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Tuesday, 19 April 1966

Mr Kevin Cairns (LILLEY, QUEENSLAND) .- It is worth while reflecting for a few moments upon the statement that was made by the Treasurer (Mr. McMahon). The proposal he outlined was designed basically to give a short term quick stimulus to an economy which has suffered from the severe general effects of a most debilitating drought. Before commenting in detail upon the Treasurer's statement, let us examine a few of the facts concerning the average weekly earnings of the employed male unit in Australia, to which the honorable member for Blaxland (Mr. E. James Harrison) has referred. It is always worth while to have a look at the picture as it is and not as honorable members opposite would attempt to paint it. The actual situation can be discerned very clearly from looking at the publication " Wage Rates and Earnings " put out by the Bureau of Census and Statistics. If we look at Table 3 on page 14 of that publication we find the average weekly earnings per employed male unit. The statistics for the employed male unit, of course, take into account the proportion of females employed in each State. If we consider the figures shown in this table and the movements in the average weekly earnings over the last few years we see that the rise in the average weekly earnings, for example from December 1964 to December 1965, has been about $3 per unit. In the previous year it was something of the same order - $3.10. In the year previous to that it was $3. What the honorable member for Blaxland forgets is that this rise in the average weekly earnings per employed male unit has shown little relationship to judgments concerned with basic wage rises. Therefore, a case concerned with wages and the basic wage standard does not have as much relationship to the take home pay of each worker as the honorable member would like to imply. That is the actual situation.

Furthermore - and this is the remarkable thing about this factor - this rise of $3 per employed male unit has occurred in a year in which we have gone through a most debilitating and far reaching drought which has had greater secondary effects than almost any other drought this country has had to sustain. The secondary effects of the drought are the principal matters which induced the Treasurer to make his statement. The secondary effects became clear last year in the general level of business and economic activity in the two States of New South Wales and Queensland. The Treasurer's techniques for applying a short term stimulus to this down turn have been most flexible. I think they have been more flexible than those which have been employed previously. There has been a sectorial approach particularly to those States and areas suffering the effects of the drought.

In considering the situation I think we have also to bear in mind that while the down turn has been intercepted much more quickly and much more effectively than ever before, out sights in this regard have themselves been raised. We have shown that we are not willing to sustain a level of unemployment that was sustained previously in the Australian economy. Let me give honorable members an example. This Government intercepted a rise in the level of unemployment before unemployment had reached 3 per cent, of the work force. In fact, the maximum it had attained was about 2.8 per cent, of the work force. In other words, this a the bottom of the situation which we intend to improve. A few years ago it would have been the height to which we would have tried to climb. The Government's measures through the new savings bank arrangements for housing, the new loan arrangement for housing in certain States, drought relief to cure unemployment and the new arrangements for long term lending with respect to the rural sector, have intercepted the down turn earlier than ever before in the history of this country, and the down turn has been intercepted more effectively than ever before. The Treasurer and the Government that have done this deserve some credit.

What has in fact happened? We learned last year that housing was declining. I am not going to talk in terms of the levels of housing or the numbers of houses being built; I shall talk in terms of the changes in the amount of the loans which were approved for housing in the various Stales. If we look at the Reserve Bank data, which gives a fair indication of the amount of money available for housing and of loans approved for new housing, we find that a decline began to set in around October or September last year. There was a variation in some States, the decline occurring in either the public sector or the private sector, but in general terms the decline did occur at about this period. The Government intercepted this decline to such an extent that by December last year the loans approved for new housing had already begun to climb beyond those approved in previous years. In other words the down turn began to be intercepted before the end of the last calendar year.

Mr Clyde Cameron - Why did noi the

Government act earlier?

Mr Kevin Cairns (LILLEY, QUEENSLAND) - There are variations in an economy. Planners may not realise this, but an economy does not move in a straight line. It should be clear that it does have variations. There are such things as seasonal factors. In my own State the seasonal factors are larger than in any other State in Australia. We know this and we also know that the seasonal factors which cause these variations have themselves been decreasing in number.

Mr Clyde Cameron - The honorable member must admit that the Liberal Party has a stop and go policy.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - lt has not a stop and go policy. It has a flexible policy which applies variations where they need to be applied. The honorable member for Hindmarsh (Mr. Clyde Cameron) comes from a State that has a low level of seasonal employment, in which there is little variation in seasonal activity and where there are not great variations in personal income due to changes in rural conditions. If the honorable member does not understand that the changes in conditions due to rural down turn are quite massive in both New South Wales and Queensland, we can only be thankful that he is on the Opposition benches and does not have the responsibility for intercepting these situations.

We have considered changes in housing. They are significant because the housing industry is a great employer of labour in the economy. If a man has the problem of being out of work for a short period a new housing programme is a very effective way of placing him quickly in employment. It is a method of building up the general level of economic activity in certain provincial areas and in rural towns and cities which depend indirectly upon these areas. This, in fact, is what has been done. However, there is one factor which worries me a little. It concerns the $15 million loan for housing.

