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Address to President of Western Division Group of the Shires Association, Hay, New South Wales

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Thanks for coming - I have been looking forward to this visit for quite some time because, as Viv mentioned, it is not so far away from where I used to live until just after the war. My father was a councillor, not in this particular area, but in the Warranambool Shire in the 1930s. I still have some very vivid

memories of those days. In the middle of the late '30s, I think we had one of the most justified shearing strikes in history because it was during one of the perennial Riverina droughts and the cheapest feed for the period before shearing had

apparently been onions in Victoria or somewhere - nobody had really thought what onions did to sheep when they were put into a hot shed. They do to sheep what they do to everyone

else. In fact, we had to go and buy some potatoes to try and dissipate the effects.

On another occasion - going from the extremes of drought to flood - we had a property about 60 miles north of Deniliquin and I suspect the roads might have been a little worse than even they are now. And for six months a wheeled vehicle couldn't get onto the place.

The first one that did was 'a.spring cart as motorised vehicles just couldn't get through the roads. Shearers came up the river by boat - they travelled fifty miles road and 50 miles by the Murray - one vehicle a month. Well the inevitable happened - the boat got lost through the red gums, they had lost track of the

river, they took three days to get out of the . The

shearers weren't in a very good humour when they arrived. I don't / know whether they took it out on the sheep or whatever. But those/ boyhood memories are very vivid in fact to me. Some of the [ difficulties and some of the problems which you do face and I think

still experience in the Western division of New South Wales and in many other parts of Australia. And that is one of'the reasons why the Government, over the last three or four years has tried to

introduce some policies which mitigate some of those difficulties. I think the people who live in the cities are people who do not really understand some of the remoteness and the problems of distance of inland Australia. It is almost impossible to understand and know what the difficulties are and the problems that can occur as a result of distance and as a result of remoteness. I am well aware that the areas that you are responsible for cover about - well over a third of the State, with 70,000 people involved - apart

from those who are in one city in Broken Hill - thousands of miles are , whether it's space, distance and isolation. And that does involve difficulties of a very real kind. But one of the reasons why I have always enjoyed, in particular, going to some

of the remoter parts of Australia is that I think that, while there are difficulties and problems of distance and remoteness, there are also qualities of Australian mateship, of independence

perhaps unfound in the same order in the more settled parts of Australia - and especially qualities of mateship and friendship - of helping each other and recognising identity and a self interest in your own community - is something that you just don't find in

the large capital cities, where people wouldn't even know who else is living in their own road and might not even know who is living next door - and are too busy with their own affairs to have any . . . 2


to have any concern other than their own immediate community. So for many reasons I am glad to be here - to learn from you - to see how you see your own affairs at the present time, and to listen to you and to do what I can to respond to your own problems. I won't have immediate answers to a number of the

things that you did raise Mr. President but I'll certainly take note of them and they will be entered into considerations of the Government. I understand that after this opening there is an opportunity for questions, so that the particular aspects that you mentioned in your own remarks which I then referred to. I have got no doubt that they will be raised a little later.

Local Government is enormously important. There are many things that the responsibility of local government that are close to the people concerned and it is important in our view that the vitality and strength of local government be maintained and enhanced. It wouldn't be the same if it was all done from the

State and it certainly wouldn't be the same if it was all done from Canberra. But local government needs to be free, as we... believe, to identify your own needs, to establish your own priorities and then to be responsible for that and answerable for

it to your own constituents. I am sure that that is very much the way that you want it to be. We have sought to provide additional funds for local government as you know. You mentioned the increase of 2 per cent, which will apply from the beginning of the 1980-81

year, as a result of a commitment given three years ago. But it is worth noting I think that the untied funds to local government have already risen in 1975-76 from $80 million in that year to over $220 million in this year and the increase of 2 per cent will involve another and further obvious increase. These are sums

that we have obviously budgeted for and taken into account. But you also will be well aware that there is another side of the Government's accounts that you don't like, and I don't think anyone likes, and that is the side that has to collect taxes and

