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Appropriation and supply bills



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4

I'HU PUKSS Embargoed until presented

LEADER OF THE OPPOSITION Check against delivery

APPROPRIATION AND SUPPLY BILLS

2\ YEARS OF LABOR '

THE APPROPRIATION BILLS THAT WE ARE DISCUSSING

TODAY PROVIDE FOR AN INCREASE OF 45% COMPARED

WITH THE EQUIVALENT BILLS LAST YEAR. THE SUPPLY

BILLS BEING DEBATED PROVIDE FOR A 62% INCREASE

COMPARED WITH LAST YEAR. THE EXTENT OF THE

INCREASE IS A MEASURE OF THE DISARRAY IN THE

AUSTRALIAN ECONOMY BROUGHT ABOUT BY THE POLICIES

OF THE PRESENT GOVERNMENT.

WE NEED TO UNDERSTAND WHAT HAS GONE WRONG......

WHY THE GOVERNMENT IS SO INCOMPETENT IN ITS

FUMBLING EFFORTS TO TACKLE THE GREAT PROBLEMS OF

INFLATION AND UNEMPLOYMENT. .

AT THE VERY OUTSET, THE GOVERNMENT SOUGHT TO DO

TOO MUCH TOO QUICKLY. A NUMBER OF PROGRAMMES

WHICH, TAKEN BY THEMSELVES MIGHT WELL HAVE HAD

MERIT, TAKEN ALTOGETHER REPRESENTED AN IMPOSSIBILITY

FOR OUR ECONOMY. THE GOVERNMENT'S EXPENDITURES

IN 1973/74 WERE 24% MORE THAN THE PREVIOUS YEAR

AND THIS YEAR, THEY WILL RISE BY 45%.

. . ./2

NO COUNTRY CAN STAND THAT RATE OF INCREASE IN

GOVERNMENT EXPENDITURE WITHOUT PAYING A HEAVY

PENALTY. AT THE SAME TIME, THE GOVERNMENT ,

INTRODUCED A SERIES OF MEASURES WHICH HAVE

RESULTED IN A MAJOR ATTACK ON PRIVATE ENTERPRISE

AND ON INDIVIDUAL EFFORT AND INITIATIVE. ' '

WE KNOW THE IMPACT OF THE GOVERNMENT'S SUCCESSIVE

REVALUATIONS OF THE AUSTRALIAN DOLLAR,

WE KNOW THE STORY OF THE 25° J > TARIFF CUTS WHEN THE

GOVERNMENT SOUGHT TO RESTRUCTURE THE WHO^E OF

AUSTRALIAN INDUSTRY AT ONCE.

WE KNOW THE HISTORY OF THEIR SALARIES AND WAGES

POLICIES WHICH EVEN THE PRIME MINISTER CONCEDES,

HAVE ADDED TO INFLATION. ■

WE KNOW THE IMPACT OF THE ABOLITION OF INVESTMENT

ALLOWANCES.

WE KNOW THE IMPACT OF THE ATTACK UPON PRIMARY

INDUSTRY.

WE KNOW THAT THE GOVERNMENT HAS THREATENED A CAPITAE

GAINS TAX - A THREAT THAT HAS ONLY BEEN POSTPONED -

AND WE KNOW THAT EVEN THOUGH THE GOVERNMENT SENDS

ITS TREASURER TO THE MIDDLE EAST TO SEEK FUNDS FOR

GOVERNMENT PURPOSES, IT HAS ABUSED FOREIGN INVESTMENT

-3-

AND MULTI-NATIONAL COMPANIES.

IT HAS INHIBITED INVESTMENT AND DEVELOPMENT AND

GROWTH, WHETHER IT BE BY SMALL BUSINESSES OR

LARGE INTERNATIONAL FIRMS. WE KNOW OF ITS WEAKNESS

IN THE FACE OF TRADE UNION MILITANCY.

IT IS THE EXPENDITURE POLICIES OF THE GOVERNMENT,

COUPLED WITH THE WAGES POLICIES EARLIER ENUNCIATED

BY THE MINISTER FOR LABOUR, THAT HAVE LED TO AN

INFLATION GREATER THAN THAT WHICH AUSTRALIA HAS EVER :

KNOWN BEFORE. THAT IN TURN LED TO A CREDIT SQUEEZE

AND HIGH INTEREST RATES. ON TOP OF THAT, THE .

GOVERNMENT'S ATTITUDE TO INDUSTRY, TO OVERSEAS

INVESTMENT AND TO INTERNATIONAL TRADE, COUPLED WITH

INFLATION AND THE CREDIT SQUEEZE, HAS LED TO LOSS .

OF PROFIT, TO A LACK OF INVESTMENT AND LARGE SCALE

UNEMPLOYMENT.

THE GOVERNMENT, IN FACT, DELIBERATELY CREATED

COMPETITION BETWEEN THE GOVERNMENT SECTOR, PRIVATE

ENTERPRISE, AND WAGE AND SALARY EARNERS. THE

GOVERNMENT ENCOURAGED WAGE AND SALARY EARNERS TO

INCREASE THEIR SHARE OF THE GROSS NATIONAL PRODUCTION!,

AT THE SAME TIME, IT WAS INCREASING ITS OWN DEMANDS

ON RESOURCES.

. . . A

SINCE THERE MUST HE Λ LIMIT TO RESOURCES IN ANY

ONE YEAR, THE SQUEEZE, THE REDUCTION, MAD TO COME

ON PRIVATE ENTERPRISE, ON INDIVIDUAL INITIATIVE.

THAT IS PRECISELY W1LAT HAS HAPPENED...........

