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Importance of appropriate energy policy



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STATEMENT BY THE TREASURER, THE HON. JOHN HOWARD, MP ! ON RETURN TO AUSTRALIA FROM THE ANNUAL OECD

MINISTERIAL COUNCIL MEETING IN PARIS, 6 JUNE 1980

IMPORTANCE OF APPROPRIATE ENERGY POLICY

Strong support was expressed at the OECD Ministerial Council

Meeting for the approach to energy policy being followed.by

the Australian Government. .

This meeting is.the principal gathering of foreign and

economic ministers of the industrialised countries. Among

the many economic policy objectives it endorsed was the need for policies enabling countries to adapt to higher . oil prices. .

The price mechanism was seen as having a major role to play

in achieving a more rational use of existing energy resources

and the development of alternatives to oil. , .

All the industrialised countries have had to face the .

impact of higher oil prices during the last seven years.

Australia is not alone in this regard. At the same time, though, it is important to remember that Australian prices are not high by world standards..

For example, in the middle of May, the price of petrol in

the U.S. was as high as 35Φ per litre, 68Φ in Britain,

72Φ in France and 45Φ in New Zealand, compared to 33Φ in Australia. , ·

2 .

The proposition' that we can have artificially lower prices

without undermining a rational approach to energy policy is an illusion. Just as higher prices aid conservation, lower

prices will make, scarce petroleum resources still scarcer.

Australia cannot avoid the inflationary consequences of

higher oil prices. What we can avoid,, however, is aggravating those inflationary consequences by attempting

to compensate for the higher prices, via the wage adjustment

process. That is why the Government has consistently: argued before National Wage Cases, in favour of discounting any general wage increase for the impact of crude oil price .rises. . .

The goals the Government has set for Australia's energy policy are being achieved. .

The rate of growth in consumption of petroleum products

has slowed measurably, greatly assisting our conservation effort.

There has also been substantial investment in the search for new oil resources.

Moreover, our policies have made the development of .

alternative energy sources much more attractive. ,

The pursuit of these goals must remain a high priority for

Australia to ensure that in the longer term we are well-

placed to meet our energy needs. To postpone adjustment to higher energy prices in the hope that the need for

action will pass is a course doomed to failure. To try . ' . . ' · % .

to follow it will make the ultimate adjustment much more disruptive than any that has already occurred. .