WORK OUT WHAT NEEDS TO BE DONE AND YOU DO I T - BUT THE ESSENCE OF

REFORM IS NOT SIMPLY FORCING CHANGE·

T hese changes have to be a c c e p t e d , and for t h a t t he y

HAVE TO BE UNDERSTOOD· THEY HAVE TO BE REAL, BUT THEY CANNOT OVERWHELM· THEY MUST BE GRADUAL AND THEY MUST BE SEEN TO BE FAIR· FAIRNESS IS ONE REASON WHY I BELIEVE our M ay E c on omi c S t at e m e n t was so well r e c e i v e d ·

G ov ernments must acknowledge in the process of change

AND REFORM, IN SOCIAL AND ECONOMIC TERMS THAT THERE NEED TO BE COMPENSATING MECHANISMS WHICH PROTECT VULNERABLE GROUPS·

B ut we r e j e c t c o m p l e t e l y and a b s o l u t e l y t he p h i l o s o p h y

WHICH TOO OFTEN MARKED THE STYLE OF OUR CONSERVATIVE PREDECESSORS IN GOVERNMENT· THEY WOULD LOOK AT AN ISSUE and s a y , " G e e , t h e r e ' s a danger t h e r e · P ut i t a w a y ·

I ts too h a r d · "

E v e r y t i m e a probl em i s s u e would a r i s e , t h e c o a l i t i o n

PARTIES WOULD WORK THEI R WAY AROUND I T , ONLY TO PUT ASIDE A LONG TERM SOLUTION IN FAVOUR OF A SOFT OPTI ON, BECAUSE THAT WAS THE SAFEST WAY OUT IN THE IMMEDIATE t e r m · T hat i s as d i s h o n e s t as i t i s i n t e l l e c t u a l l y

b a n k r u p t · T he L i b e r a l s have always b e e n t he p a r t y of

SOFT OPTI ONS, MANIPULATED BY THE PROPPED“ UP AGRARIAN FEATHERBEDDERS OF THE NATIONAL PARTY·

WE HAVE HEARD A LOT OVER THE LAST FEW MONTHS ABOUT THE NEW WAVE OF " DRI ES" SEI Z I NG THE COALI TI ON PARTI ES· BUT WE HEARD THAT YEARS AGO WHEN THEY WERE IN GOVERNMENT· T h e i r a c t i o n j u s t i n t he l a s t w e e k . to water down our

REFORM OF THE DAIRY INDUSTRY IS PROOF THAT THE OLD- TI ME, BLINKERED M c E w ENISM ST I L L CONTROLS THESE PARTIES WHEN I T COMES TO A CRUNCH ISSUE·

T he f a c t i s t h a t e v e r y go v er nmen t has i t s p r o b l e m s · B ut

THE KEY TO GOOD GOVERNMENT IS NOT TO TAKE THE STOP~GAP, Q U I C K - F I X SOLUTIONS· GOVERNMENT MUST BE ABOUT FOLLOWING COHERENT STRATEGIES FOR LONG~TERM SOLUTIONS WHICH TRANSCEND MOMENTARY PRESSURES·

WE I NHERI TED GOVERNMENT AT A TI ME OF S I G N I F I C A N T ECONOMIC I N S T A B I L I T Y · OUR METHODS IN TACKLING THESE PROBLEMS “ OF SPENDING, OF UNEMPLOYMENT, OF I N F L A T I O N , OF THE WORST RECESSION SINCE THE GREAT DEPRESSION “ IS

PROBABLY ONE OF THE REASONS WHY MANY OF YOU ARE HERE TONI GHT·

O ur s u c c e s s e s are s e l f - e v i d e n t -

IN TWO SHORT YEARS, OUR I NFLATI ON RATE HAS BEEN REDUCED SUBSTANTIALLY· ‘

ECONOMIC GROWTH HAS BEEN -STRONG AND A FIRM BASIS EXI STS FOR CONTINUED GROWTH· AUSTRALI A' S GROWTH DURING THE FI RST TWO FI NANCI AL YEARS OF LABOR WILL AT LEAST MATCH THAT ACHIEVED DURING THE ENTIRE

