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Tuesday, 24 February 1987
Page: 637

Mr KERIN (Minister for Primary Industry)(9.16) —The motion before the House states:

That this House condemns the Opposition parties for misleading and confusing the Australian people with reckless and reactionary promises of change-promises which they are unable to enunciate or cost.

The people of this country today see an Opposition with no cohesive economic or social policy. Members of the Opposition are divided on tax. They are inconsistent and duplicitous on wages. They are duplicitous on spending and deficit management. They are simply wrong and misguided on issues such as interest rates and inflation. They do not even have a sensible analysis and what they are putting forward, of course, would make the situation worse. Even the Leader of the Opposition (Mr Howard) is not game to come into this House. Where is the member for Kooyong (Mr Peacock)? Will he speak in this debate? The Government and the Australian people have to face some basic economic facts. We are losing billions of dollars on the sale of our traditional products because of the corruption of international markets and general international structural problems. The rate of inflation comes from the price of imports and the Opposition must focus on the problems we have with our external account. We are not ignoring domestic problems. Through the calendar year 1986 the wage increase was 2.3 per cent for wage and salary earners. Sure, there was some wages drift but that is because the market works, to some degree, as it did for executives where the increase was about 11.4 per cent. But we do have an incomes policy; we do have an accord. All we have from the Opposition is a lot of confusion on this key aspect of our economy.

The Opposition will not face our deteriorating terms of trade or our balance of payments situation. Its only solutions, if one could dignify them with that title, are to create unemployment and devastate the economy with short term populist solutions, none of which serious, honest members of the Opposition really believe in. Opportunism is one thing; the future of Australia is another.

If a visitor came from another world to this country today he would find a very strange situation indeed. With an economic situation which must mean a lower standard of living for all of us for a while, while policy measures in place take effect, the Opposition is capitalising on the views of the extreme and greedy in our society, most of whom are outside this chamber.

With three million people and 800,000 children living in poor circumstances, the Opposition is talking about the millionaires; favoured tax, a flat tax, as if it is some nirvana-a tax which will disadvantage between 60 and 80 per cent of all wage and salary earners. This is just another left-over from the extreme supply-side economics as if the Reagan experiment and monetarism had not been disproved constantly by now.

We constantly hear from the Opposition spokesman on social security, the honourable member for Richmond (Mr Blunt), of welfare fraud. We hear of this from the forces of reaction opposite but we never hear a word about tax fraud or medical fraud. The divided Opposition-or is it only the Liberals-have adopted the slogan `incentivation' on the assumption that the rich are not working because they have too little and the poor are not working because they have too much. This would be laughable if it were not so serious. The Opposition is saying: `Give the mob a slogan; do not give it a policy'. This is the new cynicism-well beyond the `fistful of dollars' of 1977. So now we are into slogans. What will the National Party of Australia have? Will it be `mass ruralvation' or something else? Then we have the divided old Liberal Party of Australia. The wets are probably into salivation but maybe that is really `Peacockivation'. What will the dries give us-`inactivation'? What shall we get from honourable members over in the National Party? It will be the geriatric gibberish: `Don't you worryvation'. These are the new slogans.

Every principle of social justice, every principle of social equity and everything that small `l' liberalism ever stood for is now being turned on its head by the Opposition. We have the old two-card trick. In the Heathcote and Bankstown by-elections members of the Opposition all raced round saying: `Your living standards are coming down. This is terrible, is it not?' Yet they want to freeze wages or they want to give people $171.30, which is the New Right's minimum wage. Even the Deputy Leader of the Opposition (Mr N.A. Brown), who is here tonight, has said that our dollar is at its lowest value in Australia's history. Yet the National Party wants a lower value for the dollar, regardless of the consequences. It really wants to play the two-card trick the whole time.

