F 7 7/13 0

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Jj. AUSTRALIA

P R I M E  M I N I S T E R

FOR PRESS 6 JUNE 1977

SPEECH BY THE PRIME MINISTER AT MANSION HOUSE,  LONDON, 2 JUNE 1977

I- am most grateful for the invitation from Mr. Callaghan to visit  the United Kingdom. This is my first official visit to Britain as  Prime Minister,  and I am enjoying my discussions both with Prime  Minister Callaghan and his colleagues ,  and I am looking forward to/  participating in the Commonwealth Heads of Government meeting

next xveek .

My visit is also timed to enable me to participate in the Silver  Jubilee celebrations.  As you know, for us, these began in March  when Her Majesty and Prince Philip had a most successful visit to  Australia. The visit reaffirmed once again the warm affection in  which Australians hold Her Majesty and all the Royal Family. Do not  pay too much heed to stories about republicanism in Australia. There

is no doubt about our feeling of independence,  but neither is there  any doubt that most Australians still favour our current constitutioÂ­ nal position. ‘  .

After the recent hectic years of Australian politics - with seven  Prime Ministers in the past decade - you might well ask what of  Australia today? And where is it heading as a nation? Our major  domestic objective has been to put the economy back on a sound basis.  On the international scene, our objective has been to restore

relations with close friends and allies.

I would like to take a few moments of your time to talk about the  economy, international trade, and relationships, and some of our  perspectives on the world. .

First the economy.  There has been of course a recession in all  economies. In Australia, however,  domestic factors played a larger  part in the recession than they did in most other countries. These  factors were:  a rapid expansion in the size of the Government

sector. In one year (1974/5) Government expenditure increased  by 46%. Monetary policies which fuelled inflation; utterly  unrealistic wage and salary increases - wages in manufacturing  industry went up by 53% in two years;  a more interventionist

Government role, which restricted the ability and confidence of  the private sector. Clearly, we needed a change of direction. In the view of my Government a lasting economic recovery will only  occur if we can defeat inflation.

/As your

As your Prime Minister said at the Labour Party Conference last  year, it is not possible to spend our way out of unemployment at  a time when inflation is still high. It would lead to further ’   inflation.  We have directed the arms of economic' policy towards

defeating inflation. We have restrained Government expenditure -  cutting Government spending by $3 billion in our first nine months  in office. We have established a responsible monetary policy - one  which treads the narrow path of providing adequate funds for real  growth without adding to inflation. .

We seek to improve the private sector's profits so that investment  can be encouraged and incentives have been introduced to achieve this.  We have used all the avenues open to us to restrain wage increases and  we have adopted other policies making it reasonable for wage earners

