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Wednesday, 28 March 1973
Page: 797


Mr SINCLAIR (New England) - I am sorry to disappoint the honourable member for Adelaide (Mr Hurford) about the non-participation of the Country Party. However, I am delighted to be able to make some contribution to this debate.


Dr Gun - We embarrassed him into getting to his feet.


Mr SINCLAIR - I am not at all embarrassed in your presence, my friend. The whole operation of inflation in our society is of fundamental concern to those whom we represent. In terms of those who produce the goods which make this country profitable and which have enabled it to grow and to survive, there is probably no sector of the Australian community which has a greater interest in prices than has the rural community. Indeed, in the past those whom we represent, our constituents, have suffered to an inordinate degree because of the price fluctuation in markets abroad. They have suffered because of the variability in conditions of sale and the quantity of goods available for sale, and because of seasonal conditions. These have affected the returns which they have received from the goods that they have produced.

Indeed, I think there are 2 sectors of the community which suffer more than others from inflation - those in the export industries and those on fixed income. There is no doubt that the pensioners and those who receive the benefits of social services are equally affected by price escalation. Unlike many others in the community, they are unable to pass on the costs that they have to meet to survive. They are in no different position from those who produce and export and who themselves are dependent on unreliable market conditions.

For many years we in the Country Party have sought with our Liberal colleagues to negotiate international commodity arrangements designed specifically to try to offset the variable circumstances of prices overseas, and with some success. The International Sugar Agreement, for example, is one of those agreements which has brought for the sugar industry a greater degree of price stability than would otherwise be possible. Whilst it is true that the International Grains Arrangement collapsed and exists now in only nominal form, during the time it operated effectively it provided a similar stability for the grains industry. So if we go through all the areas where it has been possible to negotiate international commodity arrangements, we can see the benefits of such a process. Regrettably it is not practical in most circumstances to provide a guarantee against price escalation at home when selling in overseas markets. Of course, in the last round of negotiations on the General Agreement on Tariffs and Trade, when efforts were made to reduce significantly tariff and non-tariff barriers against the entry of goods, particularly those from the agricultural sector but also manufactured goods, into the countries of the world, it was found that while some concessions were available for manufactured goods the concessions for agricultural goods were minimal. So the negotiation later this year in a broader GATT round is, 1 think, of tremendous importance in terms of trying to secure better and more secure access to overseas markets and perhaps better price returns for those in the export industries.

This measure is designed to provide in this Parliament an opportunity, through a committee system, to inquire not into prices paid overseas, not into prices specifically relating to all the goods which are inputs of the cost structure within the rural industry, within the Australian productive industry or indeed within the Australian community, but only into prices charged by private industry about which complaints have been made. I, with the Leader of the Opposition (Mr Snedden), deplore the narrowness of that constraint, and completely endorse the amendment which has been moved by the Deputy Leader of the Opposition (Mr Lynch) to include the public sector and prices affecting the goods and services provided by the public sector in the terms of reference of the Committee. I would hope that if the supporters of the Government are sincere in their concern for prices and the effect of prices on the community and particularly on those on fixed incomes, they will see fit to accept this amendment.

It is true that in the private sector there is a variation from one area to another. At the moment there seems to be a great deal of concern about food prices and justifiably so. Unfortunately the concern for food prices is not always seen when those in rural industries are affected by adverse seasons or adverse market conditions abroad. There is little recognition then of the marked seasonal pattern in returns of those in the rural sector. There is little realisation, for example, that the higher grain prices prevailing abroad at the moment, and consequently in Australia, is a factor which is only to a minimal degree offsetting the constant seasonal variation in growers' returns. There are many wheat farmers who in the last few years have had virtually no crop. The fact that this year they will get a high price for what they produce needs to be seen against the spectrum of one of the smallest crops for many years. So prices in the grains sector need to be seen in relation to supply and demand and the same is true in relation to meat prices. It is true that meat prices affect every housewife in our community. All of us who live in this community are concerned about high prices in one area or another. But it is remarkable that there is not the same concern for the escalation in prices in some fields of consumer durables. It is remarkable that there is not the same concern at the increase in wages beyond the level of productivity.

It is necessary to say in relation to meat prices that for the first time in about 4 years in the lamb and mutton industry there is a capacity to produce goods and to sell them at a profitable level. People who have been in the fat Iamb and sheep industries have suffered very significant losses in the last few years and if we are to look at the level of meat prices it is no use our ignoring the adverse effects of seasons when reviewing the prices paid by the housewife. Similarly when looking at the level of beef prices we need to recognise the fundamental problem with which this committee will be faced - that is, the whole field of supply and demand. It is true that the domestic market has only a minimal effect on export goods, particularly rural commodities. The domestic market has an effect only upon the quantity of goods which is customarily consumed in this country and its significance becomes greater according to the degree to which by promotion and marketing we can expand that market. Today only 40 per cent of Australia's agricultural production is sold domestically; 60 per cent is sold at export. A significant factor in determining the price level of agricultural goods is not the domestic market but the circumstances of supply and demand abroad. What I have said about the price of meat and agricultural commodities and the economic law of supply and demand to my mind applies also to the whole field of prices in the Australian community.