Mr Cope - It is only peanuts.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - It is appropriate to the conditions. If we do not want to cause excessive inflation and hurt people on lower incomes this is the correct thing to do. It will be found that the decline was greatest in the public sector of housing. That was the sector which seemed to decline more in New South Wales than in most of the other States. There is one thing about the allocation of this S15 million which rather worries me. It may be that I do not understand the position. I should have thought that about $6 million of the $15 million would have been applied to New South Wales. There may be sound reasons for this not being done. The Treasurer obviously has data available to him which is not available to me. But on the figures which are available showing the variation in housing approvals for each State, I should have thought that New South Wales would have gained a larger proportion of that money. I know that in my own State of Queensland we had a down turn in the economy which appeared to be due not to housing problems but to other factors. Nevertheless one of the ways in which the economy was stimulated was by assisting housing activities, and the economy is in fact now being stimulated in that way. Of course this means that men are being placed in employment. It is in this sense that I think the Government's policy in this regard ought to be considered. It is true also, as some have written, that the general level of consumer demand has been a little patchy. One cannot judge this very precisely because the data available to measure variations in consumer demand is a little late. It is not available for as many areas as one would desire. However, from details which one can obtain from retail trader associations in the various capital cities, consumer demand seems to have been a little patchy. When we bear in mind the measures which the Government has brought into operation, which will apply in the short term, and that there will be a basic wage adjustment not very long distant, both of which factors become stimulants to consumer demand, we see that there should be a significant rise in consumer demand in the near future. What the Government is doing now is designed to create a stimulant in the short term. The basic wage adjustment will stimulate it further in the long term.

Mr Clyde Cameron - Are you forecasting an increase in the basic wage?

Mr Kevin Cairns (LILLEY, QUEENSLAND) - I would expect there would be.

Mr Cope - Would the honorable member repeat that?

Mr Kevin Cairns (LILLEY, QUEENSLAND) - Could the honorable member for Watson not understand what I said, or was he a little surprised? The Opposition likes to pose always as the only party concerned with raising standards of living and raising wages. It might be a little surprised to learn that there are people on this side of the chamber who are more sensitive to the rights of the working man and to ordinary wage levels. All the forces of movement in Australian politics do not reside on the reactionary Opposition benches. It is we who have caused wages to rise more quickly and higher than ever before in the Australian economy. We are proud of this and hope that they will rise even further.

There is one further thing that ought to be considered. I refer to the general attitude of the Treasurer to the economy which has been portrayed in his statement. The Treasurer indicated a very flexible attitude and said that he would have a sectoral approach to the economy. I hope that in the Budget to come down later this year there will be movements in the level of social services. One would expect that there would be. Some States depend more on movements in social services than others. The States represented by the honorable member for Watson (Mr. Cope) and the honorable member for Hindmarsh (Mr. Clyde Cameron) depend less on social services than some of the other States, such as my own. They may not understand this. This is an interesting facet. It is an interesting reflection on the structure of populations in various States. This is quite important. If we look at Queensland, Western Australia and Tasmania, the smaller States, and consider the general level of income which the people in those States have to spend, in other words the general level of disposable income, we find that they depend more upon social services to simulate demand than do the other States.

Mr Clyde Cameron - That is not right.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - I will lend the honorable member my slide rule if he wishes and he can see what he can do about it. I will refer to a couple of figures which the honorable member may dispute. They reflect the situation which has obtained over a number of years. For example, in 1963-64, of the disposable income avail able to create demand in New South Wales, 8 per cent, came from cash social services. In Victoria the figure was a little over 7 per cent. In South Australia it was a little over 8 per cent. For the three other States the figures were 9.8 per cent, in Queensland, 10.2 per cent, in Western Australia and 9.75 per cent, in Tasmania.

Mr Clyde Cameron - What do you mean by disposable income?

Mr Kevin Cairns (LILLEY, QUEENSLAND) - Disposable income is income which is available to spend as one wishes.

Mr Clyde Cameron - This is a new term.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - The honorable member should ask the honorable member for Melbourne Ports (Mr. Crean) to explain it to him. lt is a very simple term. It is quite an important term to understand in relation to raising the level of the standard of living of ordinary people. But that might be for the honorable member a new way of looking at things. So we have this situation in which Queensland depends more upon these factors than do some other States.

There is another way in which this matter can be viewed. The contribution by the Commonwealth Government by way of cash social services to the disposable income in each State has been increasing. The Opposition tries to portray the Government and its supporters as being rather hard hearted people who are insensitive to social justice, but when such statements are measured there is no meaning to them. In fact they are incorrect. For example, consider the year 1958-59 - and it is not a year I pick just because it is a suitable year - we find that the contribution of social services to the disposable income in New South Wales was 8 per cent. It has not changed much since then. In Victoria the figure was down to 6.9 per cent, and now it is something over 7 per cent. In Queensland it was 8.6 per cent, and it has now risen to nearly 10 per cent. In fact, Queensland has benefited more from this contribution than has any other State.

Mr Cope - That is because of the unemployment in Queensland.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - Not in 1958-59.

Mr Cope - I think it has a good deal to do with it.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - I think the honorable member for Watson is wrong. If he checked the data he would find that he is a year or two out. The high levels of unemployment in Queensland occurred a year or two after that time. In South Australia the contribution of social services to the disposable income was 7.8 per cent.

Mr Clyde Cameron - What point is the honorable member trying to make?

Mr Kevin Cairns (LILLEY, QUEENSLAND) - That the overall level of demand and the amount of money which consumers have available to spend are dependent very largely on the Commonwealth Government's contribution by way of social services. Later on if there is a temporary lull in the level of consumer demand this will be the kind of thing which will be cured by increases in the contribution, one would expect, at Budget time later this year. It also means that people are dependent more and more upon consideration by the Government of these matters. I think I have dwelt long enough on this point. The honorable member for Hindmarsh has distracted me. Let me make this point overall: All the indicators are that after the shortest down turn which we have ever had the economy is moving to a rather level position. It is improving at the moment. Current levels of unemployment have decreased in real terms. For example, the amount of bank debits available to individual customers' accounts have increased and bank advances have increased. The Government's approach to a massive drought, during which there has been a down turn in the economy, has been more flexible than ever before. Its approach has been quicker than ever before. We have sustained lower levels of unemployment than ever before. Consumer demand has not dropped to the extent to which it had before during massive droughts. The Government and the Treasury which foresaw these situations, and have corrected them deserve every credit.

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