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Speech at the Annual Dinner of the Chamber of Manufacturers of New South Wales



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EMBARGO: 9.30PM 30 AUGUST 1973

SPEECH BY THE PRIME MINISTER MR. E.G. WHITLAM, Q.C., M.P., AT THE ANNUAL DINNER OF THE

CHAMBER OF MANUFACTURES OF NEW SOUTH WALES, WENTWORTH HOTEL, SYDNEY,. .30. AUGUST. .19.73 .

I must say that from the moment I saw the motto on your crest, I knew it would be impossible to resist the invitation to talk to you. The words of your motto are. "Labor et industria". Even those with a classical education

as residual as mine will be able to discern their meaning. I am delighted that you have seen fit to celebrate the historic links between my party and your chamber, though I am not sure whether your motto was chosen before or after 2 December.

When your-j President invited me to address you, he explained that you looked on this occasion to provide - and I quote - "a unique opportunity of hearing at first hand the aims and policies of the Government". I confess

I was a little puzzled by the implication that "the aims and policies of the Government" were not already known to you, or worse, that explanations of Government policy are somewhat rare and hard to come by. Judging by some of the

things said about the Government from time to time - not least by industry - I would have thought that you understood our aims and policies only too well. In any case, I assume that men as experienced and influential as yourselves always make it your business to discover these things. Let me stress

that it is not difficult to discover the aims and policies of the Government: they have been spelt out many times. They are there for you to read in the policy, in the Budget documents, in the reports and speeches we publish from time to time.

I suggest that no Government has presented so clear, so consistent, so coherent, so candid an account of its aims and policies as we have done in the nine months since we came to office.

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Traditionally, I suppose, a Labor Prime Minister would approach a gathering such as this with some trepidation. Here you are - the captains of industry, the representatives of vast and powerful manufacturing companies - and here am I,

the fledgling leader of a newly-elected Labor Government, with all my notorious ignorance of economics, and with so little experience of the mysteries of high finance and business. Yet I find myself, by some strange good fortune, in a very

happy and confident situation. The fact is that by practically any test we care to make, the Australian economy today is thriving. We have rarely been in better shape, with brighter prospects for the future, with a more secure foundation for economic growth and business confidence.

That is the first point I want to make. For all the talk of uncertainty in the economy and the business world, for all our legitimate concern about inflation - of which I shall have more to say - if we look at the facts, at the real

indicators and statistics, we find the Australian economy in robust good health. We have got rid of the disastrous unemployment - and under-utilization of capacity - that retarded our production and caused needless human suffering until a few months ago. Demand for labour is high. Consumer spending is running at very high levels. Our overseas reserves are immensely strong. We anticipate that

1973/74 will see the strongest real growth in the economy for some years. To take your own section of it, in the June quarter the level of activity rose in almost every major area of manufacturing industry. Sales rose by 12 per cent over March

1973, and a further increase of 15 per cent is expected in the December half yeap:. In the June quarter capital expenditure rose by 23 per cent over March, and orders were 11 per cent above the already high March values. If business is troubled today, I would hate to hear its protests in times of adversity.

The second basic point I want to make is that there is no reason for any doubt, hesitation or uncertainty about the broad outlines of the Government's policies or the priorities it will follow in discharging them. You have seen and read the Budget; you have seen the report of the Coombs Task Force; you have seen our decisions on tariffs, on the currency, on assistance to .

industry. These decisions have been made; they are decisions . that will stand. Naturally there are always areas of Government economic policy that are subject to review, especially those affected by international events. But it should now be possible

for even the most cautious businessman to discern what the Government is aiming at. The recommendations of the Coombs Task Force were considered; some were adopted, some were rejected. It is fruitless to speculate on possible developments in the

future, on decisions supposedly postponed, on mysterious "phases" to be implemented at some later stage. I ask you simply to take us at our word. If I were in the business of advising industries on their future investment policies, on the growth areas of the

economy, I would simply refer you to the commitments we have made in important areas of public spending and social reform - our plans in housing, in schools, in the cities, in transport.

Thes,e are/the great positive and forward-looking themes of our Budget. These are some of the growth areas of the Australian economy, areas to which any alert and prudent businessman will look in assessing his investment opportunities.

