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Tuesday, 23 October 1984
Page: 2239

Senator BUTTON (Minister for Industry and Commerce)(8.02) —I rise in the course of the appropriation debate simply to address some important issues relating to the performance of the Australian economy and particularly the Government's economic policy. I think it is important that the record be kept straight because the debate in the Senate in the last few days has been characterised by outrageous allegations of one kind or another. We should have a few things on the record regarding the Government's economic performance.

I begin by making the point that the rise in gross domestic product over the year to June of 10 per cent is the fastest in the history of the quarterly national accounts in Australia. Indeed, it is the fastest in the world. Over a quarter of a million new jobs have been created by the present Government. I turn to the question of unemployment because it has been addressed by honourable senators, particularly in relation to youth unemployment. I will come back to that in a moment. The unemployment rate in Australia is now the lowest since November 1982. It is below 9 per cent for the third consecutive month. As I have said in the Senate on numerous occasions, that unemployment rate is not something which any government or any society can be satisfied about. When one looks at the unemployment rate when we came to government, ours is a very creditable performance in the 18 months we have been in office.

The inflation rate, as measured by the consumer price index, is now down more than four percentage points, from 11 per cent under the previous Government. The Budget deficit has been reduced on two occasions and as I have said recently and as the Treasurer (Mr Keating) has said, the Government, of course, has a commitment to reduce the size of the deficit in next year's Budget. Interest rates are down. Again that is something which is very important to a wide section of the Australian community. There has been strong growth in sectors of the economy, particularly the housing sector, where there has been an increase of 30 per cent in commencements in 1983-84 over 1982-83. Business investment and consumer spending are beginning to pick up, and indeed the Melbourne Institute of Applied Economic and Social Research-Roy Morgan Survey of Consumer Sentiment recorded its highest September level ever in 1984. The latest retail sales figures show that the quarterly results ending in that month are also satisfactory in terms of retail sales, but they are not as high as the consumer sentiment figure recorded in the Roy Morgan poll. There has also been the best record in industrial relations in this country for 16 years and the figures have been given in the Senate.

I again make the point I have already made on a number of occasions when talking about the competitiveness of Australian industry. At the time of the Liberal governments of Mr Fraser, the only issue which was really addressed by community forums or in political debate by that Government was the question of industrial unrest. That was seen as the scapegoat for all the failings of the industrial sector in this country. All sorts of important issues relating to the competitiveness of Australian industry were overlooked, particularly the issues relating to the sorts of things that are now being talked about somewhat belatedly by the Liberal Party. I refer to the question of deregulation of business and deregulation of the financial sector. These matters were overlooked by the Fraser Government and now that the Liberals are in Opposition they suddenly find that these things are important.

It is very important to record the low figure of industrial unrest because it is an essential factor which goes to the heart of industrial competitiveness in this country and, of course, it is the result of the policies of this Government as reflected in the prices and incomes accord, and in our approach to community discussion and consultation on a wide range of issues. When we talk about the importance of consultation with a wide-ranging section of the community on tax reform, as we have done in the Senate in the last week or two, consultation is what we mean. This is an area in which we have a record of performance which is demonstrated by our record on industrial disputation. In the Liberal tax policy which was brought down yesterday, the Opposition said that it will introduce certain things when it is in government and later it said that it will have an inquiry into the preferred form of indirect tax. All this is very confusing to people who have grown used to this Government's capacity and willingness to consult with all sections of the community on these important issues during the past 18 months.

These matters of economic record and performance are not matters of mere chance . They are matters of policy and they relate to sensible and careful economic management by this Government. In response to that sort of allegation, Opposition spokesmen in the Senate ask what will happen if A, B or C occurs in the future. I make this response to that question: If unfortunate things occur in the Australian economy in the future, as they undoubtedly will and as they have in the past, the question for the Australian people is: Who is best capable and best suited, on the basis of performance and record, to manage those difficulties? Who are the best managers? That question is fundamental for the people of Australia because we have a record of performance, as against a record of disaster in the seven years of the coalition Government, culminating in the disastrous years of 1981-82. In 1981-82 the Fraser Government presided over rising unemployment, rising inflation and rising interest rates-all at once. This Government, in October 1984, now presides over an economy in which inflation is falling, unemployment is falling and interest rates are falling-all at once. That is a simple and graphic illustration of the reverse side of the coin.