SEVEN YEARS OF THE FRASER ADMI NI ST RAT I ON·

BUSINESS AND ..CONSUMER SPENDING AR^ EXPAND I NG ·

REAL UNIT LABOUR COSTS HAVE FALLEN TO THE LEVELS OF THE EARLY ' 7 0 ' S AND PROFITS HAVE IMPROVED . DRAMATICALLY·

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the A ccord has brought i n d u s t r i a l d i s p u t a t i o n down

TO VERY LOW LEVELS.

A bove a l l , our p o l i c i e s have been c o n s i s t e n t ·

W hen we came to o f f i c e , the re was a real need for

e c o n o m i c s t i m u l u s to pull the economy out of r e c e s s i o n

INTO THE I N I T I A L STAGES OF RECOVERY AND TO PRODUCE JOBS · B ut we also r ec o g n i s e d the c e n tr a l role i n our economy

OF THE PRIVATE SECTOR, AND THAT ANY LASTING AND SUSTAINABLE RECOVERY HAD TO BE BASED ON PRIVATE SECTOR GROWTH· WE ACKNOWLEDGED THAT FOLLOWING THE I N I T I A L STIMULUS, WE HAD TO PULL BACK BY REDUCING OUR OWN DEMANDS ON THE CAPITAL MARKET, TO ALLOW ROOM FOR THE PRIVATE SECTOR TO TAKE OVER· W e HAVE DONE THAT· THE

PRIVATE SECTOR IS TAKING OVER THE RECOVERY·

We followed up t h i s y e a r ' s cut i n the d e f i c i t WITH THE

$ 1 * 2 BILLION CUTS ANNOUNCED IN OUR MAY 14 ECONOMIC STATEMENT. We WILL CONTINUE THE PROCESS IN THE BUDGET -i n A u g u s t · O ur f i s c a l p o l i c y i s f o l l o w i n g the path

DESIGNATED FOR IT WHEN WE CAME TO OFFICE· I t IS A

TANGIBLE DEMONSTRATION OF THE CONSISTENCY AND COHERENCE WHICH HAS MARKED OUR APPROACH TO GOVERNMENT OVER THE LAST TWO YEARS· W e HAVE NEVER LOST SIGHT OF THE FACT THAT WHAT IS REQUIRED TO PRODUCE A SUSTAINABLE LASTING

RECOVERY IS THAT THE PRIVATE SECTOR MUST BE ASSURED OF THIS CONSISTENCY AND COHERENCE IF IT IS TO BE RESTORED TO ITS TRADITIONAL, MAJOR ROLE IN THE· AUSTRALIAN ECONOMY· ,

T hat is h a p p e n i n g · A nd the m a i n t e n a n c e of t r e n d s such

AS THAT IS THE REASON WHY WE HAVE OUR TRILOGY OF COMMITMENTS · W e HAVE PLEDGED TO CURTAIL GROWTH IN GOVERNMENT SPENDING, TAXATION, AND TO REDUCE THE SI ZE OF THE D E F I C I T · ΪΗΕ MAY ECONOMIC STATEMENT IS A

SI GNIFICANT DOWN PAYMENT ON THE TRILOGY· ΪΗΕ TRILOGY REPRESENTS THE MOST RIGOROUS SET OF FISCAL D I SC IP LI NES EVER IMPOSED BY AN AUSTRALIAN GOVERNMENT UPON ITSELF·

T he DISCIPLI NES INVOLVED i n t he s e c o m m i t m e n t s are

NECESSARY IF THE GOVERNMENT IS TO ALLOW THE BUSINESS COMMUNITY THE FREEDOM TO GENERATE THE PRIVATE SECTOR RESURGENCE WHICH WJLL SET AUSTRALIA ON THE PATH TO SUSTAINED ECONOMIC GROWTH· t

