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Thursday, 7 October 1971
Page: 2105


Mr HAYDEN (Oxley) - I rise with some diffidence because having listened to speeches by so many experts on tariffs I am one of the confused members of the community as, apparently, there is so little agreement on the subject. I certainly would not presume to make any dogmatic statements about what tariffs should or should not be. But it seemed to me that I should try to speak for the average man outside who might be listening to the debate and might be absolutely confused by all the complexities of the argument because there are some things that appear a little bewildering and even overwhelming and not without some conflict actually as to the needs for tariffs. 1 have no doubt that we do need tariffs in Australia in many areas and at various levels. I rather feel, though, that possibly this is not a justification for being totally uncritical of the way in which these things are run. Perhaps if we found that an industry was not using its full tariff level of protection this would be a good argument for reducing that tariff. If we found that industry was using the tariff level in order to obtain more profits than it ought to be obtaining, this fact would sometime.-) be an overwhelming argument for reducing that tariff.

I represent a lot of low income people. These are people who will be paying through the neck and their living standards will be affected by tariff levels. As far as I am concerned, I come to this place to get the best out of society for the people I represent. If I can see some way which can be developed for running the affairs of this country - for example in areas of tariffs and the way we spend the public's money - so that we can contain costs and reduce them I will pursue this avenue.

A good example, T guess, is in the field of restrictive trade practices. Members on this side of the House have very strong beliefs on the subject. We have to see that there is more competition, that prices are contained and so on, even though some less efficient units in an industry might have to fold up because of it. This is a very real probability that we have to look at. We accept that.

We believe that restrictive trade practices artificially keep up prices to protect inefficient marginal producers and give exorbitant and unreasonable profits to the efficient producers. I repeat that we accept it because we want to see the consumer's money going further. We want to see him get more goods, more services and more satisfaction for every dollar he spends. Therefore it seems to me that if one can see that there are some weaknesses in the way in which tariffs are structured in this community and economy of ours, we ought to be critical. So it does seem to me that there is no justification for being totally uncritical about tariffs as some people sometimes would tend to be, at least in some places where one hears them speaking about this subject.

I said at the beginning of my speech that one develops a sense of confusion from listening to the debate. I want to restate that I am quite convinced that we cannot have a free trade society in Australia. I ought to add that I want to see the jobs of workers protected. Nonetheless 1 keep having a sort of conflict - a sort of confusion. Our economy is relatively fully employed in terms of numbers of people in the work force that we put into industry to produce and the resources that we provide for them to produce with. Although we have a relatively fully employed economy we still do not have enough workers, so much so that we are running an immigration programme to get more workers. We have more jobs to be done than we have workers available. It seems strange to me, if one comes across a critical spokesman on tariffs, that he will argue that we need tariffs at any level at all. I am not imputing anything to anyone in particular, but I repeat that sometimes one wonders why he argues in this way when in fact we are running a programme to bring more workers from overseas to do more jobs. That, to me, seems somewhat inconsistent.

Perhaps I ought to raise another point at this stage in regard to the programme for bringing out workers. I talked about the need for Australians to protect jobs. However, I feel some revulsion when I read in the Press statements by various spokesmen for industry who support the continuation of an immigration programme - and this may well be justified - but, this is something that will be established by a current inquiry. However, I am revolted when I read their statements to the effect that we have to keep this programme going because we need migrants to work in a particular form of industry because Australian workers will not work in it. Conditions are so bad and pay is so poor relatively that we cannot get Australians to work in it. I have democratic socialist principles and that seems to me to mean that we identify and accept that there arc 2 classes of people in the community. There are the established Australians who demand and get good conditions and the second class ones who just arrive here and are thrown into any old job. These migrants do not get the wages they ought to receive if we had a properly competitive economy.

Let me go on with my comments on tariffs. I read a book recently on tariffs. The economist who wrote it discussed opportunity costs. It seems that in any economy, no matter what one wants to do, there are always more things to be done than one can get resources for. There is a limit to the number of workers that one can get, a limit to the amount of capital equipment and a limit to the technical know-how and so on. Let us disregard money for the moment because this is only the means of exchange; the representation which allows us or gives us some facility to mobilise and transfer and move these things about. But it seems that if we make a decision to go ahead with project A, for example, there are also other projects - maybe B, C, D to Z - which are alternatives and which ought to be considered or which are up for consideration. Therefore, if we make a decision on project A without a careful assessment overall of the other projects we might be putting $100m of the community's money - which after all is only a representation of resources - into that industry.

Again, for argument's sake, the return to the community - and I am using a fairly simplified and hypothetical sort of case - might be only 5 per cent whereas if we had made a thorough analysis through the economy we might have found that $100m in, say, project B, C or D might have given us a return of 10 per cent or 20 per cent. When I am talking about the percentage return I mean the net gain to the economy - the extra goods and services which are surplus to the economy and available for distribution. It seems to me, for instance, that if we have $100m of capital equipment and a choice between a number of industries, one of which we will say returns - these are horrible exaggerated cases - $500m worth of goods, and another one $ 1,000m worth of goods and another one, say a couple of thousand million dollars worth of goods, we will obviously go for the one that will give us the greatest return. This means that there are more goods to distribute to all the people who are working in this economy. It means more satisfaction and higher living standards. So there seems to be a case for advancing a rational argument about how we do this.

If we have a fully employed economy and if we have an optimum distribution of resources, labour and so on in that economy, someone could come along and say - and I am referring to arguments that I have read recently: 'Look, I want to start up a completely new industry over here, but 1 am a pretty high cost producer. I cannot afford to get 100 workers or the capital equipment out of the overall economy at the moment because the sort of return I would get from producing the line that I want to produce is just too small compared with what other people are getting as the economy is currently structured. But if you give me a 50 per cent tariff protection I can pluck those workers and that equipment out of the economy and I can then make a profit.' That sounds pretty good, and I used to be persuaded by this sort of argument - until a friend of mine, who is an economist, one day said to me: 'You know, you are taking that equipment and those workers and so on out of the economy where they are producing at a fairly high level and putting them into an industry where relatively they are producing at a much lower level. So you reduce the total volume of goods being produced for the market, you increase costs and you reduce people's living standards.' I am here to represent workers and consumers, and this matter really worries me. It would seem that it is our responsibility to get the most return that we can for our workers and our consumers who after all are the people for whom we are concerned in our economy. We want to ensure that they enjoy high living standards.

Perhaps the argument should be put that we ought to be planning the economy, we ought to be considering all sorts of alternatives, and we ought to be looking at input and output tables to see where the best returns are and then trying to maximise the sort of achievement we can make within the economy. Apparently in economies there is a thing that is called relative advantage or comparative advantage. It seems that we try to specialise in producing those things for which we get the greatest return, selling them locally and externally as exports and buying the things on which we receive a lesser advantage. In this way apparently one maximises one's living standards. As approximately 20 per cent of our production is exported, there seems to be a very keen case for us to make sure that we are very efficient to hold our market position. As my friend the honourable member for Cunningham (Mr Connor) was pointing out a while ago, it looks as though internationally we could be running into a difficult trading situation. It seems to me that the way in which we will hold our position and sell all these exports, or even hold our position at a reasonable level or at a hopeful level or at the best level at which we can hold it, will be determined by just how efficient we are in producing the goods. If we are a high cost producer we will lose our position in world trade, and living standards will deteriorate. Now that worries me.

The DEPUTY CHAIRMAN (Mr Armi- tage) - Order! The honourable member's time has expired.







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