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ECONOMIC SURVEY
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Fix this textSTATEMENT BY THE PRIME MINISTER
Fix this textStrict Embargo; - not for broadcasting, Cabling or publication
Fix this textbefore midnight on Sunday, 21st February, I960.
Fix this textLast week Cabinet made a general survey of the Australian economy.
Fix this textThis is something we do at fairly frequent intervals. The previous occasion
Fix this textwas just before Christmas. We always have before us a great deal of
Fix this textinformation on employment,, production, consumption and investment expendi-
Fix this textture,, costs and prices, external trade and payments, monetary conditions
Fix this textand so on: After studying all these factors, we consider what, if anything,
Fix this textthe Government should do to influence the situation in one way or another.
Fix this textWe find a good deal in our current position that is favourable
Fix this textand encouraging. The employment situation is particularly strong.
Fix this textIndustrial production continues to rise. Although there has been drought
Fix this textin South Australia and some other areas, rural output will, as a whole, be
Fix this textquite high. We are having a good export year. It looks as though the
Fix this texttotal value of exports will be well above £900 million. More imports are
Fix this textcoming in and helping to increase the supply of goods and materials.
Fix this textBut there are other tendencies which are perturbing. The most
Fix this textserious of these is the rise in costs and prices. In some degree this has
Fix this textbeen going on for a considerable time, but in recent months it has become
Fix this textfaster and it is now decidedly too fast. Our aim - we believe the aim of
Fix this texteveryone and not only of the Government - must be to slow it down and
Fix this textbring it to a halt. We say that unequivocally, because we reject the
Fix this textview that a rise in prices and costs is harmless so long as it keeps within
Fix this text"reasonable" limits. We believe that, on all counts, we are better off
Fix this textwith a stable level of prices and costs.
Fix this textThe rise in prices which has occurred has been due principally to
Fix this textcauses within our own economy. For a long time past, import prices have
Fix this textbeen virtually stable. Export prices, it is true, have risen during recent
Fix this textmonths and this has probably helped to raise the local price of some
Fix this textarticles. But in the main it has been a process of adding, one on top of
Fix this textthe other, a great many particular increases in wages, profit margins,
Fix this textcharges and the like, some large, some small, but all contributing to a
Fix this textgeneral upward movement that has grown faster as it has gone on.
Fix this textSome people describe recent developments as costs inflation in
Fix this textcontrast to so-called demand inflation.
Fix this textBut demand has had its influence as well as costs. Up till a
Fix this textfew months ago it was possible to say that overall supply and demand were
Fix this textmore or less balanced. Both were increasing but apparently at about the
Fix this textsame pace. More recently, however, it has become evident that, although
Fix this textsupplies Ä…re still increasing, demand has started to race ahead.
Fix this textVarious factors have contributed to this - the rise in export income,
Fix this textpublic authority spending, private capital expenditures, capital inflow
Fix this textand so on. The combined effect of all these is now capped by the wages
Fix this textand margins decisions. The Basic Wage increase is estimated to add £65
Fix this textmillion to total wages and salaries; the margins decision a further
Fix this textamount not far short of £100 million. These increases both add to wage
Fix this textcosts in practically all industries and trades. They also add to
Fix this textdemand for goods and services of most kinds.
Fix this textAlong with this rising trend in costs and prices and in demand,
Fix this textthere has also been a growth in the liquidity of banking and monetary
Fix this textconditions. It is of course a product of some of the factors which have
Fix this textcaused incomes and expenditure to rise, and its effect is to assist and
Fix this textIt's easy and takes two shakes of a lamb's tail!
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