Against the background of the economic situation we are in, the divided Opposition is playing the reverse of Robin Hood. It is proposing a mish-mash of policies from the reactionary groups in our society which adds up to the most cynical, fascist ideological attack on those Australians least able to defend themselves and their families by those most able to stay on the gravy train. We all understand why this is so; there is a vacuum. The leadership of the Opposition is pathetic. Members of the Opposition talk about the New Right. They grab the slogans of Katharine West, or whoever, but I cannot see that there is much difference from the League of Rights-the old Rights-because we get the same sort of nonsense. We have instant heroes and instant slogans. We really do not know where privatisation and deregulation and those sorts of concepts have gone now. Maybe they are on the hidden agenda. We have the instant heroes such as Jay Pendarvis, Ian McLachlan today in the newspapers, and I suppose it will be Bruce Ruxton tomorrow. People have to be brought in from outside to attract a bit of publicity, because the leadership of the two Opposition parties in this place has failed. They cannot articulate a policy. They have failed. They are being wrecked from outside because there is a vacuum. We hear that the answer to all these problems is wages.

Let me just tell honourable members about the price of wheat. Some wheat was recently sold to the Union of Soviet Socialist Republics for $US75 a tonne. That was subsidised by the European Community with another $US168 a tonne. Our sugar producers were getting $A223 a tonne last year for their sugar and the subsidy by the EC was $A600 a tonne after it had spent $450 getting it. The world price for sugar is between US6c and US7c a pound. The Americans pay their own growers 18c to produce it. Beef farmers in Europe get 3,440 ECU a tonne for beef. An ECU equals a United States dollar. That means that they are getting $5,160 Australian, which is five times the price we get. How the heck will the Opposition bring wages down enough to compensate for all that nonsense? The proposition of the New Right is a minimum wage of $171.30 and a wages freeze for two years. Honourable members opposite simply do not know where they are. They do not even understand the relationship between the exchange rate and interest rates and inflation. They have not even got the equation right.

Let us look at our terms of trade. Australia's terms of trade were 15 per cent lower in the September quarter of 1986 than the figures in 1983-84. In overall world price terms Australia has suffered a 17 per cent drop in average export prices over the last two years. Let us look at some of the rural price declines. In world price terms since 1983-84, wheat is down 32 per cent, wool 31 per cent, sugar 28 per cent, feed barley 32 per cent, and dairy products 33 per cent. That is the problem that we have, and we have to focus on it.

As I have said, the Queensland Premier has been able to wreck the Federal National-Liberal parties because of their pathetic leadership and their failure to develop any responsible policies. The Opposition's policy on taxes, for example, is a complete shambles, with fundamental divisions over the Opposition leader's additional broad based consumption tax and the Queensland Premier's totally unfair flat rate tax. It does not matter who wins this fight. Both outcomes would be equally bad for Australia as a whole and country people in particular. A broad based tax will inevitably harm country people. Call it what you will-consumption tax, retail tax or value added tax-there is no way that this can be avoided. It will hurt the country people.

The Opposition is incapable of developing a wages policy that could discount for the inflationary effects of increased indirect taxes. So an 8 per cent tax would become an automatic 8 per cent added to the inflation rate forever. Imagine the effects on industry competitiveness of an addition to the inflation rate of twice the average inflation of our trading partners. This would absolutely wipe out farm incomes in three years. These are the witchdoctor economics that are being put up by the Opposition.

Any indirect taxes applying at the retail level must tax the freight component of retail costs. The Leader of the Opposition is not being truthful if he says otherwise. So country people would be heavily disadvantaged. The freight component of retail prices can be very large in country areas. On Thursday Island, for example, food prices are 64 per cent higher than in the capital cities, and the honourable member for Kalgoorlie (Mr Campbell) and the honourable member for Leichhardt (Mr Gayler) are well aware of this.

