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Wednesday, 1 April 1987
Page: 1902


Mr MOUNTFORD(5.38) —Debate on Appropriation Bills is traditionally a time for the House to consider the economic performance of the government of the day. Today, in the debate on Appropriation Bill (No. 3) and cognate Bills I would like to look at this Government's economic policies against the background of our current difficulties, and see what progress has been made. The success or otherwise of a government's economic decision making can be analysed only in the light of the circumstances in which those decisions are made.

It is all very well for superficial critics to look back to the post-World War II days and yearn for a return to assured growth and prosperity year in and year out. In that Indian summer during the 1950s and 1960s, when inflation was almost non-existent and unemployment practically unheard of, the conservative government of the day had no need, by and large, to consider an apportionment of scarce resources. The world economy on the rise provided all the growth needed. Yet in that time when so much could have been done, in those days when we should have been gearing up for the rigors of the future, we were led by the shortsighted and the weak. I will give just one example. After the war, Australia actually sold cars competitively overseas, even to Japan. But as time, and the ingenuity of our trading opponents wore on, our edge was cut back. The response of the Menzies Government was not to market more aggressively, to make a better product cheaper so that we could beat the competition toe to toe-no, its response was to turn the Department of Industry, Technology and Commerce into a safe refuge for the manufacturing industry. Black Jack McEwen must bear much of the blame for this stagnant policy.

When the world became too hard, when competition made life too difficult, the government was always there to apply tariffs, thus protecting the local product before overseas expertise wiped it out. If the Menzies Administration had only pursued the aggressive marketing policies which this Government is now instituting, we would have a much larger manufacturing base to help sustain the losses we have suffered in primary industry exports. We would also not be needing to import as much. But this was not done, and while it appeared to all the world that our economy was performing nicely, we were in reality sowing the seeds of our own future downfall. We did not even have the comfort of a government which used the prosperity to fund social changes. In the general expectation of full employment and plenty of work for all, the plight of the needy in the community was insignificant enough to be ignored. Everyone could own their own home, take four weeks leave, with pay, and expect their children to grow up with the same advantages.

Tragically, the return to social reform so desperately sought by Australians after 23 years of conservative stagnation, coincided almost to the year with the first oil price shocks and the world-wide recession. A Labor government with a clear mandate to bring the nation up to world standard had also to contend with economic problems which no Western government had successfully defeated. But if some Australians wrongly blamed the Whitlam Administration for our economic woes, they were put well and truly right by the mismanagement of the Fraser years. The time of the Fraser Government is a particularly fascinating period for students of the current political scene, for it is when the leaders of our colleagues opposite gained their economic skills. What a sorry record the record of that Government is. I need only quote the editorial from the Australian Financial Review of Monday, 30 March this year:

As time goes on, the disastrous legacy of the Fraser Liberal Government becomes clearer . . . the need for structural changes in the economy as a whole was ignored as the Government promoted the idea of a resources boom to solve the country's problems.

That had two very specific effects: it encouraged a disastrous wage breakout led by the metal unions which employers found impossible to resist, given the boosterism in Federal politics at the time, and it encouraged the States to undertake a massive infrastructure borrowing program, much of which was in foreign currency and unhedged, which the whole country is now paying for in its very large overseas debt burden.

So that is the legacy of our predecessors. That is their claim to economic fame. Certainly times were tough for the Fraser-Howard Government, but no less tough than they are now. In fact, it was operating under much better terms of trade than we now face. If we were now operating on the terms of trade which applied at Christmas 1984, we would have a current account deficit of $3.6 billion, not $14 billion. Before that, in the last year of the Howard Treasurership our terms of trade measured against the 1979-80 year was 0.955. In the December quarter of last year this Government had to cope with terms of trade of only 0.803. No one with an ounce of knowledge of international economics would try to argue that any Federal government, Labor or Liberal, could change those terms of trade figures. But the fact remains that our opponents operated under difficult circumstances and failed abjectly. They had a policy of fighting inflation first, and bequeathed us a rate of 11.5 per cent. That was the best they could do when they targeted inflation as the key figure to reduce. Is it any wonder, then, that they bequeathed us over 10 per cent unemployment when we took office? Just to make the problem completely insurmountable, they gave us a Budget deficit of $10 billion, or 5 per cent of gross domestic product. Within three years, we had more than kept our promise to create half a million jobs; by 1984-85 we had an annual inflation rate below 5 per cent; and we have progressively reduced the Budget deficit in each Budget.

