Towards 2000: Challenge to Australia

The Fifth Alfred Deakin Lecture - 20 July 1971

Alfred Deakin knew that an Australia divided into separate and quarrelsome colonies could never become the great free land we now know. Therefore he devoted himself to the challenge of that time. He was significantly responsible for moves that led to Federation. His mind and his heart lay in what Australia was to become.

In the seventy years since Federation which Alfred Deakin worked so hard to achieve, Australia has experienced much. A rural agrarian economy, dependent largely on wool, meat and wheat has become greatly diversified, our industrial strength has grown, and still expands. Our greatly expanded population has become housed largely in two great cities leading to a concentration of people which has not been equalled in other countries.

The development of our economic activity has advanced pragmatically. It is true, however, that our current economic policies have been influenced significantly by what Galbraith would call the ‘conventional wisdom’ of the time. We could not forestall the boom of the late 1920's, nor could we avert the great depression. Conventional economics made the depression heavier and darker. Keynes had not yet written and been accepted and Theodore, who might have been an Australian prophet, left himself vulnerable. He could not shake the conventions and so Australia, like the world, lay in idleness and agony.

We have been involved in two world wars. We have participated in several minor wars. They have given us an Australian tradition and an Australian pride in the courage and fortitude of our people. They leave us with a sorrow that we remember.

These seventy years have seen good times, but they have been weighted by war and economic adversity.

Strong ties to Britain prevented the full assumption of independence until the century had nearly half gone. Policies of parent and child remained close, and continued so, despite the late understanding in the Second World War that it was the United States and not the United Kingdom, that could save Australia from invasion.

Australia was to be given further years of comfort, comfort that stemmed from the knowledge that she had substantial interests in common with ‘great and powerful' friends’, whose support would be unquestioned if the need arose. This was not an accident of history. It grew from an understanding of great power politics, of the tides then flowing, and of the Australian interest.

We stand now at the start of the last 30 years of this century. We look towards 2000. This paper will examine some problem that lie ahead. I will argue that the uncertainties, the challenges to be mastered will require greater responsibility and independence of decision from Australia, and that the wellbeing and security of our citizens will depend upon our response to the changing tide.

This changing attitude and approach is entirely consistent with the liberal idea. Our philosophy of Government is a vital living thing. We apply our basic ideas to the problems of the present and the challenge of the future.

Challenge to a nation can come from within, or from external sources. My theme will then be divided in two parts, but at conclusion they will join, because while we could falter on either front, the kind of nation we build within ourselves will determine our capacity to respond to external challenge.

Arnold Toynbee once wrote twelve volumes to demonstrate and analyse the cause of the rise and fall of nations. His thesis can be condensed to a sentence, and is simply stated: That through history nations are confronted by a series of challenges and whether they survive or whether they fall to the wayside, depends on the manner |and character of their response. Simple, and perhaps one of the few things that is self evident. It involves a conclusion about the |past that life has not been easy for people or for nations, and an assumption for the future that that condition will not alter. There is within me some part of the metaphysic, and thus I would add that life is not meant to be easy.

I want to add one caution; in writing of the past one ought to be bound by facts and their interpretation. Similarly, in attempting to draw out the strands of future events one must resist the temptation, which few political philosophers have done, of slipping into a dreamland peopled by races who have few of the characteristics, I and none of the failings of the human race.

National Objectives

Before coming to some problems with which this paper will be chiefly concerned, let me state the basic national objective which must be the foundation of our activities.

We plan to keep Australia secure for all time. Recognising that we are not only influenced by, but also influence our international environment, we seek to establish relationships with other countries through diplomacy and trade, which contribute to a meaningful community of nations. We live on the edge of Asia and we are| inevitably involved with Asia. We use that involvement to advance national standards — to remove economic necessity — to offer hope and more than hope in sharing affluence. Because our world is imperfect, an involvement in security matters must be added to the rest — not from altruism, but from an understanding of Australia’s own security requirements.

In Australia we advance the egalitarian society, we promote equality of opportunity, we seek to relieve hardship, we plan to maximise opportunity. We expand our strength, believing that a| stronger, more vigorous Australia will enable us to advance both our foreign and domestic objectives.

Our hope is a people united in common purposes, confident of their ability and energy, prepared to face the world and all its challenges.

Domestic Conditions

I will speak now of domestic matters.

