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NO. 113

J fe

TREASURER

EMBARGO

IMMEDIATE RELEASE

[PRESS] IreleaseJ

ADDRESS BY THE TREASURER, THE RT HON PHILLIP LYNCH, MP TO THE AMERICAN/AUSTRALIAN ASSOCIATION, NEW YORK - 29 SEPTEMBER 1977

When I f i r s t knew t h a t I would be in New York to a d d re ss your

A s s o c ia tio n I was hoping to r i d e in on th e c r e s t o f an

A u s tr a lia n v ic to r y in th e A m e ric a 's Cup.

.· ·â– â–  . - :■ /:· · ■ . - . c · ' · : . · . ■ ' · , ; ' ' ■·

. A lthough th o s e hopes have now been d ashed, knowing th e

A u s tr a lia n s p i r i t th e re w i l l be o th e r c h a lle n g e s a n d , I hope,

o p p o r tu n i tie s f o r me to come h e re w ith hopes f u l f i l l e d .

I welcome th e o p p o rtu n ity to a d d re ss th e A s s o c ia tio n a n d , a t th e

o u t s e t , I would lik e to pay a t r i b u t e to th e work t h a t i t has

c a r r ie d out i n prom oting harm onious and p ro d u c tiv e b u sin e ss

r e l a t i o n s betw een th e US and A u s t r a l i a .

M oreover I th in k i t i s im p o rta n t t h a t th e A u s tr a lia n Government

keep th o s e w ith i n t e r e s t s in A u s t r a lia inform ed o f developm ents

in our economy and o f our economic p o l i c i e s .

I propose to d is c u s s th r e e c e n tr a l i s s u e s .

These are th e G overnm ent’ s approach to economic and b u s in e s s

m a tte r s : how t h a t approach is b e in g p u t i n t o e f f e c t v ia our

economic p o l i c i e s : and what t h i s means to th o s e i n t e r e s t e d in

in v e stm en t i n A u s t r a l i a .

In a w orld where o v e r s u c c e s s iv e decades th e in v o lv em en t o f

Governments in th e economic a f f a i r s o f t h e i r n a tio n s has

s t e a d i l y expanded, th e term ’’f r e e e n te r p r is e " has ten d ed to lo s e

i t s s i g n i f i c a n c e . ·

T hat was tr u e in a r e a l s e n se in A u s t r a lia d u rin g r e c e n t y e a rs

as our p re d e c e s s o rs in governm ent sought to s u b s t a n t i a l l y

in c r e a s e th e sh a re o f th e n a t i o n ’s re s o u rc e s a l l o c a t e d to p u b lic

e x p e n d itu re . .

I b e lie v e , however, t h a t th e p r in c ip le s and p u rp o se s embodied in

t h a t term a re now ta k in g on renewed s ig n if ic a n c e in A u s tr a lia

and, in d e e d , i n many o th e r c o u n tr ie s .

I ta k e t h i s view f o r two m ain re a so n s .

The f i r s t i s th a t in c re a s e d su p p o rt has emerged fo r ., th e view

t h a t th e expansion o f b ig governm ent must be h a l t e d . ~

That i s c e r t a i n l y th e view o f my governm ent and we have been

g iv in g i t e f f e c t .

The s h a re o f p u b lic s e c to r o u tla y s in t o t a l A u s tra lia n

p ro d u c tio n , a f t e r a ra p id in c re a s e in th e y e a rs o f o f f i c e of our

p o l i t i c a l o p p o n en ts, i s now d e c lin in g .

So too i s th e s i z e o f th e F e d e ra l B u reau cracy , which h a s been

■ · \ ' 1 . ~ :

reduced s i g n i f i c a n t l y d u rin g th e l a s t two y e a r s .

Second, th e r e has been a re a sse ssm e n t o f t r a d i t i o n a l economic

p o l i c i e s , which le a d s in c r e a s in g ly to th e c o n c lu sio n t h a t beyond

a c e r t a i n p o in t governm ental demands on re s o u rc e s - and th e

i n f l a t i o n a r y p re s s u re s t h a t accompany such demands - red u ce

r a t h e r th a n s tim u la te th e t o t a l le v e l o f employment and th e

g e n e r a l economic we-lfare o f th e community.