T here has been some p r o m i n e n c e g i v e n i n the m e d i a t oday

TO AN EXPECTED REVENUE SHORTFALL FOR COLLECTIONS FROM PROVISIONAL TAX-PAYERS COMPARED WITH THE 1 9 8 4 “ 85 BUDGET E s t i m a t e s · As the T reasurer s a i d t h i s a f t e r n o o n , the

PATTERN OF THE D E F I C I T AT THIS STAGE IN THE FI NANCI AL YEAR S T I L L APPEARS TO BE BROADLY CONSISTENT WITH BUDGET EXPECTATIONS ·

A nd t he e x p e r i e n c e w i t h p r o v i s i o n a l t a x c o l l e c t i o n s t h i s

YEAR WILL NOT AFFECT THE GOVERNMENT'S TRILOGY OF BUDGET COMMITMENTS i n 1 9 8 5 - 8 6 ·

B eyond the short to m e d i u m term eco no mi c c y c l e , the

PROSPERITY OF THE NATION DEPENDS CRITICALLY UPON INVESTMENT TAKING PLACE IN THE DEVELOPMENT OF PRODUCTS AND INDUSTRIES MOST LIKELY TO EXPERIENCE LONG TERM INCREASES IN LOCAL AND INTERNATIONAL DEMAND· W e ARE A

SMALL AND RESOURCE“ RICH NATION, IN THE GEOGRAPHIC NEIGHBOURHOOD OF WHAT ARE NOW THE WORLD'S MOST DYNAMIC ECONOMIES· O ur c ha ll e ng e as a n a t i o n i s to c a p i t a l i s e

ON THE OPPORTUNITIES WHICH OUR LOCATION AND RESOURCE ENDOWMENTS PROVIDE· ΪΗΕ LABOR GOVERNMENT IS COMMITTED TO SEEING THAT AUSTRALIA AND ITS INSTITUTIONS RISE TO THAT CHALLENGE·

A lre ady t he r e are runs on the b o a r d : i m a g i n a t i v e

PROGRAMS ARE IN PLACE IN THE STEEL AND MOTOR VEHICLE INDUSTRIES, DIRECTED AT STRENGTHENING THE COMPETITIVE POSITIONS OF THOSE INDUSTRIES WHILE KEEPING THEM UPON THE STIMULUS OF INTERNATIONAL COMPETITION AND AVOIDING

INCREASING COSTS TO USERS OF THEIR PRODUCTS· A SIMILAR APPROACH HAS BEEN ADOPTED TOWARDS THE PROBLEMS OF THE DAIRY INDUSTRY·

B ut c l e a r l y the most i m po r t a n t area i n t h i s program of

REFORMS HAS BEEN THE CHANGES MADE TO THE FINANCIAL SYSTEM·

T he f i n a n c i a l s ys te m plays a l e a d i n g role i n

FACILITATING THE ECONOMIC GROWTH WE AS A NATION NEED· An e f f i c i e n t f i n a n c i a l s ystem w i l l d i r e c t r esources at

LEAST COST TO THE MOST PRODUCTIVE AREAS OF THE ECONOMY AND THUS ASSIST IN RAISING THE WEALTH AND LI VI NG STANDARDS OF ALL AUSTRALIANS·

AN I NEFFICIENT FINANCIAL SYSTEM, SHELTERED FROM INTERNATIONAL COMPETITION AND STRAITJACKETTED BY REGULATION, WILL TEND TO DIRECT RESOURCES TO L O W R I S K , " s a f e " areas of the e conomy · S uch c o n s e r v a t i s m cannot

PROPERLY CONTRIBUTE TO THE ADJUSTMENTS NECESSARY TO ENSURE OUR LONG RUN PROSPERITY·

T he IMPLEMENTATION OF ANY SIGNIFICANT REFORM IS A TRICKY PROCEDURE FOR ANY GOVERNMENT, PERHAPS EVEN MORE SO FOR A GOVERNMENT BASED ON A PARTY AS DYNAMIC AND DIVERSE AS the L abor P a r t y · E ven i n a party of reform such as ours