It is extraordinary difficult to introduce any form of government intervention which will effectively overcome those normal forces which affect the price and supply of goods in the community. If by direct intervention we try to place a restraint on the price which industry or the manufacture of a commodity can charge and if we are to place an arbitrary restraint on the price of a service or a fee charged by those who provide a service, those who provide the goods or the services will remain in business only according to the degree to which it is profitable for them to do so. If it is not profitable they will cease production. Adverting again to the rural sector, one of the reasons why many of the small farmers in Australia have found themselves unable to carry on is because prices have not been satisfactory and because costs have risen beyond their capacity to survive. So they have gone out of business and any direct government intervention in the fixing of prices needs to be seen in that context. If the result of the law of supply and demand is that a person is unable to operate profitably, he will not continue to operate at all. He will go out of business. That is one of the real problems which I Can see in price fixing. Of course, we are not discussing a price fixing body; it is a parliamentary committee. We need to recognise that we are not talking about a prices justification tribunal although the honourable member for Adelaide (Mr Hurford) spoke a great deal about the way in which the recommendations of this committee would go to such a tribunal. I would regard that as a wrong basis for this committee to act on.

I doubt whether this committee will have a meaningful function. I go along with those who see it more as a facade for the implementation of what the Australian Labor Party has said is its drive to contain prices. To me it seems a direct way in which the Government is to pursue its objective of reducing initiative and opportunity in private industry. I do not see it as in any way a meaningful attack on the inflationary forces in our community. If we are to attack inflation we need to look at it in a much broader spectrum in terms of tariffs, the Government's budget policy and the arbitration system. Through some form of prices justification tribunal perhaps we will be able to complement those activities. However, I first of all doubt the role of a parliamentary committee in price relativity. This is a role which is not properly one for the legislature. We do not have the expert knowledge or the expertise to participate meaningfully in a field where prices are determined by supply and demand in an industry in view of the wage levels applicable in it or the circumstances of overseas markets or whatever other factors may affect it. We are not experts. Those of us who come into this place with some particular expertise are no longer able to practise that expertise if we are to do our job as members of Parliament properly. For that reason I do not believe that this sort of committee is anything more than a facade to try to placate those forces within the community which are justifiably concerned at the increases in the cost of living.

If the Labor Party were sincere in its attempts to try to control inflation it would be looking at this stage far more critically at its general budget policy and it would be looking as critically as we in the previous Government attempted to do at the application of the arbitration system. The support the Government has given to the recent total wage application before the Arbitration Court would indicate that the Labor Party might well be divided on this issue. I often wonder whether the Minister for Labour (Mr Clyde Cameron) consults the Treasurer (Mr Crean) on policies of that order. One hears the Treasurer come forth with statements of concern about the way in which general activity within the community ls starting to build up, thus foreshadowing a concern that inflationary forces may well be rife later this year. Yet in the same breath as we received the report from the Treasury we heard from the Minister for Labour, per medium of the submission to the Arbitration Court, a request for a very significant increase in the total wage. In the proposal to establish a joint committee there is no meaningful attempt by the Government to do anything other than provide a brave front in an area where it sees itself as incompetent to act immediately.

I very much regret the fact that the Government has neglected public industry in the terms of reference of the proposed committee and would urge that the Government accept the amendment moved by the Deputy Leader of the Opposition. Any inquiry of this nature should take into account the relativity of wages to prices charged. It is obvious that there are many factors that affect the price structure of an industry. I tried earlier to identify some of those factors which affect the rural sector. The rural sector, of course, is very much affected by the wage levels not only of those who are employed in it directly but also of those whom they keep in business by their purchasing policies. This gets back to the whole field of tariffs embracing the cost of tractors and the cost of agricultural requisites such as insecticides, vermicides, fertilisers and other inputs which enable the primary producer to carry on his business. This committee is not being given the responsibility of looking at the relativity of wages in either a direct or indirect sense. I deplore the fact that it is concentrating on such a narrow part of a very broad problem. The honourable member for Adelaide spoke of the Galbraithian theories of the co-ordination between labour, industry and government in an attack upon inflation. I would not disagree that it is necessary that there should be this co-ordination between the 3 sectors of principal significance in this arena. But I hope that it is recognised that labour and industry have a role to play and that in any price fixing or determination it is not the role of the Government to intervene arbitrarily or without consultation or consideration of the circumstances of labour and industry. Those 2 other arms are most important in the opportunities they should enjoy for the private presentation of their arguments in both fields.

Mr DEPUTY SPEAKER (Mr Berinson)Order!The honourable member's time has expired.







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