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Wednesday, 20 March 1985
Page: 514


Senator PARER(5.32) —Mr Deputy President, it is a great honour to have been selected by the Liberal Party in Queensland to replace Kathy Martin Sullivan in the Senate, particularly as there were a large number of quality candidates. Kathy served well both the Senate and the people of Queensland before she resigned to contest the new House of Representatives seat of Moncrieff. Against tremendous odds she succeeded in winning Moncrieff for the Liberal Party because of her well-known fighting abilities. The electors of Moncrieff are fortunate to have Kathy as their representative. With her knowledge and experience, she will be a great asset in the other place to the good government of our country. I would also like to pay tribute to those honourable senators who have smoothed my transition to parliament from the world of business.

Mr Deputy President, in the Governor-General's Speech the Government outlined its views on the economy and its vision for Australia over the next three years. There are two claims, in particular, in that Speech which require comment. Firstly, the Government speaks in glowing terms of its strongest and most sustained economic performance for decades. Secondly, it claims to have created a strong momentum toward the change which is necessary to eliminate unemployment. These are strong claims, particularly in view of the weight of disarming evidence to the contrary. Certainly, overseas confidence in our economy has recently been shattered, as reflected in the collapse of our dollar. Our current account balance has led one economist to describe Australia as the 'sick boy of the Organisation for Economic Co-operation and Development'. The slide since the Second World War of Australia's living standards relative to those of comparable countries is well documented, as is our horrendous overseas borrowing requirement. Our inflation rate remains higher than the rates of our major trading partners, and the current Budget deficit in absolute terms is the second highest in Australia's history, second only to the previous Hawke Budget. Recent Bureau of Statistics figures reveal a dramatic decline in manufacturing production in the past 12 months. Unemployment remains unacceptably high at over 8 per cent and, more importantly, is becoming more entrenched. These facts cast grave doubts over the Government's grandiose claims in relation to our current economic performance and to its optimism in relation to employment. The benefits of the international economic recovery have largely been lost on the people of Queensland. That State has recently been paralysed by mining industry strikes whose costs are beyond calculation. Its unemployment rate is over 11 per cent. This is despite the much-vaunted accord between the Labor Government and the unions.

Mr Deputy President, politicians too often spend time either scoring cheap points against their opponents or against other governments, protecting vested economic interests at the expense of the national interest, or simply blaming a current malaise on the policies of a previous government. All this is at the expense of rational analysis of the root causes of our obvious and continuing economic problems. These problems are deep-seated and, under present policies, intractible. The solution, I suggest, lies in a more flexible and decentralised approach to economic management. The relative falling living standards of all Australians will be helped only by governments, both Federal and State, making the economy more sensitive to the many factors that affect our international and domestic performance. This means governments taking a less active role in directing the economy.

For decades now, governments and bureaucrats have, to our great cost, encouraged the view that the state is the repository of all economic wisdom and has the answers to all our social problems. Too often, attempts by governments at social engineering only aggravate the problems they seek to solve. The most obvious example of harmful government regulation somehow continues to escape the attention of our political opponents. I refer, of course, to Australia's rigid and centralised system of wage determination under the control of the Australian Conciliation and Arbitration Commission and its effects on employment. Under this system, bureaucrats who are removed from economic reality and who do not have to live with their decisions attempt to determine, in place of the market, what is a just wage for all Australian workers. The effect of comparative wage justice is to extend wage increases across the board and to index them to the consumer price index, irrespective of productivity or of the capacity of individual industries to pay. Last year wages rose on average by 8 per cent in Australia, well above the inflation rate. The claim that centralised wage-fixing minimises wage hikes is a myth. The present arbitration system simply institutionalises the self-interest of over-mighty union leaders who often care little for the national interest or for the interests of their members.

The lack of flexibility in our wage determination structures sits particularly awkwardly with the Government's deregulation of the financial system and exchange rates. Australian industries are expected to compete in an increasingly uncertain world of floating currencies, fluctuating commodity prices and falling overseas inflation. Yet they continue to be crushed by the high costs of a centralised system of wage indexation that can only make our industries less competitive and contribute in a major way to our unacceptably high unemployment. At the moment the depreciated value of the dollar should be helping those industries, but all possible benefit is lost as a result of continual wage hikes. Clearly, what is needed is a wage system that is sensitive to the needs of individual industries and their markets. One cannot deregulate one part of the economy while others remain in a straitjacket. Or, in the analogy of Dr Chris Higgins of the Treasury, the economy is like a patchwork balloon which can expand only as far as the flexibility of the least elastic segment will allow. The effect of artificially high wages, when combined with the crippling effects of non-wage labour costs, including annual leave loadings, workers' compensation, payroll taxes, penalty rates and severance provisions, is to give employers every incentive not to employ people. By rigidly fixing minimum wage levels, particularly for the young, industrial tribunals prevent mutually advantageous voluntary arrangements between employers and workers. In the words of one noted economist, they in effect make full employment illegal.