F o r b o th o f th e s e reaso n s th e A u s tr a lia n Government i s firm ly

com m itted to th e r e - e s ta b lis h m e n t o f p r iv a te i n i t i a t i v e and th e

p u rp o s e fu l a c t i v i t i e s which i t f o s t e r s .

We a re se e k in g to c r e a te and m a in ta in a s t a b l e economic c lim a te

in which new o p p o r tu n itie s w ill e x i s t f o r b u s in e s s i n i t i a t i v e s ,

new in v e stm e n t and h igh employment.

• F o llow ing th e d i s l o c a t i o n s , both i n t e r n a t i o n a l and d o m e stic, o f

re c e n t y e a r s , t h a t is no easy ta s k . .

But i t i s our o v e r - r id in g g o a l.

My G overnm ent's economic p o lic ie s a re based on two fundam ental

c o n s id e r a tio n s : th e f i r s t is t h a t i n f l a t i o n m ust be d e fe a te d

b e fo re s u s ta in a b le grow th in a c t i v i t y and employment can be

achieved: th e second i s t h a t th e seed s o f grow th w ill g erm in ate

o n ly in th e p r iv a te s e c t o r .

• · " , V - · ■ . ; ' - . · - . . ■ . . . . .

When we came to o f f i c e th e A u s tr a lia n economy was racked by

m ajor d i s t o r t i o n s - a l l c lo s e ly i n t e r - r e l a t e d .

- Real wages had o u ts tr ip p e d p r o d u c tiv ity and th e sh a re of

wages i n n a tio n a l income had r i s e n a la rm in g ly a t th e

expense o f p r o f i t s .

- The p u b lic s e c t o r 's c laim on re s o u rc e s was out o f c o n tro l

and money su p p ly grow th was c o n se q u e n tly f r i g h t e n i n g .

- High i n f l a t i o n was ram pant and unemployment had in c re a s e d

s h a r p ly .

5 .

- Businessm en and households had gone in to t h e i r s h e l l s :

' ■ · ■ · · . · -T . · ' . . .

in v e stm e n t was dormant and" th e sa v in g r a t i o had reached an

u n d e s ir a b ly h ig h l e v e l . .'

- A u s t r a l i a ’ s c o m p e titiv e n e s s had been damaged.

In s h o r t th e environm ent fo r th e . fu n c tio n in g o f b u s in e s s was

b ad ly p o llu te d . ’

When we s e t about th e ta s k o f r e s to r in g th e n a t i o n 's economic

h e a lth we knew t h a t we had. a" le n g th y a n d " d i f f i c u l t job on our

h a n d s.

·- * i % .·'·

We r e a l i s e d th a t p ro g re s s i n c o r r e c tin g th e d i s t o r t i o n s I have

o u tlin e d was th e v i t a l p r e r e q u is ite to an improvement i n - th e

economic s i t u a t i o n . .

From th e o u t s e t , we p u t in p la c e a c o h e re n t economic s tr a te g y

aimed a t re d u c in g i n f l a t i o n and f o s t e r i n g a s u s ta in a b le reco v ery

in p r iv a te sp en d in g and p ro d u c tio n .

We have stu ck to t h a t s t r a t e g y , n o tw ith s ta n d in g th e a d ju stm e n ts

fo rce d upon us by th e d e v a lu a tio n of November 1976 which was

needed to c o u n te r th e e f f e c t s of th e c u m u la tiv e e r r o r s of

e a r l i e r y e a r s .

6

And we have made s i g n i f i c a n t a d v a n c e s, e s p e c i a l l y in c o r r e c tin g

th e s t r u c t u r a l d i s t o r t i o n s in th e economy.which emerged i n th e

p e rio d 1972-75·.

L et me g iv e you a p ro g re s s r e p o r t.

R eal wages a re g r a d u a lly b e in g b ro u g h t back in to l i n e w ith

p r o d u c tiv ity , though more p ro g re s s i s r e q u ir e d .

