Address by the Hon. E.G. Whitlam,

Q.C., M.P. to the National Press

Club, Canberra, 20 July 1977

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The Australian economy is facing a crisis. It is a crisis of

grave and disturbing proportions, a crisis with profound implications

for the' social health and political cohesion of this nation. It is

a crisis that springs from the utter failure and bankruptcy of the

Fraser Government's economic policies. So long as those policies

continue, no employee's job will be safe; no one's living standards

will be secure. '

It must now be clear to even the blindest supporters of the

Government that its economic strategy has failed. Until the

Government scraps its present destructive and inhuman policies, the

economy will continue to decline - and the social consequences of

that decline will grow more serious every month, every week, every

day. The question is no longer whether we need a change of economic

strategy. The question is v/hen that change will be made. It is no

longer whether we need a change of direction. It is whether the

Government can make that change with good grace, with humility, with

sincerity - and above all, with urgency.

All the evidence suggests that it cannot and will not change -

that for the worst political and ideological reasons it is locked

into its present destructive course - a course that can only lead us

into deeper national recession, deeper national stagnation and deeper

national division. The calamitous mistakes and misjudgements of the

last Fraser-Lynch Budget seem certain to be repeated and compounded —

with even more devastating effects - in the next Budget. They have

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already been repeated and compounded by the Premiers'  Conference

last month.

The Labor Party - the oldest and greatest political party in

Australia, the party with the deepest humanitarian concerns - will

never tolerate these policies. What troubles us most of all - what

deeply concerns me,Â· not only as a political leader but as a human

being - is the terrible effect of these policies on people's lives

on families, on breadwinners, on our young. Are the Liberals remotely

aware of what their policies, and even worse, their attitudes, are

doing to ordinary people? Anyone who talks to migrants or the young

can see the evidence at first hand. The Fraser Government has already

created a fringe generation of young unemployed - a generation cheated

of hope and self-respect on the very threshold of their working lives.

More than a third of our young people between 15 and 19 were

in Australian society, may never be cured. That is the terrible risk,

and the terrible price in human terms, of the Fraser Government's

policies. ÃÂ  ;.Â·Ã¢ÂÂ Â·'Â·Ã¢ÂÂ 'Ã¢ÂÂ Â·.'Â· V :

Since the Liberals came to office unemployment has risen by no

less than 30 percent - and no end to this growth is in sight. There

were 86,000 more people registered as unemployed at the end of June

1977 than in June 1975. Nothing Mr. Fraser said to your luncheon a

week ago gave any hope to the unemployed; he acknowledged by his

silence in answer to a question that unemployment will rise .  . .

to at least 7 percent of the workforce in

unemployed for a period in 1976. The number this year, will be higher.

The youth of this nation, and a disproportionate number of migrants,

have been embittered and alienated by a deliberately prolonged

recession. Their disillusionment with the system, their loss of faith

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the months ahead. It will rise to levels previously unthinkable  ÃÂ^Â·Â·

in Australia in economic or political terms.

.  Â· -  But it is not just in the unemployment figures that we

see the fruits of their present misguided strategy. Growth

rates ar6 down, interest rates are up. The currency has suffered

its greatest devaluation since the depression. Living standards

have fallen. Productivity is down. While economic conditions

are generally improving in all other OECD countries, in Australia

they are decidedly worse. Truly, as Mr Fraser told you last

week, his policies have given an "impotence" to the private "

sector! And despite what Mr Fraser says, the level of inflation

in Australia is still running at close to 14 percent - with the

full effects of devaluation yet to be felt. The inflation rate  ‘  ‘  .  '  ‘  Â·  Â·Â·' - Â· .  A .

for the past year in Australia was 13.6 percent - much higher

than the OECD average of 9.4 percent, much higher than the .  :

Japanese figures of 9.5 percent, much higher still than the

6.5 percent in the United States. By comparison with our major

trading partners, inflation in Australia is still dangerously

and intolerably high. .  .

Those are the stark dimensions of our economic crisis.

No amount of fudging by Mr Fraser and Mr Lynch can disguise them.

But even worse than the figures themselves are the lies and

false assumptions by which the Government is justifying its

current misguided and tragic policies. \ -

The Government is conditioning the Australia people into  Ã¢ÂÂ   -  Ã¢ÂÂ   t -  Â·  - . Â·

accepting two dangerous and sinister fallacies about our economic

malaise. First, it is seeking to persuade the community that

permanently high levels of unemployment are not only inevitable -Â·

even beneficial - but specifically the result of itage increases

and trade union activity. Secondly, it is seeking to persuade

Australians that inflation is the result of government, spending

of government investment in federal programs and community services.

