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Wednesday, 9 March 1966

Dr J F Cairns (YARRA, VICTORIA) .- There have been two very significant changes in the position in life of the Treasurer (Mr. McMahon) in recent times, and one would have expected them to have stimulated and enlightened him. But neither has. Certainly we see no improvement in his style of debating over that of previous years.

Mr McMahon - The honorable member is smashing his own Party. Does he want to smash everyone else?

Dr J F Cairns (YARRA, VICTORIA) - It is most unfair of the Treasurer to be so hurt by such mild remarks.

Mr McMahon - That is what you are doing - smashing your own Party.

Dr J F Cairns (YARRA, VICTORIA) - I think it shows the Minister's susceptibilities, which are a little surprising. However, I think we all have to conclude that this Parliament has become considerably duller because of the retirement of the former Prime Minister. I do not object to the Treasurer putting the House to sleep, but I think it is most unfair of him to put me to sleep when I have to succeed him in the debate. This is the kind of thing about which I am complaining.

Obviously somebody has culled out of the Vernon Committee's report everything that supports what the Government has done over recent years and has given that result to the Treasurer who has presented it tonight in the form of a speech. He took about three quarters of a very long speech to tell us what has been found in the Vernon Committee's report that praises or supports what the Government has done. He said nothing much about what could have been found in the report that would have assisted the development of Government policy and which might have provided guidelines or targets for subsequent development. He referred to only one proposal that the Vernon Committee put forward that might have guided the Government in developing its future policy - one suggestion only for improvement. Of course, the Treasurer dismissed it out of hand. It was the proposal about a planning commission. He was very abstract and theoretical about planning. He dismissed the suggestion because of some theoretical and abstract considerations, but the case for planning in Australia is very realistic and practical. It is a case that arises out of the obvious deficiencies of the arbitration system that were outlined more than three quarters of an hour ago by the honorable member for Melbourne Ports (Mr. Crean), lt is a case that arises out of the obvious deficiencies of the tariff system which the Vernon Committee took to task considerably as I am sure the honorable member for Wakefield (Mr. Kelly) will do when he speaks in this debate.

Practical and realistic considerations arise out of the need for the development of Australia. Regional development and northern development are matters that provide practical and realistic reasons why we should be considering planning much more seriously than the Treasurer has been prepared to do. We have heard a speech, three quarters of which contained culled references from the Vernon Committee's report that imply some credit to the Government for what it has done. We have heard a speech which has ignored all the substantial parts of the Vernon Committee's report that might have stimulated the Government into some improvement and which might have been of some benefit in influencing its future policy. However, I suppose we have to be grateful for what has happened. After all, the Vernon Committee was appointed on 13 th February 1963 and here we are debating its report three years later in 1966. This is a measure of the sense of urgency that the Government and its advisers have. There is no sense of urgency about any of these matters. There is a sense of complacency, a sense of self satisfaction, as the Treasurer has underlined tonight by the nature of his speech.

We, of course, heard from the former Prime Minister, Sir Robert Menzies, last year. On the whole he rubbished the Vernon Committee's report. After having given it perhaps a second thought he did say something that suggested there might be something in the report that was worth considering. But what about the present Prime Minister (Mr. Harold Holt)? What does he think of the Vernon Committee's report? We have not heard. The Treasurer does not think much of it, except where it supports what his Government has done over the last few years. I think one of the reasons for this emerges from what he said about the economic council or commission that the Vernon Committee recommended. He said this was recommended as an advisory body, additional to the existing system of advice that the Government receives - in other words, additional to the existing system in the Public Service. I think this was one of the main reasons why last year's Prime Minister came into this House and rubbished the report I think that the proposed body was seen by the Government's existing advisers in the Public Service and in industry as something which might rival them - as something which might diminish their influence. I think that the gentlemen in the Public Service who had the ears of the Prune Minister whispered into those ears very effectively for a week or two, and then the right honorable gentleman came in here and told us their story. That situation is not good enough. The Committee has produced a worthwhile document, a considerable document, and in many ways a very conservative document. There is hardly anything in it about which a progressive government need have any apprehension.