revenues in one form or another. So clearly there is a limit to what any Government can do - because there is a limit which many people think governments have already exceeded - the taxes which we have collected from people. And I suppose that is a gentle

way of saying, which I think you implied Mr. President, that that figure of 5 per cent, which I know some local government association have been talking about over the last year or two is not I think a realistic one in terms of the finances available to Australia

in terms of the sums.that governments are prepared or should be prepared to take from the taxpayers of Australia. The tax burden in spite of what John Howard said yesterday remains a (inaud) on many people and.our broad objective is try and limit it and reduce it. the same time within that we have been seeking to

get the reorganisation of priorities and the movement of 2 per cent of tax funds going to the local government in an untied way does represent a readjustment of priorities which we think is important in trying to help and assist local government. We have also established over the period the Advisory Council for Inter­ government relations, which, with representatives of local government, the State and the Federal Government (inaud) is designed to discuss, in a non-political way, the problems that can arise between the different spheres of government. It's early days yet for that Advisory Council it does ultimately give evidence of the Government's intention to do what it can to assist

and to help overcome the problems whatever they might be.

In particular matters that we haven't produced to try and ameliorate some of the problems - trade equalisation in relation to oil and petrol prices - this does equalise trade and the second element is being produced about this time as you know. One of the reasons

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why inland petrol prices are often much higher than in capital cities is because the retail margins are much higher and that is not something which is in the control of the Federal Government. That (inaud) in control of the States that would have to take decisions in relation to it.. But the retail margins and differences between petrol and large parts of inland Australia

and in the seabord is very great and that's why the prices are greater and a good deal more expensive in inland areas than it is in other parts of Australia. But that is a matter, if it were to be tackled, the States themselves would have to look at (inaud) and beyond the (inaud) of problem or the power. I suppose, since you mentioned it, in a general sort of way Mr. President, that the policy of fuel trade of oil parity pricing for oil. But I ought

to mention it and I imagine that if I did not, the question would come up afterwards in any case. I think it is not generally realised that the price that is selected in world parity pricing is in fact about.the lowest world price of Saudi Arabian light crude. And there are many other world prices, spot prices and

commercial prices that are a good deal higher. It is worth noting I think that in New Zealand, where our petrol on capital city prices is about 33 cents a litre - New Zealand in the Australian sense is 43 cents a litre and in many countries in Europe in varies

from between the high 50s 60 cents up to 70-75 cents a litre in many cases. In the United States it's about 31 cents a litre, marginally lower than Australia. But under the policies they have introduced it will come up to the Australian price and I would believe they will exceed it, in the next year or two. They took the step more slowly than we did but their ultimate point will be

the same. Well in spite of the policy that does mean that Australian petrol is cheaper than in many other countries. That is just a fact of the situation - one of the reasons for it and why we have the policy. Well quite plainly if a policy is scarce

it is likely to run into short supply. You can either ration it arbitrarily, through some sort of rationing process, which will, take an enormous bureaucracy to do it, or to be rationed through price. We do not want the bureaucratic approach to it because we think it is very difficult and very hard to organise. Proper commercial decisions would not be made and we therefore believe that as a conservation project it ought to be achieved through price. But not for that reason alone. If the price is high people will then start to move towards alternative forms of energy. And that in itself is very important. But even more important

than this - if there is not a policy such as world parity pricing we will soon find that the very large sums, the massive sums that have been spent on exploration and development will not take place and that will mean we have become in future years, and in not so many, much more dependent on important suppliers of fuel, oil and

then we have no option - we would be paying world parity prices, we would be paying spot prices to make sure that we did not run short and we would not have the sense of independence or security which we are now getting because we have our own supplies.