CHANGE IN POLICY AND PRACTICE HAS TO BE HANDLED WITH s e n s i t i v i t y · B ut t h i s can never be an e xcuse for

BEGGING OFF· GOVERNMENT HAVE TO RECOGNISE THAT THEY ARE GOING TO HAVE TO MAKE DECISIONS' WHICH MAY NOT BE . IMMEDIATELY POPULAR-

T hat does not mean t h a t you s i m p l y say o b s t i n a t e l y t h a t

YOU KNOW WHAT IS RIGHT AND THEN ANNOUNCE 'THE DE C I S I O N · YOU MUST HAVE IN GOVERNMENT A PROPER BLEND OF TOUGHNESS AND A PREPAREDNESS TO LI STEN· YOU MUST ALWAYS TRY TO OPEN UP AREAS OF DISCUSSI ON WHERE THERE ARE DI F F E RI NG

VIEWS AND SAY AS A GOVERNMENT, "LOOK, WE'RE NOT THE FONT OF ALL WISDOM", AND TO LI STEN TO WHAT PEOPLE HAVE TO s a y * T h a t ' s what we are d o i n g · S o m e t i m e s t h i s i s

INTERPRETED AS WEAKNESS· BUT ISSUES MUST ALWAYS BE OPENED TO THE COMMUNITY IN THE GESTATION PERIOD I F THE ULTIMATE SOLUTION TO THEM IS TO GAIN WIDESPREAD COMMUNITY ACCEPTANCE·

T he o v e r w h e l m i n g l y o b v i o u s e x a mp l e at t h e moment i s

t a x a t i o n · T he t a x d e b a t e has been c o n t i n u i n g a p a c e for

most of 1 9 8 5 · S ome m i g h t say that i t has been r a g i n g

LIKE A BUSHFIRE· BUT FAR FROM THE DEBATE EXPOSING A LACK OF LEADERSHIP ON THE GOVERNMENT' S PART, IT REPRESENTS THE FULFILMENT OF THE PROCESSES OF OPENESS AND CONSULTATION WHICH THIS GOVERNMENT HAS MADE ITS

HALLMARK·

O nce you get an i s s u e as broad and as germane to the

POLITICAL PROCESSES AS TAXATION INTO THE PUBLIC ARENA, THEN IT IS NAIVE TO EXPECT THAT YOU ARE NOT GOING TO HAVE A BROAD AND SIGNIFICANT DEBATE, INCLUDING WITHIN YOUR OWN PARTY.·

T here are many and v a r i e d p o i n t s of v i e w about what

SHOULD BE DONE WITH TAXATION REFORM· WHAT IS AGREED UPON UNIVERSALLY AT THIS STAGE IS THAT AUSTRALIA'S TAXATION SYSTEM IS DECAYING AND INCREASINGLY I NE F FI C IE N T AND UNFAIR· ANY GOVERNMENT WHICH IS WORTH ITS SALT, AND WHICH HAS CONCERN FOR THE LONG TERM INTERESTS OF OUR

NATION - AS OPPOSED TO AN OUTLOOK BOUND FIRMLY W.ITHIN THE CONFINES OF THE NEXT ELECTION “ MUST IMPLEMENT SIGNIFICANT REFORM TO THE SYSTEM TO RESTORE ITS FAIRNESS, ITS EFFICIENCY, ITS EQUITY, AND A S I M P L I C I T Y

SO THAT EVERYONE CAN UNDERSTAND EXACTLY HOW THE TAXATION SYSTEM AFFECTS THEM·

A nother m i s t a k e t hat i s made w i t h major and c omp lex

ISSUES IS TO v i e w t h e i r i n d i v i d u a l e l e m e n t s i n

ISOLATION·

C omplex reforms such as those we w i l l e v e n t u a l l y , make to

THE TAXATION SYSTEM CONSIST OF MANY ELEMENTS· ALL OF THEM RELY UPON EACH OTHER·

A nyone who i s g e n u i n e about e v a l u a t i n g the t a x reform

OPTIONS OPEN TO THE GOVERNMENT CANNOT LEGITIMATELY DISSECT EACH OPTION, SINGLING OUT ELEMENTS HERE AND THERE AS ACCEPTABLE OR UNACCEPTABLE· THE ONLY WAY TAX REFORM CAN BE JUDGED IS BY EVALUATING EACH PACKAGE OF