Much has changed since the great depression. Our world has seen an affluence, a level of and a concentration on material goods not previously equalled. Much has been achieved. One set of problems now lies behind us, but new and perhaps more intangible ones emerge.

I am not concerned here with those questions which it is within our power and present understanding to solve. Many of the quality of life issues fall into this category. For example, the cost and| work involved in removing smog from a great city may be great, I but the techniques are known and proved. Action depends on opinion, upon pressure, upon political and economic priority.

I am rather concerned with some questions which involve a conflict of principle, or a conflict of objective, or which threaten the strength of Australia.

We have many domestic goals, some of which conflict.

* Full employment can conflict with stability.
* Without proper account of time, the pursuit of expanding can well run counter to the quality of this nation and to our future strength.
* Where efficient and economic production depends on the size of the unit, domestic competition could conflict with the best service to the consumer.
* We seek balanced development. While we have affluence in industry, we have poverty in the countryside. This presents a new problem that is not yet properly understood.

Inflation, Stability and Full Employment

As this is written, we are more than usually concerned about inflation. If Keynes had lived in a different time, if he had not been preoccupied with emergence from depression, we might well have understood this problem better. As it is, in analysing this question some have argued that the traditional weapons of monetary and fiscal policy no longer serve to control inflation. I suspect such views have merely confused the issue.

It is true that the greater power and the growing sophistication of union activities has made the maintenance of balance in the economy more difficult. There are some new attitudes, which add to these difficulties. Unions no longer have the fear of large and prolonged unemployment — thus they press their claims without any concern for their wider impact.

Governments have, for their part, more than ever sought to meet the wishes and aspirations of their constituents. Thus their inclination has been to spend rather than to conserve resources. Both these pressures work in the same direction towards the continuance of inflation. I would argue that the techniques of inflation control have not altered much, but that our attitudes are leaving us with a marked reluctance to accept the necessary unpopular action. False trails have been cast across the path. Many argue that greater production will ease inflation. This is palpably false. If resources are already fully used, any such attempt would merely bid up the cost of labour. If resources are not fully used, greater production I can only result from greater outlays of capital or from greater employment of labour. While more goods would be produced, greater resources would also be dispersed, and there is no reason why the pressure on the economy would slacken.

It has been argued that there are two separate and distinct forms of inflation, one stemming from demand, and the other from| a wage/price spiral. Their analysis however, cannot be treated separately because they interact, one on the other. For example, demand inflation establishes the circumstances in which entrepreneurs can raise prices and offer higher wages. Indeed, if resources are fully employed, this circumstance would then be inevitable.} Demand and the wage/price spiral merge into one. Likewise, a wage/price spiral is only possible if an employer is confident of maintaining demand for his product. The two elements of inflation are, thus closer linked.

The case which I think has caused the confusion is the one in which strong unions in strong industries have acted to raise wages and prices in a condition of some unemployment. If there is unemployment, many would argue, there ought to be no inflation. They are confused when the two lie side by side.| It is true that in some recent circumstances wages and price inflation and unemployment have been present together. The normal application of general monetary and fiscal measures have not always worked as efficiently as might be. It has, therefore, been argued that they would not work if wage and price inflation were present with full employment.

I would argue that if inflation and the full use of resources are marching side by side, there is no alternative but to ease pressure through broad based monetary and fiscal measures. If, despite those measures, strong union action then maintains inflation of wages a more selective approach would be required. Balance between broad based and selective measures is important. A selective approach alone will not work if there is too much general pressure on the economy.

On the other hand, sole reliance on broad measures would bite too deeply into the more sensitive areas of our activities. Inflation is caused by the application of pressure on the economy at one or more several points. I want to look more closely at some part of its anatomy.

A modern economy is full of inflationary pressure. The desire of people to produce more, the pressure put on Governments to provide goods and services, the wish of politicians at all levels to meet the desires of their constituents, the current error of judging progress too much by production — all these put constant pressure Jon resources.

Many forget that the budget is primarily an instrument for sound economic management. It must also achieve a proper and equitable use of national wealth. It can create the climate in which |wealth can be generated but it cannot of itself create wealth. As each budget approaches, how many ask ‘what will be in it for me? Many have come to regard budget time as they regard Christmas. It should not be so regarded. No responsible government can behave like Father Christmas and look after the affairs of this nation.

I wonder if, last year, the Government would have been criticised so much if people had been aware that in three years. Government decisions had increased the annual cost of welfare payments by not far short of $500 million a year.

