EMBARGO:  2.0 0 p .  m .

ÃÂ. AUSTRALIA ,ÃÂ

FOR PRESS 27 JULY 1977

ADDRESS TO ADELAIDE ROTARY CLUBS

It is a great pleasure to be able to speak to you today.

The latest economic indicators have been most encouraging. This  Week, the June quarter Consumer Price Index was announced - Â­ the increase was 2.4 percent;  over the year, excluding  Medibank effects, the index rose 10.2 percent, substantially below

the 15.8 percent increase over the year to June 1976. The  annual inflation rate is now approaching single digit levels,  and the devaluation price effects are being contained.

As we approach the second Budget of our first term of office,  it is now clear that the first Budget last August achieved a  great deal. Expenditures were largely held within Budget  estimates for the first time in some years;  the deficit was  substantially reduced; the growth of the money supply isras held  to the budgeted target; investment increased; and most significantly,  ;the economy began to grow again.

Last week, the latest Commonwealth loan closed, and .. I can say that it was a very successful result which will make  a very useful contribution to financing the Budget deficit in  the current year.  The Treasurer will be announcing the loan figures later today. Â·

The Government still runs a large deficit which must be financed  .  in a responsible way - and these two successful Commonwealth  loans will help in this task. They will make the job of  containing money supply growth to responsible levels easier,

they will help the longer run fight against inflation.

One sector of our community which has always been well represented  in Rotary is small business. Small business is a vitally important  sector of our economy<  It employs more than 40 percent of  the work force,  it constitutes more than 90 percent of all  business enterprises.  But during the past five years, small Â· .   business has been under considerable pressure. Â·

Some of the problems of the small businessman arise from inflation,  industrial trouble,  and - in some cases - lack of managerial  expertise.  But perhaps the most serious problem has been the  difficulty many small businessmen have found in raising adequate

capital to finance their growth and development.

2.

Unlike the large public company, small business cannot raise money  from the stock market or by the issue of debentures to the publicA  And businessmen are sometimes unable to raise the required finance.   The Government is most concerned to ensure that small business  has access to sufficient funds to finance growth.  For after all,

growth of small business .is vital to full economic recovery for  this country.  The Government has already moved to assist the  financial position of small businessmen. Various taxation  reforms have made available to small business substantially  increased profits and cash flow, thereby,  placing them in a better  position to finance growth out of retained profits. First,  we have introduced a generous investment allowance - a snecial

tax deduction of 40 percent of the capital cost of eligible new  plant. Second, the initial stage of our scheme for trading  stock valuation adjustment reduces the tax paid by businesses  by discounting the value of trading stock for tax purposes by  half the inflation rate, so for the year just ended, the tax value

of stock will be discounted by 5 percent. Third, with the  needs of small businesses particularly in mind, the retention  allowance for private companies - that is,the proportion ||| of after-tax business income that a private company may retain w

free of the special tax on undistributed income - has been  increased from 50 percent to 60 percent.  .

In addition, small businessmen, like all taxpayers, have ||| greatly benefitted from the introduction of tax indexation. We are also taking steps to see what action might be taken to  ensure that loan capital is readily available to small businessmen.

Last year, the Government published a report by Professor Johns  on the availability of finance to small business.  His survey  concluded that there was a gap in the supply of medium term and  long term finance to an important number of Australian enterprises.

In the light of that Report and other representations we have  received, we have set up a task force to examine this matter  further and I hope to receive their report shortly. |Â§|

In addition, wre have appointed Professor Johns to be the first ^   director of the new Bureau of Industry Economics. Part of the work of that Bureau will be to undertake detailed  research into longer run economic issues of relevance to the small  business sector. |||

WTe have also acted to improve coordination of Commonwealth and  State assistance to small businessmen. Under the new cooperative  scheme,  the States are providing counselling services,  management courses, and in some cases, guarantees for bank loans.

The Commonwealth is providing research and information and  coordinating the whole scheme to ensure a proper pooling of  resources and minimise duplication. Consultation between the  Government and manufacturers has also been increased by the  establishment of the Australian Manufacturing Council,  which  meets for the first time in Canberra today.  These measures

taken as a whole should leave no-one in any doubt of the  Government’s desire to encourage the growth of small business. One other factor which undoubtedly would further stimulate .   small business would be a significant fall in interest rates. As a farmer, I am well aware of the benefits which would flow

from an easing of the interest burden.

.  .  ./3

3.