UlllS PROFITS HAVE FALLEN AND INVESTMENT HAS FADED,

LEADING 'TO UNEMPLOYMENT,

A I J'Ul

THE TREASURER AND THE PRIME MINISTER HAVE SOUGHT

ALIBIS FOR THEIR OWN ECONOMIC MISMANAGEMENT. EVEN

IN RECENT DAYS, DR. CAIRNS HAS BEEN SAYING THAT

INFLATION IS BASICALLY OVERSEAS CAUSED. TODAY, THE

PRIME MINISTER SAYS INFLATION IS CAUSED BY EXCESSIVE

WAGES.

LAST YEAR, THE PRIME MINISTER WAS SAYING THAT

INFLATION WAS "IMPORTED".

THEN HE SOUGHT TO BLAME THE TREASURY FOR POOR

ADVICE.

HE BLAMED THE TREASURY FOR INADEQUATE STATISTICS,

EVEN THOUGH THEY DO NOT COMPILE THE STATISTICS!

HE BLAMED THE TREASURER, WHOM HE SACKED, AND

INSTEAD HE INSTALLED THE PERSON WHO HAD BEEN

RESPONSIBLE FOR ONE OF THE WORST BUDGETS THAT

AUSTRALIA HAS SEEN. IT IS AN OPEN SECRET THAT

5

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(

Tllii PRESENT TREASURER WAS LARGELY THE ARCHITECT

OF THE LAST BUDGET' AND NOT THE MEMBER FOR MELBOURNE

PORTS WHO TOOK RESPONSIBILITY FOR IT.

THE PRIME MINISTER THEN REALISED HIS ERROR OF

JUDGEMENT AND REQUIRED THAT THE SECRETARY OF

.THE TREASURY AND THE CHAIRMAN OF. THE RESERVE BANK

REPORT DIRECTLY TO HIM.

THAT WAS HIS LAST ALIBI.

HE COULD NO LONGER SAY THAT OTHER PEOPLE WERE

RESPONSIBLE FOR THE ECONOMIC ILLS BESETTING

AUSTRALIA.

HAVING GONE THROUGH THIS SOMEWHAT TORTUROUS

PROCESS, THE PRIME MINISTER AT LAST CAME TO THE VIEW

IN JANUARY THAT INFLATION WAS CAUSED BY EXCESSIVE

WAGE DEMANDS.

IN A SIGNIFICANT SPEECH IN ADELAIDE HE EMPHASISED

THIS POINT WHEN HE SAID THAT INFLATION TODAY WAS

UNDOUBTEDLY AND ALMOST SOLELY DUE TO WAGE CLAIMS

AND INCREASES. I QUOTE:

«.YOU CANNOT BLAME VIETNAM FOR THE INFLATION IN

THE WESTERN WORLD. YOU CANNOT BLAME THE OIL CRISIS

FOR THE INFLATION IN AUSTRALIA. YOU CANNOT BLAME

THE TAKEOVERS AND THE CURRENCY RATES FOR INFLATION

IN AUSTRALIA NOW. YOU HAVE TO PLACE THE BLAME ON -

V

WAGE CLAIMS. WHAT HAS HAPPENED IN THE PAST TWELVE

MONTHS IS THAT PROFITS HAVE SEEN REDUCED VERY

GREATLY IN EVERY FORM OF ACTIVITY. WAGE CLAIMS

IN THE PAST TWELVE MONTHS HAVE SO GREATLY REDUCED

THE PROFITABILITY OF EMPLOYERS THAT THEY HAVE CEASED

TO EMPLOY. AS LONG AS WAGE DEMANDS CONTINUE TO

CUT PROFITS, THEN THERE IS GOING TO BE UNEMPLOYMENT ,

EVERY EXCESSIVE INCREASE IN INCOME FOR ONE MAN TARES

THE JOB OF ANOTHER." .

THAT IS IN MARKED CONTRAST TO THE TREASURERS NEXT

STATEMENT THAT STILL BLAMES OVERSEAS CAUSES.

THROUGHOUT THE LAST YEAR, BOTH DR. CAIRNS AND THE

PRIME MINISTER IGNORED THE FACT THAT AUSTRALIA ' ■ S

ECONOMIC DIFFICULTIES WERE CAUSED BY AUSTRALIAN

DECISIONS.

IT IS ONLY AN AUSTRALIAN LABOR GOVERNMENT THAT CAN

BE BLAMED FOR THE CONSEQUENCES OF REVALUATION, FOR

THE CONSEQUENCES OF THE TARIFF CUTS, FOR THE

CONSEQUENCES OF THE MINISTER FOR LABOUR'S WAGES

POLICY, FOR THE CONSEQUENCES OF TOEIR EXPENDITURE

DECISIONS AND FOR THEIR ATTACK ON BUSINESS CONFIDENCE,

, THESE ARE ALL AUSTRALIAN DECISIONS FOR WHICH THE FEDERAL

-6-

LABOR GOVERNMENT MUST BE RESPONSIBLE

-7-

Tllli GOVERNMENT CERTAINLY CANNOT BLAME ANYONE

OVERSEAS l-'OU THE GOVERNMENT1S OWN MAD EXPENDXTUiiE

POLICIES RISING 2 <4% ONE YEAR AND ABOUT < 4 5% OR

MORE THE NEXT. THESE ARE AUSTRALIAN DECISIONS.

TO QUOTE AN OFT USED PHRASE OF THE PRIME MINISTER,

"THE FACT IS" THAT BY OVERSEAS COMPARISONS, THE

AUSTRALIAN ECONOMY IS PERFORMING VERY BADLY.

