CONFIDENCE IN AUSTRALIA

Press, Volume LXXXIX, Issue 27226, 18 December 1953, Page 16

CONFIDENCE IN AUSTRALIA

“ERA OF STABILITY ENTERED”

Since the introduction of the last Federal Budget Australian business men have been heartened by the official view that the national economy has entered a period of stability, says the Sydney financial journal, “Johnson’s Investment Digest.” No doubt strong confidence in stability is essential for its maintenance. If business men, investors and Governments are continually plagued by fears of further doses of inflation, stability will be on a very perilous foundation. There can be no over-estimating the imoprtance of confidence in Australia’s ability to fight down costs and to improve efficiency of production so that enlarged output many counter-balance those parts of increased costs which cannot readily be reduced. But, at the same time Australians should be aware that the economy is stabilising itself at a very high level of costs. Compared with overseas countries, Australia’s costs of production are high. At the moment export figures are so good that they dominate the financial position and conceal the inability to compete with other countries in circumstances in which price levels were a vital consideration. In 1952-53 Australian exports totalled £872,300,000, compared with £675,000,000 in 1951-52. The export boom is carrying the load of the Australian high cost structure. Moreover, Australia’s exports are not highly diversified. A collapse in wool and wheat would have dreadful repercussions.

The first task to strengthen Australia’s position is obviously to improve competition is obviously to improve competitive efficiency. Unfortunately Australian tariff policy and the recent restrictions. laid upon imports contribute to an element of isolationism in the national economy. Second, there must be a substantial improvement in physical productivity. Australia needs to be able to compete in foreign markets as a seller of a wide variety of goods. Only by taking steps such as these can Australia confidently assume that stability has really come to stay and that it is in fact able to meet world competition and sustain business activity in the event of a collapse of export earnings.