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U. AUSTRALIANÂ·

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PRIME MINISTER X

FOR MEDIA SUNDAY, FEBRUARY 14 1982

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ELECTORATE TALK

With the Autumn Session of Parliament about to commence, .

I would like to take the opportunity of speaking to you . about Australia's priorities and prospects, about the .

challenges we face as a people over the coming months.  We need a proper perspective on our achievements in the  economic arena because the underlying strength of the .  Australian economy is great, and we have the right policies

in place to keep it well on course.

We need to understand that Australia's economy has been  growing, while many other economies have been stagnant or  shrinking, and the OECD predicts further growth, of over 3%  for Australia in 1982, compared with an OECD average of just  over 1%. We need to understand the consumer demand remains

strong. The value of retail sales last December was .13% . higher than in 1980. We need to understand that 83,000  new jobs were created in 1981, that the average unemployment  rate throughout 1981 was the lowest for four years, and that  while the January unemployment rate was too high, it was still

below last year's January rate. We need to understand that  business expects continuing strong investment growth this  financial year, and that following the projected record of  $1.25 billion on petroleum exploration and development in

1981, the projected figures for 1982 almost doubles that Â· again to nearly $2.5 billion.

We need to understand that this level of investment would . not occur unless there was confidence in Australia's economy. . We need to understand that over six years, the Commonwealth  has consistently held down its own spending, both in absolute .

terms :.and as a proportion of Gross Domestic Product in a way  which our major trading partners have not rivalled, and that  the recent tightening of budgetary expenditure has been  designed to maintain that overall restraint, especially in

the face of some unexpected large wage increases.

We need to understand that real household disposable income after tax rose by nearly $3 billion in 1980/81, and that in the two years to last December .quarter, average weekly earnings have increased by over $13 in real terms.  We need to understand

that total taxation revenue as. a proportion of GDP, is lower in Australia than for all our major trading partners with the Â· exception of. Japan. And the Commonwealth budget deficit as a percentage

of GDP has been less in Australia than that of all our major trading partners in 1979/80. .

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There is no doubt whatever that Australia's position in relation  to economic management and development is the envy of many other  countries because we pioneered and stuck to policy approaches  which are increasingly widely recognised as appropriate in the

1980s. The Government's economic policy has the enduring objectives  of curbing inflationary pressures, achieving continuing  private sector recovery, and gaining sustained improvements  in living standards for all Australians.

There are obviously challenges and threats to these objectives, both at home and overseas, and the Government has been responding to these challenges. People are fed up with the . kind of strikes and unreasonable wage demands which have been

all too common, especially in the second half of the past year which have damaged our international competitiveness, have threatened investment, and have destroyed job prospects for many young people. There were twice as many working days lost through, strikes in .  Ã¢ÂÂ  .

the 1981 September quarter as in the corresponding period in 1980. The Minister for Industrial Relations, Ian Viner,  is bringing forward three measures to address the present industrial situation, both immediately and in the longer

term. I have no doubt that these measures are sound. . They will help to equalise legal responsibilities and balance  the bargaining positions of .unions and employers.. And I believe  the community will give them the support they deserve.

Accelerating wages are the main danger to continued economic recovery, and it is essential that all parties to wage bargains exercise restraint. If wage rises are allowed to exceed the capacity of the economy to pay, Australia will

price itself out of international markets,  causing loss of jobs and confidence. Consistent with its philosophy, the Government supports wage settlements proceeding on an industry . by industry basis. The Government believes that employers and unions bear "the prime responsibility for wage settlements,

and agreements which ignore the total economic environment Â· can only lead to unemployment and lower growth.

The depressed condition of the world economy also poses .   a challenge to Australia’s economic position. The Australian  economy derives enormous benefit from overseas trade and  from access to overseas capital markets.  At the same time,   if overseas economic conditions are poor, if overseas interest  rates are high, the Australian economy is bound to be effected. The Government can't totally insulate the Australian economy

from the effects of overseas trading, but we can and already  have shaped our policies in response to the challenges that  they pose. One clear indication of the impact of poor economic  conditions overseas can be seen in our balance of payments  Because of our strong growth of real incomes, and the demands

created by resource development, our import bill has been rising  significantly,  but because of depressed world trade, and falling  commodity prices, our export earnings have been falling. In this  connection, exchange rate management is critical. The Government's

approach in this area is one of a carefully managed exchange  rate with very gentle, sometimes almost imperceptible adjustments  according to the overall state of the balance of payments,   but also with an eye to other important considerations such  as inflationary implications.

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We will continue to follow this practice, aid adjust the  exchange rate on a gradual basis in line with market  circumstances.  The exchange rate has already been devalued  by 5% against the trade weighted index since early August

1981, and by 5.6% against the United States since early  December 1981. The Government recognises that economic  management is a continuing process of facing new circumstances,  anticipating new challenges and adapting to them.

In the final analysis, the best service the Government can.  provide to the Australian economy is to create conditions  conducive to sustained economic growth by continuing to bear  down on inflation and.by minimising Government demands on the  private sector. This is the foundation on which are policies

are built and it provides the only basis for Australia's  continued economic success.

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