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Tuesday, 29 November 1960

Mr FORBES (Barker) . - I could not help wondering when the honorable member for Macquarie (Mr. Luchetti) was speaking whether the fact that as he finished with each page of his notes he screwed it up and threw it on the floor indicated disgust at the words he uttered, because that would be a very reasonable approach to the speech he made. The principal point he made was the extraordinary one which was made before - he borrowed it from people outside this Parliament - that a government should take economic measures only once a year - at Budget time - and that that should be the end of it for another twelve months. That was the principal basis of the honorable member's criticism - that we should take these measures only once a year and should not vary them regardless of what happens in the meantime and regardless of changes which could not possibly be foreseen by any government when it framed its Budget. Analogous to that would be the suggestion that a good farmer would make his plans for the coming year and refuse to change them regardless of seasonal conditions, changes in prices and all the other things which he could not foresee when he made his plans. A farmer who acted in that way would be bankrupt in a very short space of time.

A government which did the sort of thing suggested by the honorable member for Macquarie would also be bankrupt and would go down in disaster in a very short space of time. In some ways the unknowns - the things which the Government cannot know when it frames its Budget - are even more extensive than the unknowns which face an individual, a firm or a farmer in making decisions. The Government does not know the price that we will receive for our principal exports, particularly our rural exports. It does not know what the level of economic activities in countries overseas is going to be. It attempts to make a judgment about these things, but it cannot possibly know. Above all, in a private enterprise economy which we on this side of the House support, we leave tens of thousands of individuals and companies to make their own individual investment decisions. We can make a judgment as to what those decisions are going to be, both individually and in the aggregate, but we cannot possibly be certain when we frame the Budget that we will be right. The problem of keeping a fast-developing economy like that of Australia on an even keel so that we will have the sort of stability which is the basis for future advances is extremely difficult. It is not the easy matter which the honorable member for Macquarie and other honorable members opposite have tried to suggest, that is, if the Government does its duty.

If the Government believes in, and pursues, a policy of full employment and, at the same time, attempts to ensure that the opposite of full employment does not undermine our economy, we shall go a long way towards solving our problems. There is no shadow of doubt that we have been more successful in pursuing a policy of full employment than has any other country in the free world, including the United States and Canada, to which the Opposition refers in an attempt to disparage the Government. Opposition members claim that inflation in those countries has been less than it has been in Australia, but they do not mention that the smaller degree of inflation in the United States and Canada has been achieved at the expense of employment. By our standards, large-scale unemployment exists in those countries.

The Minister for Trade (Mr. McEwen) has said that if you want to be successful in maintaining stability and a policy of full employment you have to take measures which keep the economy balanced on a razor's edge. Ever since the Minister used that phrase the Opposition has repeated it with derision to twit the Government. However, if our economy were not balanced on a razor's edge and if the Government were not constantly taking measures to keep it balanced on a razor's edge, the Government would not be fulfilling its duty. On the one hand, it would not be maintaining full employment and, on the other hand, it would not be taking measures to ensure that our policy of full employment did not go so far that our economic position was undermined by inflation. To achieve that objective the Government, if it were doing its duty, might well find it necessary to take corrective measures, not once a year or even once every three months but every month. I should be glad if the Government took such measures every month because their effect, as they were implemented, would be nothing compared to the position in which the country might find itself if correctives were applied only once a year.

The honorable member for Melbourne Ports (Mr. Crean) has echoed what I believe to be a basic fallacy which has been supported by many influential people outside this House. I refer to the suggestion that the only reason why it has been necessary for the Government to take these measures - particularly the measure in relation to sales tax on motor vehicles which we are now discussing - is because of what is claimed to be a crisis in our balance of payments position. The honorable member for Melbourne Ports suggested that if the Government had not made what he called a mistake in February last and abandoned the remaining import restrictions, the measures which the Government now proposes to take would not have been necessary. Any one who has studied the Treasurer's statement and the position that lies behind it will know that the claim of the honorable member for Melbourne Ports is utter nonsense because the pressure on our overseas reserves is itself the result of the pent-up demand in Australia - the excess of demand over supply. If the Government had not removed import restrictions and if it had been panicked into replacing them after they had been removed, the situation would have been worse, not better, because the internal demand on our resources would have been just as great as it was previously and, in addition, we would not have been able to supply some of that demand from our overseas sources.

The point I am making is that irrespective of our balance of payments position and irrespective of whether we have import restrictions and import licensing the Government, in the interests of the stability of the Australian economy, would have been forced to take the measures that were forecast in the Treasurer's statement.

The honorable member for Melbourne Ports has echoed the statements that have been made by representatives of the motor industry. He has said, quite rightly, that the motor industry is an efficient industry. As a criterion of that efficiency he stated that the price of motor cars has not risen in recent years to anything like the same extent that prices have risen in other sections of the economy. He implied that by introducing this measure to increase sales tax by 10 per cent, the Government is victimizing an efficient industry which itself has not been responsible for inflation. He went on to say that instead of taking steps such as those proposed, the Government should have got on with the real task, as he described it, of solving the inflationary situation in Australia. I do not agree with that proposition. I believe that the over-use by the motor industry of scarce resources of either labour or materials - there has been an over-use of scarce resources by the motor industry, and my honorable friend from Wentworth (Mr. Bury) gave plenty of evidence of that fact - is inflationary, irrespective of what the industry itself may do in relation to prices, because inflation can come either directly or indirectly. Although the motor industry has not increased its prices, it is also true that because that industry has been able to obtain as much of the scarce resources as it wants, other industries, which are just as important as is the motor industry, have not been able to obtain their share of our resources. If they receive less than they require, both in relation to labour and materials, prices in those industries will rise. In that way, irrespective of the fact that the motor industry has kept its prices stable, it can be said that because that industry has over-used the available resources, it is responsible to some extent for the inflationary situation.