Government bond rates have had to remain high as part of  our concerted anti-inflationary programme, but as inflation  is brought further under control, there are prospects of some  fall in rates occurring. Those businessmen among you who  are involved in manufacturing industry will know only too  well how much erosion there has been in recent years in our

international competitiveness. Greatly increased costs,  sluggish productivity and poor industrial relations have Ã¢ÂÂ    resulted in a loss of export markets, and increasing Ã¢ÂÂ  competition from imports in domestic markets. '

It xvas factors such as these which led to our decision to  devalue last November, and we confirmed our determination  to fight inflation. .

It is also clear that recovery of the economy is still being  retarded by overpriced labour costs. Do you know that  based on ruling exchange rates at the time, average weekly  earnings in Australia in 1971 were 17 percent lower than in the

United States, but that noxv they are over 13 percent higher  in Australia than in the U.S. A survey issued last xveek by the  Australian Chamber of Commerce and the National Bank showed  that txvo-thirds of companies wholly or partially absorbed

the last txvo wage rises without increasing prices, but that  half of these.companies did so by reducing their number of  employees. Never xvas it more true, as Mr Frank Crean to his  credit once observed, that "one man's wage rise, is another  man's job."

It xvill simply not be possible to reduce unemployment to  acceptable levels unless union leaders and the Arbitration  Commission take a realistic attitude to xvage increases. In the long term, structural change in our secondary industry

is inevitable. And the Government xvill be encouragng  future development in manufacturing to floxv into those  industries xvhich have the best long term prospect for groxvth.  But for the present, the Government is determined to alleviate

economic and social disruption, and minimise the erosion  of employment opportunities. We have determined, for example,  that 80 percent of the local market for passenger motor  vehicles should be reserved for local producers, this level

is regarded as necessary to avoid disruption of the industry.  The local industry's share of the market has declined this  year beloxv 80 percent. This has coincided xvith a fall in

demand for nexv vehicles and the result has been retrenchments  of employees, as occurred in the past xveek in this States. We are most concerned at the damaging effects this may have  on the South Australian economy, and the hardship caused to

employees to the car industry and their families. We have  therefore acted to introduce quotas on imported vehicles,  and we have sought reports from the I.A.C.,so that xve can take  action if necessary to prevent further major dislocation in  this industry.

.  .  .  / 4

4.

Ã¢ÂÂ   . \

On my recent trip to Europe,  trade was a central issue inÂ· all  my discussions with leaders of the European Community.  '  . One matter of primary concern to me was the increasing .difficulties  which the protectionist policies of the E.E.C. were causing  Australian exporters of agricultural products.  Virtually

all our primary products other than wool are denied access to  European markets.  And what is worse,  European surpluses ' are exported at such vast subsidies that our goods are being  undercut in many of our other traditional markets around the  world. Recently,  these policies of exclusion have been .

applied not only to agricultural but to Japanese manufactured  goods and steel from Japan and South Africa.  The attempt  was also made to make Australia reduce our exports of steel to  the E.E.C. by 25 percent - on the grounds that Australia was an  unfair trader.  I would not voluntarily contemplate such cuts

and the request has since been withdrawn. '

The E.E.C. xvith its 260 million people: .is the world's largest  trading bloc, accounting for 40 percent of the world’s trade.   In I960,our exports to members of the E.E.C. accounted for 40  percent of our total exports. Now that proportion has  been reduced to 14 percent.  Not because we are any less

efficient, than we were,  but because of the restrictive  policies of the E.E.C. As a result of my discussions last  month, the European Commission has agreed to a series of  bilateral trade discussions commencing later this year. And as a sign of the of the vital significance of these talks

to us, I have appointed a Minister, Mr John Howard, to lead  our negotiating team. Mr Howard will, as the Constitution  requires,head a new Department, but it will be confined to  20-30 people and effectively constitute a secretariat for the  negotiating team.

The matter of primary concern to the Europeans,  however, ,  ||ÃÂ was not agricultural goods - but uranium. Their most pressing  shortage is energy.  And they have reached the decision that they  must rely on nuclear energy if they are to meet the needs of

their factories and homes over the next two decades. Their nuclear industry is already well developed, over 10 perceni^J  of the energy produced in Belgium, Britain, Sweden and  Switzerland, last year was derived from nuclear reactors. European leaders made it very clear to me that they looked

to Australia - which holds one fifth of the world's uncommitted  reserves of uranium - to be a stable long term supplier  of uranium.  My response was that we were considering the  report of the Fox Inquiry and had not yet reached a decision  on uranium exports, but that their needs would certainly be  taken into account.