to accept restraint. We have restored the competitiveness of Australia  industry by devaluing the exchange rate. Vie had maintained an overÂ­ valued exchange rate until all the instruments of policy were  effectively focussed on fighting inflation. And we have strengthe, Recovery is necessarily a gradual process - but that is accepted. You  will be aware of the importance of mineral development to Australia,  and also its importance to.other economies which we supply. S The value of mineral production over the decade increased sixfold to  over $ 3 billion, of which by far the greatest part was for export.  Exports of iron-ore,  alumina , mineral sands, lead, bauxite,  zinc,  coal and nickel are all very substantial. Collectively over the lZ%t  ten years they rose from 11% to 29% of total export earnings. As  part of this development, 22 new towns and 11 new ports have been  built. Total capital expenditure on mining,  processing, smelting  and refining through the decade comprised a quarter of all new capital  expenditure.  This development peaked around 1971/2. Although the  value of exports continued to surge ahead strongly after that period,   both capital investment and exploration fell away,  discouraged by  Government policies and world recession. However, now I am confident that another decade of major mineral  development is unfolding. This calendar year I expect investment  in the mineral industry to be about 40% up on last year with the  momentum building up as the year progresses. Exploration drilling  for oil and gas will be approximately double last year’s. There has been a change of direction,  substantial progress has been  made. During 1976, inflation was reduced from an annual rate of  16% down to around 10%. Real gross domestic product resumed raoder/^e  expansion, compared with an actual decline in 1975 .  The growth i n W h e   money supply remains on target for this financial year at about 10-12%  The effects of devaluation on the internal price structure have been  small and the underlying rate of inflation has continued to fall.  Company profits, particularly those in the export industries,  have  continued their striking recovery from an appallingly low base,  and  private investment is growing again in real terms. /Base metal 3  / / / . Â· /  - Base metal exploration is under way once more,  and there have been  encouraging discoveries in Western Australia and South Australia. There are no less than 19 mining or mineral processing projects under  construction, or which should commence this year, with a total estimated  capital cost of about $2^ billion. There are,  in addition, some 25  projects in Australia which are under consideration with a combined  capital cost running into very large sums.indeed. This immediately raises the question of the availability of capital. I have no doubt that as the investment projects are developed,  overseas  capital will be required to supplement that which is available in  Australia.  It is for this purpose that when, for domestic monetary  policy reasons, we introduced controls on overseas borrowings early  this year,  we specifically exempted overseas borrowings for capital  development in mining and manufacturing industries. Moreover, the  Government has adopted a policy on foreign investment designed to  ensure that worthwhile projects go ahead and are not held up by  shortages of domestic capital. These policies are working well, but  if there are any difficulties, I would like to hear about them. One mineral of particular importance is uranium. Australia holds about  "3.0% of the western world's low cost uncommitted reserves. The Governmer  believes that the export of uranium involves important considerations of  a kind not involved 'in the export of other commodities, and last week we  announced a comprehensive safeguards policy for uranium exports. Its  essential elements are: careful selection of customer countries, and a two-tier system of ensuring that customer-countries adopt proper  safeguards. This involves applying firstly the international Atomic Energy Agency's  safeguards to verify that material supplied for peaceful purposes is  not misused, and secondly, establishing additional safeguards through  a bilateral agreement with each customer country.  Australia will also  be actively involved in international effort to upgrade safeguards. We will shortly be in a position to discuss with potential customers  the details of our safeguard policy. Final decisions will be made  concerning the first and second reports of the special uranium  environmental enquiry soon after my return to Australia. . I now turn to the question of relations between Australia and Western  Europe. Relations between Australia and Britain have of course always  been strong. Our special relationship is founded on common history,  on shared political and philosophical ideals, and on the contribution  that British migration and investment have made to Australia's  development. These ties remain strong; despite the changes inevitably  brought by Britain's entry into the E.E.C. When Britain first contemplaÂ­ ted joining the E.E.C. there was some criticism and a general sense of  unease in Australia. In a debate in our Parliament in 1961, after  Mr. McMillan had announced that Britain would negotiate for admission  to the E.E.C. I recall being one of the very few Members of Parliament  who took a view contrary to that expressed by the Government of the day.  