Instead of freeing the labour market to create real jobs, particularly in the small business sector, the Labor Government continues simply to apply band-aid solutions in the form of job programs that attempt to ease some of the symptoms of the problem but do not go to the causes. The effect of such schemes is simply to make the unemployment figures look better for the Government. The much-vaunted community employment program is no solution to the tragic plight of the unemployed. It lacks permanence and certainly does not offer much hope of career development potential to the vast majority of the unemployed who have come in contact with it. Over half the jobs created by the present Government have been in the ever-expanding, non-productive public sector. Over the same period employment has actually fallen in the wealth-generating farming, mining and manufacturing sectors. Needless to say, the jobs created in the public sector must be financed by further imposts on an already over-burdened private productive sector. The Institute of Public Affairs has referred to the efforts of governments in this area as job destruction rather than job creation.

Mr Deputy President, other examples of unwarranted and harmful intrusions by government into the economy are legion. I need only mention the distortion effects of featherbedding inefficient industries at the expense of more productive enterprises, of tariff walls and of subsidies to favoured groups. Yet the vested interests which enslave governments, when engaging in their special pleading, can always point in their defence to some other groups in receipt of similar artificial advantages. Such interests need to be exposed to the disciplines as well as the advantages of free markets. Similarly, the disincentive effect of confiscatory taxation are well known. High marginal tax rates simply swell the coffers of big spending governments while at the same time reducing the disposable income of ordinary Australians, who are continually being forced by inflation into higher and higher tax brackets. It is interesting to reflect that 30 years ago the top marginal tax rate applied at 18 times average weekly earnings. Now it applies at less than twice average weekly earnings.

The Government has realised that something must be done about taxation. What it has not grasped, however, is that the vital issue concerning most Australians, certainly Queenslanders, is not how they are taxed-whether directly or indirectly-but how much they are taxed. The seemingly certain movement towards indirect consumption taxes and capital gains taxes, whatever their merits and demerits, may simply be an excuse for this Government to impose higher taxes overall in order to finance its spending programs.

The fear of new and higher taxes is a genuine and legitimate concern of many Australians who simply want to be left alone by governments to make their own way in life. Clearly, the problem of high taxation is a function of the high cost of government regulation and of the alarming growth in government spending in recent years. Commonwealth expenditure alone now accounts for a record 31.1 per cent of gross domestic product. The Opposition is not alone in demanding that, if there has to be a summit this year, it should be about government spending and not just about the appropriate mix of taxes. The overall effect of big spending and high taxing is to sap initiative and transfer the right to make economic decisions from the individual to bureaucracies.

A less publicised yet no less important area of overburdensome intervention is revealed in the massive duplication that occurs between local, State and Federal governments. We are one of the most overgoverned nations in the world. In recent times we have seen an increase in Federal parliamentarians and even in Brisbane an increase in the size of the City Council when it is well known that the population of Brisbane has not increased in the last decade. This sort of thing is madness and serves only to denigrate politicians in the eyes of the already overtaxed community.

Under the Constitution there are clearly defined powers of Federal government. Yet over the years, by various devices, Federal governments have slowly usurped powers that are better left to the States. State governments are not let off; they have done the same to local government. Yet the bureaucratic baggage of regulation remains at all levels, much to the bewilderment of the person in the street. People are confused and frustrated at the cost and the complexity of the plethora of State and Federal laws. Obvious examples of duplication occur in the areas of housing, health, roads, education and the environment. The elimination of duplication would not only put us on the road to real reductions in taxation but it also makes political sense to have a clearly defined separation of powers. This is the essence of a properly functioning, dynamic Federal system where competition and diversity, rather than levelling uniformity, are the hallmarks. Over the years it has been all too easy for the States to sheet home the blame for various problems on the Commonwealth or vice versa.

Mr Deputy President, of particular interest in Queensland are the areas of mineral resources, primary industry and education. I would like to say a little about each of these. The mining industry did very well when left to its own devices. Since 1973, however, it has been subject to increasing economic, political and regulatory decisions which sap its competitive position in unforgiving global markets. The spirit of enterprise is shackled and weighed down by the dead hand of governments. The mining industry is exhausted by government regulations and punitive charges. The extent of the exhaustion can be seen in the dramatic decline in profitability, employment and investment-this in an industry which has the potential to contribute so much more to the prosperity of our great nation. Federal and State governments are equally to blame for the intolerable level of crippling taxes, charges and costly regulations. Governments avoid their responsibilities if they think the real problems will go away simply by the formation of committees and sub-committees. This is now happening in the coal industry and will only exacerbate the position.

