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Wednesday, 9 March 1966

Mr KELLY (Wakefield) .- I hope that the honorable member for Yarra (Dr. J. F. Cairns) will not be offended if I say that in some respects he sounded like some of my farmer friends. I do not know whether that is a nice thing to say about the honorable member. I am sure that many of my farmer friends would resent the comparison. The honorable member did sound like a prophet of doom. I know that this is a fundamental trait of farmers. They all say that they will be ruined. I have been saying this for years but it is surprising to hear the honorable member for Yarra speak with such gloom about an economy which he admits, by implication, and which the honorable member for Melbourne Ports (Mr. Crean) admitted quite definitely, is doing pretty well. Anybody would think that we were all being ruined. Indeed, our past performance, considering our difficulties, is one that we should survey with a great deal of pride.

I pay a tribute to the Treasurer (Mr. McMahon), first for laying down the Government's policy in great detail on this issue. This certainly needed to be done. I am glad that the Treasurer paid a tribute to the members of the Vernon Committee for the vast amount of work put into their report. I would add my meed of praise to the Committee for its efforts, because I was one on this side of the Parliament who urged the Government to set up the inquiry. I realise what a tremendous amount of work went into it. It was refreshing to hear the Treasurer's commendation. But I was surprised to hear the Treasurer refer to what he described as a trait of pessimism that ran through the report. I did not think it was so much pessimism as realism. I think it is proper for the economic facts to be spelled out as clearly as they can be. Surely it is not for us to be critical because errors were made. It is obvious that if you are to make prophecies and projections, in some way they must always be wrong. There has been too much castigation of the Committee for making . projections, but if it had not made projections I think it would have been failing in its obvious duty.

I was a little disappointed to hear the Treasurer say that it was wrong of the Committee to concentrate on a 5 per cent, growth rate. I cannot see the difference between an expectation of a 5 per cent, growth rate and a target of 5 per cent. There may be some difference. All I can say is that the Committee had to have a starting point. It took one pretty close to one that all of us would hope it would take - a 5 per cent, growth rate. The Committee had to do its arithmetic on some basis. It would have been remiss of the Committee not to do its arithmetic. I cannot see the force of the criticism that the Committee made rate of growth a fetish. In fairness to the Committee I should quote paragraph 2.21 of its report, which reads - . . We believe that economic growth should have high priority, but we recognise that its uninhibited pursuit may endanger the attainment of the other objectives of government policy. Therefore, we take a high rate of economic growth to mean the highest long-term rate consistent with our interpretation of the other objectives now to be set out.

With the best will in the world I cannot see what the Treasurer is growling about in this acceptance by the Committee of a 5 per cent, rate of growth as a starting point. I repeat that there had to be a starting point and this seemed to me to be a reasonable and acceptable one.

It is obvious that a report of this magnitude cannot be dealt with fully in 20 minutes. Also, it is inevitable that an honorable member will have a natural bias towards those portions of the report with which he agrees. I make no apology for the fact that I propose again to deal with the two tariff chapters of the report, and you, Mr. Deputy Speaker, will be glad to hear that I propose to be briefer in my remarks than I have been on other occasions. I dealt with these two chapters in some detail last year. I will not go through them in close detail again, but because I have been taking a lonely line on this tariff question in this House and because the whole trend of the Committee's recommendations follows almost exactly the line I have been taking for so long, you would expect me naturally to rub it in a bit, and this I will now do yet again.

I think the Committee may be said to have come to five general conclusions in the tariff chapters of the report. The first conclusion .is that the tariff system has in the past served Australia well but in the future care in tariff making will be more essential than in the past if we are to become more and more industrialised. The second conclusion is that industries once in existence are not necessarily entitled to protection in the future. This is something that I have often said and I have been heartily abused for my efforts. The third conclusion is that we should not look to the tariff to solve our unemployment problems and that secondary industry, particularly protected secondary industry, does not loom as large as most people think