REFORM AS AN INTEGRATED WHOLE· You CAN'T SAY, Ά CONSUMPTION TAX IS NO GOOD BECAUSE IT HAS TRADITIONALLY BEEN REGRESSIVE·' Or, Ά WEALTH TAX IS CRUCIAL IF THE

SYSTEM IS TO BE F A I R ' · YOU MUST LOOK AT THE RANGE OF ELEMENTS OF A PARTICULAR PACKAGE·

T he t e s t of what e ve r package i s a d o p t e d i s i t s f a i r n e s s

AND EQUI TY, WHETHER I T IS SIMPLE ENOUGH TO BE EASI LY UNDERSTOOD AND WHETHER I T MI N I MI S ES THE OPPORTUNI TI ES FOR AVOIDANCE WHICH EFFECTIVELY PLACE DISPROPORTIONATE TAX BURDENS ON LOWER INCOME EARNERS·

T h i s G o v e r n me n t w i l l not sponsor t a x r ef or ms w h i c h do

NOT LEAVE THE OVERWHELMING MAJORITY OF PEOPLE BETTER OFFOVERALL·

W h a t e v e r t he cur re nt p e r c e p t i o n s of t h e t a x a t i o n d e b a t e

IN THE c o m m u n i t y , you can be sure t h a t t h e r e l e a s e of

t h e G o v e r n m e n t ' s W h i t e P aper e a r l y n e x t m o n t h , l e a d i n g

up to t he T ax S u m m i t i n the f i r s t week of J u l y , w i l l

GIVE THE ISSUE A CLEARER DI RECTI ON·

T he G o v e r n m e n t ' s approach to the d e p r e c i a t i o n of t h e

DOLLAR IS ALSO BASED ON A LONG TERM, OVERALL STRATEGY· T he D e p r e c i a t i o n i m p o s e s a need for d i f f i c u l t

ADJUSTMENTS, FOR MORE HARD DECI SI ONS, BUT AT THE SAME TI ME I T CAN PROVIDE A STIMULUS TO ECONOMIC A C T I V I T Y THROUGH IMPROVED COMPETITI VENESS·

LET THERE BE NO DOUBT ABOUT I T THAT THE DEPRECI ATI ON IS VERY MUCH A SIGNAL THAT AUSTRALIA CANNOT CONTINUE TO LI VE BEYOND ITS MEANS, BY BORROWING MORE AND MORE FROM THE REST OF THE WORLD· THI S IS ESPECI ALLY TRUE I F THOSE BORROWINGS ARE USED SIMPLY TO FINANCE DOMESTIC CONSUMPTION, RATHER THAN INVESTMENT IN AUSTRALI A' S LONG TERM GROWTH POTENTI AL, AND THUS I TS CAPACI TY TO EXPORT AND SERVICE DEBT· , .

T he DEPRECIATION WILL SWING DEMAND TOWARDS LOCAL ’ MANUFACTURERS, AND AT THE SAME TI ME EXPORT EARNINGS WILL r i s e · T he r e s u l t i s l i k e l y to be t he a d d i t i o n of at

LEAST ONE PER CENT TO OUR ECONOMIC GROWTH RATE NEXT FI NANCI AL YEAR AND, SO LONG AS WE DO NOT D I S S I P A T E THE COMPETI TI VE GAIN IN A SURGE OF I N F L A T I O N , OVER TI ME AN OVER TI ME A SUBSTANTIAL INCREASE IN JOBS· .