The challenge that faces us now stems from the fact that the world has cut our income substantially. World commodity prices have fallen dramatically. It is a situation beyond the power of any government, and we must adjust our situation to new circumstances. Let me now outline the two responses to this dilemma which the non-Labor and Labor parties present. The conservatives, whether Liberal wets or dries, or even Queensland Nationals or national Nationals, are in broad agreement on how to restore normality-reduce government spending, reduce tax, and everything will be all right. That is the public statement; the good news, the politically salable solution. The rhetoric goes-and it is the same story for the Leader of the Opposition (Mr Howard), or for the Premier of Queensland-that if we reduce taxes and provide incentive, everyone will work harder, reap more reward personally and the whole economy will work its way out of its difficulties. But this is a false solution for many reasons. Firstly, it has failed elsewhere before now. It was this very tempting sounding policy which brought Reagan to power in the first place. This was the very policy which turned the United States from a creditor nation into the world's largest debtor, although Reagan's campaign managers were not so foolish as to label it as `incentivation'. Secondly, the hidden agenda behind this glossy picture is rather stark, for if government spending is to be reduced by the amounts which the Leader of the Opposition is proclaiming, the cuts have to occur somewhere. Courtesy of the honourable member for Maranoa (Mr Ian Cameron), we know that pensioners will have no joy out of conservative `incentivation'. He has unequivocally stated:

If we can have less taxes there is no reason why we should be giving pensioners or anybody else in the community any more funds.

Workers, too, will be pleasantly `incentivated' by an immediate year long wages freeze, making it all the more difficult for families to keep up with rising prices. This House has seen before today the leaked Liberal Party document which details where the axe will fall. I have no need to reiterate that now. The Opposition has not repudiated the document, it has not explained it, it has not said where they have disagreed with it. The only reaction of Opposition members has been to litter this chamber with the remnants of it. But make no mistake, the honourable member for Mackellar (Mr Carlton) will be back at the waste paper basket with his pot of glue and sticky tape if he ever comes to power, putting the document together, implementing its economic despair. To add insult to injury, the Opposition will `broaden the taxation base', a statement which can only mean some form of consumption tax. Each and every item of consumption will cost more. Let the tories ask their small business friends what they think of that. Let them ask the families who they pretend to protect.

An excellent example of the coalition's attitude to letting the lower end of the economic scale bear the burden of restraint comes in its recently announced housing policy. Under constant pressure from the Government to tell us where the money is coming from for its policies, the honourable member for Deakin (Mr Beale) has boasted that $690m will be cut from the Commonwealth State Housing Agreement. His attitude is that public housing is now a State issue; the problem goes away by making it into someone else's problem. The problem disappears, along with the honourable member's potential future portfolio. If these attacks on average Australians were not enough, the real insult to the electorate comes in the flip side to the incentivation campaign. It is not all bad news-far from it. Millionaires will have their pensions restored; the rich will get their perks again; anyone with extensive capital will not be paying tax on it; businessmen will get their free lunches once more. In short, honest John Howard, the Leader of the Opposition, will become the Robin Hood of the rich. It makes no difference if one then goes to the Joh camp looking for some remedy. The favouritism, the inequity, is only more blatant. All the restraint is borne by middle and low income earners, while the rich are left to consume and enjoy as much as their grasping will allow. In short, it is a formula for electoral success, an appeal to the rich and powerful, while making a sham offer of membership into the order of the elite to the middle and lower classes.

The alternative to the conservative fairy story is what we see before us from the Hawke Government. We make no promise that in one quick move we can make it all come good. The procedure will not be easy, and we must realise that a decline is inevitable in the standards we have come to expect. There will need to be continued restraint shown by all-not just workers or pensioners but all Australians. The rich must get used to the idea of paying for all their meals, including their lunches, and they must become accustomed to paying all their taxes. Such restraint will help reduce our imports. On the outgoing side we must work harder, and smarter, to increase the quality and quantity of our exports, especially our manufactured exports. This Government has initiated such policies since day one of its operation, and it is no exaggeration to say that the broad range of reform undertaken by this Government under Senator Button's Department is the envy of conservative leaders in the field. No conservative government has ever had the foresight or political will to break down protection and restructure industry in the way this Government has.

So this is the choice which the people of Australia face-on one hand the Leader of the Opposition, who says that he will not lend his name to any promise which he cannot keep, and who is consistently unable to comment when he is asked where the money is coming from and; on the other, the Hawke Government, which pulls no punches, which has been honest with the people and which has presented them with a plan. It is a plan which calls for sacrifice from all, not just some. It is a long term plan, not a nine-day wonder. It is a plan which spares the needy from the worst excesses, while achieving its goals. If the Australian's newspoll of yesterday is any indication, it is a plan far more acceptable to the people of this country than anything our factionalised opponents have proposed.