I supported wholeheartedly Britain's entry into the Common Market.  My  only regret was that Britain had not entered into such an arrangement  with the original six members at a much earlier date. The signing of  the Treaty of Rome was accompanied by high hopes on the part of all  those interested in European and world affairs. The Treaty seemed to  offer Europe the prospect for the first time in centuries of unity and  cohesion; an end to internecine conflict which more than once  embroiled virtually the entire world;  and the opportunity to fulfil /a more 4 X.  X a more constructive role in world affairs. The'policy objectives , of the Treaty of Rome were born from the highest’  motives and worthiest;  aspirations.  The community has in fact made considerable progress. But there are many people who believe that those original objectives  and aspirations have not yet been achieved.  Ã¢ÂÂ   . e  .  It is easy to understand that in the early days of the Community  there was a preoccupation with internal matters. Nor was it surprising  that, at the outset, the Community should concentrate its efforts in  reducing barriers to trade within its own boundaries. However,  interÂ­ nationally the Communities have now acquired a distinct personality  which is being expressed with greater and greater coherence. In  international forums the nine member states have developed, and  continue to develop, common proposals,  common positions, and have  common purposes. It is therefore a matter of regret that in some < aspects of Australia's relations with the European community we still  have significant problems which seem to us to run counter to an outwardÂ­ looking approach and which, if I may venture to say so, seem to us  run counter to the longer-run interests of the Community itself. ^ This brings me to a subject on which there is a particularly strong  need for us to understand fully each other's perspectives. I speak  oft our trade relations and the question of access to each other's jrg  markets. First, let me deal with manufactured goods. The European " * Commission has pressed Australia to reduce our tariffs on manufactured ’ >  goods. This pressure is understandable.  With large markets at close  proximity and advanced scientific and technological resources,  members  of the European Community have been able to develop a capacity for large  scale competitive exports of manufactured goods .  Australia's  manufacturing sector is in a different position. The bulk of our  present industry was developed during and after the last w ar.  Our  dependence on others for manufactured goods had become, most evident  during the war, and we consciously set out to expand our manufacturing  sector in order to secure a greater measure of economic independence *  and a more self-sufficient community. The relatively small size of our market however has made some significant  degree of protection imperative. Yet Australian tariffs have been  reduced overall. Since 19 7 3 our tariffs have been reduced by about' 1|  30%. Furthermore,  Australian tariffs have not prevented E.E.C.Â· c ' manufactured goods from gaining access to our domestic market. Even  though those imports adversely affect our local industry, between  19 7 2/3, the year before the onset of the recent recession, and j.974/5,  ' at the height of the recession, the share of the Australian domestic  market in manufactured goods accounted for by imports from all sources  increased by nearly 40%. The E.E.C. is today the largest single source  of imports to Australia, supplying more than one quarter of total  imports .  .  .  Â· ; Ã¢ÂÂ  Turning now to agricultural products,  the situation is quite different. In Australia's case, we excel not only as an exporter of mineral ores  and metals but of agricultural products.  We are able to produce at a  lower cost than yourselves,  beef, butter, wheat, flour, dairy products,  sugar. In short, almost every product you eat. -  Europe however has the  same problem .in agricultural production that we face with manufactured  goods. Europe has a traditionally high cost agriculture which cannot /survive survive open competition with producers such as Australia. The  European Community response,  in contrast with ours in respect of  manufactured products,  has been the Common Agricultural Policy under  which variable import levies are set at levels which severely restrict  or exclude utterly imports of important Australian agricultural products So now we see two sides of the same coin. Each of us has our strengths,  each our weaknesses. In these circumstances there is a natural  tendency for each to wish to liberalise trade in the area in which  it is stronger, and sfiore up protective measures in the sector in  which it is weak.  But the responses to this problem from the E.E.C.  and from Australia have not been the same.  