Within existing levels of taxation. Governments at all levels must learn to judge their priorities more harshly. There are many things which it is desirable to do, but we cannot achieve them all this year or next. In our families, many expenditures are postponed, and so it must be with a responsible administration. In addition, present circumstances require a reassessment of priorities. There is not much sense in further irrigation schemes to produce commodities which, through oversupply, will only tend to reduce returns for those already in production.

There has been one most unfortunate consequence of the inflationary pressures. Budget and fiscal possibilities have been stretched to the limit. Thus Governments not only here, but around the world, have been forced to resort to too great an extent on monetary policy in an attempt to control inflation. There can be only one consequence of this—a dependence on higher interest rates that bite too deeply into certain sensitive areas of the economy, and which work too indirectly on many of the causes of inflation.

High interest has much of its first impact on investment, on farmers, on small businesses dependent on external finance and on the building industry. High interest is likely to influence the affairs of small, rather than large, corporations, at least in the first instance. It would work very indirectly on consumer demand and would have an even more remote impact on the wage/price spiral. However, if Governments seeking to meet requests and aspirations are determined to stretch the economy taut, they must then resort to monetary policy in an effort to ration financial resources. Such policies have an undue influence on the weaker and more sensitive areas of the economy. Unfortunately, very often the weak and sensitive areas are amongst the most desirable and are regarded as high priority matters.

I know also that overseas policies impinge on ours; high interest rates abroad are apt to spread. There is no necessary connection, however, and domestic policies would have the greater impact.

In controlling inflation it should be high priority to change the present emphasis from interest rates, to a greater use of budget policy.

I have a further reason for this view. An economy wedded to a high interest structure remains balanced on a knife edge. Disruption of that balance can have significant and lasting consequences. The ingredient here is not some nice formula, but confidence. If entrepreneurs believe they can borrow money at ten per cent, build a factory and make a profit, that is all right, but at ten per cent they will be cautious. We are concerned here with the marginal productivity of capital. If the rate is four to five per cent the risks are less and investment more likely to proceed.

In time of high confidence and uniform prosperity, high interest rates may not be of major concern. In some countries high interest rates, high unemployment, industrial and commercial failure and inflation now exist together. Such circumstances if not mastered, breed the possibility of massive loss of confidence and tragic national and personal hardship.

We have seen that efforts to control inflation, to establish stability run counter to many popular pressures. In particular, they run counter to two major economic objectives, the conventional gauge of progress, the production report and full employment. There is no simple answer to the conflict between inflation, full employment and stability. A constant question of balance and judgment is involved. Around the world, stability generally has run a poor second to the goals of production and to its oft attendant, inflation.

Is there a better solution? Arbitrary controls that tend to remove flexibility from production and economic response provide no answer.

In modern circumstances, Unions have much power. It is a power that is used mercilessly to bid up wages. It is a power with no responsibility for the management of the economy or the profitability of industry. Breaking that power by traditional means could be costly in national and individual terms. There ought to be another way. That would depend, however, on the willingness of all parties to recognise the total situation and accept reasonable decisions. I must admit, I have not the greatest confidence in mere reason achieving a solution, but I wonder if it is possible to give Unions some responsibility in these areas. Responsibility perhaps for the relativities between different classes and types of labour. This suggestion is not necessarily as radical as it may |seem. Wage levels would not be their business, only relativities. It would not only be unions that would share this responsibility. A properly constituted body with substantial union membership appointed for this task may bring home to Unions that their actions have consequence far beyond their own industry.

Such men as Galbraith have been able to offer no better answer than restraint by employers and employees and a sliding scale of unemployment benefits designed to make it not unprofitable to be unemployed if there is much unemployment, but reducing the benefit greatly as unemployment falls. It is a suggestion that may have more problems than attractions, but none of this removes or reduces the need for judgment, which after all is the essence of government.

The reliance on judgment need not dismay us. Before Keynes, the economist, as with political philosophers, had sought to describe the economic system in terms of inflexible self regulating rules. Judgment was not required. The gold standard thus took economies through cyclic booms and slumps. It was a deficient dismal science that left little hope for sensible development. It was in part inspired from ignorance, but in part also from a desire to have a perfect system that could not fail. That is no more possible in economics than it is in political organisation.