Over the last few days a very major development has occurred which indicates the long term benefits of world parity pricing. Because the Bundle (inaud) and the development of shale oil in Queensland have announced arrangements with Exon to go ahead and work out a detailed plans for pilot plants which will in themselves cost

several hundred million dollars, but which are confidently expected to be successful. That would result in then investment and development of several billion dollars. Bundle is just one deposit. There are many others in Queensland and the great advantage to Australia is that if it all goes as the partners expect and plan

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fuel and oil from Rundle and from other shale oil reserves will come onto the Australian market at a time when the Bass Strait reserves start to run down quite significantly. And this just would not have occurred if there had not been a policy of world parity pricing because then the conversion processing of shale

oil would not be economic. Therefore that is, if you like, the first major demonstration that the policy is necessary and is important if future supplies are going to be secure for this country and of course there are other points in relation to it.

If we did keep petrol artificially low this generation would use up more than its fair share of finite reserves. And I am not sure that we would then be leaving Australia in the best order for our children if we acted in that way. We would certainly be leaving them with massive problems of readjustment as we worked out our own reserves and became much more dependent upon the

supplies overseas, leaving, in a short space of time a massive process of readjustment for Australian industry. But I am well aware of. the problems that are caused by the policy but in the

interests of this country I am (inaud) that it is the

only responsible policy to pursue. (inaud) policies have been introduced over the last two or three years which are designed to help people living in the countries areas of Australia, policies which when they were introduced, I think people might have thought - well what's the use of that, we have not got much

income. But the new tax averaging provisions, income utilisation deposits are now starting to come into their own and with slightly better times in the rural areas, many people are starting to understand the real benefit of these policies, which have been introduced to help people rebuild and overcome some of the pitiful needs of past times. The Primary Industry Bank itself has been operating and operating effectively indeed - another initiative

that (inaud) produced. Rural Australia has been through a number of very difficplt years as I am only too well aware. Cattle prices for a long while were hopeless, cheap prices were not too good. There has also been the perennial problem caused by seasonal difficulties which look like hitting parts of the State again.

But the prices for major products at the present are reasonable and I would think that as far as one could reasonably see into the future we can have confidence that that will continue - the wool industry, the beef industry, cheap prices, wheat prices and sugar prices are all strong on international markets and that is

reflected on the prices in Australia. I think it is not generally realised how much of the trade negotiations over the last two or three years - sometimes people have said that the European Community it was more like a wrestle or a brawl or whatever. But those negotiations have significantly had as their objective building more secure markets for Australia's major and most important

exports - the exports of primary produce of one kind or another. The International Sugar Agreement for sugar for Queensland Australia's sugar exporters has been vastly important and the accession of the United States and of Europe - and we can achieve

it to that agreement - will be very important to them. The problems we have earlier had with Japan have been overcome. For decades Australian Governments had dreamt of being able to get rid of or have substantial reduction in the wool (inaud) with the United States. I can remember John McEwan in the late fifties or early sixties saying that he thought that he had it sewn up - he

thought it had achieved and then something went wrong and it never occurred. We have achieved a 60 per cent reduction in the United States wool apparel as a result of the negotiations and trade with that country over the last two to three years.

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We have achieved better and more secure access to beef to Japan, the United States and the beginnings again of whatever a .longer term might be more reasonable access to the European Community, whose policies have previously excluded Australia

from what have in fact been regarded as traditional markets for us. So the trade offensive that the Government has conducted that has been pursued vigorously by Doug Anthony and by the Minister for Special Trade Representations over the time, has in

fact (inaud) as I believe and the Government believes in more secure access for many of Australia's important and major export commodities. And when we are looking to try and establish a degree of security for primary exports for-’ .the passport areas -

that indeed is one of the most important things that we can do.