Company p r o f i t s in c re a s e d by alm ost o n e -q u a rte r in 1976^-77 and

t h e i r sh a re o f t o t a l income re c o v e re d to 14.4 p e r c e n t compared

w ith th e d a n g e ro u sly low le v e l o f 12.4 p e r c e n t th r e e y e a rs a g o . .

My f i r s t Budget c o n ta in e d th e grow th o f f e d e r a l o u tla y s to 11

p e r c e n t, le s s th a n h a l f t h a t o f th e p re v io u s y e a r:, th e r e w ill

be no r e a l grow th i n f e d e r a l e x p e n d itu re in th e c u r r e n t f i s c a l

y e a r.

The p ro g r e s s iv e re d u c tio n in th e grow th o f f e d e r a l spending, has

reached a p o in t w here, in c u rre n t c irc u m s ta n c e s , a re s p o n s ib le

spending base has been a ch ie v e d .

U nderlying money su p p ly grow th i s now ru n n in g a t about 10 p er

• v . .... :

c e n t a y e a r compared w ith 20 p e r c e n t i n "1975.

7

The household sa v in g r a t i o h as d e c lin e d . .

B roadly based i r i c e i n d i c a t o r s ro s e in 1976-77 by some 4-6

p e rc e n ta g e p o in ts l e s s th a n in 1975-76.

In th e f i r s t h a lf o f 1977 consumer p r ic e s ro s e a t an an n u al r a t e

o f around 9 p e r c e n t: t h a t in c r e a s e was a c tu a lly low er th a n th e

average in c re a s e re c o rd ed by our m ajor tr a d in g p a r tn e r s .

R eal o u tp u t r o s e by 3·5 p e r c e n t in 1976-77.

We a re encouraged by th e s e achievem ents to p re s s on w ith our

economic s tr a te g y .

I have a ls o been encouraged by th e outcome o f th e IMF/World Bank

■ · i - ·

m e etin g s in W ashington t h i s week, which gave s tro n g s u p p o rt to

_ * v . : - . ' ' . -

th e economic p o l i c i e s bein g pursued in A u s t r a lia .

More g e n e r a lly , i t was agreed a t th o s e m e etin g s t h a t a h ig h e r

r a t e o f grow th o f w orld a c t i v i t y next y e a r i s d e s ir a b le w ith in

th e framework o f a medium-term s tr a te g y .

There seems to be an m e rg in g view t h a t th e s tr o n g e r c o u n trie s

can now aim f o r f a s t e r grow th o f t dom estic demand w ith o u t

r e k in d lin g i n f l a t i o n . ■ .

8

. ■ ;.· : . ·: · . t < · -

F a s te r grow th in th e s tr o n g e r c o u n tr ie s w ill a s s i s t re c o v e ry in

c o u n trie s such a s A u s t r a l i a .

The 1977-78 Budget which I in tro d u c e d l a s t month w ill move

A u s tr a lia f u r t h e r tow ards a c h ie v in g our o b je c tiv e s o f lo w e rin g

i n f l a t i o n and th e re b y prom oting m oderate n o n - in f la tio n a r y grow th.

I t . w i l l do so by b u ild in g on th e fo u n d a tio n s l a i d by l a s t y e a r 's

B udget. ■ - „ .- * - - 1 ?Γ · . 1 * ’ . ( » -■ ' 1

Those fo u n d a tio n s h av e, i n f a c t , enabled us to make p ro g re s s

• ' ‘ . . - w * · ' · ; · " ' i ; · , " ' > . 1 t ' K . ' ' » ·

tow ards handing back to th e p r iv a te s e c to r new o p p o r tu n i tie s f o r

in c re a s e d sp ending and p ro d u c tio n .

In ap p ro ach in g t h i s m a tte r , we were g u id e d by an o v e r r id in g need

to reduce th e burden o f income ta x i n o r d e r to r e s t o r e in c e n tiv e

f o r p e rso n a l e f f o r t . .

