Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard   

Previous Fragment    Next Fragment
Monday, 25 March 1985
Page: 732


Senator ARCHER(5.41) —In the Weekend Australian of 23 and 24 February there was a large item which posed the question: 'What's gone wrong with Australia'? I read on and started to research the question more fully. It was fairly easy to see that Australia's position is slipping. Domestically and internationally we have slipped. Our comparative standard of living not so long ago was fifth in the world and has now dropped to twenty-first. We have taken all the soft options and we will pay for it until we stiffen up again. According to Mr Dawkins, in a speech that he made to the Insurance Association on 19 February, Australia is now ranked only twenty-first in world trade terms in the value of services exported in 1980. That twenty-first position is behind such countries as Italy, Spain, Austria, Singapore, Korea, Mexico, Yugoslavia and Greece. The latest figures show that a mere 27 per cent of jobs are now in the primary and secondary sectors and that over 70 per cent are in the tertiary or service sector-this is still according to the same speech of Mr Dawkins; that is, for every person doing something productive, producing wealth, there are two people in the community living off that work.

What of 1985? How strong is Australia's trading position? Where do we stand in relation to metals and minerals, to primary production and to manufactures for export? I was looking very hard to find the good news. I ask again: What has gone wrong with Australia? Are we competitive in international markets? I find that we are not, according to Sir Roderick Carnegie's address to the National Outlook Conference, when he was reported to have said that Australia had become uncompetitive on the international trade market and needed to review its whole approach to agriculture and that fewer and fewer Australians were directly engaged in competition with the rest of the world in their daily employment. The Director of the Bureau of Agricultural Economics, Dr Andrew Stoeckel, according to the same report, said that Australia needed to keep the lid on wages, reduce inflation and aim to reduce Budget deficits and that this would result in a lower exchange rate.

I ask: Are we reliable suppliers of commodities? Again, we would have to answer no. I instance coal, uranium, live sheep, meat and wood chips where our record has not been good. How often do we have to give the world's best customers reason to look to see who else they can buy from more easily while we, lemming-like, are rushing to push ourselves over the end into oblivion? I also ask: Can Government decisions be taken as secure? The answer to this has to be: Good heavens, no! We need look only at our decisions on uranium, the pensions assets test, on land rights, on taxation and on the MX missile to see that. Next, I ask: Do our allies see us as totally dependable? I doubt that also. To see that one has to look only at our relationship at present with the Association of South East Asian Nations, our real position in ANZUS-if anybody can tell us-and, again, at the MX fiasco. I think we all understand why United States House of Representatives member Richard Cheney of Wyoming introduced legislation suggesting that the United States should ban the imports of Australian and New Zealand lamb, wool, beef, and uranium yellow- cake. Why would he not think in that way? One can hardly blame him for wondering whether we are friendly. Are we as friendly as other potential suppliers and/or allies? How do we rate in the United States compared with countries such as Japan and Korea, the United Kingdom and Canada?

Of course, we know that this is the lucky country. It is rich in resources. We can produce enough food for ourselves and for much of the world too, if we have to. We have resourceful, energetic people of character and independence, but, however we look at it, we have a declining comparative standard of living. Sir Roderick Carnegie said that Singapore's income per head would exceed Australia's in less than 15 years. According to the January 1985 balance of payments figures, we now spend more than we earn. As of January 1985, our exports were worth $15,622m while our imports were worth $17,186m, a decline of $1,920m in the 12 months. We are running up debts that this generation will not be able to meet. It is with despair that I read that our deficit for 1984-85, according to Mr Kenneth Davidson-if his information is correct-could be of the order of $10,000m to $11,000m, thus one of the largest in the world relative to our gross domestic product. If our dollar does not improve from its present record low, that alone will add about 3 per cent to the inflation rate over the next year or so.

So what is the problem? Is it one of subsidies and protection? Frankly, the only conclusion that we can come to is that it is. The only totally protected item and the one most highly subsidised is, of course, wages. Clearly, the country can no longer afford total wages protection when there is no relationship between those wages and those internationally marketed goods and services that this country produces. This probably applies particularly to the tertiary sector. There is a total conflict between the concept of domestic money and international money. It just so happens that our currency is a commodity currency-an international commodity. Our wages and costs system is based on domestic prices, but what we get is based on world markets. The two things are totally incompatible, and the second item has the most importance. If one is a dentist, a taxi operator, a valuer, a producer of corn flakes, a seller of milkshakes, or a union official, it does not matter. If the money received for wages is spent on other goods in the same currency, that is okay; but if one adds a component of international competitiveness, if we buy the raw materials from overseas, get equipment and machinery from overseas, or compete with other countries which have access to Australian markets, suddenly all the little reds lights come on.