A broad based indirect tax must also cover some farm and other business inputs. Major items could be exempted at a considerable compliance cost, but what about smaller items? What about every time a farmer wants some tools to fix a shed? He will be slugged with an indirect tax. This impact on farm costs has been recognised by the National Farmers Federation, so perhaps it is time that Mr McLachlan told his friends in the extreme Right of the Liberal Party some of these facts of life.

Will food be exempted from the tax? Farm organisations have been very critical of any indirect tax on beverages. Imagine the impact of completely taxing food. The Federal National Party-if we can call it that these days-has done a complete about-face on indirect taxes. It has come to recognise some, though not all, of these effects. Three weeks ago the Deputy Leader of the National Party was asked how he would pay for his wild promises and he said:

It just depends on how you change your tax system. If you had a broader based tax as the IAC recommends-a broader based indirect tax-you would not need to tax fuel to the extent that we are taxing it. And the IAC Report has come out very strongly in favour of the line that we are advocating.

We could not get a clearer endorsement of the Opposition Leader's consumption tax proposals. That was the week that the Deputy Leader of the National Party was on side with John Howard. But what did he say last week? He said:

Our Party room is very much opposed to a consumption tax because we feel that a consumption tax introduced at this time could have a very serious effect on people out in those regional areas.

As we all know, the National Party is being directed from outside this Parliament by the Queensland Premier.

Let us look at the tax policies of the Queensland Premier. He says that he wants a flat tax. We all know that this means an increased tax slug on the great majority of taxpayers-60 per cent to 80 per cent. I have said before, and I shall say it over and again until the Queensland Premier and his backers learn: A flat tax will cost farmers money. Let me explain once again. Average farm income this year will be $16,400. A taxpayer on this income will pay $1,200 more under a flat tax than under our tax scales. This is 9 per cent of his total net income. It would be a rip-off of $200m from the farm sector. In addition, tax averaging must, by definition, go under a flat tax, at a further cost to farmers of $88m. So the Queensland Premier may be arrogant enough to believe that all he has to do is blow the whistle and farmers will follow him like sheep. But wait until they learn what his flat tax policy will cost them.

No one in country Australia should kid himself that the Queensland Premier is capable of fixing any of his other problems. For example, interest rates would absolutely skyrocket as a result of the massive Budget deficit that would occur. The evidence for this can be seen in Queensland, which had the largest increase in debt of any State last year-an increase of over $2 billion. Of course, this problem of interest rates is not unique to the Queensland Premier. The Federal Opposition's policies would do exactly the same thing. There would be a massive run on the dollar, the foreign debt would explode, and inflation and unemployment would go through the roof.

Let us turn to the shambles the Opposition is also in over primary industry policy. Three weeks ago the Deputy Leader of the National Party announced a so-called strategy for primary industry. What a joke that turned out to be. Of course, as is usual with the National Party, it completely ignored anyone who is not a farmer. The National Party has no interest in the great majority of people in country Australia. But let us look at the policy itself. The strategy surreptitiously dumped most of the things that National Party members have been running around the bush with. No more will full freight equalisation be increased, or sales tax on wine and lubricants abolished, or income equalisation deposits restored-three of the promises that have already been torpedoed by the Liberals. The Leader of the Opposition has said that the only expenditure increase he would countenance is to pay pensions to millionaires so the Nationals' promises about extra funding for the rural adjustment scheme and the abolition of export inspection charges were stillborn.

Similarly, the coalition's industry spokesman, Senator Chaney, has broadly endorsed the Government's industry policy approach, thus sabotaging the National Party's attempts to tell farmers that it would lower tariffs more rapidly than we are already doing. We know what the former Leader of the National Party said when a former Prime Minister cut tariffs by 25 per cent: He said that it was cowardly. What Mr Anthony said at the conclusion of the last General Agreement on Tariffs and Trade round was really cowardly. So it is the old National Party trick of saying one thing to farmers and another in this Parliament. All this means a contempt for democracy that we are used to getting from the National Party in Queensland.

Mr DEPUTY SPEAKER —Order! The Minister's time has expired.