GERMANY, THE UNITED STATES AND JAPAN HAVE ACHIEVED

A SIGNIFICANT IMPROVEMENT IN THEIR ECONOMIES, .

AMERICAN INFLATION IS LIKELY TO FALL FROM 12% to

6% AND GERMANY FROM 6£ OR 7% TO 5% AND JAPAN FROM

OVER 23% TO APPROXIMATELY 10%. IN AUSTRALIA,

INFLATION GIVES EVERY INDICATION OF MOVING IN

THE OTHER DIRECTION. IN ADDITION TO THIS,

AUSTRALIA'S UNEMPLOYMENT IS WORSE THAN MOST OF

THE O.E.C.D. COUNTRIES WHOSE EMPLOYMENT LEVELS

ARE NORMALLY QUOTED.

EXPENDITURE AND WAGE POLICIES TO BLAME

IN SHORT, THE GOVERNMENT'S INFLATION IS CAUSED BY .

ITS EXPENDITURE POLICIES AND BY ITS WAGE POLICIES,

UNEMPLOYMENT HAS LARGELY BEEN CAUSED BY THE GOVERNMENT’S

ATTITUDE TO INDUSTRY AND BY THE INFLATION WHICH HAS

RESULTED FROM ITS HAPHAZARD POLICIES. INDUSTRY HAS

t t ι/β

- t i -

HUN OUT OF PROFIT, INVESTMENT HAS DRIED UP, AND

UNEMPLOYMENT HAS GROWN. AUSTRALIA'S UNEMPLOYMENT

IS WORSE THAN IN JAPAN, IN FRANCE OR GERMANY, IT IS

EQUAL TO THAT IN ITALY, IT IS WORSE THAN IN THE

UNITED KINGDOM, BELGIUM OR THE NETHERLANDS, OUR

PROUD INTERNATIONAL RECORD IN MAINTAINING FULL

EMPLOYMENT HAS BEEN SHATTERED BY THIS LABOR GOVERNMENT,

NO COMPREHENSIVE POLICY

THE INDICTMENT OF THIS GOVERNMENT IS THAT IT HAS NEVER

HAD A COMPREHENSIVE POLICY TO DEAL WITH AUSTRALIA'S

ECONOMIC DEVELOPMENT AND GROWTH. IT HAS NEVER HAD AN

UNDERSTANDING OF THE MANY INTERACTING FACTORS THAT

PRESS IN UPON AN ECONOMY.

IT APPEARS TO HAVE CHANGED ITS ATTITUDE AT TERRIGAL

BUT I WOULD BELIEVE THAT THIS IS A TACTICAL CHANGE

MUCH MORE THAN A CHANGE OF HEAR. IT IS A TACTICAL

MANOEVRE IN RECOGNITION THAT TEMPORARY AND SHORT

TERM COOPERATION WITH PRIVATE ENTERPRISE - WITH

INDIVIDUAL INITIATIVE - IS ESSENTIAL IF THE GOVERNMENT

IS TO HAVE ANY CHANCE OF SURVIVING. I DO NOT BELIEVE

IT IS A FUNDAMENTAL CHANGE OF HEART AND APPROACH -

LABOR HAS SHOWN THAT THEY RECOGNISE THAT PRIVATE

ENTERPRISE EXISTS, NOT THAT THEY WANT IT TO BE A

PERMANENT PART OF THE AUSTRALIAN SOCIAL AND ECONOMIC

STRUCTURE.

.is /θ

5

TUB PRESENT TREASURER WAS LARGELY THE ARCHITECT

OF THE LAST BUDGET AMD NOT THE MEMBER FOR MELBOURNE

PORTS WHO TOOK RESPONSIBILITY FOR IT.

THE PRIME MINISTER THEN REALISED HIS ERROR OF

JUDGEMENT AND REQUIRED THAT THE SECRETARY OF

.THE TREASURY AND THE CHAIRMAN OF THE RESERVE BANK

REPORT DIRECTLY TO HIM.

THAT WAS HIS LAST ALIBI. .

HE COULD NO LONGER SAY THAT OTHER PEOPLE VERB

RESPONSIBLE FOR THE ECONOMIC ILLS BESETTING

AUSTRALIA. .

HAVING GONE THROUGH THIS SOMEWHAT TORTUROUS

PROCESS, THE PRIME MINISTER AT LAST CAME TO THE VIEW

IN JANUARY THAT INFLATION WAS CAUSED BY EXCESSIVE

WAGE DEMANDS.

IN A SIGNIFICANT SPEECH IN ADELAIDE HE EMPHASISED

THIS POINT WHEN HE SAID THAT INFLATION TODAY WAS

UNDOUBTEDLY AND ALMOST SOLELY DUE TO WAGE CLAIMS

AND INCREASES. I QUOTE;

'(YOU CANNOT BLAME VIETNAM FOR THE INFLATION IN

THE WESTERN WORLD. YOU CANNOT BLAME THE OIL CRISIS

FOR THE INFLATION IN AUSTRALIA. YOU CANNOT BLAME

THE TAKEOVERS AND THE CURRENCY RATES FOR INFLATION

IN AUSTRALIA NOW. YOU HAVE TO PLACE THE BLAME ON ·

WAGE CLAIMS. WHAT HAS HAPPENED IN THE PAST TWELVE

MONTHS IS THAT PROFITS HAVE BEEN REDUCED VERY

GREATLY IN EVERY FORM OF ACTIVITY. WAGE CLAIMS .

