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Monday, 13 May 1985
Page: 1813

Senator SHORT(4.28) —The subject of this debate, 'The urgent need to implement an effective program for business deregulation', is, I believe, one of the most important subjects facing this Parliament and this nation. I congratulate Senator Peter Rae for bringing it forward. It is widely accepted that business in Australia is grossly overregulated. For many years now we have experienced a seemingly inexorable and exponential growth in the rate of government. This has taken place on two fronts. First I refer to the very size of government and the proportion of our total national activity pre-empted by government at all levels. In the mid 1950s total spending by governments in Australia was about 27 per cent of our gross domestic product. Today it is about 43 per cent. That is an increase of almost 60 per cent.

This huge growth in the relative size of government has been reflected in the increasingly greedy grab by governments of taxpayers' money to finance the growth in spending. As a result, out of every additional dollar earned by the average wage earner, he pays 47c-almost half-in tax. Thirty years ago the corresponding figure was only 19c. In Australia today one does not have to be wealthy to be subject to the vicious and penal maximum marginal rate of tax. Today, if one earns only about one and a half times average earnings one pays the maximum marginal tax rate. In the mid-1950s one had to earn almost 18 times average earnings before the maximum rate applied. So government has become much more intrusive in its spending and taxation policies. The present Hawke Labor Government is in fact the highest spending and highest taxing government in Australia's history.

The second area in which government at all levels has become equally intrusive is that of regulatory activity-in new Acts of Parliament, regulations and ordinances. Over the last 20 years 49,000 new regulatory Acts and regulations have been passed in the Federal Parliament alone. The situation with State and local governments is similarly staggering and alarming. For example, in my State of Victoria, the Cain Labor Government recently announced with pride that 445 Acts had been presented to the State Parliament in the Cain Government's first three year term, and that excludes all the accompanying regulations and other restrictive rules. What good has all this legislation achieved? What scrutiny has been given to it? What estimates have been made of its costs to the community relative to its benefits? I think the answer to these questions is precious little.

The cost to the nation of this burden of regulation is enormous. It transcends the actual cost of compliance by the business sector, great though that cost is. As was mentioned by earlier speakers in this debate, the Confederation of Australian Industry estimated several years ago that the direct cost approached more than $1 billion annually. That figure would be substantially higher now. Another study, in 1983, indicated that there were 54,000 employees engaged in dealing with Federal and State government regulations, at a cost of $3,720m. That study also found that out of every $1 of net income received by business, an estimated 13c or 13 per cent was spent in complying only with Federal and State laws.

In the 1950s Australia was, on a per capita basis, the third or fourth richest country in the world. Despite all our natural resources, despite all the skills of our people and despite all the other advantages we have, today we are about twentieth, depending on the particular value of the Australian dollar. It is no coincidence that the monumental increases in government spending, government taxation and government regulatory activity to which we have been subject over recent years, starting particularly in the Whitlam years and given an even greater dimension by the present Labor Government, have been accompanied by a progressive decline in our living standards relative to those of so many other countries.

The overriding objective of government must surely be to encourage economic growth and therefore job creation and improved living standards, not to stifle growth and initiative in the way in which government has done. Important as the economic factor is, the question of regulation goes much wider. The debate over the regulation of business is really a debate over whether freedom of choice should be a fundamental human right in a pluralistic society which accepts as its basis the free market economy. Regulation should aid choice, not hinder it. A former Federal Attorney-General, Mr Ellicott, put his finger on this point recently when he said:

Not only are we realising that the law of regulation is costly and not returning the commensurate benefits it promised, but also that it may be undermining the very notion of freedom upon which our society is based by moving into areas of morality which are best left to the individual exercising a freedom of choice.

I believe that the Hawke Government is attempting to move us down a very dangerous path through the use of its regulatory bodies. The Australian Broadcasting Tribunal and the Trade Practices Commission are two such bodies that particularly come to mind. What legitimate reason is there, for example, for the Trade Practices Commission to monitor television advertisements, as it will be doing shortly? Why should the Australian Broadcasting Tribunal be set up as an arbiter of community standards to protect the so-called public interest? What is the public interest? If there is a public interest, who better to judge it than members of the public themselves. Why should a government body such as the Australian Broadcasting Tribunal, which is not directly accountable to the public or the electorate, be permitted to engage in fishing expeditions into social issues which have enormous economic and wider impact? The answer, quite simply, is that it should not.