We have b u ild on l a s t y e a r 's in d e x a tio n reform by . in tr o d u c in g a

new p e rso n a l income ta x system t h a t w ill p ro v id e s u b s t a n t i a l

b e n e f its to ta x p a y e rs a t a l l income l e v e l s .

We have made t h i s reform b ecau se we know t h a t i f governm ent

. . . ■ % -

ta k e s to o la r g e a sh are o f th e n a t i o n 's r e s o u r c e s , th e in c e n tiv e

to work - th e b a s is o f a c o u n try Ts p r o s p e r ity - i s underm ined.

Our ta x , reform s r e s to r e .- th e in c e n tiv e ; to work h a r d e r , and . more

p r o d u c tiv e ly , and t h e r e f o r e to earn m ore. ? *-L i .

These d e c is io n s i n th e p e rs o n a l income ta x a re a fo llo w very

s u b s t a n t i a l ta x c o n c e ssio n s to b u s in e s s e s l a s t y e a r . _ -.

i A ll t o l d , th e ta x a tio n m easures in tr o d u c e d , by t h i s governm ent

w ill d i r e c t l y b e n e f i t th e b u s in e s s s e c to r by ab o u t $700 m illio n

in 197.7-78, even . a f t e r allo w an ce is made. fo r ,:th e sm all .-. in c re a s e

i n th e company ta x r a te in t h i s y e a r 's B udget.

Γ ’ ' -r r:* ···:'·â–  i” ' ·.: .. '

T his i s a c l e a r e a r n e s t o f our commitment, to:· renewed - e n te r p r is e

i n th e p r i v a t e s e c t o r . "

The o v e r a ll outcome o f .our f i s c a l management t h i s y e a r i s a

f u r t h e r s i g n i f i c a n t re d u c tio n in th e d e f i c i t , ..which i s more th a n

$2 b i l l i o n low er th a n in 1975-76.

The 1977.-78 d e f i c i t i s e s tim a te d a t about 2 \ per c e n t o f GNP

compared w ith 5 p e r c e n t in 1975-76. , . ; .

Our f i s c a l p o lic y s e t s th e scen e f o r f u r t h e r m o d eratio n in . money

su p p ly grow th - which should be w ith in th e ran g e ; o f 8-10 per

c e n t i n -1977-78 - and in i n f l a t i o n .

10

■ A nother im p o rta n t f e a t u r e o f' my re c e n t Budget- ' was: a new ' crude

o i l p r ic in g p o lic y . · ■ ' ' - - - - . . . . .

We have decid ed to make - an o rd e rly t r a n s i t i o n tow ards im port

p a r i t y p r ic e s f o r a l l lo c a l o i l .

This w a s.n e c e s sa ry because th e w orld p r ic e of· cru d e o i l has

r i s e n s h a r p ly i n re c e n t y e a rs but o nly very minor a d ju stm e n ts

had been made to th e p r ic e o f-c ru d e fro m -A u s tra lia n w e lls . -

. The new p o lic y w ill encourage new e x p lo r a tio n and e n su re f u l l

economic re c o v e ry of known re s o u rc e s . . "

' ■ '.Λ- _ * A r , . ' .

In th e l a t t e r re s p e c t I was g r a t i f i e d to le a r n t h i s week t h a t

th e Broken H ill P r o p r ie ta r y Company has upgraded’ i t s Bass S t r a i t

o i l re s e rv e s by 15 p e r c e n t. ■ ' ·.'· ' r ■ - '

. . ■ · . - _ ■ . ·. ■ ■

Our f i s c a l and m onetary p o lic ie s p ro v id e th e b a s is fo r

c o n fid en ce ..about A u s t r a l i a 's e x te r n a l p o s itio n , ’ which i s

expected to s tre n g th e n as th e "year p ro c e e d s . : ’ - ■ '

We a re a lre a d y s e e i n g ,- i n th e wake o f l a s t y e a r 's d e v a lu a tio n .; a

s i g n i f i c a n t f a l l in im p o rts and renewed grow th in e x p o rts." '

