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Wednesday, 18 March 1987
Page: 1040

Mr BARRY JONES (Minister for Science and Minister Assisting the Treasurer on Prices)(3.12) —This is another pathetic attempt by this apology of an Opposition to divert attention from its total incapacity to address any of the major social and economic problems of our time. The Opposition is politically bereft and comes naked into the Parliament, lacking even a fig leaf to cover its embarrassment. What are the alternative economic policies for the nation which we could be debating rationally? The Opposition has been weighed and found wanting. After four years in office, the Hawke Government can claim to have tackled more tough issues than any government for decades. We have effected the first major taxation reform for 40 years-the first attempt to overcome fiscal creep, as the Treasurer (Mr Keating) always puts it-to reduce marginal rates for medium taxpayers. The Opposition tax policy is yet to be disclosed. So far it has confined itself to whingeing and nitpicking, telling various interest groups what they want to hear in a completely dishonest and opportunistic way.

The Hawke Government has turned round the direction of our industry-a remarkable achievement in four years. The steel industry, the car industry, shipbuilding, textiles, clothing and foot- wear, plastics and chemicals have all been converted from inward looking defensive areas seeking only to service a local market and sheltering nervously behind high tariff barriers, unwilling to compete against the rest of the world. This is an historic turnaround with the Government tackling really tough issues. But where is the Opposition response? Where is the Opposition industry policy?

The prices and incomes accord, first negotiated in 1983, has been a remarkable success and, against all the scoffing of the sceptics, it has held up very well. But with the restraints imposed on low and medium income earners, the need to enforce comparable restraint on price levels has never been more obvious as a matter of equity. But while the Government's policy is clear- restraint on wages and restraint on prices-this apology for an Opposition wants to freeze wages and let prices rip. Of course, it proposes the abolition of the Prices Surveillance Authority.

I take up one or two of the points that were mentioned by the honourable member for Deakin (Mr Beale). I want to qualify what I said when I was interviewed by Laurie Oakes on Sunday. There appeared to be an inconsistency between what the Prime Minister (Mr Hawke) said in his Press Club speech on the preceding Friday and my remarks on Sunday morning. But I think the difference is more apparent than real. I confirm what he quoted me as saying that the total percentage of household income devoted to food purchases has remained remarkably stable. It has gone from about 14.7 per cent to 14.5 per cent over about an 8-year period. However, the amount actually purchased, that is to say the volume of goods purchased, has fallen sharply. I failed to make that distinction clear when talking to Laurie Oakes on the Sunday program. That is, that people who are on fixed or low incomes feel the pinch very greatly and a $5 variation in buying the same items as were bought six or 12 months earlier is significant for them. Instead of buying five loaves of bread they now buy three loaves. The amount they spend on bread as a proportion of income is constant but, of course, the amount of bread received is not constant.

I do not propose to respond to the personal criticisms such as `the Minister for puffed wheat', `Inspector Clouseau' and all that business because it is childish. It indicates that the Opposition is not capable of addressing the issues seriously.

Mr Gear —They are taking you seriously.

Mr BARRY JONES —It is only the second matter of public importance that I have had in my own right in four years as a Minister. I thank my friend, the honourable member for Deakin, for at least persuading his colleagues to allow him to get up as the shadow Minister and put a matter of public importance before the House today. I thought the matter of public importance was very facetious. It states:

The failure of the Government to deal with the true causes of price rises . . .

This Government's entire economic strategy is aimed at dealing with the true causes of inflation. It has done this so much more effectively than the Opposition did when it was in office. As I said earlier at Question Time, we are in a time of major transition. The direction of the economy has changed fundamentally over four years. This is a difficult period to be in office. How is the Government dealing with the underlying causes? Before depreciation, inflation had fallen to 5 per cent at the end of 1984, the lowest annual rate since 1970-71, and down from the 11 per cent rate we inherited from the Opposition. The contributor to that big fall in inflation was the accord with the trade union movement which provided a basis for agreed and effective wages restraint. However, from early 1985 the Australian dollar depreciated, bringing with it inexorably a temporary increase in inflation.

The devaluation was inevitable and inescapable. The consequential effects could not be ducked. Why did the dollar depreciate? The immediate reason was that it was responding to Australia's worsening balance of payments brought about by the big decline in commodity export prices. But the real question to ask-and not one real economic question has been asked by Opposition members-is how did it happen that Australia was so dependent on a narrow range of exports in the first place? Who put us in this precarious situation?

Mr Robert Brown —The captains of industry.

Mr BARRY JONES —They are not really captains; more like lance corporals. Poor public policy decisions over decades have left the Australian economy with an inward looking manufacturing sector and all our export eggs were in the one basket. The coalition parties are especially culpable for this state of affairs because they administered Australia for so much of the period between 1949 and 1983-all but three years.

Mr Robert Brown —And botched it.

Mr BARRY JONES —Exactly. They compounded their error of the previous decade in the late 1970s when they talked up the pseudo resources boom. Do honourable members remember the Fraser-Howard resources boom and how mineral exports were going to be the foundation of all our future wealth? Of course, it did not happen. The tragedy of McEwenism was, of course, that the strategy, which I must say had bipartisan support for a lot of the time, looked politically successful when commodity prices were high and rising, but when they were low and falling it was a recipe for disaster. That was something that the honourable member for Deakin did not refer to.