Both these assertions are false. And until we dispose of them

there is no way that our- economic problems will be solved.

So long as the Government remains blinded by prejudice, so long

as it tries to hoodwink the Australian people and even swallows its

own propaganda, the economy will continue to decline, unemployment

will continue to grow. .

So let us clear our minds of all preconceptions, let us look

clearly and honestly at what went wrong with the economy,^at the.

mistakes that were made on both sides. I put it to you that the key

to recovery, the key to the restoration of jobs and living standards,

lies in a humane and responsible balance between two competing

needs.- the need for stimulation of the eonomy, particularly its

most depressed sectors, and the need for overall restraint in .

government spending. Reconciling these needs has been the challenge

for all democratic governments in the advanced industrial nations

since the outbreak of the international recession. And the central

lesson is this: the countries that have weathered the recession

most successfully have not done so by a vendetta against the public

sector, by destroying and diminishing ffederal programs, by creating

needless unemplomment.  Labor believes that the right balance between

restraint and stimulation can be found. We beleive we found it in the

Hayden Budge tin 1975. That Budget was working well in the conditions

of late 1975 and early 1976. It provided for a sharp reduction

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in the overall growth of government expenditure while meeting the pressures of national and international recession. Under ' # 8 6 !

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the Hayden Budget unemployment was falling, and falling steadily;

indexation was working; inflation was being contained. Only

when the Fraser Government began destroying the basic calculations

of that Budget did recovery begin to falter.

am

I affirmed in Perth.two weeks ago* that Labor's social programs

would have to be tailored to a new set of economic conditions. That

will mean a substantial deferment of many of our social goals. We

accept that. We accepted it as part of our basic economic strategy in

1975. But that strategy has since been reversed. In place of Ã¢ÂÂ

responsible restraint on public spending the Fraser Government has

resorted to overkill. The basic cause of our present galloping

recession and unemployment is Mr. Fraser's demolition job on the Â·

public sector. That policy is having disastrous effects, ,  not only

on the Federal Government's programs, many of which were initiated '

by former Liberal Governments, but on the capacity of the States

and local authorities to provide employment for our people. It is '  v

killing jobs, it is killing productivity, and will end by killing

economic growth itself. Â·  .  v .

The figures tell the story. In the 12 months to March 1977

private investment rose by 7 per cent in real terms, but public

investment was down by 7 per cent. That gross inbalance has done

little for the private sector; it has had grave consequences for the

public sector. In real terms the Fraser Government has reduced public

investment by 5 per cent relative to 1974-75 - the last financial

year for which Labor was responsible. Put more starkly, real budgeted

capital expenditure was about 17 per cent lower in the first

Lynch Budget than in the Hayden Budget.

.  Ã¢ÂÂ   Ã¢ÂÂ   Ã¢ÂÂ   .  .  .. ,/6 '

SB *  ^ There lies the cause of our continuing recession. The

whole misguided Liberal strategy rests on the false assumption . Ã¢ÂÂ¢  ‘ :  i Â·  Â·  Ã¢ÂÂ   ' v - V :y ; Â·?

that our problems will,Â· ^be. solved only so long, and only to the

extent, that the public sector is diminished. Yet by'world :

standards,the Australian public sector is small. In 1974 .  Â·  .

current public expenditure on goods and services as a proportion of GDP

was 15.4 per cent in Australia. It was 18.8 per cent in the

United States,Â· 19.2 per cent in Canada, 19.7 per cent in West Germany,

20.5 per cent in Britain, and 23.6 per -cent in Sweden. Why should .

Australia's public sector be depressed any further? ,

It has always been a fallacy that public spending of itself

is the cause of inflation. Inflation took off in Australia well

before there was a Labor Government committed to stengthening the

public sector. In December 1969 the C?IÂ· was increasing at an annual

rate of 2.8 per cent. By the end of 19 71 it was growing at an

annual rate of 7.2 per cent. Wages took off in this period too, as .

I shall show in a moment. The rapid growth of mineral exports and

private investment from overseas between 1970 and 1972 led to a

surplus in the balance of payments, a rapid accumulation of reserves

and a sharp increase in the money supply. All these danger signs were

ignored by the Liberals; indeed, the risks were recklessly prolonged .

for electioneering purposes. The Snedden Budget in 1972, in the

context of an undervalued currency- and a grossly inflated money

supply, did more than any Labor Budget to fuel continuing inflation

in Australia. .  \

Of course these Liberal errors and severe international pressures

were not the only cause of our economic problems. I am perfectly .

willing to acknowledge that the Labor Government made serious mistakes

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The first was the credit squeeze. Our monetary -restraints were

imposed ..too late and too hard in September 1973 and taken off too .

late in September 1974. This created severe liquidity problems for

perceive the dangers of the sudden and excessive growth of wages in .