IN THE PAST TWELVE MONTHS HAVE SO GREATLY REDUCED

THE PROFITABILITY OF EMPLOYERS THAT THEY RAVE CEASED

TO EMPLOY. AS LONG AS WAGE DEMANDS CONTINUE TO

CUT PROFITS, THEN THERE IS GOING TO BE UNEMPLOYMENT,

EVERY EXCESSIVE INCREASE IN INCOME FOR ONE MAN TARES

THE JOB OF ANOTHER."

THAT IS IN MARKED CONTRAST TO THE TREASURERS NEXT

STATEMENT THAT STILL BLAMES OVERSEAS CAUSES,

THROUGHOUT THE LAST YEAR, BOTH DR. CAIRNS AND THE

PRIME MINISTER IGNORED THE FACT THAT AUSTRALIA!S

ECONOMIC DIFFICULTIES WERE CAUSED BY AUSTRALIAN

DECISIONS.

IT IS ONLY AN AUSTRALIAN LABOR GOVERNMENT THAT CAN

BE BLAMED FOR THE CONSEQUENCES OF REVALUATION, FOR

THE CONSEQUENCES OF THE TARIFF CUTS, FOR THE

CONSEQUENCES OF THE MINISTER FOR LABOUR'S WAGES

POLICY, FOR THE CONSEQUENCES OF THEIR EXPENDITURE

DECISIONS AND FOR THEIR ATTACK ON BUSINESS CONFIDENCEt

, THESE ARE ALL AUSTRALIAN DECISIONS FOR WHICH THE FEDERAL

LABOR GOVERNMENT MUST BE RESPONSIBLE.

-7

S

THE GOVERNMENT CERTAINLY CANNOT BLAME ANYONE

OVERSEAS FOR THE GOVERNMENT'S OWN MAU EXPENDITURE

VOLl.Ca.Eti RISING 2*t% ONE YEAR AND AUOUT k % OR

MORE THE NEXT. THESE ARE AUSTRALIAN DECISIONS,

TO QUOTE AN OFT USED PHRASE OF THE PRIME MINISTER,

"THE FACT IS" THAT BY OVERSEAS COMPARISONS, THE

AUSTRALIAN ECONOMY IS PERFORMING VERY BADLY,

GERMANY, THE UNITED STATES AND JAPAN HAVE ACHIEVED

A SIGNIFICANT IMPROVEMENT IN THEIR ECONOMIES,

AMERICAN INFLATION IS LIKELY TO FALL FROM 13% to

6% AND GERMANY FROM OR 7% TO 5% AND JAPAN FROM

OVER 23% TO APPROXIMATELY 10%. IN AUSTRALIA,

INFLATION GIVES EVERY INDICATION OF MOVING IN

THE OTHER DIRECTION. IN ADDITION TO THIS,

AUSTRALIA'S UNEMPLOYMENT IS WORSE THAN MOST OF

THE O.E.C.D. COUNTRIES WHOSE EMPLOYMENT LEVELS

ARE NORMALLY QUOTED.

EXPENDITURE AND WAGE POLICIES TO BLAME

IN SHORT, THE GOVERNMENT'S INFLATION IS CAUSED BY

ITS EXPENDITURE POLICIES AND BY ITS WAGE POLICIES,

UNEMPLOYMENT HAS LARGELY BEEN CAUSED BY THE GOVERNMENT'S

ATTITUDE TO INDUSTRY AND BY THE INFLATION WHICH HAS

RESULTED FROM ITS HAPHAZARD POLICIES. INDUSTRY HAS

.../6

HUN OUT OF PROFIT, INVESTMENT HAS DRIED UP, AND

UNEMPLOYMENT HAS GROWN. AUSTRALIA'S UNEMPLOYMENT

IS WORSE THAN IN JAPAN, IN FRANCE OR GERMANY. IT IS

EQUAL TO THAT IN ITALY, IT IS WORSE THAN IN THE

UNITED KINGDOM, BELGIUM OR THE NETHERLANDS. OUR

PROUD INTERNATIONAL RECORD IN MAINTAINING FULL

EMPLOYMENT HAS BEEN SHATTERED BY THIS LABOR GOVERNMENT,

NO COMPREHENSIVE POLICY .

-ti-

-TJIE INDICTMENT OF THIS GOVERNMENT IS THAT IT HAS NEVER

HAD A COMPREHENSIVE POLICY TO DEAL WITH AUSTRALIA'S

ECONOMIC DEVELOPMENT AND GROWTH, IT HAS NEVER HAD AN

UNDERSTANDING OF THE MANY INTERACTING FACTORS THAT

PRESS IN UPON AN ECONOMY.

IT APPEARS TO HAVE CHANGED ITS ATTITUDE AT TERRIGAL

BUT I WOULD BELIEVE THAT THIS IS A TACTICAL CHANGE

MUCH MORE THAN A CHANGE OF HEAR. IT IS A TACTICAL

MANOEVRE IN RECOGNITION THAT TEMPORARY AND SHORT

TERM COOPERATION WITH PRIVATE ENTERPRISE - WITH

INDIVIDUAL INITIATIVE - IS ESSENTIAL IF THE GOVERNMENT

IS TO HAVE ANY CHANCE OF SURVIVING. I DO NOT BELIEVE

IT IS A FUNDAMENTAL CHANGE OF HEART AND APPROACH -

LABOR HAS SHOWN THAT THEY RECOGNISE THAT PRIVATE

ENTERPRISE EXISTS, NOT THAT THEY WANT IT TO BE A

PERMANENT PART OF THE AUSTRALIAN SOCIAL AND ECONOMIC

STRUCTURE.

i i i /'Q

IN THE LAST FEW LAVS, THE TREASURER HAS MADE .

