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Tuesday, 14 September 1971
Page: 1235


Mr WENTWORTH (Mackellar) (Minister for Social Services) - I must thank the honourable member for Forrest (Mr Kirwan), for his kind references to me. I hope that there was some sympathy in his voice when he referred, mistakenly I trust, to my tenuous hold on office. I shall do my best to endeavour to disappoint him. The honourable member referred to the fact that not everything that the Government would have liked to do is in this Budget. But he did not refer to the facts which very properly have limited the ability of the Government to get into this Budget the things which it would have liked done. Those limits come from the sense of responsibility which informs every action of this Government and which contrasts so notably with the irresponsible proposals brought forward by the Opposition.

Nobody could deny that the honourable member for Forrest was high-minded. His sentiments are impeccable. But the tragic thing is that he himself, unknowingly perhaps, is associated with a Party the impact of whose policies must make it impossible to do those things which he would desire. At question time today, the Prime Minister (Mr McMahon) pointed out the different kinds of forces which could lie behind an inflationary situation. He distinguishes between demand inflation and wage inflation. These are, of course, related although the relationship is not simple. I think that we perhaps might have a look at the first principles concerned. In any economic system, demand must be limited to the goods available. If there is an effective demand over the short term for more than the available goods the system must react. In a slave system like the totalitarian system the reaction shows itself in chaos, fearful repression and deprivation. This, of course, is the history of Soviet Russia with its ferocious discipline. In a democratic system the reaction is milder but still unpleasant. It goes by the name of inflation. The system equates demand to available goods by raising prices. This is something which we do not want to happen but it is at any rate better than the kind of ferocious discipline which is the only' alternative when demand outruns supply.

For Australia and for this Budget the limiting factor on progress is the need to control inflation and, of course, inflation involves a lack of balance between supply and demand. We can meet it from one side of the equation or the other, that is, by reducing demand or by raising production. As honourable members will know,the relationship I have spoken of is not a simple one. It is complicated by the variations in propensity to save and the ways in which stored ability for demand can come through fluctuations in the amount of credit available, the decision of depositors to withdraw money from the bank or to put money into the bank, and many other related factors. The matter is not simple but in general it could be said that demand is a function of incomes. I say this subject to the qualifications I have made.

The overwhelming component of demand is wages. However, there is the other side to inflation - the side of which the Prime Minister spoke earlier today during question time. There is also wage inflation which can send prices up even though excess demand may not be involved in the process. In the old days classical economists thought that money wages would not tend to rise in times of slack demand and that an excess demand was necessary in order to push up money wages. This was a simple assumption which is certainly untrue under present arrangements. Let us have a look at the things on the cost side which send prices up and overwhelmingly they are wages. Behind this process, as I have previously said, are the 2 engines - the big engine and the small one. The small one is the tendency of companies to try to maximise their profits. The big one is the tendency of wage earners to enforce wage demands faster than the increase in productivity.

I think it is worth while, for the House to look at the comparative size of these 2 engines. The wages and salaries paid in Australia total a little more than $ 18,000m a year. Company profits are only one-sixth of that amount - $3,000m. Almost half of those company profits is paid in taxation so that company profits very largely support social services. More than a quarter of those profits go into reserves where they build up the capital goods on which increased productivity in the future must depend. When one looks at these 2 engines one can see that overwhelmingly the one which pushes up prices and costs is wages.

Now let us have a look at this matter. I ask the House to consider the position from the 1970 June quarter to the 1971 June quarter. During that time average weekly earnings rose by about 13 per cent. They are now $90 a week. In the same time prices rose by only a little less than 5i per cent. Company profits remained static; indeed in that 12 month period they receded a little. Therefore we can see in point of fact - this is quite clear from the figures - that wages are leading prices and it is because of the inordinate increase in wages that prices are going up as fast and as far as they have been. It is because of this that the Government has to be wary of adding to the demand side.

It is the tendency of wages to rise so inordinately which is hampering the desire of the Government to increase such things as social service benefits. I have heard members on the opposition side say 'Look, if wages are controlled by . the Arbitration Court why should prices not be thus controlled?' As I have already pointed out, wages are the overwhelming components of costs; profits mean very little in terms of costs, and this is on the. figures. But there is a complete logical fallacy behind the argument of the Opposition in this particular case. Members on the Opposition side say that wages are controlled and therefore we should let prices be similarly controlled. But the fact is that wages are nol controlled. The Arbitration Court does not set a maximum wage; it sets a minimum wage. There is nothing to prevent, neither should there be anything to prevent, the payment of a wage over and above the declared minimum wage or the declared wage with its margin for any particular calling. These over-award payments are made and the very fact that they are made shows conclusively that there is no control of wages. There is no control as to how high wages can go. There is a control as to how low they can go, and this is set by awards. It is quite common now for over-award payments to be substantial.

