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Speech to the Rotary Club of Melbourne



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MINISTER FOR FINANCE

EMBARGO NO: 56.

SPEECH TO THE. ROTARY CLUB OF MELBOURNE BY THE HON ERIC L. ROBINSON MP MINISTER FOR FINANCE MELBOURNE - 22 AUGUST 1979

Mr Chairman

I well recall my induction into the Rotary movement. It

was about 23 years ago when I was a member of Brisbane Rotary

for a limited time; not long after that I went to live on

the Gold Coast and regrettably, meetings there were on a night

which made it difficult for me to give the attendance which is

essential if you are to discharge your responsibilities as a

Rotarian. ■

I have visited a number of clubs over the years. I well .

understand the ideals and the immense amount of public service

that the movement does, . . .

I want to say something to you about the Budget and then make

some.broad observations on the future of the economy as I see

it. '

I suppose like me, most of you listened to the Budget speech . .

last night. If you didn't do that, you no doubt heard the

commentators this morning or have read the newspapers; I think

I read too many because as I read them I begin to become

confused myself because of the differing interpretations of

the Budget. . · .

In simple terras, what we are trying to achieve is a continuation

of economic recovery and at the same time, continue to bear down

on the most constant evil which faces this country and indeed

the Western world - that is the matter of inflation.

v

We will have some growth in Australia this year. It is not

going to be spectacular. We are going to have good farm

incomes but we are not going to have the acceleration that

we saw in them last year. .

For those of you that are interested in the deficit we have

got it down to $2,193 million. The domestic deficit is down

to $875 million which is a reduction of about $1400 ion last

year. You can do a lot with figures but it is worthwhile

remembering that the deficit, as a percentage of the G.D.P.,

is 1.9%; last year it was 3.4% and it peaked, in 1975, at

over 4%.

This means thit at the same time as we are pursuing policies

to contain and reduce the rate of inflation, we are also

getting the deficit down in relation the growth of the nation.

Persons say, quite validly, to me "why can't you Ministers in

Canberra still contain further the rate of growth of Government

outlays". .

Well, let us look at a few figures. Before 1972, you will

appreciate the significance of the year, the average growth

in Government outlays was 4 3/4%; in 1973 to 1975 it was

10^% - this is the average for the three year period; and for

the last three year period the growth was 1%. So there has

been a real measure of restraint but we all wish it to be more.

Where are the significant outlays of the Government.

Defence takes 9%. This year we have deliberately increased it

by $281 million which, in real terms, is about a 2%% increase.

We make no apology for that because we believe there has to be

a defence capacity in this country. I can tell you, as somebody

who goes through those figures with Jim Killen, and my officers

with his officers, defence hardware comes very very expensively.

The Federal Government spends 8% of outlays on education; v/e

all know that education has a high allocation in all State

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Government expenditure. There has been little movement because

we have been able to reduce capital expenditure simply because

there will be less children to go to school in the years ahead.

13% of our outlays go in health; this is again substantially

added to by the States. I do invite all Australians to take

a real interest in the cost of health in this country

particularly, as it applies to hospitals.

22% of outlays go back to the States and Local Authorities but

the largest percentage, 28, goes to Social Welfare. There are

about two million Australians who, one way or the other, receive

a welfa re benefit. .

One of the problems is that the electorate is aging; there are

also many veterans moving now into their sixties who at that

age, five years before others, are entitled to a benefit.

We also decided to reintroduce twice yearly indexation of

pension benefits. Last year we made it only once each year

because we believed, at that time, that the rate of inflation

was going to moderate; I will speak a little more about that

later on. , .

Unemployment benefits cost almost $1 billion; the social

welfare bill is almost $9 billion. That is $1 billion out of

$9 billion on social welfare outlays. Good lesson isn't it?

When you get a nation that decides not to be concerned about

costs, and decides not to be concerned about competition

inevitably there are. lost markets and lost jobs. That position

is not going to be corrected guickly.

However, despite those outlays and they are massive, the

increased assistance to industry this year is substantial.

Export incentives will cost about $215 million. An enormous

increase on last year; 1 am pleased to see it being paid

because we are now starting to regain old markets and 'get new .

ones.

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Tiie export drive is starting to v/ork and the Government is

very pleased indeed that those who are sharing in this are

receiving the benefits of it.

Industrial Research and Development-$24 million last year and

$32 million this year; we can't be afraid of technology in

this country, we have got to use it. Because of our concern

about technology and productivity, we have given the Department

of Productivity $32 million to nave programs designed to improve

Australia's research and development.

Your Chairman told you that I come from the Gold Coast. I

therefore know a little about the tourist industry - it is one

of the great growth industries in the world and we are not

getting our share of it. .

I was interested to hear that my good friend Sir John Buchan

is coming to talk to you in a few weeks time. He has a very

good understanding of this, particular industry.

We therefore decided, despite all the difficulties, to increase

promotional expenditure from $4.4 million to $8.4 million.

The Australian Tourist Commission is to sell this country more

agressively overseas and to encourage more travel within

Australia; if we are going to encourage travel within

Australia, then we have got to have, the facilities. We

therefore decided to give'a depreciation allowance for new

buildings for those involved in the tourist industry.

In the personal tax area, as everybody knows, we have taken

off the surcharge, and to ease the load on a number of people

with smaller incomes, we have raised the existing threshold of $400 to $1000 in respect of liability to pay provisional tax;

this is to try to avoid the position where a lot of people on

lower incomes are being distressed about having to pay

provisional tax. '

Private companies have a role in a free enterprise society.

