press statement - dspace cover page - University of Melbourne

PRESS STATEMENT:

MAIOOLM FRASER:

February 25th,1962

When I worte my last talk, just after the election, I , like many others, thought the Government had won with a reduced but still comfortable majority. Two or three days later we all discovered that the Government was fighting for its life, and that it could be beaten. It wasn't for two or three weeks after the election that the final decisions became known - a majority of one for the Government after the appointment of the Speaker.

It appeared there was a large section of the community which had previously supported the Government which did not support the Government on December 9th, and any sane leader would certainly cast around in his mind and seek the reason why, and do what he could to remedy the position.

This is, in fact, what the Prime Minister has done. Talks have been held with, I think, probably every responsible section of the Australian community, such as the Chamber of Manufactures, the Chamber of Commerce, the Banks, the National Farmers' Union and other Primary Industry Organizations. The views of all these organizations have been sought. The Government has asked what they thought was wrong with the economy. As a result of these talks, and as a result of the Government's own discussions a short while ago, several new measures were announced.

A special non-repayable grant of £10M. has been made available to the States, which is to be spent on works that would add to the employment.

An additional £72M. is being made available for housing. Somi-government and local Government borrowing has also been substantially increased.

Personal income tax has been reduced by 5% over the full year 1961/62.

This will reduce Commonwealth revenue from this source by £30M.

Sales tax on motor cars has been reduced from 30% to 22w. In this respect it must be recognised that the motor industry, together with its subsidiary industries, is one of the greatest employers in Australia.

In addition to this the maximum loan onaa War Service Home has been increased from £2,750 to £3,500, and steps are being taken to further

increase other lending for housing.

These are all short term measures designed to give immediate

stimulus to the economy to lift employment to a level which Australians and the Government would regard as satisfactory. It should be remembered that the sums involved are larger than one would think because they are designed to operate over the last four months of the financial year, and thereafter the Budget of next August will take over.

There are other long term measures. For many years primary industries have been able to write off 1/5th of the capital cost of new plant and equipment in each year, thus over 5 years the cost of such equipment would be completely written off. Secondary industries have always tried to get this same allowance, and now a measure very similar is going to be granted to them. There is an important reason for this The local Australian market is relatively small; Australian industry cannot

get the advantage of large scale production to the same extent that industries in the United Kingdom and the United States can. For this reason it is

necessary that everything possible be done to see that Australian industry has the most modern and efficient equipment to help it compete. This measure will assist greatly in this regard.

I am very glad that for reasons which I have mentioned repeatedly import licensing as it was once known is not going to be re-introduced.

However, the Tariff Board will be given power, under certain circumstances, to recommend import restrictions to protect a certain industry. Such a power, I hope, will be used with the utmost discrimination.

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The Commonwealth Development Bank is having its capital increased by a further £5M. This is in addition to the £5M. added to this Bank's capital last August. I was interested to see a short while ago that since its inception that Bank has loaned £55M.

These measures are designed to restore national confidence so that Australia can go ahead, and with a rate of growth such as it has had in the last 10 years. Rightly or wrongly the Government's measures of 14 months ago reduced confidence and made both industries and private people hesitant and reluctant to spend and plan for the future

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Even though this result of the 1960 economic measures was unfortunate it should be remembered that this measure had done much to strengthen our Bal

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ce of Payments, and to reduce inflation, to bring about a real degree of financial stability which is so essential if our exports industries are to compete.

Now I want to say something about confidence. This is one of the intangible things which Governments have to try to judge. For example, when a Government plans a Budget or an economic measure of any kind it has got to try

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d judge how that measure is going to affect people. If it judges wrongly the offect will not come out as the Government planned. There is no doubt that the 1960 measures shook confidence. Businesses were not prepared to plan for the future, and private people were more inclined to save and less inclined to spend. Some of us might think this is a good thing, but if everyone saves and no one spends, the less things will be bought from the shops, and if you have the volume of sales falling there is less demand for goods from factories - the factories find their stocks are building up and thus they cannot employ as many people as they once could.

Rightly or wrongly the Government measures caused a change of heart im regard to these matters. One only has to look at the official

figu

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s in the Savings Banks and on Fixed Deposit with the Trading Banks to see how savings have 2hcreased throughout these last 18 months. People were saving rather than spending.

The measures just announced are designed to give a spurt to confidence. They, themselves, will not do the whole job, a return to the spending pattern a little nearer that of 18 months ago will also do a very great deal to revive the economy, Industry, too, must play its part and plan for an expanding future.

During the last election I said that if the employment figures did not improve as they were in the Spring, I was confident that the Government, if returned, would introduce whatever measures it thought necessary to lift employment to proper levels. This faith in the Government has been justified and measures that will revive the employment levels have been introduced.

There is one point which the Government will have to watch most closely. The unpopular measures of November, 1960, were introduced to curb inflation, and to bring a balance into our overseas reserves. It was most essential that inflation be curbed so far as the primary industries - the export industries - were concerned. Inflation must not be allowed to

recur, if it does the position of the exporting industries will become untenable.

The Government has the difficult task of balancing the economy

in

such a way that the employment levels are satisfactory which, at the moment, they are not, and, at the same time, preventing inflation which would jeopardise the future development of this country. If inflation does recur other means

must be found to assist primary industries. It is essential that primary industries be maintained in an effective, efficient, economic and productive manner. If this is not done any and every Government policy would fall to the ground.

Library Digitised Collections

Author/s:

Fraser, Malcolm Title:

Press statement Date:

25 February 1962 Persistent Link:

http://hdl.handle.net/11343/40031 Terms and Conditions:

Copyright courtesy of Malcolm Fraser. Contact the University of Melbourne Archives for permission requests.