EMBARGO: 5.00 PM

3ÃÂ·

PRIME MINISTER

FOR MEDIA SUNDAY, 14 MARCH 1982

ELECTORATE TALK

A few days ago, in a speech to the Barilament and to the .   nation, I drew attention to the increasingly troubled and  uncertain world scene; to the tensions and threats to  international security that exist; and to the prolonged recession

in Europe and North America which has reduced world trade and  world growth to a virtual standstill.

We in Australia cannot ignore those developments. We live in  a world that is increasingly interdependent, and we are . inevitably affected by political arid economic circumstances  overseas. But, while there is no .  denying that we cannot turn  our backs on developments elsewhere in the world, while there

is no denying that they have a significant impact on us, our  interdependence with the rest of the world does not make us  totally captive to those developments. Interdependence does  not implyv a complete loss of our independence. Rather it means ;   that there are challenges to be faced; it means that the

policies of Governments., and the attitudes and expectations  of people must be shaped to face realistically the circumstances  of the time.

For ..most of the post-war period, our increasing links with the  world economy and world financial markets have been positively  beneficial. Along with the rest of the world, Australia benefited  greatly from the significant growth, of world trade and  'investment that occurred in the period following the war until

the early 19.70 1  s.  Indeed because of our small domestic  market, and our relatively small domestic supply of capital  for investment, our ability to tap overseas markets is especially  important to the growth of our real incomes. We look to others

to provide markets for our products, and to enable our industries  to achieve the seals of operations that enable them to be  internationally competitive; we look to others to provide the  specialised imports we need for industrial and resource development;  and our real living standards have been raised by the willingness

of others to invest in Australia's industries and resource  projects in co-operation with Australian capital and Australian  management.

The.first of the dramatic oil.price increases in 1973 marked the  end of an era of rapid world growth, although the deterioration  in economic stability and the associated acceleration in

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world inflation were clearly apparent before those price rises  .occurred, and can be attributed in large part to excessive .   growth of Government spending and inappropriate deficit  financing policies pursued by many countries. In Australia,

the big spending big deficit policies of the Labor Government  exacerbated problems that were already evident.

When the present Government took office in 1975 we put into place  policies designed to restore confidence, growth and prosperity  to Australia against the background of an already weak world  economic scene. We made the fight against inflation the  cornerstone of our policies; and through restraint of  Government spending, winding-back the budget deficit, and

control of the money supply; through the provision of  incentives to industry to invest,  to undertake research and  development and seek our new and expanded export markets;  we succeeded in restoring confidence to-the private sector,  and  we gave it the room it needed to once again become the mainspring

of growth and development. Moreover, through our decisive action  in introducing import parity pricing for oil, arid associated Â·   policies for old and new oil, we succeeded in revitalising the  petroleum exploration and development industry, providing  Australia with renewed activity and renewed security of supply.

That our policies were right, that the right policies and  attitudes can enable us to succeed against world trends,  is  convincingly demonstrated by Australia's economic performance  in recent years. For we have had economic growth at twice  the average of other major industrialised countries in recent  years, the highest rate of increase in business investment for  three decades last financial year, and substantial growth in

employment and in after tax real incomes over several years,  while most of the major industrialised countries in Europe and  North America have been struggling to maintain any growth at all.

Indeed, following further substantial oil price increases in  1978-79, their growth rates declined even more as they entered  the 1980's, their unemployment rates are high and rising, and  because of high budget deficits and the associated need for

stringent monetary policies in some countries, interest rates  have risen to some of the highest levels the world has seen. At the same time, depressed demand and high unemployment has  led their inflation rates to fall. Through trade and

international capital flows we have now begun to feel the effects  of these most recent developments,  at a time when wage demands  in Australia have been growing. .

The current situation makes it all the more essential that the  broad thrust of our economic policies be maintained. With a  weakened balance of payments and strong inflationary pressures,  there can be no thought of allowing the money supply to

expand to accommodate inflationary wage demands,  and no thought  of abandoning our careful and non-disruptive management of the

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the exchange rate.  With wage pressures and industrial disruption  already affecting employment prospects, our initiatives to  improve industrial relations and bring about a restructuring  of unions are all the more essential; and with the need to

seek lower taxation and a more balanced tax structure,  while making provision for the essential needs of defence, the  elderly and the disadvantaged, there can be no thought of  abandoning our policies of restraining government spending.

The objectives of the vast majority of Australians for  themselves and for their children are plain. We seek rising  living standards, and an increasingly compassionate and secure  society, but one in which individuals are free to develop  their talents and express their individuality in their own  way. In difficult times such as those we experience at present  we must accept that there are tighter limits on the rate at  which our aspirations can be fulfilled. .

Above all we cannot, as a nation, afford to destroy the  conditions which foster economic growth,  for it is economic  growth which makes it possible for us to satisfy our broader  goal of developing further a strong, civilised and humane

society. .

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