Despite our tariff barriers,   Europe does have reasonable access to our markets, but we cannot get  reasonable access to European markets for important agricultural proÂ­ ducts. Twenty years ago, exports to the nine member states of the  E.E.C. were virtually at the same level as our imports. Today, largely due to the Community's Agricultural Policy, there is a  serious imbalance of trading opportunities between Australia and the  E.E.C. Last year, the value of imports from the E.E.C. exceeded that  of our exports to the E.E.C. by nearly 60%. Reduced opportunities for  Australian agricultural exports to the E.E.C. have had a direct effect  on Australian primary producers. For example,  in the last six years,  one dairy farmer in three has left the Australian dairy industry. In other areas of export opportunity, such as processed mineral  products, Australia is often faced with escalating levels of tariff ; in the E.E.C. as the degree of processing increases. For example, the  duty of bauxite is nil, alumina attracts a 5.5% duty,  and aluminium  ingots attract up to 22%. This policy directly inhibits the developÂ­ ment of processing operations in our country, but the imbalance in cur  responses to the problem of market access is even greater, for, under '   the Common Agricultural Policy, the Community does not merely prevent  reasonable access for our goods to your domestic markets; it heavily  subsidises the export of primary products to other markets.  ;  .  j In some cases, the subsidy is greater than the final price of the Ã¢ÂÂ  products .  The subsidies have the effect of depressing world prices  and disrupting our traditional markets outside Europe.  Let me give  you just one example of what has happened. Our largest traditional  market for flour was Sri Lanka. Our share of that market used to be  87%. It is now less than a quarter of that because E.E.C. subsidies  have enabled European exporters in recent months to undercut our producj  by up to $36 per tonne. The E.E.C. subsidy is in the order of  $100 per tonne.  .  A similar story could be told for numerous other  products in other markets. j All of this raises some questions. Would it not be possible to find  a level of beef support and beef levy that allowed trade to flow  without damaging the European beef producer? Would it not be possible  to find a level of support for wheat and grains and other foodstuffs  that also allows trade to flow and that allows the consumer the benefi'  of cheaper food? Would not this also help you in the fight against  inflation? Would it not be possible to fix levels of export restituÂ­ tions, subsidies, that do not wreck other people's markets, that do no'   depress world prices? These are questions I asked myself. Ã¢ÂÂ  /It would 6  S  % It would seem to me that you can answer these questions in the Ã¢ÂÂ  affirmative while still preserving the basic thrust of the Common  Agricultural Policy. It is clear that we look at these matters from  different perspectives.  We need to understand each other's point of  view.  I have spoken about our trade relations because of their  importance to both of us, but there is a whole range of other issues,  political and international, which ai*e also of mutual concern. We hope to see the European communities increasingly develop the role  which they are already playing internationally as a force for  stability. We have many shared interests which a developing interÂ­ national role by the Communities can do much to enhance. Quite apart,  from our agricultural products,  our capacity to act as a long term  and stable supplier of raw material and energy resources clearly  provides a basis for such a closer relationship. Moreover,  despite  our distance from Europe we are most conscious of the strategic  importance of Europe and the contribution which a strong European  Community makes to the North Atlantic Community and the present  global balance. %#Ã¢ÂÂ  While we are all deeply involved in the regions nearest to us, we  sometimes overlook the identity of interest between democratic  communities.  This is more than a regional matter.  Despite the  doomsayers,  those who speak of inflation and unemployment, of the W   crisis of democracy, our societies have great internal strength and  resilience. However because we are dispersed in large and small  groups around the world,  the interdependence of the democracies is  seldom well understood. The common interests between u.s are rarely  sufficiently emphasised.  Our strength does not lie exclusively in  the U.S. A., Europe or Japan or in afny other single region in the world Our future is in a fundamental sense a collective one. We should not  allow ourselves to be isolated from one another commercially or  strategically. We need a global outlook and this is no less true , ,  of Europe than it is of the South Pacific countries. Our societie V   are pre-eminently ones which thrive on their interconnections with one  another and the rest of the world. They would wither without them. You in Britain have much to contribute to fostering this recognition,  to help avoid narrow exclusiveness which corrodes a common purposeg*  Jp My Lord Mayor, thank you for your invitation to speak to this  distinguished gathering today. I am looking forward greatly to  the discussions which I will be having.over the next few weeks in  London,  Brussels, Paris and Bonn.  Australia strongly desires a  closer and broader relationship with all members of the European  communities,  complementing the strong relationship which we already  enjoy with Britain. I am most hopeful that these discussions will  be a start in securing that closer relationship which we seek.