Now we know some of the limitations, but much more of the possibilities of economic management. So we use better information and better analysis as aids to better judgment. We should not quail if our future is dependent on our judgment as opposed to some allegedly self regulating formula that was, admittedly through ignorance, a denial of responsibility.

Production and Progress

I come to the second matter.

The use of production tests as a mark of strength and progress may well run counter to the quality of Australia and to our future strength. While higher production goals carry with them their present acclamation we are liable to find too great resources devoted to increased production, and insufficient to properly balanced development. Here we must look at the long term. We need to have an idea of where we wish to stand in 1980, of where we hope to stand in 2000. The present components of strength will change. A nation with production targets as a paramount economic goal may well be led astray.

Let me illustrate.

There are current theories that United States business activity in Europe has been successful, not because of superior capital, for United States firms have used much capital borrowed in Europe; not because of better research, for many of the processes exploited by the United States firms were invented in Europe; but because of organisational and managerial capability which, it is claimed, flow from a better educated and more fully qualified people.

If we are to advance our cause, we need to be our own managers, all the more so because a small nation cannot match the large in capital and invention.

Thus education is not an exercise in altruism. Tomorrow's tasks, unless we are to be the servants of another, will require greater training, higher skills and better management. Education needs to be available to those with talent and the will to work. It needs to be of high quality. It must be diverse in its opportunity. Investment in education is investment in adaptability and in the capacity to survive. We are but part way to that objective. It will be interesting to see to what extent the business world will support, financially, the decision to establish an advanced business school in Australia.

One can now see how production objectives can run counter to investment in education. One achieves immediate results, the other builds for the future. One is generally undertaken in the private sector and has all the pressures and artifice of consumption to back it, the other must compete for its share of public funds. I doubt if we yet fully understand the impact of education on the strength and quality of our nation.

Here I wish to pay tribute to the Chancellor of Melbourne University (Sir Robert Menzies). He has done more for higher education in Australia than anyone before or since Federation. We all owe him thanks. History will record his achievement in significant terms.
Education is important to our future quality and strength, but there are other matters. If we are not to be an industrial satellite we will need to use those educated better, to conduct more well orientated research. Only then can Australian based firms be freed from a bondage that would bind them to overseas principals or competitors. Partly because of the speed of technological change, which in the last 30 years has outpaced all previous conceptions, substantial research and innovation are necessary ingredients of commercial and industrial success. For example, the chemical industry looks to be earning half its profits ten years hence from products not yet discovered. Change and innovations are necessary for success and for continued success.

If Australian industry is to develop its own characteristics and expertise, if it is to have its impact in world industry, then it will only do so from Australian based research and innovation. Great resources beyond the capacity of most Australian enterprises are needed in this area. I do not suggest that Australian industry should seek to cover the field. We need to distinguish those areas where we have some national advantage, determine those industries in which we should specialise, then seek to develop our position in a full blooded manner. I hope I have made it plain how too great a reliance on short term production tests may lead us to neglect other vital areas of national interest which must have attention if longer term stature, strength and quality of Australia are to be enhanced.

Size and Competition

I come to the third of the economic matters I wish to discuss, namely the possible conflict between competition, the size of units and the interests of the consumer.

Pure competition described by economists probably only exists in economic text books. It is allegedly the perfect state of economic organisation which most benefits the consumer. Competition between a few firms is not so good, so the argument goes, but it is much better than monopoly. As so often happens, example is seldom as nice as the theory. It is true, however, that the feeling, the spirit of competition is something that many of us support wholeheartedly, at least in theory.

We need to recognise, however, that the modern world is in many ways moving away from competition as we once understood it. The demands of modern technology and science and the efficiency of large scale production units offer great potential advantage to the consumer. Thus we have an immediate conflict with competition. One motor firm may be able to supply the Australian market cheaper than four. If this be so and if we were starting with a clean slate other factors would then need to be considered. What weight should we give to diversity, what significance to the prevention of domestic monopoly power? It must be, noted that the monopoly element could only prevail to the extent that import competition was prevented.

We need to ask ourselves what different value we place on competition between Australian firms and competition that may exist between an Australian firm and overseas firms. Are we content to let the overseas firm keep the Australian firm honest?

Considerations of this kind need attention. Omnibus rules cannot be made. Each industry is different and the required decisions involve different sets of circumstances and facts. It would be unreasonable to expect one rule to operate in all circumstances. Industrially we are small, but even so there are some areas in which there may be a possibility for Australia to become a market leader, to have a significant influence in one world industry or another.