IT QUITE PLAIN THAT HE BELIEVES THAT IT IS

PERFECTLY PROPER TO CONTINUE DEFICIT FINANCING

TO A GREATER AND GREATER EXTENT IN AN EFFORT TO

LOWER UNEMPLOYMENT. I APPLAUD HIS OBJECTIVES

BUT HE NEEDS TO REALISE THAT HIS POLICIES CREATES

UNEMPLOYMENT AND UNFORTUNATLEY HIS PRESENT POLICIES

WILL IN THE END MAKE MATTERS WORSE. UNEMPLOYMENT '

BREEDS ON INFLATION.

AS THE "FINANCIAL REVIEW" PUT IT TODAY

"DR. CAIRNS" COMMENTS WERE NOTABLE FOR THEIR

CONFUSION, THEIR LACK OF COMPREHENSION OF

CURRENT ECONOMIC ISSUES, AND THEIR OUTDATED

DEMAGOGUERY"......

"HE UNDERSTANDS VIRTUALLY NOTHING ABOUT THE PROCESS

OF INFLATION"

-10

Dll CAIRNS lb NOW ALSO OUT OF PRASE WITH THE GOVERNMENT'ti

EOUNOM1U ADVISORS, PROFESSOR UUUEN AND MU BRIAN BROGAN AIU5

ROTH ON RECORD AS HAVING POINTED TO TILE NEED AND THE POSSIBILITY

Oi‘ VUTb IN GOVERNMENT PROGRAMMEb OR INCREASED TAXATION, PROPESSOU

GRUEN HAb SAID WE MAY HAVE TO RAISE SOME OTHER TAXES OR WE MAY

HAVE TO REDUCE EXPENDITURE SOMEWHERE, HE IS MAKING THE POINT

THAT YOU CANNOT CONTROL THE ECONOMY BY MONETARY ACTION ALONE,

THE GOVERNMENT ADVISORS HAVE COME TO TERMS WITH REALITY BUT

THE PRIME MINISTER AND THE TREASURER CONTINUE WITH THEIR MAD

HATTER TEA PARTY,

THEY BELIEVED THEY COULD INCITE WAGE AND SALARY EARNERS TO

ASK FOR HIGHER AND HIGHER WAGES AND THAT THEY COULD CONTROL

INFLATION BY ONE OF THE TOUGHEST CREDIT SQUEEZES AND THE HIGHEST

RATES OF INFLATION THAT HAD EVER OCCURRED, THE POLICIES DID

NOT AND COULD NOT WORK,

THE GOVERNMENT'S ECONOMIC POLICIES ARE 30 YEARS OUT OF DATE,

LET ME EXAMINE THE REASONS WHY KEYNESIAN TYPE PUMP PRIMING

WILL NOT PUT RENEWED LIFE AND VIGOR INTO THE INDIVIDUAL ENTERPRISE

ECONOMY UNDER THE PRESENT CIRCUMSTANCES, KEYNES WROTE DURING

THE PERIOD OF THE GREAT DEPRESSION WHEN CURRENCY VALUES ]iERE

STABLE, INTEREST RATES WERE LOW, THERE WAS MODERATION BY GOVERNMENT

AND UNIONS, THERE WAS GREAT UNEMPLOYMENT AND RESOURCES LYING IDLE,

THE GREAT PROBLEM IN THE 193O'a WAS LACK OF DEMAND AND THEREFORE

KEYNES WROTE THAT PUMP PRIMING COULD WORK AND WOULD WORK TO

RESTORE DEMAND, TO RESTORE INDUSTRIAL ACTIVITY AND EMPLOYMENT,

SIMILAR POLICIES HAVE WORKED AT DIFFERENT PERIODS IN POST-WAR YEARS,

THERE WAS STILL A FEAR OF INADEQUATE DEMAND, IN THE MINI­

RECESSIONS THAT OCCURRED, ESPECIALLY IN 1961, KEYNESIAN TYPE

PUMP PRIMING WORKED WITH GREAT EFFECT, WITH GREAT SPEED, DECAUSE

THE PRE-CONDITIONS FOR A PRIVATE ENTERPRISE TAKE-OFF WERE

PRESENT* THERE WERE STABLE CURRENCY VALUES, THERE WAS STABILITY

IN WAGE RATES, THE COST STRUCTURE WAS CERTAIN, INTEREST RATES

WERE LOW, COMPANIES COULD THEREFORE BORROW AND INVEST AND PLAN

FOR THE FUTURE KNOWING THEY WOULD BE ABLE TO MAKE A PROFIT,

EMPLOYMENT AND INDUSTRIAL ACTIVITY PICKED UP,

UNDER PRESENT CIRCUMSTANCES, HOWEVER, THE GOVERNMENT IS PUMPING

HUGE SUMS INTO THE ECONOMY HOPING THAT IT WILL PROVIDE 'LIFT

OFF· FOR THE PRIVATE ENTERPRISE SECTOR, BUT THE PRE-CONDITIONS

DO NOT EXIST, '

THERE IS NO STABILITY IN THE ECONOMY. THERE IS HIGH - AND THE

PROSPECT OF HIGHER - INFLATION. THERE IS CONTINUED EXCESSIVE

PRESSURE FOR WAGE DEMANDS. THERE ARE VERY HIGH INTEREST RATES,

GOVERNMENT POLICIES HAVE MADE AUSTRALIAN COMPANIES UNCOMPETITIVE

WITH FOREIGN IMPORTS, MANY BUSINESSES THAT WOULD LIKE TO PLAN

AND INVEST FOR THE FUTURE CANNOT DO SO BECAUSE THEY WOULD HAVE

NO PROSPECTS OF COVERING THE BORROWED FUNDS,

FUNDS HAVE TO BE BORROWED AT 10 TO 14 PERCENT, UNDER PRESENT

CIRCUMSTANCES, THERE CAN BE NO CERTAINTY THAT BUSINESSES WILL

MAKE SUFFICIENT PROFITS IN THE FACE OF HIGH DEMANDS TO ENABLE

THEM TO STAY AFLOAT.