Recovery is necessarily a gradual process - but that is accepted. You  will be aware of the importance of mineral development to Australia,  and also its importance to.other economies which we supply. S

The value of mineral production over the decade increased sixfold to  over $ 3 billion, of which by far the greatest part was for export.  Exports of iron-ore,  alumina , mineral sands, lead, bauxite,  zinc,  coal and nickel are all very substantial. Collectively over the lZ%t

ten years they rose from 11% to 29% of total export earnings. As  part of this development, 22 new towns and 11 new ports have been  built. Total capital expenditure on mining,  processing, smelting  and refining through the decade comprised a quarter of all new capital

expenditure.  This development peaked around 1971/2. Although the  value of exports continued to surge ahead strongly after that period,   both capital investment and exploration fell away,  discouraged by  Government policies and world recession.

However, now I am confident that another decade of major mineral  development is unfolding. This calendar year I expect investment  in the mineral industry to be about 40% up on last year with the  momentum building up as the year progresses. Exploration drilling

for oil and gas will be approximately double last year’s.

There has been a change of direction,  substantial progress has been  made. During 1976, inflation was reduced from an annual rate of  16% down to around 10%. Real gross domestic product resumed raoder/^e

expansion, compared with an actual decline in 1975 .  The growth i n W h e   money supply remains on target for this financial year at about 10-12%  The effects of devaluation on the internal price structure have been

small and the underlying rate of inflation has continued to fall.  Company profits, particularly those in the export industries,  have  continued their striking recovery from an appallingly low base,  and  private investment is growing again in real terms.

/Base metal

3

/ /

/

. Â· /  -

Base metal exploration is under way once more,  and there have been  encouraging discoveries in Western Australia and South Australia. There are no less than 19 mining or mineral processing projects under  construction, or which should commence this year, with a total estimated

capital cost of about $2^ billion. There are,  in addition, some 25  projects in Australia which are under consideration with a combined  capital cost running into very large sums.indeed.

This immediately raises the question of the availability of capital. I have no doubt that as the investment projects are developed,  overseas  capital will be required to supplement that which is available in  Australia.  It is for this purpose that when, for domestic monetary

policy reasons, we introduced controls on overseas borrowings early  this year,  we specifically exempted overseas borrowings for capital  development in mining and manufacturing industries. Moreover, the  Government has adopted a policy on foreign investment designed to  ensure that worthwhile projects go ahead and are not held up by

shortages of domestic capital. These policies are working well, but  if there are any difficulties, I would like to hear about them.

One mineral of particular importance is uranium. Australia holds about  "3.0% of the western world's low cost uncommitted reserves. The Governmer  believes that the export of uranium involves important considerations of  a kind not involved 'in the export of other commodities, and last week we

announced a comprehensive safeguards policy for uranium exports. Its  essential elements are: careful selection of customer countries, and a two-tier system of ensuring that customer-countries adopt proper  safeguards.

This involves applying firstly the international Atomic Energy Agency's  safeguards to verify that material supplied for peaceful purposes is  not misused, and secondly, establishing additional safeguards through  a bilateral agreement with each customer country.  Australia will also

be actively involved in international effort to upgrade safeguards. We will shortly be in a position to discuss with potential customers  the details of our safeguard policy. Final decisions will be made  concerning the first and second reports of the special uranium

environmental enquiry soon after my return to Australia. .

I now turn to the question of relations between Australia and Western  Europe. Relations between Australia and Britain have of course always  been strong. Our special relationship is founded on common history,  on shared political and philosophical ideals, and on the contribution

that British migration and investment have made to Australia's  development. These ties remain strong; despite the changes inevitably  brought by Britain's entry into the E.E.C. When Britain first contemplaÂ­ ted joining the E.E.C. there was some criticism and a general sense of

unease in Australia. In a debate in our Parliament in 1961, after  Mr. McMillan had announced that Britain would negotiate for admission  to the E.E.C. I recall being one of the very few Members of Parliament  who took a view contrary to that expressed by the Government of the day.

I supported wholeheartedly Britain's entry into the Common Market.  My  only regret was that Britain had not entered into such an arrangement  with the original six members at a much earlier date. The signing of  the Treaty of Rome was accompanied by high hopes on the part of all

those interested in European and world affairs. The Treaty seemed to  offer Europe the prospect for the first time in centuries of unity and  cohesion; an end to internecine conflict which more than once  embroiled virtually the entire world;  and the opportunity to fulfil

/a more

4 X.

X

a more constructive role in world affairs. The'policy objectives , of the Treaty of Rome were born from the highest’  motives and worthiest;  aspirations.  The community has in fact made considerable progress. But there are many people who believe that those original objectives  and aspirations have not yet been achieved.  Ã¢ÂÂ   .

e  .

