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Speech to Real Estate Institute Luncheon - Gold Coast

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NO. 60

p a r l ia m e n t ho u s e CANBERRA ACT 2600



Thank you for inviting me to address you this morning.

It is doubly a pleasure to do so as this function is being

held in my own Electorate - the Electorate of McPherson.

I have always believed that it is important for members of

Parliament, whether they be Ministers or not, to make

themselves available to address such gatherings as these

for two very good reasons.

Firstly, because they enable Ministers to talk a little about

the thinking behind government policies and decisions in a.

general sense. .

Secondly, because they provide feedback on the policies and

decisions we have made on behalf of the Australian people.

This is a good thing - it is mutually advantageous.

When one is invited to address such a body as the Real Estate

Institute of Queensland - and the Gold Coast Branch in

particular - I believe the key Word we. should use when we

think Real Estate is 1 confidence 1. .





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Confidence is a key to development.

The 1979/80 Budget is designed to provide just this.

The theme of this year's Budget is to create economic conditions

which will provide a sound base for confidence and optimism

in the future of this country.

It is a Budget which is designed to ensure tht we as a nation

continue on the road to economic recovery.

It is a budget which is designed to build upon the gains the

Coalition Government has already achieved.

The 1979/80 Budget as with our previous budgets has been

designed to continue the stability and predictability in

economic management which was so sadly lacking during the

years when Labor was in office.

The Budget has been designed to ensure maximum restraint in

public expenditure - that is, the spending of the taxpayer's


As Minister for Finance I am committed to ensuring that the

taxpayers'‘dollars are spent in the most effective and

efficient way possible.

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We believe that the proper role of government

is to provide a stable and sound economic framework within

which business can operate, and operate confidently.

To achieve this aim we have concentrated on correcting a

number of fundamental imbalances in the economy.

Imbalances largely caused by Labor's economic mismanagement

of four years ago.

First and foremost has been the task of reducing inflation.

Wages were allowed to grow so rapidly under Labor, especially

in 1974/75 that many Australians were priced out of the market

The Government is trying to ensure that wages are once more in

line with what the economy can afford to pay.

We have trimmed back the size of the public sector to keep it

as small as possible, thereby giving the private sector the

room it needs to operate in.

Government policy has helped to restore our ability to compete

and improve profitabilities.

These are both essential the overall welfare of the Australian


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A lack of profitability in business simply means lack of

jobs for Australians presently looking for employment.

Lack of profitability also means little opportunity for

employment for Australians who seek to join the work force

in the future.

Some commentators have complained that our Budgets - including

the last one - have been 'dull1, and bereft of initiatives

or what those concerned call 'creative responses' to Australia's

undoubted economic problems.

But our approach to economic policy-making is not that of a

flashy PR exercise.

We will not find any fancy expenditure gimmicks to solve the

country's economic ills in o"ur Budgets.

We know that the economy does not f u n c t i o n thst v a y .

A Government cannot buy its way out of economic trouble by

resorting to the printing press.

What is needed is not superficial 'band-aid' treatment, but a

careful and sustained approach to curing the real problems

of the economy.

Call that dull if you like; convalenscence usually is, but it

is what gets the patient back to good health.

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The Government persists with its strategy because it knows

that this is the only one that can be successful.

Only when the fundamentals are right will economic growth be

restored and unemployment reduced.

It is in the private sector that this will occur.

We take heart from the fact that our approach is producing

results, very real results. '

Inflation is today much below that experienced when Labor

was in office.

Do not forget that the CPI recorded a growth rate of nearly

17 per cent in 1974/75.

It is currently around half that.

However, this is not the time to relax our concern on this front,

q i v e n the international inflationary pressures now evident.

The Government is determined to "see, as far as it is able,

that those pressures do not endanger Australian economic


The deficit has been reduced substantially in the recent. Budget.

The 1979/80 domestic deficit is estimated at a low $875 million,

almost one-third that recorded in 1978/79.

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This is a.clear indication of our commitment to the belief

that large deficits are bad for the economy.

The Government has imposed tight restraints on its own

expenditure since coming into office, a reflection of its

belief in the importance of small Government.

In addition we have been able to reduce the tax burden.

Whatever anyone may say on this matter, the plain fact is

that from 1 December all Australians will be paying tax at a

rate less than it was on 30 November.

Confidence is returning to the economy with private business

investment showing a sound rate of growth.

Private foreign investment is also on the increase, with a

marked upsurge in net private capital inflow evident towards

the end of last financial year.

The prospects for the forthcoming year are therefore encouraging

The economy still has its weak points, but improvements are

appearing in an increasing number of areas.

I am pleased to be able to say that housing is one such area.