Yet nobody is suggesting that there should be minimum prices. When you talk about controlling prices you are not thinking of minimum prices. Indeed the Government has taken steps to reduce the capacity to declare minimum prices by outlawing such things as resale price maintenance. When we talk of prices control we mean exactly the opposite to the sense in which we use the words in regard to wages control because we are talking about maximum prices, not the minimum ones. This confusion between maximum and minimum seems to be at the root of a good deal of the confused thinking on this matter by members on the Opposition side. But this is really not the whole story or even the most important part of the story. Let us think of the production side. If productivity can be increased, money wages can be increased without increasing prices but unfortunately, in the community, there has been organised sabotage of production and this is one of the most important things that must be considered. ,

The machinery of trade unionism^ which has had its. good features and has played its part, is now being manipulated and abused in a way which has never been seen before, even in the times after the Second World War when a Labor government was last in power. We now have the technique of the rolling strike - a strike which is deliberately meant to disorganise production. One section in a factory will go on strike on Monday and Tuesday and the next section on Wednesday and Thursday; the trains in Sydney will stop for half a day; the concrete mixers will go out one week and the builders labourers will go out the next. This is being run to an organised plan in order to sabotage production. I believe it is being run by people who have a vested interest in bringing the Australian economy to its knees. It is not being done in order to improve the conditions of workers. Indeed, the effect of the process is to worsen the workers' conditions, because every time production is reduced the standard of living of all Australians is reduced. Every time the construction of buildings is prevented, the housing shortage increases. Have the people who want houses received any benefit from the present building strike? Of course not. Did the people in Sydney receive any benefit from the Metropolitan Water, Sewerage and Drainage Board strike? Of course not. These strikes were deliberate. They were strikes against the workers, with the workers being manipulated by a number of people who have no good intentions either towards the workers or towards Australia.

The rolling strike is a political strike. I remember the words of the infamous Ernie Thornton who, by ballot rigging, long preserved his position in the Federated Ironworkers Association of Australia. He said: We made strikes our business'. They were the words of an avowed Communist who gained control of a union and used it in order to bring down production. The strikes were not made in order to improve the standard of living of workers. That is not why they made strikes their business. They made it their business in order to bring Australia down. It is only recently that this technique has received its perverted escalation in the technique of the rolling strike. It has been elaborated and is now being made the instrument of these people who are working against the workers and against Australia. They are using the strength of the workers to destroy the workers. It is a pathetic thing that in this situation the Opposition finds itself on the side of disorganisation and indiscipline.


Mr Daly - That is a shocking thing to say.


Mr WENTWORTH - It is not only a shocking thing to say; the shocking thing is that it is true. On no occasion has the Opposition come out strongly against this kind of thing because unfortunately - I know that no member of the Opposition likes to hear this - the Opposition is dependant upon the trade union movement and the left wing in the trade union movement is so considerable that members of the Opposition dare not say what they think. I ask members of the Opposition to consider the words spoken by their Leader quite recently. The Leader of the Opposition (Mr Whitlam) said that the time for confrontation is ended. What could this mean? It must mean that confrontation should be superseded by arbitration - by negotiation. This is right. But, if this is so, both sides must agree to accept the arbitrator's decision. If there is not to be confrontation, there must be law. But what has been happening in the last 3 or 4 weeks when militant factions in the unions have brought on their confrontations in the building industry, in the Metropolitan Water, Sewerage and Drainage Board - which is a government instrumentality and not something which could be accused of making profits - and in the New South Wales railways a couple of days ago? What happened when these confrontations were brought on by the people, some of whom, at least, support the Leader of the Opposition? Did we hear anything from him? We did not hear a word. If he had been an honest man he would have said to his own people: 'The time for confrontation is past; you must go to the negotiating table*. But we did not hear a word from him because, whether well intentioned or not, we havehere a frightened man who does not dare stand up to the forces which he himself has helped to call into being. These forces are not aimed at the prosperity of the workers or at the progress of Australia. They are, to some degree although not entirely, being directed by people whose aim is to destroy both.







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