We have increased Division 7 to 70%. I should imagine that

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there are a number of people in this room who take a hearty

interest in what goes on with regard to Division 7. This

action should either ease liquidity or give them capital for

expansion; this will be employment creating and free enterprise

building. . .

Also.given is some additional assistance to encourage the

transfer of resources away from oil into other forms of energy.

Because we need oil exploration in this country, we are about

70 per cent self sufficient now but this will be down to about

50 per cent by 1985, we have extended the tax rebates that were

available to off-shore oil exploration to on-shore exploration.

For those of you who are involved in the rural area there is some

additional assistance there for fodder conservation.

I don't want to go into a great deal more detail but those of

you who are interested in particular matters will no doubt make

a point of finding out the position. ■

Mr Chairman the Budget is designed to continue recovery and it

is designed to keep fighting the battle against inflation.

Because we now have ney pressures, new oil price increases alone

will add about 1·^% onto the C.P.I., and if there was a need for

this country to have anti-inflationary policies before, there

is even more need for us to have them now. . . ■ '

It is important that once we have regained some of our

competitiveness that we maintain our position vis-a-vis our

great trading partners. I am. certain that is going to. occur;

you have all seen, the upward trend in inflation in Britain and

in the United States.

There are however still difficulties in the economy. Nobody

in commerce or in manufacturing would seek to hide that.

Private dwelling is only showing some sign of improvement.

Private consumption demand is subdued , · I hope that some of

the decisions that we have taken will help somewhat in that area.

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I have mentioned that we are not going to easily overcome

the problems of unemployment. ■

However, we should not overlook the good signs because there

are some very very good signs. It is.a different Australia

to what it was four years ago. It is a much stronger and

better economy. . . .

As I move around the country I, of course, like my colleagues,

are pretty heavily criticised; and that is fair enough -

people in politics have to accept that.

It was refreshing however, when I went to Washington last year

for the I.M.F. and World Bank and then to Paris this year for

the O.E.C.D. to have so many Finance Ministers from around the

world say to you "you are doing very well in Australia,

I wish we had embraced the policies that you have embraced.

We are very interested in you and we are looking for investment

opportunities". We are now seeing a substantial increase in

foreign investment and domestic investment in this country.

This is because the shrewd observers regard us as worth investing

in. We have enormous projects in this State, in my own State,

and also in Western Australia. So investment is looking very

good.

Exports are starting to lift across-the-board. We have been

fortunate ill the rural sector with good crops and with increases

in.the prices of wheat, wool and beef.

For the first time in six years there is an increase in

employment in the manufacturing sector in this country, Only

marginal, I admit, but it is there for the first time in six

years. There are signs of improvement in private employment;

that is where the jobs were lost and that is where the jobs

have to be regained. It is a long way off before we will get

back to the position of the employment levels of a few years

ago but at least there are some encouraging signs.

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I wonder if as a group of Australians, we have yet grasped

the! § i yh i i i C a i i C ( 3 &£ tim eontribution we can make. to energy

throughout the world. Over at the O.E.C.D. it didn't matter

whether you sat beside a Foreign Minister, a Trade Minister

or a Finance Minister, particularly if they are from Europe,

all they wanted to talk to you about was the oil crisis and

the problems of energy. I was very happy to say to them that

I was from a country that is a net exporter of energy.

Australia is rich in gas, in coal, in all manners of coal, and

in uranium. They were very pleased to hear me and Andrew

Peacock and others who were there say we want to be a reliable

supplier. There is enormous scope for development and the

earnings can only assist in our national development.

As I see it, the outlook for the 1980's is one in which we can

all have a degree of confidence. I make, however, two

qualifications. The first one is that we must have common sense

in the wages area - one would hope that after all the talking

and political comments we have had, we, as a group of people,

could settle down and devise a sensible wages policy. We have

the structure - the Conciliation and Arbitration Commission.

Can't we as Australians seek more consensus and agreement?

That just does not only require Governments to have right policies

but requires goodwill and co-operation from employers and trade

unions. '

The other qualification is in the matter of industrial relations.

I suppose people think the Government ought to improve in

regard to industrial relations. You will see the Government

taking a more positive role and there will be legislation

introduced into the Parliament before long to do just that.

Again, there has to be a conscious effort not only by the

Government but by everybody to improve industrial relations.

Very often a question comes about industrial disruptions, when

you are overseas. Potential purchasers, before they order goods

and minerals, want to know that they are going to arrive on

time.

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Mr Chairman, I hope that my comments will be helpful to all

Rotarians and their guests. One of the problems with having

the National Capital, in Canberra is that you have to spend a

lot of your time away from the large cities of this country.

The exchange between Canberra and Melbourne and Sydney and

the other capitals doesn't happen as much as we would wish it

to .

We are seeking to rectify this situation.

It is important for Rotarians to be informed and equally if

they have comments to make to us that we hear of them.

We have got a great opportunity in this country. We are so

rich in resources and so rich in capacity. I hope each and

every one of us share in the benefits which must inevitably

flow on from it. .

MELBOURNE

22 AUGUST 1979

NOTE: A speech similar in content was also given to the

Annual Convention of the Retail Traders Association

in Sydney on 22 August 1979.