T he c o m p e t i t i v e n e s s g a i n s brought a bo ut by d e p r e c i a t i o n

SHOULD RESULT IN A CONTRACTION OF OUR PRESENT UNACCEPTABLY LARGE CURRENT ACCOUNT D E F I C I T * ALL A u s t r a l i a n s are c o n f r o n t e d w i t h m a k i n g a d j u s t m e n t s to

ACHIEVE T H I S · Wl THI N THESE ADJUSTMENTS, WE MUST REDUCE THE PROPORTION OF PRODUCTION THAT IS USED FOR CONSUMPTION· .

O t h e r w i s e , the b e n e f i t s of d e p r e c i a t i o n w i l l s i m p l y

EVAPORATE IN AN ENDLESS SPIRAL OF DEPRECI ATI ON AND I NF L AT I ON·

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T he e s s e n t i a l chall enge for p o l i c y i s to ensure t ha t the

COMPETITIVENESS GAINS ARE PRESERVED,· THIS REQUIRES REAL WAGES TO BE LOWER THAN WOULD OTHERWISE HAVE BEEN APPROPRIATE·

WE ARE DETERMINED TO PRESERVE THE BENEFITS OF DEPRECIATION WITHIN THE FRAMEWORK OF THE ACCORD·

YOU WILL HAVE NOTICED THAT THE ACTU EXECUTIVE, IN ITS MEETING IN MELBOURNE LAST WEEK, REAFFIRMED THE PRINCIPLE THAT WORKERS ARE ENTITLED TO PRODUCTIVITY PAY RISES, AND THAT THESE SHOULD BE IN THE FORM OF SUPERANNUATION

IMPROVEMENTS·

B ut the E x e c u t i v e also made two other r e l e v a n t p o i n t s -

FI RST, AND I QUOTE, THAT .

" I T IS CLEAR THAT NO COST INCREASES ARISING FROM PRODUCTIVITY DISTRIBUTION ARE LIKELY DURING 1 9 8 5 " ·

S e c o n d , i t should i n v o l v e , and a g a i n I q u o t e ,

"PROGRESSIVE IMPLEMENTATION OF SUPERANNUATION OVER TIME IN A MANNER WHICH SHOULD BE CONSISTENT WITH THE ECONOMIC CIRCUMSTANCES THAT THE NATION FACES" ·

T he T r e a s u r e r , P aul K e a t i n g - someone who i s no s tr ang er

TO ALL OF YOU HERE TONIGHT “ INDICATED IN THE ECONOMIC STATEMENT . EARLIER THIS MONTH THAT THE· QUESTION OF THE S I ZE , TIMING AND PHASING OF ANY PRODUCTIVITY INCREASE SHOULD BE DEFERRED UNTIL THE* SCOPE OF THE DEPRECIATION

AND THE EXTENT OF ITS EFFECT ON THE ECONOMY BECOMES APPARENT·

T he G o v e r n m e n t ' s p o s i t i o n on any p r o d u c t i v i t y i n c r e a s e

REMAINS UNCHANGED· FOLLOWING THE DEPRECIATION, THE G overnment takes t h e . v i e w that t he r e must be a lower

REAL WAGE LEVEL DURING THE ADJUSTMENT PERIOD THAN WOULD OTHERWISE HAVE APPLIED· THE OPTIONS AVAILABLE FOR BRINGING THIS ABOUT ARE BY DISCOUNTING OR BY DELAYING THE IMPLEMENTATION OF ANY PRODUCTIVITY INCREASE·

T he p o s i t i o n taken by the ACTU E x e c u t i v e wh i c h see ks

SUPPORT FOR A PRINCIPLE DOES NOT IN ANY WAY PRECLUDE THE G overnment c o n t i n u i n g to have the o p t i o n of a lower real

WAGE OUTCOME THAN MAY OTHERWISE BE WARRANTED THROUGH THE POSITION IT TAKES ON THE S I Z E , TIMING AND PHASING OF ANY PRODUCTIVITY INCREASE·