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I know that in previous years it has not. always been easy for you to look ahead with certainty or even reasonable confidence. It is just a year ago this month, I recall, that Australian manufacturing organisations wrote to the former

Prime Minister stressing the need for a clear understanding of Government policies and directions. In view of events in the months that followed you might have saved yourselves the trouble. Nevertheless, I suggest that you now have a

far better knowledge of where this Government is going than you had of its predecessor. Could you really be sure where things were heading in those days of stop-go economics and Budgets that frequently reversed the whole direction and

intention of Budgets of the previous year? Was there any sense then of firm guidelines or settled philosophies? I concede that a few of you may be misguided enough to prefer some of

the previous Government's attitudes to some of ours. But I am sure you have a very good idea of what we stand for and what we are aiming to achieve. And I have sufficient faith in you as businessmen and managers to believe that, given this knowledge,

given this awareness of our aims and priorities, you will be shrewd enough, businesslike and sensible enough, to accept realities and get on with the job.

In the past few months the Government has taken a number of decisions that basically effect the future of Australian industry, its competitive strength, its growth, its place in the economy as a whole. I should like to bring together the most important of these decisions. They are the establishment of an

Industries Assistance Commission, the appointment of a Prices Justification Tribunal, our plans for the motor industry and the Australian? Industry Development Corporation, our proposed legislation on restrictive trade practices, and our decision to cut tariffs on imported goods by 25 per cent.

You will see that in all these'' decisions there are two consistent and overriding themes. The first is the need to promote a healthy and more competitive spirit in Australian industry, to encourage it to adapt and respond to the challenge of change, both in the domestic economy and in the context of

international trade. I hope the word "competition" does not alarm you. After all, it is a concept more closely identified with the philosophy of our opponents. Our opponents, I am sorry to say, lacked the courage of their convictions - or at least of their myths. They were the party of restriction, of featherbedding,

of subsidies, of protection, of sluggishness, of stagnation - in short, of conservatism. I acknowledge that many of their policies were the result of the standover tactics of the junior coalition partners. Nevertheless, the fact remains today that the true party of competition, of modernisation, of freer trade - even, perhaps, of free enterprise in its most genuine sense -

is the Labor Party. What you are experiencing now is the impact on the Australian economy of the first genuine free enterprise Government in 23 years. I hope the experience is not too daunting.

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The second basic theme of all our policies is our determination to assert greater Australian ownership of Australian industry and resources. The great foreign takeover of Australia will not be allowed to continue. The principal

instrument for reasserting Australian control - your control, our control - will be the Australian Industry Development Corporation. This week we approved proposals to expand the scope of the corporation's charter to enable it to maximise Australian ownership of industry and resources. Under

the previous Government, the corporation was limited to providing assistance only for developmental projects. It was effectively hamstrung. We will give it greater power and greater opportunity. It will no longer have to rely on overseas borrowings for its funds. Money will be raised in a National Investment Fund, through which all Australians will be able to invest in their country's growth and development. Ambitious and far-reaching as these proposals are, I remind you

they are by no means unprecedented or untried. Other countries, vulnerable as we are to foreign control, have similar corporations - I.R.I. in Italy, the Industrial Development Corporation of South Africa - which have worked successfully to strengthen

local industries and preserve local ownership.

It is basic to our approach, in all our dealings with industry, that the one thing we cannot and will not do is subsidise inefficiency at the expense of the taxpayer or the consumer. Vie do not believe that any Australian industry has an

immutable right to exist. In this context I want to mention our new Industries Assistance Commission, which we are establishing on the basis of Sir John Crawford's remarkable, indeed historic, report on Governm^it policy towards industry. Our aim is to extend the principle of public scrutiny and open inquiry, as applied by the Tariff Board, to the examination of all kinds of assistance to industry, including industries outside the manufacturing

sector. We want to improve the efficiency with which the community's productive resources are used and recognise at the same time the interests of consumers. Our objective is to . develop a more active and healthy competitive climate in Australian industry.

