PRIME MINISTER

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FOR MEDIA .  SUNDAY, 10 AUGUST, 1980

ELECTORATE TALK

Both the world economy and the Australian economy have been  through a difficult period since the first energy crisis in  the early '70s. All of the Western industrialised countries  felt these pressures.  But the response in Australia by the  Whitlam Government was in itself a transparent crisis of  management and policy because in many ways Australia had

been in a more fortunate position than other countries. .

Our natural resources, our great endowment of energy,  our  long record of low inflation - these should have provided.   the basis for relative improvement in Australia during  those testing and.difficult years. Yet we lost ground.  Australia suffered a severe loss of international

competitiveness. Our industry lost export markets. It  faced increasing competition from importers and as a result  had to really battle just to survive. Now, five years later  - as a result of policies that have at their heart the  reduction of inflation - forces are at work in our economy

and our industries which give us cause for optimism.

There is no doubt we faced a formidable task in restoring  the conditions on which Australia's future wealth and welfare  depend - and in many ways the job has been much more  difficult than many people believed. But we have achieved .   success because of our commitment to overcoming inflation and  responsibly restoring a stable economic climate in which  business can make decisions.

ÃÂ In essence, what we have been about has been to rein-in  | the demands of Government and to reduce what is called the .   Budget deficit. Last financial year the Budget deficit was  reduced to just over $2,000 million - well below the deficit  " o f  $3.4 million in the previous year. That deficit was

equivalent to substantially less than 2 per cent of the  Gross Domestic Product,  which is in marked contrast to the  5 per cent recorded in 1975-76 when Australia was counting  the cost of the Whitlam Government's spending binge.

There is no doubt that in difficult world conditions our  policies have had encouraging success.

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The economy has been steadily growing in strength during  the past few years and our relative position in the world has  substantially improved. Inflation in Australia has been .   below' that for major industrial countries since 1978 - and

that margin has widened in our favour to about 3 percentage  points.  In other words,  during the Labor years Australia lost  ground,  slipped behind the rest of the world, because of  the policies followed by the Government of the day.

But today the position is reversed. We have pulled ahead of  our competitors because we have been willing.to take the .   necessary tough decisions. As a result,  our competitive  position has returned to levels that were last achieved in  Australia in the very early 1970s. Our exports have greatly _

expanded, having risen by 33 per cent last financial year.  And our balance of payments position has strengthened  accordingly.

Continued strength is in prospect in 1980-81 despite the  gloomy economic conditions facing many countries.  Of course,   the good news is not confined to exports. The Australian  Bureau of Statistics’  Survey of Investment suggests that a  surge in capital spending will take place this year with gains  in all parts of the economy.

The Government also knows of at least $29 billion worth of .   investment in the 1980s that is firmly committed or ready to  go ahead. Employment growth has also been strong during the  last year. The number of people employed has risen by

175,000 while this week's figures show that total unemployment  in July fell by 21,000 from the previous month. The figures .   showed that the unemployment rate, although too high, is  below that at this time last year.

Australians do not need reminding that irresponsibility will .   certainly sweep aside these hard-won gains.  That irresponsibility  is already stalking the stage in wage demands and in  confidence-shattering spending and tax proposals. If it is  allowed to persist without challenge, faith and optimism for  the future will be eroded and improvements in wealth and . incomes forestalled.

Like Mr. Whitlam before him, Mr. Hayden clearly has thrown  away any vestige of the essential commitment and sense of  duty required of government leaders to strive for the best  forÂ· all Australians. His commitment is to big spending. -His faith is in an open-ended cheque book that bears the

name "Australian taxpayer".  .

The ALP has already committed itself to $2,000 million a year  extra expenditure - and that in only about five areas of Â· government.  When all the other Shadow Ministers put in their  bids - and all the other commitments are met - the additional

spending under Labor will be much more than the taxpayers of  Australia could ever afford. .

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Without exception, each of Labor's so-called policy  initiatives that Mr. Hayden trots out comes with the promise  to spend up big. It is all trussed up to look moderate and  reasonable. But beneath the word games,  Mr. Hayden's answer

in every policy area is simple - spend, spend, spend.

Australians were conned once by Mr. Whitlam's big spending.  They won't be caught again. The plain truth is that sound  and stable economic management is what is required - the  type of management that my Government has undertaken  Ã¢ÂÂ¢  in the last five years.

The Budget to be brought down in just over a week's time  will demonstrate our continuing and unyielding commitment  to sound and responsible economic policies. For without  this we can never hope to control inflation, increase

employment,  encourage investment and development and secure  a future for all Australians. Certainly many challenges lie  ahead of us. We are determined to play our role with  responsible economic decision-making as we move through

the 80s.

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