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WEDNESDAY, MARCH 2, 1977
TELEVISION TALK ON BUDGET BY FINANCIAL SECRETARY
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THE FOLLOWING IS THE TEXT OF THE TALK BY THE FINANCIAL SECRETARY BROADCAST TONIGHT: -
GOOD EVENING,
THIS AFTERNOON I PRESENTED MY SIXTH BUDGET TO THE LEGISLATIVE COUNCIL THE BUDGET FOR THE FINANCIAL YEAR 1977-78.
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I WAS ABLE TO REPORT THAT THE PUBLIC ACCOUNTS AT THE END OF THIS YEAR WILL SHOW A SURPLUS OF AT LEAST $600 MILLION, RATHER THAN THE DEFICIT OF OVER $300 MILLION I
BUDGETTED FOR. THIS SURPLUS WILL BE ADDED TO OUR RESERVES WHICH WILL, THEREFORE, BE IN A HEALTHIER STATE THAN FOR SEVERAL YEARS. THIS WILL MAKE IT EASIER FOR US TO COPE WITH ANY SHORT TERM DIFFICULTIES WE MAY ENCOUNTER IN THE FUTURE, FOR SHORT TERM DIFFICULTIES SHOULD NOT THROW US OFF COURSE ALTHOUGH WE MUST ALWAYS ADJUST TO SERIOUS RECESSIONS IN WORLD TRADE.
THERE ARE TWO REASONS FOR THIS RATHER UNEXPECTED SURPLUS IN 1976-77: FIRST, ALTHOUGH TOTAL EXPENDITURE WILL BE NEARLY $6,900 MILLION OR 13-1/2 PER CENT MORE THAN IN 1975-76, IT WILL BE LESS THAN I BUDGETTED FOR. THIS IS BECAUSE PROGRESS ON CAPITAL PROJECTS HAS NOT PROCEEDED AS FAST AS I HAD EXPECTED AND, ALSO, CONTRACT PRICES HAVE BEEN LOWER THAN ANTICIPATED. SECONDLY, WE HAVE ENJOYED BETTER REVENUE YIELDS THAN I EXPECTED A YEAR AGO LARGELY BECAUSE OF THE SPEED WITH WHICH OUR ECONOMY RECOVERED FROM THE RECESSION FROM MID-1975 ONWARDS.
THUS IN 1976 OUR ECONOMY EXPANDED BY NO LESS THAN 16 PER CENT IN REAL TERMS, THAT IS TO SAY, IN TERMS OF THE OUTPUT OF GOODS AND SERVICES. THIS MEANT THAT, BY THE END OF THE YEAR, EMPLOYMENT IN MANUFACTURING WAS 30 PER CENT HIGHER, AND REAL WAGES WERE 16-1/2 PER CENT HIGHER, THAN AT THE BOTTOM OF THE RECESSION IN MARCH 1975. UNEMPLOYMENT GENERALLY BY THE END OF 1976 HAD BEEN REDUCED TO ITS NORMAL LEVEL OF ABOUT 4-1/2 PER CENT OF THE TOTAL LABOUR FORCE.
SO WE FARED WELL IN 1976, BUT LET US NOT FORGET THAT EXPORTS, EMPLOYMENT AND REAL WAGES, HAVING REACHED A PEAK IN 1973, SLUMPED DRAMATICALLY FOR 18 MONTHS IN 1974 THROUGH TO MID- 1975. OUR ESTIMATES OF THE GROSS DOMESTIC PRODUCT REFLECT THIS: AFTER INCREASING BY 14 PER CENT IN 1973, THE ECONOMY GREW VERY SLOWLY IN 1974 AND 1975. AS THE MANAGEMENT OF THE PUBLIC FINANCES MUST BE GEARED TO SUCH FLUCTUATIONS, THE BRAKES HAD TO BE APPLIED IN 1975-76. THIS WAS PARTLY RESPONSIBLE FOR THE RAPIDITY OF OUR ADVANCE IN 1976 FOR WE WERE VIRTUALLY INFLATION FREE AND SO ABLE TO TAKE FULL ADVANTAGE OF SUCH RECOVERY OF WORLD TRADE AS TOOK PLACE.
THE QUESTION
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