It is easy to understand that in the early days of the Community  there was a preoccupation with internal matters. Nor was it surprising  that, at the outset, the Community should concentrate its efforts in  reducing barriers to trade within its own boundaries. However,  interÂ­ nationally the Communities have now acquired a distinct personality  which is being expressed with greater and greater coherence. In

international forums the nine member states have developed, and  continue to develop, common proposals,  common positions, and have  common purposes. It is therefore a matter of regret that in some <

aspects of Australia's relations with the European community we still  have significant problems which seem to us to run counter to an outwardÂ­ looking approach and which, if I may venture to say so, seem to us  run counter to the longer-run interests of the Community itself. ^

This brings me to a subject on which there is a particularly strong  need for us to understand fully each other's perspectives. I speak  oft our trade relations and the question of access to each other's jrg  markets. First, let me deal with manufactured goods. The European " *

Commission has pressed Australia to reduce our tariffs on manufactured ’ >  goods. This pressure is understandable.  With large markets at close  proximity and advanced scientific and technological resources,  members  of the European Community have been able to develop a capacity for large

scale competitive exports of manufactured goods .  Australia's  manufacturing sector is in a different position. The bulk of our  present industry was developed during and after the last w ar.  Our  dependence on others for manufactured goods had become, most evident

during the war, and we consciously set out to expand our manufacturing  sector in order to secure a greater measure of economic independence *  and a more self-sufficient community.

The relatively small size of our market however has made some significant  degree of protection imperative. Yet Australian tariffs have been  reduced overall. Since 19 7 3 our tariffs have been reduced by about' 1|  30%. Furthermore,  Australian tariffs have not prevented E.E.C.Â· c ' manufactured goods from gaining access to our domestic market. Even

though those imports adversely affect our local industry, between  19 7 2/3, the year before the onset of the recent recession, and j.974/5,  ' at the height of the recession, the share of the Australian domestic  market in manufactured goods accounted for by imports from all sources

increased by nearly 40%. The E.E.C. is today the largest single source  of imports to Australia, supplying more than one quarter of total  imports .  .  .  Â· ; Ã¢ÂÂ

Turning now to agricultural products,  the situation is quite different. In Australia's case, we excel not only as an exporter of mineral ores  and metals but of agricultural products.  We are able to produce at a  lower cost than yourselves,  beef, butter, wheat, flour, dairy products,  sugar. In short, almost every product you eat. -  Europe however has the

same problem .in agricultural production that we face with manufactured  goods. Europe has a traditionally high cost agriculture which cannot

/survive

survive open competition with producers such as Australia. The  European Community response,  in contrast with ours in respect of  manufactured products,  has been the Common Agricultural Policy under  which variable import levies are set at levels which severely restrict

or exclude utterly imports of important Australian agricultural products

So now we see two sides of the same coin. Each of us has our strengths,  each our weaknesses. In these circumstances there is a natural  tendency for each to wish to liberalise trade in the area in which  it is stronger, and sfiore up protective measures in the sector in  which it is weak.  But the responses to this problem from the E.E.C.

and from Australia have not been the same.  Despite our tariff barriers,   Europe does have reasonable access to our markets, but we cannot get  reasonable access to European markets for important agricultural proÂ­

ducts. Twenty years ago, exports to the nine member states of the  E.E.C. were virtually at the same level as our imports.

Today, largely due to the Community's Agricultural Policy, there is a  serious imbalance of trading opportunities between Australia and the  E.E.C. Last year, the value of imports from the E.E.C. exceeded that  of our exports to the E.E.C. by nearly 60%. Reduced opportunities for  Australian agricultural exports to the E.E.C. have had a direct effect  on Australian primary producers. For example,  in the last six years,  one dairy farmer in three has left the Australian dairy industry.