The"Government has l i f t e d th e s p e c ia l r e s t r i c t i o n s on ' p r iv a te

o v e rse a s borrow ings an d , as I announced some t i m e 1 a g o ,'" h a s

resumed an a c tiv e program o f o v e rse a s lo a n r a is in g s on ' i t s own

a c c o u n t, ta k in g advantage o f fa v o u ra b le borrow ing c o n d itio n s and

A u s t r a l i a 's hig h c r e d i t r a t i n g . ·

A u s tr a lia has a very c o n s id e ra b le c a p a c ity to fin a n c e any

tem porary e x te r n a l d e f i c i t in th e p e rio d ahead and th e Prime

M in is te r s ta t e d r e c e n tly th a t th e Government i s p re p a red to

expand i t s o v e rse a s . borrow ing program ' i f t h a t ' becomes n e c e s sa ry

or d e s ir a b le . " - . . · . . . ■ ·*·· '**'■· " ' '

The- fo rc e o f o u r in te n tio n s i n t h i s a re a was c l e a r l y e s ta b lis h e d

by t h i s w eek's announcement t h a t th e Government has ‘ a rra n g ed

o v e rse a s borrow ings which w ill " supplem ent A u s t r a l i a 's

i n t e r a t i o n a l re s e rv e s by a b o u t $850 m illio n d u ring th e n e x t few

weeks. "

These fu n d s, which a re a d d itio n a l to t h e G overnm ent's ongoing

program o f o v e rsea s b o rro w in g , w ill be made a v a il a b le th ro u g h

German banks and th ro u g h banking a rra n g em en ts between th e

R eserve Bank o f A u s tr a lia and th e BIS. ' "

Our dem onstrated c a p a c ity to r a i s e fund's o f t h i s ' o rd e r a t low

i n t e r e s t r a te s on p r iv a te c a p i t a l m ark ets i s in i t s e l f a

r e f l e c t i o n of i n t e r n a t i o n a l c o n fid e n c e in th e A u s tr a lia n economy

and i n th e p o lic ie s b ein g pursued by my Government.

12

.Our o v e r a ll e x te r n a l p o lic y , , in . c o n ju n c tio n .· w ith , dom estic

.econom ic p o l i c i e s i s geared tow ards e n s u rin g more s t a b i l i t y , in

A u s t r a l i a 's b a la n c e o f payments than has been e v id e n t in re c e n t

y e a rs . t

This s t a b i l i t y w i l l , I am s u r e , be welcome to o v e rse a s in v e s to r s

.a n d i t . is to th e s p e c i f i c ..q u e stio n ... o f fo r e ig n in v e stm en t in

A u s t r a lia t h a t I now tu r n . .. . „ . .

The G overnm ent's ..fo re ig n ,investm en.tT .p o lic y s t a r t s , from th e view

t h a t f o r e ig n c a p i t a l is fundam ental to A u s t r a l i a 's economic

p r o g r e s s .

.7.- ■;./ ,ΐ- \r, r '. ·â– · ■ ·- ' .

W ith .th a t .in mind, we a r e d e t e r m i n e d to c r e a te th ro u g h our

g e n e ra l economic p o l i c i e s as w ell a s in our. s p e c i f i c tre a tm e n t

o f fo r e ig n in v e s tm e n t.p r o p o s a ls ,.c o n d itio n s which a re fa v o u ra b le

to th e employment i n A u s tr a lia f o r f o r e ig n s a v in g s .

~We see fo re ig n in v e stm en t making a p o s itiv e c o n tr ib u tio n tow ards

th e p ro c e ss o f .economic re c o v e ry , and we a re c o n sc io u s o f .the

a d d itio n a l claim which an in flo w of· fo r e ig n c a p i t a l g iv e s . us on

goods and s e r v ic e s from t h e . r e s t of th e w orld and of th e

b e n e f its which such c a p i t a l can b rip g in th e form of

te c h n o lo g ic a l and manpower s k i l l s , new m a rk e ts an d -so on.

13

The G overnm ent's view i s t h a t i t i s s e n s ib le and n e c e s s a ry f o r a

c o u n try such as A u s t r a lia , w ith g r e a t n a tu r a l re s o u rc e s and

lim ite d c a p i t a l s u p p l i e s , to seek to use fo r e ig n c a p i t a l on a

s i g n i f i c a n t s c a le .