If the mining discoveries are to be developed to our greatest advantage, Australian operations need secure access to large markets overseas. This could involve overseas investment from Australia. Such arrangements may be necessary to achieve significantly greater processing in this country. These possibilities could be destroyed if in the pursuit of competition, an industry is fragmented into too many competitive firms. Indeed this may have happened in aluminium.

As Liberals, we ought not to be apologetic for size. Recently B.H.P. was compelled to raise steel prices by 8 per cent. This was a pity, but B.H.P. is a responsible firm which has given Australia the cheapest steel in the world. We should ask why this firm felt compelled to make this decision when it knew the government was concerned with inflation.

I suggest part, at least, of the answer lies in the wage and industrial policies of unions, which have added many millions to B.H.P. costs. If these events had occurred in a small enterprise, they would not have been noticed. Their occurrence in one of Australia's greatest enterprises should not be impugned even by implication.

Our policies have so far been largely across the board. Only in rare cases have they been tailored to particular industries. To a greater extent an industry by industry approach is required in the formation of government policy. This need not involve any great extension of government planning. We already have plans within the broad base of a liberal outlook. I would have thought that a government approach would be more likely to meet industry's needs, developed in cooperation with one industry, than they now do seeking general application to all or most industries.

This is one of the areas where the liberal must accept the pragmatic approach. In so many areas the government holds the ring seeking to maximise opportunity for Australia. It cannot deny all responsibility here. The requirements of modem technology, the advantage of size and its implications (which we can still regard as unfortunate) will require closer attention lest opportunities are to be permanently lost.


I cannot ignore the question of rural poverty. Its extent is not adequately understood. The change in prices and in confidence has been as dramatic as any that occurred in the great depression, and yet our metropolitan community marches on, relatively unconcerned. It is not my purpose to document this poverty, but it represents a new circumstance for Australia. We need to ask whether we have not also been brought to the point at which industrialisation has so forced up the costs of rural producers, that they cannot survive without significant support.

Very often when major export industries come to difficulty, the nation concerned has been forced to devalue. This has been the natural remedy. Strangely it is not Australian industrialisation or mineral exports that have prevented this, but a massive influx of foreign capital. Without this, Australia would have been forced to devalue, and many of the problems of the wool industry would have been reduced.

One thing I know. If adequate policies are not introduced and pursued, we run the real risk of denuding the Australian countryside and of changing the shape and character of Australia in a manner that ought not to be allowed.

I have spoken of full employment and stability, for despite their conflict, both are important to the vigour of our economic life and to the morale of Australia. I have spoken of the need to look to long term matters, to education, research and innovation, the real investment for the future, to the necessity to check our economic assumptions, to be able to distinguish those areas in which Australia has some particular advantage and to be able to develop that advantage.

I have spoken of these matters because they affect the quality and strength of our nation. They will determine our resilience and sophistication in responding to the greater international problems which represent the challenge to survival.

Foreign Policy

Let me turn to these matters. We live at the beginning of a new era which we do not yet fully comprehend. More than ever in our history we need to stand up, to tread our own path, not in isolation, but in partnership with countries great and small.

The break with the past is this. We have been used to making many foreign policy decisions, amongst which one must count the commitment of troops, in the comfort and shadow of decisions earlier made and earlier announced by great friendly powers. It was then the proper course for Australia. It minimised the risk to this country. It was responsible.

For the future we are unlikely to be allowed such luxury. If we are to await policy decisions by major allies before making our own decisions, we are likely to wait too long. Now they are likely to ask us, it concerns you, your part of the world, what are you Australians going to do about it? Only if they know our view will their decisions be made. This is a significant change. Let me emphasise this new world of decision making.

Defence Arrangements

Until very recently the United Kingdom had a categoric absolute defence guarantee for the Singapore Malaysian region. That policy is changed. Their presence will remain, but their commitment is now much less in terms of forces and of obligation.

The new arrangements are ones of equal partnership. They are ones in which Singapore and Malaysia place some value. In this kind of arrangement we are dealing in confidence—confidence that the five countries take these defence arrangements seriously. This can only be so if there is full confidence between the partners—confidence that the United Kingdom has every intention of honouring this lesser commitment—confidence that Malaysia and Singapore continue to regard their defence as indivisible—confidence that Australia, in many senses the lynch pin, is a willing and forthright partner. Australia is the lynch pin because if we as the most significant local power, were uninterested, the United Kingdom from the other side of the globe could hardly be expected to maintain her concern, and New Zealand, so much smaller, could not act alone. Hence the concern with Australian views.

