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3YB 21 JULY 1977

F77/151

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

FOR PRESS 17 JULY 1977

ELECTORATE TALK

The high level of unemployment in Australia is of continuing  concern to the Government, as it is to the community as a whole.  Unemployment is a dispiriting experience that not only undermines  self-respect but creates social problems. Its effects are not

just confined to the person unemployed, but they are felt throughÂ­ out the whole structure of family life. High unemployment cannot -  and will not - be solved overnight. No single action by the  Government - any Government - can wipe the slate clean.

It is possible for government to follow a misguided policy and  try and spend its way out of trouble. But bitter experience has  shown that this kind of action boosts inflationary expectations  and worsens unemployment, while business tends to pull in its  belt even further. Unemployment can be reduced on a long term

and sustained basis. This will be done as wage demands are  moderated and as the rate of inflation continues to come down.

Australia's manufacturers and businesses will not employ high cost  labour at the present time - particularly unskilled labour - when  they can cut their costs by buying labour saving machines. It is  a fact of life that businessmen will opt for this course rather  than pay high wages for unskilled labour.

Government policies can, however, lay the groundwork so that  industries are in a position to maintain the level of their workÂ­ force or even to increase the number of people they employ.

Over the past few weeks, as a direct result of Government action  and initiative, employment opportunities for many thousands of  Australians have been safeguarded. We have saved jobs.

When I was in Europe recently talking to the European Economic  Community's Commissioners about trade with Australia, I was  asked to agree to a voluntary 25% cut on Australia's steel exports  to the Common Market countries. I did not accept that request. I  argued that Australia, through B.H.P., supplies only a very small

amount of steel to the European markets and on fair and competitive  terms. A few days ago I was gratified to learn that the E.E.C. had  in fact withdrawn this request. This decision is good news for  Australia. It will, I believe, prove important for the maintenance

of existing jobs in Newcastle, Wollongong and Whyalla - centres of  great steel manufacturing activity.

/Last week,

-  2 -

Last week, the Government also decided to place special  restrictions on the number of passenger cars that could be  imported into Australia. This decision was made effective  immediately. The decision was in line with our long-standing  policy that Australian industries share of our local market

should not fall below 80%. We decided that import quotas for  the next six months would be based on a total annual quota of  90,000 cars. The Government has asked the Industries Assistance  Commission to recommend what further action we should take in  this area. The decision to impose special quotas was made only  after careful examination of the present and potential car

import situation. We concluded that immediate action was  necessary to prevent severe disruption to employment in local  industries. In other words,: we wanted to protect jobs in the  industry to the extent that this is possible.

Early next month I will be attending a meeting in Kuala Lumpur  with the Heads of Government of the five ASEAN nations - and the  Prime Ministers of New Zealand and Japan - to discuss a range of  trade and other issues. Apart from consolidating our overall

relations with ASEAN and individual ASEAN countries, this  meeting will be of particular relevance to Australia's  manufacturing industries and jobs in those industries. I will be explaining Australia's policies in relation to

imports, and how they affect our own industries. Trade  between Australia and ASEAN is buoyant and has been for some  time. In fact, it has grown rapidly over recent years.

For instance, since 1970-71 total imports from ASEAN into our  country have increased at an annual rate of 29%, while our  exports to ASEAN have increased at a rate of 17%. ASEAN  countries are winning an increasing share of our overall

import market - particularly in manufactured goods. Since  1970-71 imports of manufactured goods have increased in value  from $47 million to $221 million. This average annual growth  rate of 36% is more than double the growth rate of our total  Australian imports of manufactured goods.

What needs to be clearly understood is that this increase has  coincided in the last few years with a period of economic downÂ­ turn in Australia. Accordingly, some Australian industries -  which of course means many companies which were already facing

cost pressures - found themselves in increasingly difficult  situations. Jobs were lost while others were put at risk.

But, rather than ban imports of products in sensitive areas,  like textiles, and footwear - as some countries may have done  in a similar situation - the Government has acted with restraint  and moderation. We took steps to limit - and not prohibit -  imports. We recognised we did have obligations to our trading

partners in ASEAN as well as to our own industries.

/Our policy

3 -

Our policy is clear. In the short term with Australian  jobs on the line, increased market access for ASEAN goods  in the sensitive areas poses real problems for Australia.  However, in the longer term, developments in the Australian  economy are almost certain to create additional trading  opportunities for ASEAN countries.

I make it clear that the Government is sympathetic to the  particular trading problems of ASEAN. Indeed, there are  many we share.

A special working group of ASEAN and Australian trade  experts set up to discuss trade is unmistakable evidence  of our willingness to overcome trading difficulties. .

I look forward to the meeting with the Heads of Government  in August. I am sure it will play a significant role in  promoting and fostering relations between Australia and  our ASEAN neighbours.