Why should the Government have as its chief adviser on consumer issues the Australian Federation of Consumer Organisations, a completely undemocratic body of limited membership which, far from being representative of consumers, is funded almost entirely, to the tune of 99 per cent, by the Government? Organisations such as this have enormous sway over governments and that sway is invariably biased in favour of more and more regulation and less and less freedom of personal choice.

The developments I have just described are symptomatic of the inherent bias of Labor governments towards regulation, particularly of the productive business sector of the nation. The present Labor Government is no exception. Despite its praiseworthy actions which I fully acknowledge in respect of the deregulation of the financial sector-actions which, of course, were initiated by the previous Liberal Government-and despite its actions, again admirable, in relation to the floating of the Australian dollar, the overwhelming thrust of Labor's policies is for increasing regulation. The clearest demonstration of this is contained in Labor's business regulation policy document released as part of its 1983 election campaign. Senator Childs commented on the deregulation aspect of that policy. However, to me it is a highly regulatory document. For example, the document contained not one word about the need for regulation to have regard to the requirement for economic growth. It contained not one word on possible areas of deregulation. On the contrary, the whole policy dealt with additional regulation in the areas of companies and securities law, trade practices, consumer protection, prices surveillance, petroleum industry pricing, insurance legislation, occupational health and safety and environmental policy. This 1983 policy of regulation and intervention was strongly endorsed by the supreme policy making body of the Labor Party, its national conference, in July 1984. Senator Peter Rae referred to that.

In all of these areas, Labor's proposals involve more restriction on the free enterprise sector, which is the sector from which jobs, income creation and living standards flow. I will quote just a few examples from the 1983 document. In the area of companies and securities law, the document proposed additional regulations concerning public disclosure, fixing individual liability, sanctions against corporations and making the takeover code more regulatory of the market. In the area of trade practices, it proposed greater regulation of corporate mergers and an increase in enforcement provisions.

In the area of consumer protection, it proposed a fuller reliance on the advice of the Australian Federation of Consumer Organisations. I have already commented on that body. In the area of price surveillance, it proposed the establishment of the Prices Surveillance Authority so that government could intrude still further into the pricing policies of business, regardless of the basic economic laws of supply and demand. In other words, the Labor Government's attitude towards the business sector is to deny it the opportunity to get on with its job, which is to produce goods and services, to enable income to be created, to give consumers increased freedom of choice, to create jobs and to increase the living standards of all Australians.

The Government's anti-business approach is well reflected in the recent submission to the Government by the Business Council of Australia. The Council's submission is very important for the future of Australian business and I commend it to all honourable senators. The submission looks at both the current expansion of government regulation and existing regulation. So far as the former is concerned, the Council makes various recommendations, including the following. It recommends that the Prices Surveillance Authority has failed and that, at the very least, its proposed new guidelines should be scrapped; that the Government's proposals for trade practices reform be scrapped or completely revised to accord with commercial realities; and that the Government's regulatory proposals to bludgeon employers into a new form of so-called 'industrial democracy' will entrench confrontation.

There is much more I would like to say on these and other issues, if time permitted. Today in this debate we have barely scratched the surface. For example, we have not looked at all the economic costs of the regulatory activities of bodies such as the Foreign Investment Review Board. Senator Vanstone has highlighted the horrendous regulatory problems that we face in the area of wage fixation and industrial relations-two issues which are of fundamental importance to the future of this country but which the Government obviously is unwilling to tackle because it has become the captive of the trade union movement and deregulation would involve change. We have not looked at other important areas.

Senator Button —Higher wages too, Senator.

Senator SHORT —Yes, at higher wages as well. We have not looked at other important areas, such as the growth in the number of government agencies involved in the regulatory process. That growth has been staggering. To give the often quoted classic example, in 1966 and 1967 Western Mining Corporation developed its Kambalda nickel ore body in the commendably short space of 18 months. The approval process to enable it to do so involved just two government departments. In 1975 it discovered the Olympic Dam ore body in South Australia, but following three government inquiries and dealings now involving more than 25 departments, both Federal and State, the first ore shipment is unlikely before 1988. It has meant 13 years of frustration, not to mention the enormous costs generated, with resultant adverse effect on jobs, profitability and the taxes ultimately payable. The example I like best of the absurdity to which our regulatory situation has brought us is what I understand to be the law in South Australia, under which one is not allowed to kill snakes unless one is attacked by them. There is an urgent need for the Hawke Labor Government to implement an effective program for business deregulation.

The ACTING DEPUTY PRESIDENT (Senator Jessop) —Order! The honourable senator's time has expired.