It is impossible to do more in the time that I have than to indicate half a dozen points of significance in respect of this report which the Treasurer completely ignored in his speech tonight. One of the basic propositions appears on page 17.13 of the report - this strange numbering system that the honorable member for Melbourne Ports referred to. The Committee said -

We believe that the growth and anticipated growth of the economy will be powerful incentives making for a high level of private investment although, as we have suggested, the distribution of this investment will need to be watched. It is for the Government to ensure that the required public investment is forthcoming, and there is probably scope for more effective planning and co-ordination for this purpose.

Instead, the Treasurer takes from the report reasons which justify complacency about public investment. Anyone who knows the condition of development of Australia - basic development, regional development, northern development; anyone who knows the condition of education - the crisis that exists in our schools system; anyone who knows the inadequacies of research and technical development; anyone who knows the inability of industry to overcome the problems of relatively rapid automation as they exist in Australia today, cannot be complacent about the situation. It is not just a matter of economic growth. It is a matter of the allocation of resources to meet the needs of the development of this country. The basic proposition that I have referred to as coming from the Committee indicates that we must have a plan. We must have a series of targets in different sectors of the economy. This involves priorities. It necessitates deciding that it is better for the nation to have this rather than that. Here is the great economic problem that exists today.

From 1931 to 1951 the most advanced economic thinkers were satisfied if full employment were maintained. Since 1951 advanced economic thinkers have been satisfied provided economic growth has been maintained at 3, 4 or 5 per cent. We have now reached the stage where economic growth at that rate should satisfy us. But we have now to be concerned with allocation inside that growth total. That is the way economists are thinking about the question in the United States of America, for example, where men like Chairman Ackerley, of the President's Committee of Economic Advisers, have pointed out that governments should not be satisfied with 4 or 5 per cent, of growth, regardless of how it is made up, but should be devising machinery to determine the allocation of resources necessary to solve the nation's problem. There was no indication in what the Treasurer had to say tonight that he is even aware of this kind of problem. There was no indication that he is aware of the necessity for national priorities in the development of this country or of the necessity to think of new forms of machinery - social and economic institutions - to achieve those priorities. I repeat that there was not one word in what he said to indicate that he is even aware of these things. Of course, there may be some justification for his omission in the fact that the Vernon Committee's report has not laid sufficient stress upon the matter. That is why I say that in some ways the report is quite a conservative document and that it should not have worried the Government at all.

Mr Chipp - Will the honorable member give us an example?

Dr J F Cairns (YARRA, VICTORIA) - If we turn to page 17.13 of the report we find that the Committee identifies some basic inconsistencies in the development of the economy and points out that the manufacturing sector is out of line. It points out that the pattern of production is heavily weighted towards manufacturing which does not correspond to the pattern of expenditure in the economy. The rate of growth in manufacturing will decline unless, by some anticipated changes in the levels of expenditure, we can establish some consistency between these things.

One thing that the Committee does not emphasise in sufficiently clear terms is that there is a pattern of need which is heavily weighted towards public services and the production of things like education, research and development, which does not correspond to the pattern of expenditure. There is no automatic process to achieve the kind of public service and production that we need. That production is not geared to the market system significantly. Thus we rely a lot upon taxation. This Government, during the 16 or 17 years that it has been in office, has been unwilling, through taxation, to obtain sufficient to keep the public sector of the economy developing rapidly enough. So we have had regional decline rather than regional advance. We have had country decline, we have had. provincial centres falling off, and we have had education crises and so forth. In what the Treasurer has had to say tonight there has not been any recognition of the urgency of this problem.