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T he G o v e r n m e n t ' s wages p o l i c y , w i t h i n the framework of

the A c c o r d , i s often the t ar g e t of those who would see

MINIMAL WAGE RISES, AND A DIFFERENT BASIS FOR WAGE DETERMINATION WITH A DISMANTLING OF THE PRESENT CENTRALISED WAGES STRUCTURE· SUCH THEORISING BETRAYS AN IGNORANCE OF THE STRUCTURE OF OUR WAGES AND

INDUSTRIAL RELATIONS SYSTEM·

WE HAVE, FOR BETTER OR FOR WORSE, A CENTRALISED WAGES SYSTEM BASED ON THE TIME“ WORN PRINCIPLE OF COMPARATIVE WAGE JUSTICE· OUR SYSTEM IS FAR FROM PERFECT· BUT ANY THEORISING ABOUT POSSIBLE REFORMS TO IT HAS TO ACKNOWLEDGE THE ENTRENCHED NATURE OF THE SYSTEM AND THE

PRINCIPLES UPON WHICH IT IS BASED· YOU CANNOT SIMPLY WISH AWAY COMPARATIVE WAGE JUSTICE· No AMOUNT OF FORMAL DECISIONS BY GOVERNMENT OR THE TRIBUNALS WILL OVERCOME I T·

So IN RECOGNISING THOSE REALI TI ES, ONE MUST ALSO RECOGNISE THAT REAL AND EFFECTIVE CHANGES TO THE SYSTEM,TO AFFECT ITS CURRENT OPERATION, HAVE TO BE MADE WITHIN ITS EXISTING FRAMEWORK· ANYTHING ELSE WOULD TAKE MANY YEARS AND IS NO SOLUTION TO CURRENT PROBLEMS·

T h i s does not mean t hat change should not be s o u g h t ·

T he G o v e r n m e n t ' s e s t a b l i s h m e n t of the H ancock C o m m i t t e e

- whose report was t a b l e d i n the P a r l i a m e n t a week ago -

DEMONSTRATES THIS GOVERNMENT' S SERIOUSNESS ABOUT REFORMING THE INDUSTRIAL SYSTEM· BUT CHANGES SUCH AS DECENTRALISATION, FRAGMENTATION, AND SIMILAR GLIB SOLUTIONS ARE NOT REMEDIES FOR CURRENT I LLS·

I T IS FASHIONABLE TO BLAME CENTRALISATION FOR MANY OF OUR ECONOMIC PROBLEMS· ΪΗΕ GOVERNMENT - IS NOT ALONE, HOWEVER, IN ITS BELIEF THAT SUCH A SYSTEM IS APPROPRIATE for A u s t r a l i a * .

T he H ancock R eport i t s e l f lends c o n s i d e r a b l e s u p p o r t ·

H ancock s a y s , for e x a m p l e , tha t " many and s e r i o u s

u n c e r t a i n t i e s b es e t the s u g g e s t i o n of a p ermanent

ABANDONMENT OF CENTRALISED WAGE FI XATI ON· A t THIS STAGE, WE DO NOT THINK THAT THE INCURRING OF THESE UNCERTAINTIES IS WARRANTED· AND THERE ARE P O S S I B I L I T I E S OF THE CENTRALISED SYSTEM'S CONTRIBUTING SI GNI FICANTLY to A u s t r a l i a ' s eco no mi c r e c o v e r y · "

T he report i s couched i n c a r e f u l l a n g u a g e · I n s o m e t h i n g

OF AN UNDERSTATEMENT IT SAYS THAT "PROPONENTS OF LABOUR MARKET DEREGULATION IN THE ROUND NEED, WE THINK, TO BE MORE S P E C I F I C , " AND IT GOES ON TO SAY: "We HAVE GRAVE DOUBTS ABOUT ITS (THAT I S , DEREGULATION'S) REALISM"·

T h i s i s not some q u i c k - f i x report w h i p p e d up i n a c o u p l e

OF MONTHS TO JUSTI FY A PARTICULAR POLI TI CAL P O S I T I ON -T h i s i s a report w h i c h took two y e a r s to p r e p a r e , w h i c h