In the employment spectrum. The Committee made some remarks about the Special Advisory Authority system and pointed out that the integrity of our tariff system would be jeopardised if we continued our past policy of shuttling references backwards and forwards between the Special Advisory Authority and the Tariff Board. The Committee then proceeded to do something that had to be done. It laid down the general bench mark which industries should be expected to approach in the future if not immediately. The general bench mark which the Committee laid down is that an industry could be said to be economic and efficient if it could work with the most favoured nation tariff rate of 30 per cent. The Committee did not say that the tariff should not exceed that figure, but it did say that if the tariff did exceed 30 per cent., the matter should be looked at with care. I think you will agree, Mr. Deputy Speaker, that this is the kind of thing I have been saying in this House almost ad nauseam - trying to ram it down the throats of an unwilling and indifferent House. Yet strangely, some of the critics of the report have made the criticism that it is a high protectionist report. One reason for the criticism may be the fact that there is in existence a table used by the Australian Industries Development Association which shows that the Australian tariff was lower than the general bench mark which the Vernon Committee used and that the average rate recommended by the Tariff Board was between 11 per cent, and 12 per cent. I dealt with this table rather effectively in a speech on 14th August 1963. The table is still being used. It was used by die Minister for Trade and Industry (Mr. McEwen) in his Roy Milne lecture in Brisbane on 5th July 1965. That this table is wrongly based there is no doubt, as the Vernon Committee said in a footnote to paragraph 13.17, which reads -

Moreover, it is a source of controversy in Australia. Some bodies submitting views to the Committee, for example, the Australian Industries Development Association, quoted this index with apparent approval. Others were critical of it. It is, in our view, a bad index and ought not to be used.

It may be true that our general tariff level is low. I have never contested that. But it is also true that many of the tariffs which have come into this House recently have a general rate much higher than this general bench mark of something under 30 per cent. Indeed, there is a tariff proposal on the table of the House awaiting our attention at this moment. For example, there are on the Table of the House, proposals for tariffs of 55 per cent, on cotton textiles, 55 per cent, on man made fibres, 35 per cent, on components of cars, 35 per cent, and probably 45 per cent, on built up cars, and so on. The tariff schedule abounds with similar high tariffs. There is a tariff of 85 per cent, on stationary engines and 60 per cent, on vinyl acetate monomer. These and similar matters are the things that should be looked at with care and which indeed I think the House will admit I have been looking at with care.

The consideration that is important is that in tariff making there is no such thing as a free ride. Someone has to pay. It is usually the export industries or the consumer, and in many cases it is the secondary industries that use the highly protected' product. The Vernon Committee spelt out these recommendations with, I thought, gratifying clarity. What I find alarming is that nothing seems to have happened about these matters since the report was presented.

Sir, leavingtariffs, although you will be surprised to hear that I shall come back to them, I should like to deal briefly with the question of savings, the need for an increased pool of savings to use in the development of our country. I know that the Vernon Committee recommended that we should increase our taxation rate to supply the capital required to deepen and widen the economy. I admit that I am not enough of a statistician or an economist to be able to analyse critically whether the Committee is right or wrong in that recommendation. I do know, of course, that a general rise in taxation to do this would tend to dampen down the incentive to work well and so would hinder the development of the country. And 1 realise the temptation that any government would face in having such a pool of savings. It would feel tempted to use the pool to make a good fellow of itself. In saying so I am not being critical of the Government. My statement is critical of democracy as a system. Lt would be difficult for any government not to use up the pool in some unwise way.

I know, too, that our rate of saving is much higher than is the case in most other countries, but there is one thing of which I am certain, and it ought to be emphasised in this House more often. Australia is a very difficult country indeed to develop. Because of that factor we need to have a higher level of savings than most other countries. In this House, as the honorable member for Dawson (Dr. Patterson) will soon realise, we have a very happy knack of solving all these problems with a few well chosen speeches. It is something that comes easily to us. Performance is always much more difficult. The size of the country and the arid nature of a great deal of it pose great problems which will be solved only with difficulty.