Trade policies force the mining industry into the world market arena like a boxer with one arm tied behind his back. How can any business expect to succeed in the rough and tumble of international commerce if commodity buyers know that the seller cannot commit himself to a deal without leaving the negotiating table to get the blessing of a bureaucrat sitting in his office half a globe away? Take the example of the coal industry. What rational being could expect a government edict to have any influence at all on the market price of an international commodity in a market oversupplied by around 20 million tonnes? In the 1960s and early 1970s the industry, in a market just as tough as today's-that should not be forgotten-without government intervention achieved remarkable success. We, the Parliament of Australia, need to remove these shackles and let our exporters compete for every corner of every market to which they can gain access.

Of great concern is the gravity of the situation confronting the sugar industry in Queensland. I have recently completed an extensive visit to north Queensland talking to cane growers and millers. What came out of those meetings is that the cane growers, who were and still are very hardworking Queenslanders, have a feeling of total neglect and confusion. They have been made pre-election promises which have not been honoured. The vast majority do not have outside investments. They have ploughed back past profits into their farms. They are not looking for handouts. They have too much dignity for that. They are, however, looking for a price stabilisation scheme and they point with pride to a similar situation in 1966 where every cent borrowed was paid back with interest when the market recovered. What they are concerned about is that out of the current review will come an inquiry and by the time that inquiry is completed a great many will be bankrupt. Their confusion is understandable when they read of $170m royalty relief given to gas producers in Western Australia by the stroke of a pen.

Governments are fiddling, Mr Deputy President, while this great and efficient industry is burning. If it should collapse we will see an economic catastrophe which will not only affect cane growers-that should be remembered-but will also mean disaster for whole communities in towns and provincial cities from Maryborough to north of Cairns. There are differences between the growers and millers, but this should not be seized upon by either government as a petty excuse to avoid or delay the implementation of a scheme which, over a period, will cost the taxpayer nothing. It is a scheme which has the support of the Australian Cane Growers Association. It is also a scheme which is directed at the whole industry. In any industry, and the sugar industry is no exception, there are always a small number who will not survive. That must be recognised. Any attempts, as has been suggested, to prop up only inefficient producers, will be of no benefit whatsoever to the sugar industry. The problems of growers and millers are further compounded by the inflexibility of wages policy referred to earlier. The number of jobs lost because of it runs into thousands. People working in the mills are still being paid a prosperity bonus which was introduced in the short-lived boom of earlier years. The position of the sugar industry is critical. I urge both the State and Federal governments to put aside political differences and act quickly in the best interests of a very large sector of Queensland and Australia.

Mr Deputy President, Queensland has two major education problems. The first is that at the Grade 12 level we have a system of assessment which, while it might be understood by academic educationalists, is totally beyond the comprehension of students, parents and employers. Any system in our society which can boast those attributes is inherently bad. The defects of this system are highlighted by the increasing difficulties young people have in gaining entry into a tertiary institution. We encourage them to go on to Grade 12. They qualify and then are denied entry because of lack of places. This is really the major problem. Participation rates in tertiary education in Australia are too low and Queensland has the lowest rate per capita in Australia. According to a recent OECD survey, the United States of America has 74 per cent of people in the 15 to 19 age group enrolled in higher education, Japan has 71 per cent, Canada 65 per cent and Australia only 45 per cent. In 1984 13,500 people were turned away from entry into tertiary institutions in New South Wales. In Queensland the number was 20,000. The result is that many students are repeating Grade 12, which will exclude from entry many now going into Grade 12 this year. Thus the problem is compounding. Enrolments at the University of Queensland are less then they were 10 years ago. Based on total recurrent funds available for 1985, Queensland is down $25.8m on a per capita basis compared with, say, Victoria which is up $52.8m. That $25.8m would educate a further 6,000 students at a quality institution like the Queensland Institute of Technology. With those sorts of figures freely available, it is impossible for us in Queensland to understand when we read about it why yet another tertiary institution, the West Melbourne Institute of Higher Education, is to be built in Victoria.

Compared with all other States, qualified students in Queensland are being denied access to tertiary institutions. This obvious discrimination against one State must stop. Queensland must receive its fair share of recurrent funds. This does not, of course, solve the problem of lower participation rates throughout Australia. In order to achieve greater equality of opportunity in higher education, it may be desirable to look at a system whereby students who benefit from higher education may be willing to pay for that education out of their future earnings. This would not discriminate against less advantaged groups, and it would enable more young people to pursue their chosen careers.

Mr Deputy President, it is often claimed that those of us who question the policies of the status quo and who query the achievements of the Government are simply prophets of doom and gloom. This is a dangerous attitude that can only stifle debate about the important issues that confront us. We have a responsibility to attempt to explain to the growing army of unemployed youth, to businesses that must keep putting people off, to industries that are being priced out of the international market place and to qualified students who are not allowed to go to college or university, why governments are failing them. I hope in this place to continue to ask these questions on behalf of the people of Queensland and to continue to argue for Liberal solutions to our problems. I thank honourable senators for the courtesy of their attention.


The DEPUTY PRESIDENT —Before I call the next speaker I inform the Senate that this will be Senator Brownhill's first speech in this chamber. I ask honourable senators to afford him the normal courtesies.