IS THE MOST THOROUGH REVIEW OF AUSTRALI A' S I NDUSTRI AL SYSTEM EVER CONDUCTED· I T IS A REPORT BY THREE OF A u s t r a l i a ' s most r e s p e c t e d i n d u s t r i a l e x p e r t s and

PRACTI TI ONERS- PROFESSOR KEI TH HANCOCK, GEORGE POLI TES and C h a r l i e F i t z g i b b o n have a wealth of s c h o o l i n g i n t he

I NDUSTRI AL RELATIONS WORLD· IN I NDUSTRI AL RELATI ONS, PARTICULARLY “ AND I SPEAK AS ONE WHO KNOWS A B I T ABOUT THE SUBJECT “ PRACTICAL EXPERIENCE IS THE KEY TO UNDERSTANDING-

S u pp or t such as t h i s h e l p s to r e i n f o r c e t he G o v e r n m e n t ' s

VIEW THAT OUR LONGER TERM APPROACH TO ISSUES IS THE MOST APPROPRIATE APPROACH TO TAKE· I t IS AN APPROACH BASED IN P R I N C I P L E , NOT SHORT TERM EXPEDI ENT·

T he G o v e r n m e n t i s p r e p a r e d to we at h e r s ho rt t erm

UNPOPULARITY FOR THE SAKE OF " P R I N C I P L E " IN ALL AREAS·

T he G o v e r n m e n t ' s f u n d a m e n t a l g o a l , h o w e v e r , i s a

PROSPEROUS ECONOMY, BECAUSE ONLY WITH SUCH CONDITIONS CAN ANY REAL PROGRESS BE MADE TOWARDS A FAIR DI ST RI BUT I ON OF WEALTH, RESOURCES AND OPPORTUNI TI ES· I t IS AN ASPI RATI ON WHICH FI TS NEATLY WITH LONG TERM

STRATEGIES·

YOU KNOW US WELL ENOUGH BY NOW TO KNOW THAT THI S G o v e r n m e n t i s not a bout to force s h i f t s i n r e s o u r c e s i n

A PEREMPTORY OR DI SLOCATI VE WAY- W e RECOGNISE THE STRUCTURES AND I NST I T U T I ONS WHICH UNDERLY OUR ECONOMY “ OUR SOCI ETY· We b e l i e v e tha t the f un d a m e n t a l reforms

WHICH ARE. NEEDED IN OUR ECONOMY WILL -ONLY BE EFFECTIVE AND PRODUCTIVE FOR EVERYONE'S BENEFIT IF THEY ARE IMPLEMENTED GRADUALLY·

IT IS GRADUALISM' AND COHERENCE WHICH DETERMINES HOW WE APPROACH REFORM· AND IT IS OUR CONCERN FOR THE WELL­ BEING OF ALL SECTIONS OF AUSTRALIAN SOCIETY, FOR FAIRNESS AND EQUITY TO ALL, WHICH SHAPES THE REFORMS

THEMSELVES ·

OUR GOALS ARE SOCIAL AS WELL AS ECONOMIC· THEY ARE GOALS BY WHICH ALL AUSTRALIANS ARE EQUALLY ABLE TO TAKE ADVANTAGE OF THE OPPORTUNITIES OPEN TO THEM, TO EXPRESS THEMSELVES AND DEVELOP TO THEIR FULL POTENTIAL·

W e want a s o c i e t y ,, i n wh ic h a ll of us are free to go

ABOUT OUR BUSINESS IN OUR OWN WAYS, BUT IN WHICH WE ALL HAVE A COMMON CONCERN AND CARE FOR THOSE WHO, THROUGH A VARIETY OF CIRCUMSTANCES, ARE NOT FULLY ABLE TO LOOK AFTER THEMSELVES·

11

L a d i e s and g e n t l e m e n , t he s e are long term g o a l s · A nd i t

i s why t h i s G overnment places p r i o r i t y on long t e r m ,

c o n s i s t e n t s t r a t e g i e s to a c h i e v e t h e m -