I admit the potential, but I do not admit that the realisation is going to be easy. Noone can deny that, in this milk bar economy into which we have drifted, we are making it easy. If we really want to do something about developing Australia, we have to do something about the milk bar economy - the opera houses, the ten pin bowling alleys and so on. If we are earnest about these things, we have to pay a price for them. So in my opinion we need to have a bigger pool of savings.

For that reason I urge the Government to think seriously - I do not pretend that I have examined this matter in detail - about having a compulsory savings scheme for young unmarried people, the money to be returned to them with interest at the time of marriage. This would do four things. It would give us a revolving fund to use for development. It would reduce the spending power of young unmarried people, leaving more resources available for other things. It would make young unmarried people realise the value of money, and would give them money when they needed it most, that is, when they were homemaking. The honorable member for Mackellar (Mr. Wentworth) has mentioned this kind of thing often in this House. I hope that the Government will have another look at it. We have to get more savings from somewhere if we are to do this job of development about which we are all so eloquent. I think Government action on the lines I have suggested would help both our country and our young people. We must recognise that this action would not be popular with the young people and it would not be popular with the people who do very well out of supplying them with luxury goods.

The other matter I wish to discuss briefly is the vexed question of Government planning. The Government was unable to accept the idea of economic planning by a special project's commission or by the bigger economic advisory council. I can understand the Government's attitude. It would feel that, if the special projects commission were to recommend that a certain project be undertaken, so much steam would be generated that it would be difficult for the Government to resist the pressure, even if it thought that the project was not soundly based. This would apply also to the more important economic advisory council. But this procedure seems to have worked pretty well with the Tariff Board. In many instances, the Government does not follow the Board's report and no-one seems to worry very much, except me.

Mr Chipp - Not in many instances.

Mr KELLY - It does happen sometimes but not frequently. The need for outside advice would not be so necessary if the Government would spell out the economic facts, as I think it should. I know it is not easy for the Government to accept this proposition. Since the report of the Vernon Committee the Treasury has put out some perfectly splendid White Papers. This is the kind of information that should be supplied to us more, frequently. The White Papers may be slanted according to the policies of the Minister, but at least they spell out the facts so that we can look at them. On the other hand, a special projects commission would naturally be biased according to the personalities of its members. The facts will be slanted a bit one way or the other, but at least they will be spelled out for us. Let me give an example of what I mean. Many people have expressed a great deal of enthusiasm for the Ord River project. The Western Australian Government prepared a not altogether unbiased statement and indeed the previous head of the Northern Division of the Department of National Development also prepared a not altogether unbiased statement. I think he would agree with that comment. I do not deny his right to be enthusiastic, but I do not regard his statement as the kind of clear exposition I want. I want a clear statement of what it will really cost; whether it is right for the cost of the engineering work to be borne by the taxpayer and not the farmer; what would be the real effect on the cattle industry in the area; what would be the effect on cotton growers in the Namoi Valley; and whether pests in a tropical environment will increase. These are the questions that are worrying me and, I should think, are worrying the Government. My complaint is that I have not yet seen the facts set down for me to examine as I ought to examine them if I am to do my job as a member of the Parliament. If we are not to have a special projects commission let us at least have the facts spelled out for us.

Let me turn again relentlessly to my tariffs. The Government's policy has always been to protect economic and efficient industries. No-one has ever argued about this. The Vernon Committee made a rough stab at measuring the effect of tariffs. But since its report has been published not one single statement has been issued by the Department of Trade and Industry saying whether it agrees with the report or not. It must either agree or disagree. If it agrees, it would be helpful to tell us. If it disagrees, then it should say so and tell us why it disagrees. As it is, we are inclined to wander from one ad hoc decision to another. I presume that the Government knows what it thinks about the Committee's report. What I want is a clear exposition of the Government's thinking. Not to have a clear exposition makes it difficult to resist the plea for outside advice so that these matters will be spelled out for us. Sir Robert Menzies said that if the Government consented to the Committee's recommendations for outside committees of advice democracy would have ceased and a technocracy would have begun. That is fair enough. But if we are not to be given the facts it is only fair to say that democracy has ceased and bureaucracy has begun.

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