The better prices in the rural area is clearly having an impact on Australia. I think over a long period governments have under-estimated the problems caused for Australia as a whole when the rural sector has been badly depressed - when all you can do is to maintain properties and even less than that, when maintenance runs down, when machinery can not be replaced, when

farms are struggling to stay alive and this represents a very real loss situation. That clearly has an enormous impact on country towns. It has an enormous impact on the factories and the cities where people are producing things for Australia's

farmers and pastoralists. And seeing better returns, the capacity again to start to re-establish some financial reserves in many parts of rural Australia also means a great deal I think to everyone in the whole community. There is an interdependence here which is often not understood by governments and often not understood by people that live in the major cities. I think one of the reasons why John Howard last night was able to say that the budget

forecasts of activity and employment look like being exceeded through the course of this year is very much because of the strength parts of Australia's rural sector carrying through the economy as a whole. Well nobody can give guarantees about future prices

that are effected very much by international markets. You can say that the operations of the Wool Corporation, the various access arrangements that have been made give us better prospects, a greater degree of certainty in looking to the future with some confidence than I think Australia's pastoralist industries have had for a very long while. And it is and will always remain a

major objective of my Government to try and see that that kind of situation remains. Because without it, what one might do on the other problems of people who live in the remoter parts of Australia without it, the future for those areas would indeed be a bleak one.

But I think people are entitled to look to the future years with more confidence than we have had for quite a long while. And that again is another reason why I have a very real pleasure in being here on this occasion. I believe that local government, as I

indicated earlier, is vastly important to the individual communities and in particular the remoter parts of Australia because it provides a voice means of focussing the attention of State and Federal Governments on the particular problems, the particular

interests that you have. And that again is the reason why I have (inaud) being here and having the opportunity to listen to your views.

A number of things that are happening in the wider world are not particularly encouraging. The economies in the United States and in Europe are under pressure. I don't know that many people realise the United States interest rates now are running on their prime lending rate at about 17%, 17% per cent because of

inflationary pressures. In the United Kingdom they are also very . . . .6

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high. In the United Kingdom the inflation rate is about 18 per cent In the United States I think between 13 and 14 per cent. So while inflation is still too high in Australia, as a result of the strength of this economy, as a result of policies which have

significantly reduced the absolute and the relative levels of inflation, there is a perception of strength in the outside world in the Australian economy which has meant that the impact of the

sorts of interest rates that we have seen in American and Britain on Australia are much much less than they would have otherwise been. Obviously some impact of the policies we have pursued have enabled that impact to be minimised to the maximum extent. That also is one of the things which is attracting more investment into

this country, more interest in Australia again - building up a greater confidence in what might well happen here through the years of the 1980s. It is not generally realised that while John Howard was able to report that the growth of this economy is greater than he had estimated when he brought down the last budget, in most of the countries of Europe and North America the very reverse is happening. Their estimates of growth in their economies are diminishing and therefore that indicates a fairly big period in the world economic scene. That does not mean to say that anyone in Australia should throw up their hands in horror or despair. That does not diminish the confidence that I have for Australia. Because we are running a total economy. We are managing our affairs I believe better with inflation rates below that of a number of our major trading partners. We maintain the strength of rural exports. Manufacturing industries are also getting the export market in a significant way. In other words if world trade is not growing Australia is putting herself in a position to.get a larger share of trade that is going. On that basis we ought to be able to look after our own affairs and with a good deal of effect. Obviously it would be easier if the world economy was moving.ahead strongly, but because it isn't - it is not a cause for us to say - it's all too difficult - but to recognise that the job is therefore a little tougher and to make sure that we succeed nonetheless.

Mr. President, I again would like to thank you very much for the invitation to be with you on this occasion. It is something I have been looking forward to very much, quite apart from my own association with the Riverina in earlier days. My own oldest son spent two years jackerooing in the Riverina and I wasn't too sure

that Western Victoria wasn't going to lose him. He then fell in love with the country in this part of the world. And I'm not at all sure that at some stage he might not decide that Victoria is too civilised, too inhabited, too many people around, you can get bottled milk delivered before breakfast and newspapers arrive

every day - and I really do believe because I have always thought myself that if there is an attachment about the Western Division in New South Wales, about the country in the Riverina, about the activities - whether it's just the people or the land or whatever -

there is an attraction about this part of Australia which is very hard to beat. And I have very great pleasure indeed in declaring this conference open.