Again I ask: What has gone wrong with Australia? We used to have a dried fruits industry, a canned fruits industry, an export car industry, a clothing and textiles industry, a ship building industry, a dairying industry and a sugar industry. Where are they? How safe are the wheat and meat industries from going down exactly the same road as these others? Simply, our domestic costs are higher now than those overseas competitors have to pay for the same goods and services. We refuse to admit it or to do anything about it. We are dealing in an international commodity currency. I shall quote Arun Abey from the Australian Financial Review's 'Investors Diary'. He said:

. . . the value of Australia's exports is falling below that of its imports. Low commodity prices and declining international competitiveness have been the main causes of the growing balance of trade deficit. Commodity prices are unlikely to recover significantly in the near future and, unfortunately, Australia's attempts to improve its international competitiveness have lagged well behind that of rival economies. A turnaround in this position is unlikely in the near future.

What are we doing about it? The factors which have caused the dollar to decline are Australia's growing failure to export and its growing failure to attract foreign investment. Mr Abey went on to say:

A sustained recovery can only be expected when government policies are implemented which genuinely increase the competitiveness of the Australian economy.

Does the Government want to see us improve our international competitiveness? If so, when will it introduce the sort of legislation that will bring that about? Protection for labour is clearly provided; it is not provided for goods. Dr Stoeckel, at the Bureau of Agricultural Economics Outlook Conference, said that the basic productive sector, the rural sector, would earn 17 per cent less than last year. At the same time, according to the Department of Industry and Commerce publication, 'Recent Trends in the Economy', wages went up 10.8 per cent. How can one go down and the other go up at that rate? I will, and the country should, support all those industries in which productivity is good and production per person per hour rates in the world standard of production, or in which production per cow, per acre or suchlike is there, but I would not expect anybody to support those industries for which this clearly is not the case. The February 1985 'Industrial Review' of the Confederation of Australian Industry brings it all home. What is our national productivity? The review states:

. . . output increased for all industrialised countries except Australia, Italy and Switzerland.

Honourable senators may well ask why. The productive sector in Australia never did accept the justification based on equity and profitability for things such as the 35-hour week, the 17 1/2 per cent loading, severance pay, superannuation portability and the like while they were granted without being totally tied to productivity and the capacity of the country to pay. We went wrong in that we brought in all those things without ever looking to see whether the country could afford it. Statistics published by the International Monetary Fund show that the decline in the Australian economy between 1981 and 1983 was the greatest amongst all industrialised nations. The CAI 'Industrial Review' also states:

It is simply no longer possible to avoid facing up to the certainty that something particularly Australian was responsible for the massive decline, that 'something' being the tremendous increase in labour costs which took place at the end of 1981.

. . . . .

. . . the two previous National Wage Case decisions have more than obliterated the effects of the wage pause. As at June 1984, real labour costs were at the highest level in the economy's history . . .

Food, all the while, is becoming relatively cheaper and cheaper. Who pays? Again I refer honourable senators to the BAE Outlook publication in which it is made fairly clear. It says:

Farm income is expected to decrease in 1984-85 to a level of $12,000, or about $7,000 per work-year of family labour.

Meanwhile, the average annual adult male wage in Australia is plus or minus $20,000. One section of the community has an earning expectation of $7,000 a year so that we can have cheap food. Other countries now compete with us, even in Australia, on things such as meat and dairy products, confectionery, fish and even fruit and vegetables. We may ask how this could happen. The answer has to be that we are just too dear. With high costs, the non-food producing sectors of our economy are driving out the producers, all the while clamouring for more and more for themselves to assist the speed-up of driving out the others. The Governor-General's Speech covered this very well when it said:

The Government believes that economic growth is not an end in itself, but a means to greater ends-a means towards the achievement of high social goals of equity and fairness.

It gives me great heart, because I have not yet found that equity and fairness being applied to those who feed the nation. I have reached the stage at which I have started to question seriously Australia's capacity even to feed itself in a few years. The industries we lose cannot readily be replaced. We used to have a dried fruits industry. We had peas, beans and corn; we are watching them go. What about dairying and the sugar industries? What other country in the world just writes off these food producing industries and lets them go? Self-sufficiency in food production is the goal of every other country, developed or developing. Why is that not Australia's goal?

How does the current situation facing food producers tie in with the Governor-General's Speech about the high social goals of equity and fairness? Our food producers starve and consumers buy produce overseas. Some imports are dumped on our markets. The food is often of a lower grade. Whatever it is, it is always to the detriment of Australian producers and the nation as a whole. The political attitude is in favour of the supply of cheap groceries. Certainly there are more consumers than producers. The index for food produced is rising at a little over half the rate of that for the overall consumer price index. I do not see why food producers are left to subsidise the whole of the CPI. I quote Dr Stoeckel once again:

Changing a foreign country's internal domestic policies is no easy matter . . . It's the consumers, the taxpayers, the unemployed and other sectors who must tip the political balance if major change is to be successful. People are sensitive to rising food costs and because of that, they can influence outcomes.

All I can say is that that is tough luck for the producers. Still worse, the manufacture and sale of groceries is in very few hands. Australia has only four or five major producers and about seven major retailers. This is a terribly unhealthy situation, probably the least desirable in the world. I will certainly move at an appropriate time that there be a Senate inquiry to study retailing practices in Australia.