Because of Australia's central position in terms of attitude, because we have the physical strength and capacity to act usefully in defence matters, Australia carries much of the responsibility to make these arrangements work. If we wish to make them work, I believe we will succeed. This does not mean we should accept unequal responsibilities. It does mean that we need to believe in the arrangements, for if we do not, others will not believe us.

It may be worth recalling the theory of the self-fulfilling prophecy. If one fears a certain course, one's very fear may cause the’ result one fears. Expectation breeds its own result. There is the converse; if one does not believe in a certain arrangement, one's disbelief can destroy it.

I have developed the view that Australia stands in a crucial position, not only to the Five Power arrangements, but also to the United Kingdom's continuing concern for this area. If Australia withdrew to within our own shores as our political opponents would have us, while others continue to want our support, our credibility would be destroyed in the region and in the United Kingdom.

Our opponents' policy of withdrawal behind our shores is a policy of despair. It would mean we had ceased to believe in, and be concerned for, the general security of our area; it would mean we felt Australia would not be touched by turmoil abroad; it would be in conflict with our policies of civil aid, trade and general diplomacy. Such a policy would be a policy of last resort for a nation under siege. At this time it would be disastrous for Australia and contrary to vital principles that the Liberal Party has endorsed since its foundation.

I do not believe that regional defence is possible without active defence arrangements, for others would then lose confidence in us, and without confidence we are nothing.

United States

In shorter terms, the same change is happening in the United States. Withdrawal from Vietnam—maintenance of treaty obligations—but determination to help only those that adequately help themselves, have become essential U.S. policy. This is the official Nixon doctrine. There are other concerns. After Vietnam, in what circumstances will the United States be able to go to the aid of any country? What will their people or their Congress permit? There is one main chance for American support. The country concerned, and very likely the region, will have to demonstrate that they have done what they can and ought to do to help themselves, and if they have not, why should they get help from the United States or anyone else?

Thus two great friendly powers are moving in directions that will put greater responsibility and effort on Australia.


There are other matters that concern us. Soviet encroachment in the Indian Ocean cannot be ignored. The probability of a reopened Suez Canal will enable them to increase greatly their deployments in the Indian Ocean. Their purposes are still obscure, but a naval presence could be used for strategic or political purposes, as naval forces have so often been used in recent years over Cuba, Taiwan and in Alexandria Harbour, to name but three instances. Their presence will increase tension and the possibility of countries in the Indian Ocean and South East Asian areas being involved in dispute between the major powers.


The Prime Minister has told us what actions are being taken to remove the shadows and the myths from policy with China, but I want to step further ahead to what I call the time of danger.

Up to the present, China has been concerned to hold the ring around her borders and except for a few significant instances, she has been concerned to devote her major energies to her internal problems. When she has put her own house in order, when her house is more settled, she will have more time and energy to look outward. This may occur in five to ten years. In a similar timescale, she should have the means of delivering Inter-Continental-Ballistic Missiles. Thus because of her domestic position, and because of her growing military capability, China is likely to be much more vigorous in foreign policy in five to ten years time.

What direction will she take? Will she continue to press outward, as has the Soviet Union? Will she foment trouble as does the Soviet Union? As she masters her own land, some significant change in China's attitude and posture is inevitable. Its direction will be vital.

Meanwhile the movement to dialogue and beyond has begun. This does not mean we can be less wary. Indeed, I could understand a view that held you did not have to take much notice of a man if he were 1,000 miles away, but if he came into your own home, you would not leave him in a room alone. The closer we get to this great giant, the more wary we may need to be.

Can this be understood? Dialogue does not necessarily imply common ideals or compatible objectives.


It is necessary to mention Japan. Her industrial strength is immense. Her dependence on trade is great. She is breaking with reticence of their immediate postwar era, and will inevitably seek to expand her influence. The nature of her future relationship with East and South East Asia will be of great significance to the region and to Australia.

Thus I have set some part of the foreign scene. Great friends are less on call, others are pushing into our area for purposes that cannot be identified with our national interest, and China is awakening and preparing to move in directions we cannot yet foretell.