If we are to have stability it is necessary to look at those sectors of the economy which are using more of our scarce resources, both internal and external, than we can equitably allocate to them under present conditions. Irrespective of what the Opposition has said in relation to this matter, I do not believe that if it were in office it would not, on an objective judgment of the present economic situation, come to the same conclusion as the Government has come to, that is, that the motor industry is using more than its fair share of available resources. The Government has taken one step to deal with that situation. It has increased sales tax by 10 per cent, in an attempt to dampen down temporarily demand in the industry. The Opposition is opposed to that proposal root and branch, and has criticized it severely. But what would the Opposition do in these circumstances?

There is only one other course that could be followed in these circumstances - disregarding the question of the constitutional powers of the Commonwealth - and that would involve complete socialist planning. You can control the use of our resources by complete socialist planning. You can license motor vehicle plants. You can allocate labour to one industry and take it away from another. You can allocate steel and other scarce materials. I have no doubt whatsoever that the Opposition, faced with a situation similar to that confronting us at the moment, would adopt measures of that kind. Members of the Opposition are socialists. They believe in socialist planning. All I can say is that that is not this Government's way of achieving the objectives that are desirable. Nor do I believe it would be a method that would be welcomed by the motor industry, having regard to all the frustrations, controls, black markets and other undesirable results that would flow from socialist planning and the adoption of socialist policies.

The motor industry, and the members of the Opposition have claimed victimization. They have claimed that the motor industry has been singled out for unfair treatment. I think it was the honorable member for Macquarie (Mr. Luchetti) who said that the industry, as the result of the Government's proposed measures, will bear more than its fair share. It has been said that it was, even before the introduction of this legislation, bearing more than its fair share. Let us see just how much there is in that argument. I suggest that such, a claim is valid only if the additional impost is applied for the specific purpose of raising revenue. In this case that is not the purpose. The very fact that we have had the Budget presented, together with the Government's accounts for the year, and that those accounts have been settled, is proof of my point - even if one does not believe what the Treasurer has said - that the purpose of this legislation is purely economic, to damp down economic activity in the industry.

The legislation is not brought forward for the purpose of raising revenue. It has regard to the extent to which the industry is drawing on resources that are scarce in Australia at the moment. It is not a question of victimization or of giving the industry more than its fair share of the burden. This is a matter involving statistical facts. I am not going to bore the House by reiterating the statistical facts of the situation, because they have already been brought out by many speakers on this side of the House. It is, however, a matter of statistical facts. It is not a matter of equity, as the industry and the Opposition imply. The simple fact is that the motor industry in Australia is using more of our available resources, whether locally produced or imported, than we can afford to allow it to use at the present time. It was for that reason that it was necessary to damp down demand by increasing sales tax.

It is an observed fact that the motor industry is booming. We have no objection to a booming industry. In fact, the very high level of activity in industry in Australia during the last eleven years has been due to the favorable climate created by this Government's policies. We do not object to a prosperous and booming industry. We would not take measures, as the Opposition would, which would depress industry, such, as the imposition of an excess profits tax or of price control. We are delighted when an industry is prospering, provided that it does not prevent equally important industries from prospering also.

Statements that have been made about victimization suggest that the industry is depressed, but, from the figures which have been given, it is obvious that this is far from the truth. The industry has never in its history been more prosperous, and I do not believe either the representatives of the motor industry or the members of the Opposition who say that this legislation is going to lead to a depression in the industry.

The last point I want to make concerns the effect of the Government's measures on primary industry. This is a very important aspect of the situation. It was a consideration of the position of primary industries that was largely responsible for the Government's decision to adopt not only this measure of increasing sales tax on motor cars, but also the other measures announced in the Treasurer's economic statement. As honorable members on this side of the House, and particularly the members of the Country Party, have said many times, prices for primary products have been falling while costs have been increasing. The increase in costs has followed the overall rise in costs in Australia brought about by our expansion. This measure, and the others outlined by the Treasurer, form a determined attempt to do something about the problem.

What does the Opposition do about it? It goes to the electorate of Calare and bleats that it has the interests of primary producers at heart. Yet it comes into this House and opposes the measures that the Government takes which will be of the greatest possible assistance to primary producers. The honorable member for Wentworth (Mr. Bury) has already pointed out the effect on the primary producer of the very extensive use of steel in the motor industry. You can go to any of the rural electorates to-day and you will find that great difficulty is being experienced in obtaining Australian-made fence posts, fencing wire and other goods. Primary producers have to buy imported articles, which are very much more expensive. One of the effects of this legislation will be to allow supplies of local steel to flow back into the industries producing the goods required by primary producers. Then, of course, we will see the chain reaction that I have already mentioned, which will have a beneficial effect on costs generally. 1 regret that primary producers will have to pay more, as a result of this measure, for their private motor cars, which are essential in the country. But they themselves are conscious of the fact that although they will suffer this minor irritation, as we might call it, the overall result of these measures will compensate them many times over for that minor irritation, because stability will be produced in the cost structure. It is worth pointing out that the Government has specifically recognized the position of rural industries, because, although it has raised the sales tax on cars and station wagons, it has made no alteration in the concessional rate of sales tax which was applied by this Government on other vehicles used by primary producers, including utilities. In other words, the relative benefit bestowed by those concessional rates has actually been improved, as- a result of this legislation.

I support the bill.

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