In other areas of export opportunity, such as processed mineral  products, Australia is often faced with escalating levels of tariff ; in the E.E.C. as the degree of processing increases. For example, the  duty of bauxite is nil, alumina attracts a 5.5% duty,  and aluminium

ingots attract up to 22%. This policy directly inhibits the developÂ­ ment of processing operations in our country, but the imbalance in cur  responses to the problem of market access is even greater, for, under '   the Common Agricultural Policy, the Community does not merely prevent

reasonable access for our goods to your domestic markets; it heavily  subsidises the export of primary products to other markets.  ;

.  j

In some cases, the subsidy is greater than the final price of the Ã¢ÂÂ

products .  The subsidies have the effect of depressing world prices  and disrupting our traditional markets outside Europe.  Let me give  you just one example of what has happened. Our largest traditional  market for flour was Sri Lanka. Our share of that market used to be

87%. It is now less than a quarter of that because E.E.C. subsidies  have enabled European exporters in recent months to undercut our producj  by up to $36 per tonne. The E.E.C. subsidy is in the order of

$100 per tonne.  .  A similar story could be told for numerous other  products in other markets. j

All of this raises some questions. Would it not be possible to find  a level of beef support and beef levy that allowed trade to flow  without damaging the European beef producer? Would it not be possible  to find a level of support for wheat and grains and other foodstuffs

that also allows trade to flow and that allows the consumer the benefi'  of cheaper food? Would not this also help you in the fight against  inflation? Would it not be possible to fix levels of export restituÂ­ tions, subsidies, that do not wreck other people's markets, that do no'   depress world prices? These are questions I asked myself. Ã¢ÂÂ

/It would

6

S  %

It would seem to me that you can answer these questions in the Ã¢ÂÂ

affirmative while still preserving the basic thrust of the Common  Agricultural Policy. It is clear that we look at these matters from  different perspectives.  We need to understand each other's point of  view.  I have spoken about our trade relations because of their

importance to both of us, but there is a whole range of other issues,  political and international, which ai*e also of mutual concern.

We hope to see the European communities increasingly develop the role  which they are already playing internationally as a force for  stability. We have many shared interests which a developing interÂ­ national role by the Communities can do much to enhance. Quite apart,

from our agricultural products,  our capacity to act as a long term  and stable supplier of raw material and energy resources clearly  provides a basis for such a closer relationship. Moreover,  despite  our distance from Europe we are most conscious of the strategic

importance of Europe and the contribution which a strong European  Community makes to the North Atlantic Community and the present  global balance. %#Ã¢ÂÂ

While we are all deeply involved in the regions nearest to us, we  sometimes overlook the identity of interest between democratic  communities.  This is more than a regional matter.  Despite the  doomsayers,  those who speak of inflation and unemployment, of the W   crisis of democracy, our societies have great internal strength and  resilience. However because we are dispersed in large and small  groups around the world,  the interdependence of the democracies is

seldom well understood. The common interests between u.s are rarely  sufficiently emphasised.  Our strength does not lie exclusively in  the U.S. A., Europe or Japan or in afny other single region in the world

Our future is in a fundamental sense a collective one. We should not  allow ourselves to be isolated from one another commercially or  strategically. We need a global outlook and this is no less true , ,  of Europe than it is of the South Pacific countries. Our societie V

are pre-eminently ones which thrive on their interconnections with one  another and the rest of the world. They would wither without them. You in Britain have much to contribute to fostering this recognition,

to help avoid narrow exclusiveness which corrodes a common purposeg*  Jp

My Lord Mayor, thank you for your invitation to speak to this  distinguished gathering today. I am looking forward greatly to  the discussions which I will be having.over the next few weeks in  London,  Brussels, Paris and Bonn.  Australia strongly desires a

closer and broader relationship with all members of the European  communities,  complementing the strong relationship which we already  enjoy with Britain. I am most hopeful that these discussions will  be a start in securing that closer relationship which we seek.