THEREFORE THE OBJECTIVE IS SIMPLY SURVIVAL.

. UNDER THESE CIRCUMSTANCES, EMPLOYMENT OPPORTUNITIES FALL, AND

COMPANIES FIND IT HARD ENOUGH TO CONSOLIDATE LET ALONE EXPANDe

SMOKE SCREEN

WHENEVER THE GOVERNMENT GETS INTO ECONOMIC TROUBLE, IT TRIES

TO CREATE A SMOKE SCREEN0

LAST WEEK THE PRIME MINISTER SOUGHT TO DIVERT ATTENTION FROM

HIS GOVERNMENT'S MISMANAGEMENT BY ASKING THE OPPOSITION WHERE

IT WOULD CUT EXPENDITUREi THE AUSTRALIAN PEOPLE ARE LOOKING

TO THE GOVERNMENT FOR THE ANSWERS BECAUSE THE GOVERNMENT HAS

THE POWER TO ACT, "WHEN WILL THE GOVERNMENT OVERCOME

UNEMPLOYMENT? WHEN WILL THE GOVERNMENT REDUCE INFLATION TO

REASONABLE LEVELS?"

THE GOVERNMENT'S SUGGESTION THAT THE OPPOSITION SHOULD INDICATE

WHERE WE MIGHT REDUCE THE RATE OF EXPENDITURE IS ABSURD0 IN

THE NORMAL COURSE OF EVENTS, IT IS TWO YEARS UNTIL AN ELECTION a

I WOULD HOPE IN THE INTERESTS OF THE NATION, THAT THE GOVERNMENT

CAN GET THE ECONOMY UNDER CONTROL BY THEN» IF IT CANNOT,

MANY TENS OF THOUSANDS OF PEOPLE THROUGHOUT AUSTRALIA WILL BE

GRIEVOUSLY HURT»

AS A RESULT OF THE GOVERNMENT'S INCONSISTENT POLICIES, AND

FAST CHANGING EVENTS, IT HAS BECOME VERY DIFFICULT TO PREDICT

WHAT WILL BE THE CIRCUMSTANCES OF THE AUSTRALIAN ECONOMY SIX

MONTHS, TWELVE MONTHS OR EIGHTEEN MONTHS FROM NOW. IT IS

QUITE IMPOSSIBLE TO PREDICT THE NEW EXPENDITURE COMMITMENTS

THAT THE GOVERNMENT WILL ENTER INTO WITHIN THE NEXT FOUR OR

FIVE MONTHS OR IN THE NEXT BUDGET,

■ ! : . ■ . ,.

\ . | ! . ■ ·. ■ " ’ ' .

■ - . . ! ' .

·: . . · · _ · ' , ■ ■ ■ . - 1 3 - ' ■ · .

WE DO KNOW THAT NEARLY EVERY SUBMISSION FOR EXPENDITURE THAT . · !

HAS BEEN TAKEN TO THE GOVERNMENT BY A MINISTER HAS BEEN

ACCEPTED, THERE ARE BOUND TO BE SIGNIFICANTLY INCREASED

COMMITMENTS BEFORE THE NEXT TWO YEARS ARE OUT,

UNDER THESE CIRCUMSTANCES, IT IS NONSENSE TO SUGGEST THAT

THE OPPOSITION SHOULD SAY WHERE AND HOW IT WILL CURB THE • · · i . - · .

RATE OF GOVERNMENT EXPENDITURE WHEN IT COMES TO POWER» WE

JUST DO' NOT KNOW WHAT THE SITUATION WILL BE,

IN ADDITION, ONLY THE GOVERNMENT HAS THE INFORMATION BASE,

THE RESOURCES OF TREASURY AND OTHER GREAT DEPARTMENTS OF

STATE WHICH ARE NECESSARY BEFORE THAT KIND OF DECISION CAN .

BE MADE»

WHILE SAYING VERY FIRMLY THAT IT IS NOT A RELEVANT QUESTION

TO ASK THE OPPOSITION, LET ME SAY WITH ABSOLUTE FIRMNESS THAT

. V ' ■

WE WOULD GIVE HIGH PRIORITY TO ALLOWING THE INDIVIDUAL

AUSTRALIAN A GREATER RIGHT TO DETERMINE MORE OF HIS OWN

ECONOMIC AND SOCIAL DESTINY,

' . / . :

WE WOULD GIVE GREAT PRIORITY TO THE CONTINUED IMPROVEMENT

OF EDUCATION AND TO THE PROVISION OF FACILITIES FOR THE

DISADVANTAGED, THEIR RIGHT TO PROTECTION NOW AND FOLLOWING

ANY FURTHER ECONOMIC MADNESS OF THIS GOVERNMENT WOULD BE

_ _ ] ? „ . λ- - . . . -. · .. .· _’....· ■ ,. ■ , ·,· - 1 Λ » .·. .... . . . - ν „ , Ί ^ · - > . · ^ / · . ή ^ ^ ? :···'-,·-· - π - , r — - - · ■ - » · > —

PRESERVED

WE WOULD GIVE HIGH PRIORITY TO THE RIGHT OF THE PRIVATE SECTOR

TO BE ABLE TO MAKE PROFITS, WHETICER LARGE CORPORATIONS OR SMALL I . ■ .