1974. The high wage demands of 1974, and the exceptionally high

awards granted by wage tribunals, were largely, a response to booming

commodity prices, to a sharply increased demand for labour in 1973

and to the inflationary effects of the Snedden Budget. With hindsight

we ought to have done more to urge caution on the Arbitration

Commission and other tribunals. :

Even so, let us keep the facts in perspective. Mr. Fraser and

Mr. Lynch foster the myth of an unprecedented wage explosion under

Labor. Certainly the rise in 19.74 was too sudden and too steep.

But as the Melbourne Institute for Applied Economic and Social

Research has shown, the total increase in real after-tax earnings

during the three years of Labor rule Ã¢ÂÂ - about 8 percent - was

considerably less than the 12 percent increase during the previous

three years. Moreover, Labor acted promptly to ensure that .

many companies. That error arose from relying on bad advice and

inadequate statistical information; we took steps to K^t-h

deficiencies. As a result of Labor's action to improv

availability of statistical economic date, I doubt if

Government will make that mistake again.

Our second mistake concerned wages. We were too slow to

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excessive wage rises would be kept in check without damaging

living standards. That.was the purpose of wage indexation.

Indexation was a socially equitable and economically sound response  /  /  '  ;  . . Â·

to the wage inflation of 1970 and 1974. And by late 1975, in

conjunction with our other policies, it was helping to restrain . .  .  '  '

wage demands, to restrain inflation and to provide a solid basis for

genuine social consensus and general recovery. So I put it to you

that while Labor made mistakes, at least we learnt from our experience

We know where we went wrong. We know .what caused our problems and, Â· Â· . .

just as important, we know what didn1t cause them. -  .  .

The Liberals have pretended that government spending is the '

cause of inflation; that line is false. They have pretended that

wage rises are the sole cause of unemployment; that line is false.

Mr. Fraser is still blaming wage rises for unemployment when real

wages under this Government have fallen. Real household disposable

income per person fell by about 3.5 percent in 197 6. Mr. Fraser .

blames strikes for unemployment; yet the number of industrial .

disputes has fallen sharply in the economic climate created by the

Fraser Government. Everything the Fraser Government does is

justified by the specious claim that it will recuce inflation. It has

not, and it will not. For reducing inflation is not the primary

objective of this Government. If it were, it would not have taken

decisions which have directly added to the cost of living — the

exorbitant Medibank levy, the excessive devaluation. What, then, are

the Government's primary objectives? For this Government, cutting

government spending is a primary objective - not as a means of

reducing inflation but an objective in itself — part of the process of

dismantling the public sector, of undoing Labor's reforms, of '  ‘  . .

abolishing any role for the Federal Government in any creative or

constructive national endeavour. Again, the deliberate creation

of unemployment is a primary objective - not a means of reducing Ã¢ÂÂ   '  Ã¢ÂÂ   '  Ã¢ÂÂ   Â·  V;;;c Â· . Â· ' Ã¢ÂÂ

inflation but an end in itself. And its purpose is to weaken and .

Ã¢ÂÂ   Â·  / .  Ã¢ÂÂ   Â·  . Â· Ã¢ÂÂ  "

demoralise the industrial and political Labor movements.

t Having failed in its attempts to revive the Australian

economy, the Fraser Government is now pinning its hopes for

recovery on a renewed boom in the mining sector. Essentially

Mr Fraser and his colleagues have rehashed the oldest and most

simplistic attitudes towards our uranium. They are telling the

Australian people that Australia's uranium resources are an

El Dorado; that they will bring us countless millions of dollars

and countless thousands of jobs. They have blurred and minimised

the hazards of uranium and the nuclear industry. Last week, in .

this room, you heard the result of so-called "intensive research"

in Mr Fraser's office designed to demonstrate that Labor's

attitude towards uranium is hypocritical, and-by implication,

that Liberal attitudes have always been decent, clear-sighted and Â·

honourable. .  .

.  The hypocrisy of the Prime Minister's analysis of past

Labor policy does not deserve the compliment of rational discussion.

Of course my Government was exploring the possibility of sales of

Australian uranium. We were determined as a Government to be

dependable suppliers of raw materials to our trading partners.

But all our discussions on uranium hinged on the need for adequate

safeguards. The fact is that the industrialised nations and most

western governments are far more conscious today of.the hazards of

nuclear energy than they were even two years ago.  It was precisely

because of those hazards and uncertainties that my Government

commissioned the Fox inquiry. And it is precisely because of the

Fox Reports - and the growing climate of international concern -

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that even the Fraser Government is treading cautiously today.