The honorable member for Higinbotham (Mr. Chipp) asks questions consistently of honorable members on this side of the

House, particularly upon economic subjects, and I am glad to note that tonight he is still asking questions. Let me tell him that one of the things we must bear in mind in the future is the need to expend more of our resources on matters like education - the training of teachers, the improvement of the system of education technically, and a reduction of the size of classes. We should also provide more resources for research in combined operations, one might say, with industry. In all countries, research expenditure has come predominantly from the public side of the economy. It is important to think in terms of the development of public enterprises for the production of minerals such as iron and bauxite, and of gas. We have only to look to Italy to obtain a lead in this respect. The way in which great public corporations have developed the natural resources of Italy probably has contributed more than anything else to the rapid development of that country in the post-war period. Nothing of this kind really is taking place in Australia. Our public enterprises are no more progressive now than they were 25 years ago. These activities must be coupled with regional development, because these basic resources are regional.

Turning to manufacturing, I believe we must look at our system of arbitration. The Vernon Committee has indicated some of the lines along which development of our arbitration system might be undertaken. The Committee had this to say at page 17.8 of its report -

The decisions o{ the Commonwealth Conciliation and Arbitration Commission should take fully into account their expected economic, distributive and industrial consequences, and should pay particular attention to the maintenance of stable prices.

Our arbitration system is quite handicapped in this respect today. Our arbitration system must be developed in the very near future if it is to be able to do as the Committee suggests. Really, there can be no wage policy in this or any other country until there is a prices policy. It is quite impossible for a conservative government like the present Government to continue for very long trying to impose a wage fixation system while it is totally unwilling to look at what is happening in regard to prices. The emphasis laid upon this matter by the honorable member for Melbourne Ports would have justified the expectation of the Treasurer having something to say about it. But the honorable gentleman ignored it altogether. Seeing he was formerly the Minister for Labour and National Service, it was a surprising omission from his speech.

The arbitration system must be developed more along the lines of a planning authority acting in consultation with industry so that it may know what industry is thinking and what it is capable of allocating in wages from year to year, Then some agreements must be worked out between the parties involved so that the development of industry may take place along anticipated lines and not haphazardly as happens at the present time. I should like to refer to the obvious development that must take place in relation to tariffs. One could speak for an hour or two on this subject alone.

Mr Chipp - The honorable member for Wakefield will do so.

Dr J F Cairns (YARRA, VICTORIA) - No doubt he will. What is more, he will do it very well. Broadly speaking, our tariff system is in exactly the same condition as it was a quarter of a century ago. This is not nearly good enough. No government can long expect to hand out protection and subsidies to industries without expecting to have something to say how those industries will handle that protection and those subsidies. We need a price policy such as the Vernon Committee's report indicates we should have.

Mr Kelly - Where did the Committee say that?

Dr J F Cairns (YARRA, VICTORIA) - It said so at page 14.15 of the report.

Mr Kelly - Will the honorable member give me the paragraph?

Dr J F Cairns (YARRA, VICTORIA) - I shall read the passage. I did so last year. It is a wonder that the honorable member has forgotten it. The Committee said -

A request for an undertaking about price policy, if high protection is given, would not be unreasonable, especially where the product concerned is an essential raw material.

This is perhaps one of the most important indications of future development in the forms of tariff that the Committee's report provides for us. The Committee wants a simplification of tariffs. It speaks about not protecting an industry if it cannot operate at normal profits with a tariff protection of something like 22i per cent, or 30 per cent. That is rather too artificial, but it is an indication of the kind of simplification that I believe our tariff system could benefit from. The point I am making is that I do not think that tariff protection or subsidies should merely be handed out to industries without there being some supervision by some public authority of what those industries are doing and some sharing of decision making in relation to both what they are to do and what they are to provide in the distribution of income. We cannot hope to get the most rapid rate of economic development or the allocation of resources that is necessary for national purposes unless we have an income and price policy that will allow that development to take place.

Although these problems have been wrestled with with some measure of success by almost every country that is as advanced as Australia, there are no signs of the fact having been recognised by this Government or at least by those of its supporters who speak as Ministers in this place. One would expect that somewhere on the back benches we would have younger men who were looking to the future problems of this country rather than to the past successes of the Government. The surprising and disappointing thing about the Government and its supporters is that there seems to be a complete absence of any new or radical thought in the field of economic policy.

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