BUSINESSES, AND

WE WOULD ESTABLISH INCENTIVES AND OPPORTUNITY FOR PROFIT.

I '

TO WOULD GIVE HIGH PRIORITY TO PROTECTING THE AUSTRALIAN NATIONAL

HERITAGE, TO PROTECT AND DEFEND BOTH OUR CULTURAL AND MATERIAL

HERITAGE - V

THAT INVOLVES A HIGH PRIORITY FOR DEFENCE„

LET ME REMIND THE GENTLEMEN OPPOSITE THAT THEY ARE THE GOVERNMENT

THEIR ROLE IS TO MAKE DECISIONS DETERMINING THE FUTURE OF

AUSTRALIAo IT IS THEIR JOB TO GOVERN NOW. IT IS OURS TO ASK

THE QUESTIONS

“WHEN ARE THEY GOING TO CURE INFLATION?"

“WHEN ARE THEY GOING TO CURE UNEMPLOYMENT?" -

“HOW ARE THEY GOING TO ACHIEVE IT?" ·

LET ME ALSO ASK THE GOVERNMENT THAT IF BY SOME ODD CHANCE THEIR

POLICIES ARE SUCCESSFUL, IF THE PRIVATE ENTERPRISE SECTOR DOES

TAKE-OFF, HOW WILL THEY PREVENT AUSTRALIA FROM BURSTING FORTH

INTO A VIOLENT PERIOD OF HYPERINFLATION TOWARDS THE END OF

THIS YEAR, OR MORE LIKELY SOME TIME IN 1976?

-15-

TILE PRIME MINISTER HAS SAID THAT IF UNEMPLOYMENT FALLS TO

REASONABLE LEVELS, THE GOVERNMENT WILL NOT INCREASE TAXES AND

IT WILL NOT CUT ITS EXPENDITURE PROGRAMS, THE GOVERNMENT1S

PRINCIPAL ECONOMIC ADVISORS HAVE POINTED TO THE NECESSITY OF

TAKING ONE OR EITHER OR BOTH OF THESE COURSES, THE PRIME

MINISTER HAS RENOUNCED THE POSSIBILITY OF USING EITHER OF

THESE WEAPONS OF ECONOMIC CONTROL, .

HOW UNDER THESE CIRCUMSTANCES WOULD HE BE ABLE TO PREVENT

INFLATION RISING TO MONSTROUS PROPORTIONS? WOULD HE RESORT

M E R E L Y TO A CREDIT SQUEEZE AS THE GOVERNMENT DID ON PAST

OCCASSIONS? WOULD HE RESORT TO EVEN HIGHER INTEREST RATES

THAN THE GOVERNMENT HAS ALREADY DONE? . ;

THESE ARE MAJOR QUESTIONS, , . .

' ■ ' ■ . . V ' ■ · ' ■

THE GOVERNMENT HAS AN OBLIGATION TO ANSWER, . : .

SO FAR IT HAS REFUSED TO SET OUT ITS LONG TERM OBJECTIVES FOR

THE AUSTRALIAN ECONOMY AND THE WAY IN WHICH IT WOULD ACHIEVE

THOSE OBJECTIVES, . : . . ;V ! -

OUR OBJECTIVES WOULD BE TO ESTABLISH THE CIRCUMSTANCES IN WHICH

INDUSTRY COULD RETURN TO PROFIT, IN WHICH PEOPLE WOULD HAVE

THE INCENTIVE TO WORK FIVE DAYS A WEEK,

WE WOULD ARGUE FOR WAGE RESTRAINT, . . . ’ .

-16-

WE WOULD ESTABLISH CLOSE COMMUNICATIONS WITH EMPLOYERS AND WITH

THE TRADE UNIONS. '

WE WOULD LOOK TO THE A.C.T.U. FOR A LEADERSHIP ROLE - A ROLE . . . . .1— 1 . II * OF NATIONAL RESPONSIBILITY WHICH WOULD BE IN THE BEST INTEREST

OF THE TRADE UNION MOVEMENT AND OF AUSTRALIA. .

WE WOULD CHANGE THE CONCILIATION AND ARBITRATION ACT TO

RE-ESTABLISH REASONABLE RULES FOR THE CONDUCT OF INDUSTRIAL

NEGOTIATIONS, TO PROVIDE GREATER PROTECTION FOR THE PUBLIC

INTEREST AND TO UPHOLD THE SYSTEM OF NEGOTIATION, CONCILIATION

AND ARBITRATION WHICH HAS SERVED AUSTRALIA WELL OVER A LONG

PERIOD. IN OTHER FORUMS I'VE SPOKEN OF PROPOSED CHANGES IN

MORE DETAILED TERMS. · '

AS PRIVATE ENTERPRISE STARTED TO MOVE FORWARD IN CHANGED ...

CIRCUMSTANCES, WITH CONFIDENCE RESTORED, THERE WOULD NEED TO

BE A PHASED REDUCTION IN THE RATE OF GOVERNMENT EXPENDITURE SO

THAT THERE WAS NO LONGER A BASIC COMPETITION FOR RESOURCES BETWEEN

GOVERNMENT AND PRIVATE ENTERPRISE. . .