! v?iÂ§s  Â«I :  . ... ÃÂ ÃÂª ÃÂ

The dangers have been brought home to everyone by the

Fox Reports, and, for" my part, by my talks in Europe this year.

Certainly I am much more aware of the risks than I was two years

ago. So is the Labor Party as a whole; so are the Liberals; so,

according to the latest polls, is the entire community. The

House-of Assembly of South Australia, in March this year,

unanimously adopted a resolution in these terms:

That this House believes that it has not yet been

demonstrated to its satisfaction that it is safe to

provide uranium to a customer country and, unless and

until it is so demonstrated, no mining or treatment

of uranium should occur in South Australia; and

further believes that the S^uth Australian Government

should give the greatest possible financial support

to research into the use of solar energy and other

alternative energy sources as a matter of extreme

'  '  urgency. . .  .  . . . . .  Ã¢ÂÂ  . Ã¢ÂÂ  Ã¢ÂÂ  Ã¢ÂÂ  .

That motion was carried by both sides, by all parties, without

dissent.

Who are the real hypocrites? It was the coalition parties

that refused to ratify the treaty on the non-proliferation of

nuclear weapons.  It was the coalition parties, until 1971, that

sought to develop a nuclear weapons option for Australia. Prime

Minister Gorton promised in his 1969* election platform to take

Australia into the atomic age. In 1969 the Liberal National

Country Party Government conducted a feasibility study on the use

of a series of nuclear explosions to excavate a harbour at Cape

Keraudren in Northern Australia, in spite of the fact that such

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action would have been contrary to treaties and agreements relating

to the use of such nuclear devices. Prime Ministers Menzies, \ Â· 1 ; ÃÂ¥ Â· ÃÂ¯ ' Â·

Holt and Gorton, influenced by Sir Philip Baxter, pursued national

and international atomic policies which encouraged the gravest

suspicion among our major allies about Australia’s commitment to

nuclear non-proliferation. The Fraser Government, to its credit,

has agreed to Australia joining the international nuclear fuel

cycle evaluation study. Its main purpose is to work out stronger

international safeguards for the nuclear industry. Its work will

take two years. There is no conceivable reason why Australia

should make any commitment to renew the export of its uranium

until that study is concluded. Any such decision while the study

is in progress would wreck it.

Labor's historic decision at Perth was the result of more Ã¢ÂÂ¢ " Ã¢ÂÂ   -  " Â·  . "  ’

than twdlve months of active and wide-ranging, study of the problem

of uranium throughout the rank and file of the Labor Party. The Â·

decision at Perth was democratic; it was unanimous. I support . .

it absolutely. It reflects Labor's concern that the current -international nuclear non-proliferation regime is inadequate. This

is not argument, it is fact. The authorities responsible for the

safeguards regime, the International Atomic Agency is Vienna and

the Euratom Commission in Brussels, acknowledge these facts. .

Moreover, the relations between those two major western safeguarding

authorities are themselves at an imperfect stage of development. '

After almost ten years of negotiation the IAEA and Euratom have

completed a framework agreement for cO-operation on nuclear

safeguards. This is a positive development, but the framework v

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agreement is nothing but a framework. It is now necessary for its

terms to be specifically completed, that is for adequate physical  ' % Â· Â· ' Â· Â· Â·

safeguards to be mounted on the 300 nuclear facilities that  - V

presently exist in Europe. Not one facility agreement has yet been

concluded. In other words, neither European nor Japanese safeguards

yet meet the non-proliferation requirements. Two years ago a ship

carrying uranium, a ship under European safeguards, disappeared! .

Its cargo was hijacked to a country in the Middle East. It was unde]

safeguards. They were inadequate. The Labor Party at Perth

recognised these facts. The Fraser Government is seeking to obscure

them. .  .

Labor also recognised in Perth that the radio-active waste

produced by nuclear power generation cannot yet be safely stored or

disposed of. Those wastes constitute the major threat to the

biological and genetic future of humankind. The techndlogy of .

waste control and disposal is in an embryonic stage. The

nuclear industry therefore remains unsafe for manking and for

the global environment. The Labor Party recognised these facts at

Perth. The Fraser Government is turning its back on them. :  .