It will also be said that all sorts of things have contributed to the economic policy success of this Government which were dreamed up in the dying years of the Liberal-National Party Government. 'Dreamed up' is the right term to apply to them. Remember how the wage freeze was dreamed up not as a piece of serious forward-looking policy making but as the means of getting the previous Government off the hook over the shocking record of unemployment over which it presided. It had to dream up something about that. There are all sorts of excuses for why those policies were dreamed up-and I am not prepared even to deny that they were, perhaps, of some benefit. This society needs continuity and the capacity to look forward to where it is going with the economy. That is something which this Government has given.

It is a question of management, and that is what it is all about. I cannot but draw a contrast with the Opposition's period in government. There was record unemployment when we came into government; high inflation, above 11 per cent; high interest rates; no growth in the economy; economic stagnation; no wages policy at all; and the year 1981-82 represented the most serious outbreak in wages for years because of a total absence of a wages policy-and still Opposition spokesmen, by implication, are saying that those matters are not important. They are suggesting that tax policy and other matters are not relevant to wages policy, in total contradistinction to the views of their spokesman on industrial relations, Mr Macphee, who wrote a chapter on wages policy in the book called Liberals Face the Future. One thing that can be said about the line of the Leader of the Opposition (Mr Peacock) on these issues is that he does not face the future. That is clearly understandable; he has not got one.

There is a smorgasbord of different views floating around amongst Liberal spokesmen on all these issues. As I said, there was economic stagnation, no wages policy and industrial confrontation which was very divisive of this community and which resulted in very bad effects on Australian industry. There was also community division on a wide range of issues. The prices and incomes accord has proven itself as a means of bringing about moderation in wage growth and industrial harmony at the same time. The two things are very important. Industrial disputes are at their second lowest annual level since 1969. In June they were the lowest since 1969. The accord has brought moderation in wage growth. I do not think that there are many years which can be pointed to in which wage growth has been lower than it will be between the beginning of 1984 and April or May 1985. On overall labour costs, the position has been much improved and the figures are comparable with those of 1969. The important point is that Australia now enjoys predictability and moderation in wages growth. We have the basis of a prices and incomes policy which will take this country into the future and ensure a steady recovery.

All this has been achieved within the first 18 months of this Government's term of office. The Opposition had seven years. It squandered its opportunities. It ran away from a review of the taxation system. It floated ideas and then abandoned them-no one more frequently than Mr Howard, the Deputy Leader of the Opposition now and the putative head of the Opposition after the coming election . This Government has been responsible and restrained in its fiscal and monetary approach. It came to office with a prospective very large deficit. It cut that deficit in its first Budget in spite of implementing some high priority programs to improve equity and create jobs. It has budgeted for a further cut to $6.7 billion in the deficit in the year 1984-85. The money supply target was achieved in 1983-84, the first time that target has been met in five years. As I said, employment growth has been substantial. Since April 1983, 264,000 new jobs have been created in Australia. This Government is well on the track to the 500,000 new jobs it said it would create in its first three years in office. Since April 1983 unemployment has dropped by 83,600.

I said earlier that I would make some comments about the question of youth unemployment. We are not satisfied with the situation of youth unemployment in this country. As I said earlier, no government, no political party, no community leader and no member of this society could be satisfied about that issue, but unemployment among 15 to 19-year-olds looking for their first full time job dropped by 8,300, or 11 per cent, in September 1984. Full time unemployment of teenagers fell by 25,200, or 17 per cent, to 122,000 over the year to September 1984. It is nonsense to say that all of this employment growth was concentrated in the public sector.

Senator Crichton-Browne —What percentage was it?

Senator BUTTON —The figures just do not add up to that. I am happy enough to give Senator Crichton-Browne the figures. I do not intend to interrupt what I am saying at the moment to do so. I will also be happy to give him Mr Macphee's misinterpretation of some of the figures in a public statement. I do not in any sense suggest that it was a deliberate misinterpretation. I just say that it was a misunderstanding of the figures which we released. It is nonsense to say that all of this employment growth was concentrated in the public sector. The majority of it was in the private sector. I think that factor is very important because that is the area in which real employment growth opportunities lie.