I was also able to outline to them the comprehensive system of safeguards which would, apply to any uranium we might export.  They constitute the most stringent safeguards so

far adopted by any country,  and will be applied both through Â· compliance with the requirements of the International Atomic Energy Agency,  and through bilateral agreements, between Australia and each user-country.

.  ./5

3.

Government bond rates have had to Remain high as part of  our concerted anti-inflationary programme,  but as inflation  is brought further under control, there are prospects of some  fall in rates occurring.  Those businessmen among you who  are involved in manufacturing industry will know only, too  well how much erosion there has been in recent years in our

international competitiveness.  Greatly increased costs,  sluggish productivity and poor industrial relations have  resulted in a loss of export markets, and increasing  competition from imports in domestic, markets.

It was factors such as these which led to our decision to  devalue last November,  and we confirmed our determination  to fight inflation.

It is also clear that recovery of the economy is still being  retarded by overpriced labour costs. Do you know that  based on ruling exchange rates at the time, average weekly  earnings in Australia in 1971 were 17 percent lower than in the  United States, but that now they are over 13 percent higher

in Australia than in the U.S. A survey issued last week by the  Australian Chamber of Commerce and the National Bank showed  that two-thirds of companies wholly or partially absorbed

the last two wage rises without increasing prices, but that  half of these companies did so by reducing their number of  employees. Never was it more true, as Mr Frank Crean to his  credit once observed, that "one man's wage rise,  is another  man's job."

It will simply not be possible to reduce unemployment to  acceptable levels unless union leaders and the Arbitration  Commission take a realistic attitude to wage increases. In the long term, structural change in our secondary industry

is inevitable.  And the Government will be encouragng  future development in manufacturing to flow into those  industries which have the best long term prospect for growth.  But for the present, the Government is determined to alleviate  economic and social disruption, and minimise the erosion  of employment opportunities. We have determined, for example,

that 80 percent of the local market for passenger motor  vehicles should be reserved for local producers,  this level  is regarded as necessary to avoid disruption of the industry.  The local industry's share of the market has declined this  year below 80 percent.  This has coincided with a fall in

demand for new vehicles and the result has been retrenchments  of employees, as occurred in the past week in this States. We are most concerned at the damaging effects this may have

on the South Australian economy,  and the hardship caused to  employees to the car industry and their families. We haxre  therefore acted to introduce quotas on imported vehicles,  and we have sought reports from the I.A.C. so that we can take  action if necessary to prevent further major dislocation in

this industry.  .

.  .  .  / 4

4.

On my recent trip to Europe, trade was a central issue in all  my discussions with leaders of the European Community, One matter of primary concern to me was the increasing difficulties  which the protectionist policies of the E.E.C. were causing  Australian exporters of agricultural products. Virtually

all our primary products other than wool are denied access to  European markets. And what is worse, European surpluses  are exported at such vast subsidies that our goods are being  undercut in many of our other traditional markets around the  world. Recently, these policies of exclusion have been  applied not only to agricultural but to Japanese manufactured

goods and steel from Japan and South Africa. The attempt  was also made to make Australia reduce our exports of, steel to  the E.E.C. by 25 percent - on the grounds that Australia was an  unfair trader. I would not voluntarily contemplate such cuts

and the request has since been withdrawn. '

'  .  v

The E.E.C. with its 260 million people is the world's largest  trading bloc, accounting for 40 percent of the x^orld's trade.  In I960, our exports to members of the E.E.C. accounted for 40  percent of our total exports. Now that proportion has  been reduced to 14 percent. Not because we are any less

efficient, than we were, but because of the restrictive  policies of the E.E.C. As a result of my discussions last  month, the European Commission has agreed to a series of  bilateral trade discussions commencing later this year. And as a sign of the of the vital significance of these talks

to us, I have appointed a Minister, Mr John Howard, to lead  our negotiating team. Mr Howard will, as the Constitution  requires,head a new Department, but it will be confined to  20-30 people and effectively constitute a secretariat for the  negotiating team.

El

The matter of primary concern to the Europeans, however, ^ was not agricultural goods - but uranium. Their most pressing  shortage is energy. And they have reached the decision that they  must rely on nuclear energy if they are to meet the needs of

their factories and homes over the next two decades. ^

Their nuclear industry is already well developed, over 10 percenw  of the energy produced in Belgium, Britain, Sweden and  Switzerland, last year was derived from nuclear reactors. European leaders made it very clear to me that they looked

to Australia - which holds one fifth of the world's uncommitted  reserves of uranium - to be a stable long term supplier  of uranium. My response was that we were considering the  report of the Fox Inquiry and had not yet reached a decision  on uranium exports, but that their needs would certainly be  taken into account.