The so-called resources boom turned out to be a cruel hoax perpetuated by the then Prime Minister and the then Treasurer to win the election in 1980. The Opposition does not talk about it now. It left us extraordinarily vulnerable to that fall in commodity prices over the last few years. Our balance of payments went into the red and the value of the Australian dollar fell very dramatically. The fall in the Australian dollar is the key element in fixing the balance of payments deficit-and the strategy appears to be working. I was certain that there would be a matter of public importance discussion either yesterday or today on prices. If yesterday's trade figures had been bad, there is no question that there would have been a matter of public importance on trade yesterday.

Mr Beale —They were bad.

Mr BARRY JONES —In the circumstances, taking the trend line, I think they were remarkably good. The lower value dollar brings with it many potential benefits. First, returns to our exporters are increased, encouraging them to seek out new markets and/or export products which were not exported previously. Second, Australia becomes a cheaper tourist attraction. The Organisation for Economic Co-operation and Development figures show that in 1986 we had the fastest growing tourist industry of all members states. Third, the price of imports rises, leaving Australians to buy fewer goods from overseas and providing our local manufacturers with new opportunities to compete against foreign products. All these things help to fix the balance of payments, provide new job opportunities for Australians and help restore the Australian economy to a more balanced structure.

As part of this process there must be some price rises in Australia. Imported goods cost more so that local manufacturers are able to compete against them. The Australian dollar price of some things we export will also increase because Australian producers are getting a better return from sending goods overseas. But these price rises are temporary. The new value of the Australian dollar is now doing its work in fixing the balance of payments. How appalling it is that this rabble of an Opposition should so consistently talk down the Australian economy. How extraordinary it is that its putative leader, the Premier of Queensland, should go to Japan to talk down the Australian economy. That is an extraordinary activity and nobody on the Opposition side, not even in the National Party-none of its Queenslanders are gracing the chamber at the moment-would defend in this Parliament the actions of that Premier. Honourable members all know that it has been absolutely despicable.

The Government is confident that Australia's inflation rate has peaked at 9.8 per cent in the December quarter. Future consumer price index results will show a marked slowing in Australia's inflation rate. The Opposition and its shadow Minister for ensuring Australian workers are not compensated for price rises show no understanding of this. They are not interested in restoring Australia's manufacturing sector. They are not interested in fixing our balance of payments and they still refuse to acknowledge that if previous Australian coalition governments had not failed Australia so miserably in the past we would not be facing this situation now.

The honourable member for Deakin referred to the fact that inflation levels were very low in Japan. That is correct but there has to be a qualification. There is zero inflation in Japan as a trend. It is also true of Germany-where the rate is slightly negative-but it has to be recognised that our absolute price levels, for example for fuel, food or building materials, are far lower than they are in Japan or Germany. One would think, from the way that those opposite talk about it, that our prices are very much higher than in other countries. That is just nonsense. I agree that the rates of inflation growth are matters for concern. They certainly cannot be disregarded but we have to look at the whole context in balance.

I was staggered to hear from the honourable member for Deakin about the vast new empire that I was presiding over-the Bureau of Consumer Affairs. Obviously he is not aware that there has been an Office of Consumer Affairs for some years and that what is actually happening now is a consolidation. Instead of having people spread over a number of different departments, including the departments of Health, Science and the Attorney-General, very sensibly they are being brought under the one umbrella. It will make the operation much more effective but will not mean the creation of some monstrous bureaucracy. Nor do I imagine that those sections of the Government will be performing new tasks that they were not performing before. They will be performing them with a greater degree of concentration and a higher profile.

The Prices Surveillance Authority was referred to as carrying out an inquiry into biscuits. I have decided that the biscuit inquiry can rest for the time being. I do not see it as a very high priority. I have already decided that the priority areas ought to be children's clothing and shoes-about which I think there is a great deal of concern-and pharmaceuticals.

Mr Beale —Why children's?

Mr BARRY JONES —Because it seems to be an area where there is an unusually high price rise and where low income families appear to be particularly disadvantaged. In talking to groups over the weekend I have been struck by the number of people who have raised the issue of children's clothing and children's shoes again and again. It needs to be looked at. The second area is non-prescription pharmaceuticals and cosmetics.

But what does the Opposition say? Its attitude is to get rid of the Prices Surveillance Authority and let prices all rip. The PSA which was set up as part of the prices and incomes accord has three formal powers. First, it can declare a supplier. This forces suppliers to advise the PSA of price increases 21 days before they are scheduled to take effect and goods worth more than $30,000m a year are declared. Secondly, the PSA can freeze prices pending a public inquiry and most inquiries take about three months. Businesses know that it is in their interests to avoid prices that attract a public inquiry. Thirdly, the PSA has power to demand information of businesses. No business wants to open its books for scrutiny by government agencies. The result is that they are very sensitive to the power.

Mr DEPUTY SPEAKER (Mr Leo McLeay) —Order! The Minister's time has expired.