In the same spirit we are bringing forward stronger legislation against restrictive trade practices. It used to be argued that such practices were a necessary evil - a regrettable, but essential, feature of Australian business life. With them, business could plan ahead; without them, there would be chaos. '

Even the partial and tardy removal of such practices under . existing legislation has shown how fatuous such assertions were. The effect on industry of the end of resale price.maintenance and the dismantling of the more flagrant restrictive practices has been beneficial and invigorating. Our own proposals will be even more so. We are taking action - much needed and long overdue

action - to prohibit restrictive practices directly, rather than leaving them to be restrained one by one after lengthy processes of investigation.

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Next, our tariff cuts. In July we made a reduction of 25 per cent in all tariffs on imported goods. Together with our general review of the tariff machinery, this will allow a whole range of imports to come into Australia more cheaply and

in greater quantities. This in turn will mean keener, healthier competition for Australian industries. I suppose that no single economic decision the Government has taken has given me more satisfaction, since it embodies so much of what the Government aims for: cheaper imports, more goods for people to buy, more competition, lower prices for all Australian families.

• I can understand your initial fears about the effects of our tariff cuts on Australian industry. A little reflection will show that such fears are groundless. The average effect of the reduction on the imports competing with your products will be equivalent to a revaluation of slightly less than 6

per cent. Compare that with our revaluation of 7 per cent in December, and the further effective 3 per cent appreciation of the dollar in February, which has since been counterbalanced by the floating of European currencies. It is clear that manufacturing

industry has not been seriously damaged by a revaluation of 7 per cent. Why then should we expect an action equivalent to less than a 6 per cent appreciation of the dollar - in relation to tariff-dependent industries - to have seriously damaging consequences?

At the same time, however, we are conscious of the welfare of particular industries and their employees. We have provided $25 million for industry adjustment, for retraining workers displaced by our tariff measures, or to guarantee their income while they find alternative employment. This bears directly 'on our whole manpower policy - a policy that reflects our awareness

of industry's needs in an economy approaching full capacity. The Minister for Labour is designing a,manpower policy to cater for the needs and aspirations of employees, employers, the whole community. The objective is to develop re-location, training and other adjustment schemes and employment services and create a mobile, skilled and flexible labour force with mutual benefits

for the individual and the business community.

Already the first steps in the program have been taken. The subsidies paid to employers of first-year apprentices under the national apprenticeship assistance scheme are being increased from $194 to $260 per annum for country employers. As a further ,

stimulus to apprentice training, subsidies will be paid to encourage employers to provide initial full-time off-the-job e training for the first-year apprentice. These actions are * being taken to encourage employers still further to take on apprentices and give them better training in basic skills during the first year of apprenticeship. We are increasing the number of apprentices training advisers employed by State Governments, whose salary costs are paid by the Australian Government for up

to 3 years. The role of the advisers is to help employers improve on-the-job training of apprentices. The major development of the Government's manpower policy and related programs, however, awaits the report of the interdepartmental mission which recently

returned iio Australia after studying overseas manpower and industry policies and programs.

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In no industry is the achievement of our broad objectives more important than in the motor industry. The·industry is one of the governing influences on our economy; indeed, on our contemporary culture. Our policy objectives for the motor

industry were announced this week. They are consistent with our objectives for industry as a whole. We await the advice of motor firms and the Tariff Board on how best to implement our aims for the motor industry. We want the industry to operate at the '

highest possible level of efficiency and with high Australian content. We want it to be well located for social, employment and environmental purposes. We want improved labour relations, better production techniques, safer cars, more product "

rationalisation, joint use of resources, and some restraint ; on the wasteful proliferation of models. Once again our aims are ' clear: greater competition, more rational use of resources, lower prices for the consumer.

These, then, are the basic elements in our drive for more efficient, more competitive Australian industry - tariff review, removal of restrictive practices, the establishment of the Industries Assistance Commission, new manpower policies. All these policies will help to restrain prices. And they will operate, not in artificial or palliative ways, but in a basic

structural fashion on the economy. I do not pretend that these measures alone will contain inflationary pressures. They will work in conjunction with the Prices Justification Tribunal, which began its operations on 1 August. As you know, the Tribunal is now

conducting its first public inquiry into the -9.42 per ceht price increase proposed by B.H.P. and the Australian Iron and Steel. It will report to the Government; its report will be published. I do not attempt p o forecast the outcome of its inquiry, but I am confident its Report will command wide respect and have a compelling influence on the industry and on public opinion. . .