The Government has also moved on a number of important policies in relation to improving the engines of growth in the Australian economy. We have moved to improve the business climate. Recently we announced a tripartite review in relation to business deregulation. As I have said on previous occasions in the Senate, we have a good track record on deregulation compared with that of the previous Government. We have taken substantial deregulation initiatives in the financial sector. We have floated the dollar. That is something which the previous Government considered but was not finally prepared to do. We have introduced a new regime in respect of business taxation. We have extended the business allowance. We have introduced the 5:3 depreciation allowance. I fully concede that that was promised by the previous Government, but we went ahead and introduced it and retained the investment allowance at the same time. We have also introduced group taxation which will enable companies to write off losses in a conglomerate as against the total tax of that conglomerate or group of companies.

Senator Chaney —Also promised by us.

Senator BUTTON —Senator Chaney said that it was also promised by the former Government. With respect, it was flagged by the former Government but that Government rejected it.

Senator Chaney —In the Budget in 1982.

Senator BUTTON —No, with respect, the former Government rejected it. An estimate of $200m was given at that time and I believe the proposal was rejected. I stand to be corrected about that. I do not make any particular claim about it. In any event, we did it in terms of the company taxation regime. We have also revised the depreciation allowance regime in respect of industrial buildings, extending the rate to 4 per cent, that depreciation being allowed over 25 years instead of 40 years.

I have addressed particular matters relating to business and industry. I have done that simply because, as I said in my opening remarks a minute ago, those are the engines of growth for the Australian economy. It is growth in the Australian economy which is needed if we are to solve the unemployment situation . That is, of course, a prime task of this Government. We have had very substantial and ongoing growth in this economy. The effects have been seen in the reduction in unemployment. We need to sustain that growth into the future if there is to be a continuation of that reduction in unemployment. I make the point that in respect of unemployment generally, and more particularly in respect of youth unemployment, the figures have been significantly reduced in the period of this Government. As I said, I do not claim satisfaction about that . I simply claim that we are entitled to be pleased that that has occurred at a very difficult time for the Australian economy as a whole.

In respect of industry policy, which is again a key arm of economic growth, we have gone a long way towards changing the debate in this country away from the mindless debate which went on about barrier or tariff protection. We have made considerable steps in making Australian industry more outward looking and export oriented. We have raised the level of the debate about important questions concerning the competitiveness for Australian industry. We have introduced a number of specific industry plans. The key element in all those plans is that for the first time industry has been told that there will not be government assistance unless there are equal contributions from those involved in the industries themselves; that is to say, government assistance is not to be seen by this Government as a sort of everlasting alms. Governments will assist in circumstances in which industry is asked to assist and the unions are asked to co-operate in ensuring the sound future of the industries concerned.

This Government, as I said, has had evident economic success. We believe that the Opposition has still not faced up to many of the problems, as has been revealed in its dribble-out of policy releases on various issues in the last few weeks. Yesterday the Opposition's taxation policy was produced. Yesterday Mr Peacock said at a forum which I too addressed that the Opposition had been 12 months in preparing its taxation policy, in getting it together. Look what happened when it came out. It is vague and uncertain. Sections of that policy are to be financed by other sections of the policy relating to indirect taxes. It is an extraordinary document and, even in the debate on taxation policy this afternoon launched by the Opposition in the Senate, the Opposition did not make clear the precise costs and effects of its proposals. For example, the Minister for Social Security, Senator Grimes, was challenged, as we were challenged, for giving the figures which the Treasurer (Mr Keating) gave last night on the program with Mr Howard.

Senator Chaney —They are wrong.

Senator BUTTON —They are not wrong. Mr Howard said they were not wrong last night.

Senator Chaney —It is a misquote and he has put out a statement this afternoon.