The Labor Party had no other course but to declare a moratorium

on the mining and export of Australian uranium until the safeguards

and waste disposal problems are solved. This is not an anti-mining

policy; it is not a ‘leave it in the ground forever1  policy. It

accepts the realities of the present state of the nuclear industry

and it refuses to add to the grave problems of the industry. A

Labor Government would use all the influence that flows to

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-Australia from its ownership of much of the world's uranium

. Ã¢ÂÂ  ... -

to ensure that adequate international and technological safeguards

are made.

The Fraser Government's sole justification for uranium developÂ­

ment is economic - the El Dorado theory. Yet the Fox report shows

that the economic'benefits of uranium mining, through its

contribution to net national income and employment opportunities,

would be - to quote its words - ''relatively small". Based on the .

assumptions in the reports about output and price, uranium mining

would never be likely to contribute more than about 0.5 percent of

net national income, or employ more than 400 people, during the

production phase.

The notion of uranium as an economic salvation is-an illusion -

a dangerous illusion in every sense of the word. The only way to

genuine economic recovery lies in a change of policy, and a

change of heart, by the Fraser Government. As a result of our :’ Ã¢ÂÂ  Â·

Conference in Perth, Labor comes before the Australian people

with an unqualified pledge to restore full employment, protect

living standards and put an end to the recession. We acknowledge

that the task will be long and difficult. But Australians now

know that only a Labor Government will attack unemployment.

We are the only party with a humane and comprehensive policy to

deal with our greatest human problem and our greatest social

evil. Â·*

Accordingly, in addition to fiscal and monetary measures to

stimulate the most depressed sectors of the economy, Labor will

concentrate on specific job creation and retraining programs.

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The Labor Government will finance projects with a substantial

employment impact through its own expenditure and grants to the

States.

I - Â·  Ã¢ÂÂ

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I,shall spell out the details.

Specifically, we shall set up a project bank to assess the

employment potential of useful projects and to ensure that finance

is readily available when needed. '

We shall provide adequate funds for local government

bodies and other non-profit organisations to provide employment

and fund worthwhile projects in depressed regions. .

We shall give special incentives to employers to provide

employment for nominated groups - especially.the school leavers,

the long-term unemployed and the disadvantaged. .  .

We shall set up a full-scale national inquiry into

apprenticeship training. It will examine in particular a refundable

levy scheme on employers to induce them to train apprentices and

the need for supplementing training in schools and training .

establishments. ÃÂ Â·  *' Ã¢ÂÂ

We shall put more emphasis on retraining programs to meet

the OECD target of retraining 1 percent of the workforce each

year. This will enable more women to enter the workforce and

redundant workers to find other jobs.

We shall develop a system of comprehensive vocational

training, as recommended by the OECD, for all young school leavers

who do not take up formal training courses or apprenticeships.

‘  I  .  .  Â·  ’  ‘  1  ‘  .  Â·  ‘ "  i Ã¢ÂÂ   ‘ _  .  Â·  Â·  -  ’

We shall ensure that all migrants who want it will receive

English instruction on the job or at training centres, and that

all members of the workforce receive the necessary literacy or

numeracy training to enable them to find work. .

We shall expand vocational guidance facilities throughout

Australia. '  '  .  . '

We shall reform and improve the Commonwealth,Employment

Service and give assistance to any employees who want to move

to areas where work is available. Â·- ,

I have sought in this address to do two things - first, to

trace the real origins and causes of our present economic .

difficulties; secondly, to outline a carefully developed strategy

to put our people back to work, to end the recession and to meet

the challenge of profound, long-term structural change in our

conomic conditions.  Nothing will be gained by pretending that all

our troubles began with a Labor Government. If we fall for these

Fraser lies we will inevitably set back the prospect of recovery.

We will spend our energies in futile and destructive remedies

and deepen our national divisions. We are seeing now the fruits

of a historic Liberal neglect of the public sector and essential

community services;  the pressures of long-hidden structural

imbalance and instability in our industrial economy;

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the results of novel and unpredictable international economic

forces. Mistakes have been made by. Governments, Liberal and

Labor. This is the ti'me to acknowledge those mistakes and

make a fresh start.Â·

'  i  '  '  Â·  "  ‘  .  _  "  '  -  i

In place of the blind and destructive policies of the

Fraser Government, Labor puts forward a positive alternative.

In any period of readjustment to economic change there is bound

to be hardship and dislocation for Australians and their families  1  "  Â·  _

With sound and humane policies,  with a government that genuinely

cares for people's welfare, that hardship can be kept to a

minimum. Labor offers the Australian people a long haul back

to prosperity - but in the meantime, indeed as an essential

ingredient in our struggle, we offer Australians a new sense

of security - security in an age of uncertainty, security in an

age of unprecedented difficulty and unprecedented economic

hazard for our nation. .  .