As yet, Australia is not as confident as she ought to be. There have been doubts—I have used the phrase before—we are not yet used to walking alone. But we have more than come of age, and must look forward confidently. We need to look to see where we plan to be in 1980 and where we hope to be in the year 2000.

We can only fail if we lose the way, if we falter and destroy confidence, ours and others, in foreign policy or if we become bemused by a soft life without sacrifice at home.

There are pressures from both directions. I spoke earlier of the domestic pressures on any government. After Vietnam, many will question the need for adequate forces, some will protest that man's nature has changed, others will argue that emergencies are not important, that difficulties will disappear.

We may even find some politicians who have forgotten Neville Chamberlain and who will start talking about ‘peace in our time.’

Understanding and Will

There are two essential influences, understanding and will, without which we will not meet the challenges of the next decades.

Understanding is not easy. Our system encourages debate, contrary views and even divisive arguments. How do we martial our people to a national objective—we do not like discipline, we are independent. These are characteristics to be cherished, but they put a greater challenge and a heavier burden on national leadership, which must maintain the essential unity of our people.

How does a nation sustain political and public will, how does a nation establish agreed national objectives; how can sacrifice be endured when the danger is only a cloud in a distant sky? What can the generation of the 1930s do, to see that we of the 1970s do not commit the same sins of neglect, of misunderstanding? Is it necessary for each generation to learn that freedom is not inevitable and that it cannot be bought?

We become bemused by our own activities. How can we persuade people of the necessity to look over the horizon, to put decisions in their total setting. Governments must explain their policies in clear and credible terms. If a policy is difficult or dangerous, its explanation will need to be forcibly put. For such policies a general consensus is desirable in the cause of national unity. Our purposes need to be understood, the advancement of our people and the prosecution of peace. We can argue about the means, but let no one challenge the objective.

The determination of people and political fortitude can be destroyed by the difficulties of foreign policy or by internal divisions and weaknesses. Thus the two parts of my paper join.

We need a rugged society, but our new generations have seen only affluence. If a man has not known adversity, if in his lifetime his country has not been subject to attack, it is harder for him to understand that there are some things for which we must always struggle. Thus people or leaders can be trapped to take the easy path. This is the high road to national disaster. There are many strands to the maintenance of will—a society that encourages individual strength and initiative, an understanding of events, ability to bear sacrifices, an understanding that there are obligations that precede rights and a belief that work is still desirable.

There is no simple answer. Democracy protects independence of mind and action, it encourages debate but how does a democracy accept discipline unless there is a present need? Democratic leadership must maintain the essential unity of a people, not easily marshalled to a common purpose. We criticise our own objectives, we give the benefit of every doubt to our opponent. Do we want to be able to go on our way so much, do we want peace so much that we cannot recognise that others do not all share our objectives? Do we not recognise that this course creates more doubt than there ought to be about our purpose and greater belief than there ought to be about the purposes of our opponents?

The black and white of the Victorian era has given way to a murky grey. It is no, longer my country right or wrong. Our country must now be right and each person wants to make up his own mind. And so there is a greater challenge to leadership which must explain and win respect, for without respected leadership a nation is destroyed.

What is the catalyst that will unite a people—an obvious danger? But that can be too late. Can it be love of country or obligation? Is it liberty, philosophy or material standards?

True democracy is so diversified in its constituent parts that it is difficult to find the catalyst that will light the hearts of men, except when that democracy is threatened. Such a catalyst is the ‘Holy Grail’ of democracy. Its search places particular responsibility and a particular challenge on those who aspire to leadership.

The great task of statesmanship is to apply past lessons to new situations, to draw correct analogies to understand and act upon present forces, to recognise the need for change. We must be particularly aware of the great weaknesses of man's idealism which is to forget the frailty of the human race, to believe that man is something that he is not and so construct a view of society that can only exist in the mind. We can only draw reality from our idealism when we can accept that while we strive for perfection, we will not reach it in this world nor our sons after us. Recognition of this truth should soften the radical, bring tolerance to the fanatic, temper the extremes of love and hate. But it will not make our vigilance or struggle any the less necessary.

Thus I come to the end of my path. The problems of economic organisation and policy set the stage for the nation we wish to be, their solution shapes the stature and vigour of our nation, the independence and resolution of our people.

We need these qualities to enable us to forge our own path, to master whatever challenge the unpredictable world may cast our way.