Of co u rse th e Government does n o t ex p ect fo r e ig n i n v e s t o r s to

tu r n t h e i r a c t i v i t i e s tow ards A u s tr a lia w ith o u t th e r e b e in g good

re a so n fo r th an to do s o . '

I n v e s to r s sh o u ld be amply com pensated by p r o f i t s - we expect

th is" to be s o . ' -

When we came to o f f i c e we were concerned t h a t u n c e r ta in ty

e x is te d in th e minds o f fo r e ig n in v e s t o r s ab o u t th e f u tu r e r o le

a v a il a b le to than in th e A u s tr a lia n economy.

Our aim has been to remove t h i s u n c e r ta in ty by - s e t t i n g o u t

c l e a r l y th e "R ules o f th e Game". ' -

We have la i d down c l e a r g u id e lin e s f o r fo re ig n , in v e stm e n t.

These g u id e lin e s a r e b e in g a d m in is te re d ' f l e x i b l y to s t r i k e a

p ro p e r b a lan c e betw een a c h ie v in g th e economic b e n e f i t s t h a t come

from fo re ig n in v e stm en t w h ile a v o id in g th e p o s s i b i l i t y o f hig h

s o c ia l c o s ts . ' ~

14

The p o lic y is d esig n ed to g iv e , o p p o r tu n i tie s f o r . p r o f i t a b l e

in v e stm e n t to fo re ig n c a p i t a l , where p o s s ib le in p a r tn e r s h ip

w ith A u s tr a lia n c a p i t a l . : . ....··

W hile r e c o g n is in g t h a t A u s tr a lia n e q u ity c a p i t a l i s in lim ite d

s u p p ly , we se e k - by means o f f l e x i b l e approach - th e . maximum

o p p o rtu n ity f o r A u s tr a lia n s to p a r t i c i p a t e . as f u l l y and

e f f e c t i v e l y as p r a c tic a b le in th e ow nership and c o n tr o l o f lo c a l

re s o u rc e s and i n d u s t r i e s .

I want to em phasize t h a t th e A u s tr a lia n G overnm ent's. a t t i t u d e to

f o r e ig n in v e stm en t i s s u b s t a n t i a l l y d i f f e r e n t to t h a t o f our

p re d e c e s s o rs . . . . . . . . . . . . ·

A good i l l u s t r a t i o n o f · th e d if f e r e n c e i n a t t i t u d e ... was . our

d e c is io n to e s t a b l i s h a F o re ig n In v e stm e n t Review Board

com prised o f peo p le w ith e x te n s iv e b u s in e s s and commercial

e x p e r ie n c e . . . .

The Board has now e s ta b lis h e d i t s e l f w e ll as an e f f e c t i v e lin k

betw een fo r e ig n in v e s t o r s and th e governm ent - a lin k which th e

p re v io u s a rran g em en ts could n o t p ro v id e ., ... . . . . . . .

The Government i s concerned t h a t a rran g em en ts f o r c o n s id e ra tio n

of fo re ig n in v e stm e n t p ro p o s a ls s e t down in our p o lic y should

n o t unduly in c o n v e n ie n c e o r d e la y businessm en.

15

The Board has been i n s t r u c t e d , th e r e f o r e , to p ro v id e guidance to

fo re ig n in v e s to r s in th e p r e s e n ta tio n o f t h e i r p ro p o s a ls and to

g e n e r a lly f o s t e r aw areness and u n d e rsta n d in g o f th e p o lic y .

I m ight add t h a t , to t h i s s ta g e , th e r e has been a c o n s id e ra b le

improvement in th e speed and e f f ic ie n c y w ith which fo r e ig n

in v e stm e n t m a tte rs a re now h an d led .

The new p o lic y a c c e p ts th e r e a l i t y t h a t a fa v o u ra b le c lim a te f o r

fo re ig n in v e stm en t must re c o g n iz e t h a t d e c is io n s w ill be made

e s s e n t i a l l y on th e b a s is o f commercial judgem ent.