I was also able to outline to them the comprehensive  system of safeguards which would apply to any uranium we might  export. They constitute the most, stringent safeguards so  far adopted by any country, and will be applied both through

compliance with the requirements of the International Atomic  Energy Agency, and through bilateral agreements, between Australia  and each user-country.

.  .  / 5

*

5.

/

The European's wish for us to be a stable long-term supplier  of uranium bore striking similarities to our request that they  be a stable long-term customer for our beef and other agricultural  nroducts, and I do not think the logic of this comparison

was lost on them.  The development* of our uranium resources  of course affects not only the Europeans,  it also affects  all Australians,  some very closely indeed. The benefits

of mining are obvious, particularly to the economy of the  Northern Territory.  But we shall not determine this issue until  other fundamental issues have been resolved. In particular,  no decision will be made on mining until we are absolutely

satisfied that the environment will be fully protected, and  that the needs and interests of the Aboriginal peopleÂ· are  safeguarded.

The issue of uranium is not the only matter on which the interests  of the Aboriginal people require urgent attention. For too long,  the interests of Australian Aborigines have been.overlooked  by the rest of our society, their plight as among the most  underprivileged Australians is not always appreciated. Sickness and malnutrition are rife in many Aboriginal communities.  Child mortality rates and life expectancy for adults are far  worse than for other Australians, and over 50 percent of the  Aboriginal workforce is unemployed. The Government is

giving a high priority to tackling these problems, and in doing  so, to restore self-confidence and dignity to the Aboriginal  people.

The Land Rights Act,  proclaimed earlier this year, is an  historic achievement, and the Law Reform Commission is  currently studying the feasibility of recognising  Aboriginal customary law as part of the law of the land.

Substantial sums are being paid for Aboriginal health services,   and our aim is to train more Aboriginals as field health  workers, to ensure that there is adequate communication  between those providing and those receiving the service.

The Minister for Aboriginal Affairs, Ian Viner,  recently announced that we would establish an Aboriginal community  health service using the community itself and traditional  healers to provide the service. This is an appropriate point  perhaps to lay to rest speculation which I have read in the  press about an early election.

I can tell you that there will be a national election in November -  an election for the National Aboriginal Conference. This new body has been set up on the recommendation of a Committee  of Enquiry, all but one of whom were Aborigines.

The N.A.C. will operate under a charter which has already  been tabled in Parliament, and will provide a forum in which the  viewrs of Aborigine communities can be expressed at Federal and  State level. Another body, the Council for Aboriginal Development,  will also be established. This all-Aboriginal body - half Ã¢ÂÂ   .

elected by the N.A.C. and half nominated by the Government - Â« will be the formal adviser to the Government on Aboriginal affairs.   We have introduced a number of initiatives which together  amount to a national employment strategy for Aboriginals.

.  .  .  / 6

We are establishing a programme of community development  employment projects. This, -.programme is directed towards  Aboriginals who live in remote or separate communities,  and who do not form part of the ÃÂ¿-ÃÂ²ÃÂ²ÃÂ· labour market.

The projects approved under this programme will provide work,  including part-time, contractual and cooperative work, as an  alternative to income support by way of unemployment benefit.  Aboriginal Councils or incorporated groups will receive lump

sums which will enable them to determine the work projects  to be undertaken - and allocate resources to them. You may be aware that in response to the Government's  initiative, two Aboriginal communities in South Australia  have already decided to work on community development projects

instead of receiving the dole.

The Government is also taking steps to expand the number and (|||  variety of employment opportunities for Aboriginals in both  the private and public sectors. A national campaign will be  undertaken with a view to persuading employers at top management  level to train and employ Aboriginals in their establishments. ^   Support of this will be provided under the National Employment  and Training Scheme. I would be particularly delighted

if Rotary would ensure that all its members were aware of this  Scheme and urged to support it.

Mr Chairman, thank you for inviting me to speak here today. Gordon Davidson has been extolling the virtues of Adelaide  Rotarians to me for as long as I can remember. Rotary is an organisation which I personally hold in high regard,

its reputation is largely based on its manifest concern for the  underprivileged in our community. This is a concern which the  Government endorses and shares. (b/|

I congratulate your social service programmes and I wish you  even greater success in the years ahead.

OOOoooOOO