Senator BUTTON —For goodness sake! When will Mr Peacock put out a statement about his misquotes? He said again yesterday afternoon at a Press conference that if the Hawke Government were re-elected it would introduce capital taxes. When is he going to put out a statement rectifying that canard? That is the sort of performance we have had in the last few weeks. The point I am simply making is that the Opposition is still not prepared to face up to the problems. The policies which have been announced on all issues will mean more of the same. They include a whole range of promises which promise the world and will build enormous sums into the structural deficit. These are the policies which have been announced. They will create an enormous structural deficit for the future. These are the things which cause a lot of concern for the Government.

Senator Chaney —What does your policy amount to?

Senator BUTTON —Senator Chaney interjects and asks what our tax policy amounts to.

Senator Chaney —An inquiry.

Senator BUTTON —An inquiry? Yes, that is what I have said. There will be a comprehensive inquiry into the Australian tax system which the Opposition did not do in seven years of government in spite of all sorts of moans about it. It tried a few things; it floated a few things. Then that doughty little fighter, Johnny Howard, the discredited former Treasurer, backed away from them, backed away when the retail traders or somebody else said booh, backed right away from all the policies which he floated. We have a recipe in these Opposition policies for a return to the past. Big deficits, high inflation, all those things, are implicit in the sorts of policies which have been enunciated by the Opposition in the past week or so. I make the point that this Government's policies on taxation mean simply that as from 1 November the majority of taxpayers will get a $7.60 cut in their tax. Of course, that was opposed by the Opposition.

Senator Peter Baume —Not at all.

Senator BUTTON —Oh yes it was. It was opposed by the Opposition. Some references have been made to tax indexation. No taxpayer in the low income groups would have got that sort of tax cut under indexation. This is an attempt by this Government to rectify some of the inequities that have been heaped on pay as you earn taxpayers in the period of the Fraser Government. That is what it is. In addition, we have guaranteed to undertake a comprehensive review of the taxation system, in consultation with a wide range of community groups, which will provide a system which will be fairer and equitable and will be a further contribution by this Government-we have made a number in the 18 months in which we have been in office-towards continuity in the development of policy and in getting this country on the road to a long term path of economic growth.

The task before any government is clear. Australia needs sound economic management. As I have said before, there will be significant pressures on governments to the end of this decade to provide sound economic management. We will do that. We have the capacity to do that. We have the runs on the board. We have the record of sound economic management compared with our opponents. We believe the deficit has to be brought down and economic growth encouraged and maintained. The Government has shown that it is up to the task; the Opposition has not. The Opposition has rescrambled the old mess of 1975 to 1982. It has turned back the hands of time, bringing back the dream divine to let us hear it all over again. That is what the Opposition policies which have been enunciated in the last few weeks amount to.

This country desperately needs serious economic management, economic management which is devoted to steadiness into the future and to restoring and maintaining economic growth. Those things will not be achieved by the Opposition. It will not have the opportunity to do them but, if it did, it would present again to the people of Australia a grab-bag of promises and half-truths which are not the remedy for the sort of success which we have had in this country in the past 18 months. That success has not been based on the exclusive wisdom of this Government; it has been based on that plus wide ranging consultations with important sectors of the Australian community. We will continue to do that and those groups in the community understand that we will continue to do that. In government as in anything else trust and confidence is based on reputation and performance. This Government has those things and we will use that reputation of trust, based on our record and performance, to take this country into the future .

Senator Peter Rae —You didn't hear the comments made last night at the MTIA.

Senator BUTTON —Senator Rae interjects that I did not hear what somebody said at the Metal Trades Industry Association dinner. With the greatest respect, of course, there will be differences of view about these things. But we have never heard from the Opposition how it will satisfy members of the MTIA with their particular problems, or with anything else. That is one of the unfortunate things. There has been great silence from the Opposition.

Senator Peter Rae —They came out with a very complimentary statement about our policy.

Senator BUTTON —They ought to be complimentary about much of the Opposition's policy because much of it was stolen from us. They ought to be complimentary about it. As I have said, this Government has the runs on the board in terms of economic management and performance. It is recognised by the Australian people. As somebody said, I think to Senator Rae, the other day, the Opposition is full of rhetoric but bad on performance. That is the choice that the people have to make. Those factors are all relevant to the Appropriation Bills which the Senate is now debating.