The q u e stio n may be asked: why sh o u ld US b u s in e s s e s in v e s t in

A u s tr a lia ?

My answ er i s t h a t th e re a re many very good re a so n s fo r doing so:

- th ere- has been a lo n g a s s o c ia tio n . betw een our two

c o u n trie s and our m utual u n d e rs ta n d in g o f each o th e r

g r e a t l y f a c i l i t a t e s smooth b u sin e ss o p e ra tio n s ;

• : .· · ' ‘ ' ’ · ' . . . ' · · .

th e A u s tr a lia n p o l i t i c a l environm ent i s s ta b l e ; .

■ · ' . · .. . ·< - ' - ·.·

we have immense n a tu r a l re s o u rc e s ; and .

16

- we have a f r e e e n te r p r is e economic system su p p o rte d by

s k i l l e d human re s o u rc e s and my governm ent b e lie v e s

fu n d a m e n ta lly in th e m o tiv a tio n which p ro fit-m a k in g

p ro v id e s w ith in th a t sy ste m .

I b e lie v e t h a t any r e a l i s t i c assessm en t o f lo n g -te rm in v e stm e n t

o p p o r tu n itie s w ill in d ic a te th a t A u s t r a lia c o n tin u e s to rank

h ig h among th e r e s o u r c e - r ic h c o u n tr ie s a s an avenue f o r s e c u re

and p r o f i t a b l e employment o f c a p i t a l .

' . ... ύ . Λ ” „· > Λ ■ - . ■ . ·.·..* v , ν . :

/ · . . . / - · . "■ * : :.· ,

My c o n c lu sio n i s su p p o rte d by th e re sp o n se from o v e rse a s

_ , '?■·; ■ ·.. a · Λ . a · ·. ■ >

in v e s to r s to d a te .

As an exam ple, firm d e c is io n s have been made to proceed w ith a

number o f s i g n i f i c a n t p r o je c ts in th e m in e ra ls s e c to r :

. Development by Utah o f th e Norwich Park coking co al

- p r o j e c t a t an e stim a te d c o s t o f $250 m illio n (in v o lv in g

a d d itio n a l employment o p p o r tu n itie s fo r 1,000 men d u rin g

. ■ ' . ; . · 1 _ "■ ; · _

th e c o n s tr u c tio n p e r i o d ) .

Commitments to expend th e Robe R iv e r, Mt Newman and

' 7 . . . . ‘ - 1 '

H anm ersley ir o n o re p r o je c ts a t^ a t o t a l c o s t o f $600

mi H i cm.

In a d d i t i o n , o f c o u r s e , th e p ro p o s a ls to develop n o rth w e st s h e l f

n a tu r a l gas re s o u rc e s a re e n te r in g th e p r o je c t d e fin itio n s ta g e ,

and th e go-ahead has been given to uranium m ining.

In m a n u fa ctu rin g in d u s tr y , new p r o je c ts am ounting to about $600

m illio n were announced in th e p r e s s d u rin g th e June q u a r te r .

More co m p reh en siv ely , i n t h e - f i f t e e n months up to end-June 1977,

over 1400 in v e stm en t p ro p o sa ls; were c o n sid e re d by th e governm ent.

' ■ .3 l·V': r ; .r; Ί : '· ,·â– ;·· i. .

Of th e s e , v i r t u a l l y a l l were c le a re d to proceed - some s u b je c t

to c e r ta in - .c o n d itio n s . , F · « .· · . > ·. . . ;

■ v · ■ . · ■ · . ’ ^

T his c l e a r l y in d ic a te s th e f l e x i b i l i t y w ith which th e p o lic y is

a d m in is te re d . . . . . .

These s t a t i s t i c s p ro v id e a good in d ic a tio n o f our keenness to

re c e iv e - and th e c o n s id e ra b le sco p e f o r - f o r e ig n in v e stm e n t

th a t i s n o t c o n tr a r y to th e n a tio n a l i n t e r e s t .