I turn briefly to taxation. I find the Government is displaying an extraordinary attitude, If I understand it correctly. Employment comes from development; development is funded from capital; and capital is generated from savings. The Government looks like promoting a policy of thrashing Australia's savings and capital which, in turn, ensures that we destroy the desire to save, the source of capital and the basis of employment. Where is the money to come from? Our taxes generally, including capital taxes, will be used to shore up deficits in the day to day business of running the country. In other words we will eat our capital. Australia, more than any other countries, is short of capital. We should be trying to build it up, at all costs. Just to prove the rest of the world wrong, we will eat our capital.

What has gone wrong with Australia? The Government has introduced vengeance taxes. It has dredged up new taxes from past operations of business, from items which were never taxable and from others which never involved evasion. The Government has destroyed all confidence in government and has encouraged the destruction of savings. Therefore, the Government should accept responsibility for destroying employment opportunities. Our country depends on productivity, development, progress, trade and work and employment. The productive sector is important and everyone in the community should know and respect the position of the productive sector.

A couple of weeks ago, I listened to two commentators on early morning television, Robert Haupt and Laurie Oakes, fawning over the great job done by this Government in the course of its two years in government. They said that all promises had been fulfilled, that inflation and unemployment were down and that the Government had done a good job. I could imagine the smug looks from Government members Australia-wide as they said it. Those two people would be typical of the non-productive sector of the community. They chanted about superficial issues and made fools of themselves by ignoring the real issues. What is the state of the country? What is our currency worth? What is the medium to long term reaction to that? Sir Roderick Carnegie gave us an example when he said at the Outlook Conference:

. . . we should recognise the declining value of our money for what it is-a cut in the nation's living standards.

Our inflation rate is about double that of many of our main trading partners. It is still 50 per cent higher than the Organisation for Economic Co-operation and Development average. I think that is important. The Victorian Chamber of Manufactures, in its publication 'Towards the Regeneration of Australian Manufacturing', stated:

Forecasts for 1985-86 suggest that consumer prices in Australia will increase by 7.6%, compared with 5.2% for the OECD as a whole, and the difference between Australian and OECD inflation could be even greater by 1986/87.

What about the money supply? It was once very important and the Treasurer (Mr Keating) made much of the fact that it was going to be held at between 8 and 10 per cent. We are now told that it is between 11.3 and 11.8 per cent and that it is not important any more. What about the deficit? The deficit has trebled in the last five years and we are told by Kenneth Davidson that it could easily be $10 billion to $11 billion. What of that? What about the declining balance of trade? We are buying more than we are selling. We must be careful that we do not run out of money because that is the inevitable end unless things change. What about the outflow of foreign investments? Our investments are no longer seen as being totally secure. Our currency, long since having been seen as stable, has suddenly gone into a decline. International investors seldom invest in currencies that appear to be unstable or possibly even a little insecure. But, of course, Haupt, Oakes and the rest of the non-productive sector of the community still continue to get their salary rises, their benefits, cheap groceries and Sunday afternoon cricket with the Prime Minister (Mr Hawke), and the country looks lovely. At the same time newspapers are headlining the fact that Canberra backs the wage push for a further 2.7 per cent, which the country cannot afford. We know that the country cannot afford it. Again I ask: What has gone wrong with Australia?

Clearly every commentator, every politician, every businessman knows the symptoms, has diagnosed the complaint and wants a miraculous and painless cure that simply does not and should not exist. The complaint will not go away if we are to survive economically. I am not yet sure that we have enough national fortitude to even want to do so. The fact is that the pains have to be faced and the sooner the better. Australian manufacturing must be stepped up. So many commentators, including the Manufacturers' Bulletin and the Business Council of Australia, say that we simply cannot survive on an export level of 8 to 9 per cent when all the other competitive countries have an export level of approximately 30 per cent.

What has gone wrong with Australia? I look over the ridiculous issues and often sheer trivia that have occupied the Senate for days, weeks and months in recent times-disruptive issues, interferences, pet foibles and grandstanding-while all the time the country runs out of money, while people become more and more selfish and self-interested, while our relative prosperity compared with that of the rest of the world continues to decline alarmingly, while we are hardly competitive with any other major trading nation and while there are disincentives to effort, savings and investment and they grow week to week. We have to sit here through drivel instead of getting down to the business of the country.

Australians need to be made more industrious; they need to be made more keen. We should encourage them to invest and employ people and become more Australia minded. The Government is busy changing the colours of the funnels of Australian National Line ships, abolishing the national anthem and taking down photos of the Queen. These are the matters which the Government sees as important. There must be a stop to these ridiculous summits and the Government which has been elected to govern must govern. The country at large, responsible for the cosy circumstances that started in more profitable days, must now face up to the realities and altogether meet the challenge of the nation's maladies. The Government must lead and the country must again become productive and competitive. That is the way to gain investment, employment and international respect or we will continue to lose investment, become more dependent on government, have fewer jobs, fewer markets, import more and build up even larger deficits and higher inflation. This is the choice and the only choice. The productive sector-the export productive sector in particular-must be encouraged and unfettered if a return to overall prosperity is to be achieved.


The DEPUTY PRESIDENT —Before I call Senator McKiernan, I inform the Senate that this will be his first speech in this chamber. I ask honourable senators to afford him the usual courtesies.