It should by now be clear from the v/ay the Tribunal has been conducting its affairs that it is not setting out to victimise legitimate business activities or engage in officious interference in companies' affairs. On the contrary, it is taking

all possible steps, within the spirit of the legislation, to ensure that companies which deal fairly with it are not impeded .

unnecessarily in their day-to-day business. It is therefore > very much in the interest of companies to co-operate with the Tribunal, as a great many have already done. ■ -

It is important to remember that our approach is one of . price justification, not price control. The emphasis in our anti-inflationary program is on voluntary co-operation. That surely must be our first line of attack. We do not rule out - no one can rule out - a system of statutory restraint. If the decisions of the Prices Justification Tribunal are regularly or

flagrantly defied - and I do not believe they will be - clearly it may be necessary to adopt other measures. Let us, however, get the problem of inflation into some perspective. As the Treausrer said last week, "inflation is not a peculiarly Australian disease that commenced at midnight on 2 December". It was running at 7 per cent

in 1971, at nearly 8 per cent in 1972, and is currently running at something over 8 h per cent. Nor is it easy to see that control of prices would have helped us much in the last six months. Some 40 per cent of the increase in the Consumer Price Index since last December is attributable to increases in the price of meat, which

in turn are attributable to buoyant demand for meat and wool.

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X emphasise that we are determined to contain inflationary pressures, but like every other Government in every other country where inflation is a problem, we know it is not .easy. There is no - quick, simple solution. With or without statutory powers, success

depends on the co-operation of the whole community.

I have heard some statesmanlike suggestions in recent days in favour of a prices and incomes policy. Those who put forward . this idea know as well as I do, as well as you do, that it is not constitutionally possible for the Australian Government to introduce

a prices freeze in peacetime, although the State Governments could. It is not constitutionally possible in peactime for the Australian and State Governments, singly or together, to freeze all wages. (In the A.C.T., where the Australian Government does have power over prices, our opponents in the Senate threatened to block Mr. Enderby1s freeze on petrol prices - you will see how difficult

it is to know just what they favour at the moment.) But I remind you that general prices and incomes policies are exceedingly difficult to enforce, even in countries which do not have the constitutional problems that we have. The history of such policies has been far from encouraging. Price and wage freezes have often

been followed by price and wage explosions, and the administrative complexities which they involve can be justified only in the most desperate circumstances. As I have said, the Government does not rule out such measures, but it would be absurd to regard them as a

cure-all for our problems, or to rush into them before voluntary and co-operative measures have been fairly tried. Certainly we would be very hesitant to embark on a fully-fledged prices and incomes policy without greater constitutional.powers than we have at the moment.

I stress, as I have before, that we fully recognise the interdependence of a Labor Government and private enterprise. We need your prosperity. We cannot achieve the things we aim for . in our social program without it. I also repeat, as firmly as I can, we do want communication with industry. We want it just as much with industry as we do with the trade union movement,

but we want it on an open, regular, constructive and, in significant areas, institutionalised basis.

We recognise that our program for change will inevitably . disturb the environment in which industry has worked in past years.' But let me assure our industrial leaders that the Australian Government regards the continued development of efficient . · . Australian secondary industries as central to the future

development of the nation. Our objective is to encourage the . transformation of weak, dependent industries into vigorous and more self-reliant ones, to help industries withstand pressures of national change and international competition without the need

for inordinate Government support. · -

I ask you not merely to have confidence in the Government, but to have confidence in yourselves. Look to the future. Look to the opportunities we offer you. You are not, by instinct or training timid or faint-hearted men. Nor are we. We believe it is possible, by democratic means, to create a stronger, more just, more vital

society. We recognise that in the modern world change is an essential condition of progress. We accept that the Australian Government has a role to play in assisting industries and workers '

to adapt to this change - to give companies and employees a new lease of life, in new industries, new areas, new occupations, new opportunities for our country.