When o v e rs e a s in v e s t o r s th in k o f A u s t r a l i a , th e r e . i s a n a tu r a l

tendency to focus on n a tu r a l re s o u rc e s developm ent, s in c e th e

lo n g ru n o p p o r tu n itie s in t h a t a re a a re o b v io u s ly immense.

S p e c ia l in te r e s t " a tta c h e s to uranium . · · · ' . -v T -

As I have just" m entioned th e governm ent has r e c e n tly decided to

allo w developm ent and e x p o rt o f uranium re s o u rc e s to p ro c e e d ,

s u b je c t to a p p r o p r ia te en v iro n m en tal and o th e r s a fe g u a rd s -

p a r t i c u l a r l y as re g a rd s w aste d is p o s a l - b e in g m e t. · " ··

In ta k in g - t h i s d e c is io n ," we have re c o g n ise d ~ A u s t r a l i a 's

o b lig a tio n to th e r e s t ” o f t h e Λ w orld in r e l a t i o n to th e

developm ent o f much-needed energy re s o u r c e s .

I have n o ted a p p re h e n sio n s in th e US ab o u t th e ' c o n tro v e rs y in

A u s tr a lia on th e q u e stio n of uraniizn developm ent.

I w ish to make i s a b s o lu te ly c le a r t h a t th e Government " w ill

ensure th a t i t s d e c is io n in t h i s v i t a l a re a i s given e f f e c t .

L et th e r e be no m istak e a b o u t t h a t . ■ ■ -

As we p r o g r e s s iv e ly sweep away th e u n c e r t a i n t i e s o f r e c e n t

y e a r s , I e x p e c t to s e e US c a p i t a l p la y in g a very prom inent " r o le

in A u s t r a l i a ; r ' · ' · · 1 · ··' ***·'*

I t i s r e le v a n t t h a t f ig u r e s j u s t com piled by th e US D epartm ent

of Conxnerce show t h a t c a p i t a l e x p e n d itu re by m ining and s m e ltin g

a f f i l i a t e s o f US com panies in A u s t r a lia i s planned, to in c re a s e

by alm ost 50 p e r c e n t in 1978. .

T o ta l c a p ita l- sp en d in g by- .a ll;.. US;v a f f i l i a t e s i n : A u s t r a lia i s

, expected .to r i s e by 25. p e r c e n t. τ - " ;

These in c r e a s e s a re th e f i r s t o f a s i g n i f i c a n t m agnitude s in c e

1971. · ■

The s t a t i s t i c s serv e to u n d e rlin e th e b r ig h t m ediim -tenn o u tlo o k

. f o r th e A u s tr a lia n economy.

' . ' · , · ; \ .;· < . .

. " ■ " ■·'. ί i J " J

A u s t r a lia has n o t y e t reached a new h e a lth y e q u ilib r iis n . .

But th e G overnm ent’ s economic p o l i c i e s have put th e c o u n try w ell

on th e way t o th a t g o a l. . .

We have i n f l a t i o n on th e way down and th e governm ent w ill make

s u re t h a t t h i s tre n d i s m a in ta in e d .

C o rp o rate p r o f i t a b i l i t y has re c o v ere d a p p re c ia b ly and w ill

a s s u re d ly improve f u r t h e r .

C onfidence i s b ein g r e s to r e d i n th e p r iv a te s e c to r and we can

e x p e c t to s e e h ig h e r in v e stm e n t o u tla y s and, e v e n tu a lly ,

in c re a s e d employment o p p o r tu n itie s flo w in g from th e improved

%

economic c lim a te .

20

\

\

I am c o n fid e n t th a t th o se w ith I n t e r e s t s i n A u s tr a lia can e x p ec t

improved f e r t ilis e and new oppor tin t i e s as our p o lic ie s d riv e

heme. ’

I lo o k forward to oth ers o u ts id e A u s tr a lia s h a rin g t h i s

c o n fid e n c e . There i s very good reason to do so .

, . . V . » I t * , * .

CANBERRA ACT 4 Oct 1977 . 1

* * · · ' ’ v -I* t ‘ * v ‘ " - ■