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Private investment in dwellings has shown firm growth in

1978/79 - I am informed that it is around 9 per cent over the

year. ·

The stock of unsold dwellings - a cause of much concern in

recent times has now been reduced and the volume of

mortgage finance has been on the increase.

Major lenders in 1978/79, for example, approved loans worth

considerably more than for the previous year for the

construction or purchase of dwellings.

This augurs well for the real estate industry this year and

for the level of house building activity generally because

the rise in mortgage approvals has yet' to be fully reflected

in the number of value or dwelling commencements.

Funds flows for housing tend to have their effects on

construction activity with something of a lag.

Given this 'pipeline' effect, quite firm growth in investment

in dwellings seem to be in prospect for 1979/80 following

recent strong mortgage finance flows.

The statistics show that Queensland is doing well in the

housing area.

The value of loans approved in this State for housing

acquisition increased substantially during 1978/79 - at

almost twice the national rate of increase.

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Queensland1s share of the funds made available for such

purposes by major lenders is increasing.

The Government believes in the free enterprise approach.

We believe in providing the right climate for industry, but

not in dominating it.

Our policy is to minimise governmental interference in

the workings of the private sector.

There are, nevertheless, obligations which our government has

accepted to assist the needy and the underprivileged in our


The Budget includes an amount of $260 million in grants and

advances to the States to support their housing programs.

Of this amount, $100 million has been ear-marked in the form

of grants specifically for pensioners and others in need of

housing assistance.

The Government is mindful of the financial difficulties

facing young couples who want to buy their first home and

has accordingly provided an amount of $75 million for Home

Savings Grands.

Another direct Budget measure of relevance to those of you

here today was the decision to permit, for the first time,

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depreciation of new income-producing buildings used for

travel accommodation. ' > ■

The Gold Coast should, of course, benefit greatly from this

concession. ;

This again shows the Government's support for those sectors

of the economy that have considerable growth potential and

offer employment opportunities on a large scale. ■ ; . '

■ ' · ! '

The greatest benefit of the Budget to the housing industry,

and to yourselves, is of course in the broader economic

context of interest rates, inflation control and the

availability of finance.

As I explained earlier, the Government's economic policies

are squarely directed towards a sound economic climate in

which interest rates can be sustainably reduced over the

longer haul.

Lower inflation, and a contained public sector borrowing

requirement, are key prerequisites to lower interest rates.

The Budget .makes a substantial contribution on both these


It must of course be recognised that f at any particular time,

interest rates reflect the reality of market conditions.

- >

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Decisive increases in interest rates overseas and a resurgence

of inflationary pressures, both in Australia and overseas since

late 1973^ have placed upward pressure on interest rates

in financial markets.

For these reasons, and so as to contain the growth of the

money supply yields on government- securities increased through

the first half of 1979, they have stabilised since early June.

Notwithstanding these necessary money market adjustments in

the first half of 1979 the reductions in interest rates on

housing loans and on other borrowings from banks

and finance companies that the Government's policies brought

about, remain in place.

As to the future, one cannot be too precise as to interest

rate developments. ■

However, the c o n t i n u e d fi r m a n t i - i n f l a t i o n a r y st a n c e of the

Budget and policy overall., should help to assure financial

markets that domestic pressures on interest rates are being


It is also the Government's policy that a high priority for

housing finance be maintained consistent with overall

monetary policy.

The Treasurer announced in the Budget speech that lending

institutions were again being informed of the Government's

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■ i ' .·

wish that, within the parameters of monetary policy and

subject to their own commercial judgment, they lend to

home seekers to the maximum extent.

Decisions taken and announced some time, ago to reduce the

proportion of savings bank assets required to be held

in certain prescribed forms, should continue to facilitate

lending for housing by savings banks during 1979/80.

All in all, Mr. Chairman, there is much reason for confidence

in the future.

But confidence can only be maintained if Governments sustain

responsible economic programs.

Let me assure you that this Government will not be dissuaded

from its anti-inflationary policy.

A policy which once again is designed to create and maintain

stable economic conditions within which the individuals and

business can thrive.

The Gold Coast, Mr. Chairman, is an example of what consumer

confidence can achieve.

Residential and commercial property sales continue at high


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There is no shortage of confidence in this area. b u i l d i n g approval?; for the Gold Coa st a rea pro ve


For the year-ending 30 June 1978 I am informed that approvals

totalled $86,000,000 but to 30 June 1979 they have shot up

to $180,000,000.

A very pleasant picture for this area.

It is also a picture which the Government would like to see

reflected throughout Australia.

I have no doubt that with the continuance of our economic

policies, consumer confidence will further rise which will

in turn be reflected in increased activity throughout the

housing and construction section of Australia.

It now gives me very great pleasure indeed to declare Real

Estate Week on the Gold Coast well and truly open.