IT WOULD AT THE SAME TIME ESTABLISH A TRULY FEDERAL SYSTEM OF GOVERN

MENT TO PREVENT CONCENTRATION OF OVERRIDING POLITICAL AND ECONOMIC

POWER IN ONE PLACE. WHILE THERE IS A NEED FOR THE FEDERAL

GOVERNMENT TO HAVE COMPLETE CONTROL OF THE ECONOMY, WE MUST AT THE

SAME TIME RECOGNISE THAT THERE ARE MANY OTHER ECONOMIC. POWERS NOW

IN THE POSSESSION OF THE GOVERNMENT WHICH ARE NOT NEEDED FOR THE

MECHANISM OF ECONOMIC CONTROL. IF THOSE POWERS WERE DECENTRALISED

SO THAT THE STATES ASSERTED A GREATER INFLUENCE OVER THEIR OWN

AFFAIRS, THE PROSPECTS OF ECONOMIC IRRATIONALITY AND OF GROSS

EXTRAVAGANCE WOULD BE MUCH LESS THAN UNDER THE SYSTEMS CREATED

OVER THE LAST TWO YEARS.

17 V . ■ i -

CONCLUSION · · .

let' me make one final point» partly as a result of the history

OF THE LAST 30 YEARS, POLITICIANS BELIEVE THAT IT IS A i - ' '

PROPER AND GOOD THING FOR THEM TO BUY VOTES WITH OTHER PEOPLE'S i · ■

MONEY» KEYNESIAN ECONOMICS IN THE 19308s ESTABLISHED IT AS AN

ACKNOWLEDGED AND RESPECTABLE POLICY S D R .GOVERNMENTS TO SPEND

MORE MONEY THAN THEY COLLECTED IN ANY ONE YEAR» WHILE KEYNES i '

WAS1 WRITING IN THE CIRCUMSTANCES OF THE DEPRESSION, THAT VIEW i . '

HAD; VALIDITY. BUT THAT VIEW AROUSED EXPECTATIONS IN PEOPLE,

IN THE POST-WAR YEARS, THE PROSPECT OF INADEQUATE DEMAND

WAS STILL A MATTER FOR PUBLIC CONCERN, KEYNES AND "THE NEW

DEAL" HAD CREATED GREAT EXPECTATIONS. " "

CONTINUED ....

- ν ' · · T ; ’' - " I W

-18-

G G V / E R Ν Π Ε N T S C O U L D A C T U A L L Y S P E N D MORE T H A N T H E Y G A T H E R E D

I N T A X E S A N D B E P R A I S E D F O R I T . A F T E R T H E U A R , T H E S O C I A L

' A N D E C O N O M I C T H E O R I E S O F K E Y N E S U E R E W I D E L Y P R A C T I S E D .

·. I N T H E R I G H T C I R C U M S T A N C E S , T H E Y C O N T R I B U T E D G R E A T L Y T O

T H E V A L U E A N D R I C H N E S S OF O U R S O C I E T Y . . '

F O R S OME T I M E A F T E R T H E U A R , T H E M E M O R Y A N D F E A R OF M A S S I V E

. " U N E M P L O Y M E N T U A S S T I L L E V I D E N T . P O L I T I C I A N S S T I L L H A D

S OME I N H I B I T I O N S A B O U T S P E N D I N G T O O MUCH O F O T H E R P E O P L E ' S

M O N E Y . R E C U R R I N G B A L A N C E OF P A Y M E N T S C R I S E S A N D T H E . . .

M O D E R A T I O N OF T R A D E U N I O N S M A I N T A I N E D A D E Q U A T E R E S T R A I N T

— BY G O V E R N M E N T S A N D I N O U R C O M M U N I T Y A T L A R G E . T H U S , I N F L A T I O N

U A S H E L D T O R E A S O N A B L E L E V E L S A N D U N E M P L O Y M E N T TO A . M I N I M U M ,

T U O T H I N G S HA V E N O U A L T E R E D . T R A D E U N I O N L E A D E R S H I P S E E M S

NO L O N G E R F E A R F U L O F L A R G E S C A L E A N D C O N T I N U I N G U N E M P L O Y M E N T ,

E V E N T H O U G H T O D A Y S OME OF T H E I R A C T I O N S S H O U L D G I V E T H E M C A U S E

F O R MUCH F E A R ON T H I S C O U N T . S E C O N D L Y , N A T I O N A L G O V E R N M E N T S

T E N D TO H A V E L O S T T H E A R T O F R E S T R A I N T . ‘ .

A S A R E S U L T , G O V E R N M E N T S N O U A C T A S I F T H E I R R E S O U R C E S .

AR E U I T H O U T L I M I T A N D A S T H O U G H T H E Y C A N S P E N D A N D S P E N D .

A N D S P E N D . P E O P L E C A N L O S E A L L P E R S P E C T I V E U H E N U T C O M E S .

T O E X P E C T A T I O N S F R O M G O V E R N M E N T S . A S K T H E G O V E R N M E N T A N D ·

T H E G O V E R N M E N T W I L L P R O V I D E ! U E M U S T U N D E R S T A N D T H A T I N

A S K I N G G O V E R N M E N T S , U E A R E A S K I N G O U R N E I G H B O U R S , O U R F R I E N D S ,

A N D U L T I M A T E L Y , U H A T T H E G O V E R N M E N T P R E T E N D S I T CA N P R O V I D E ,

M U S T COME F R O M T H E P O C K E T S OF E V E R Y A U S T R A L I A N . - . '

: : " ;r

U N L E S S G O V E R N M E N T S A N D P E O P L E A G A I N L E A R N TO P R A C T I C E

R E S T R A I N T , U N L E S S IJE CA N C A S T O F F T HE S E L F I S H N E S S AND G R E E D

T H A T H A S B E E N S O MUCH E N C O U R A G E D BY T H E G O V E R N M E N T I N T H E

L A S T T U O Y E A R S , T H E R E U I L L B E L I T T L E H O P E F O R U S A S A N A T I O N

AND N ONE FOR OUR S O C I A L A N D E C O N O M I C S T R U C T U R E . ·

• · ·

Canberra, 1? April 1975