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Thursday, 17 May 1973
Page: 2291

Mr SNEDDEN (Bruce) (Leader of the Opposition) - The Opposition views with concern the alarming rate at which prices are increasing. The Opposition is anxious to see the current rate of price increases abated, lt is appreciated that for the consumer the immediate symptom, and perhaps the most crippling symptom, of inflation is the increased price charged for products bought from week to week. The Opposition is anxious that prompt action be taken to cut back price increases. It does not believe, however, that the proposals advanced by the Government in this Bill will achieve this result. This is unfortunate. We have serious doubts about the ability of the Prices Justification Tribunal to achieve any real progress. We will see whether the Government's belief that it will succeed is true. The Opposition does not accept that view but will not hamper any proposals that may help in combating inflation. The Government has said that this proposal will work, lt is now up to the Government to prove that it will work. It is laudable to express concern for inflation. It is laudable to be concerned for the rights of the consumer. The Treasurer (Mr Crean) expressed his concern in these regards during his second reading speech. But where in this Bill is the Government combating inflation? The maintenance of consumer rights may be stated as an objective of the Prices Justification Tribunal but only the Bill will show whether it is a reality.

This Bill is the most naive piece of economic legislation that I have ever seen. I doubt whether there has ever been such a piece of naivety put before any Parliament in the world, let alone this Parliament. Given time it will further confound any reader or observer. The Treasurer has a grounding in Utilitarian philosophy. He believes that the greatest happiness should be made available to the greatest number. I appreciate his idealism but I find it hard to accept the notion of a prices justification tribunal as upholding the rights of the consumer by pillorying the major supermarket when it increases the price of bargain basement items but leaving without scrutiny every shopkeeper whose turnover last year was less than $20m. It is like a scene from the theatre of the absurd.

Mr Armitage - Who do you think is naive?

Mr SNEDDEN - The honourable member for whatever electorate he temporarily holds is a star performer in the theatre of the absurd.

Mr Grassby - The honourable member for Chifley.

Mr SNEDDEN - Yes, the honourable member for Chifley is the absurd actor.

Mr SPEAKER -Order! The previous speaker was heard in complete silence and I would ask honourable members to extend the same courtesy to the Leader of the Opposition.

Mr SNEDDEN - The context of consumer protection is important, but in a curious context such as this Bill how is it to be viewed seriously? The legislation is all-embracing so long as the company concerned happens to have a large enough turnover in accordance with sub-clause (1) of clause 5 of this Bill. The provision applies only if the sum of th& amounts received as payment for the supply of goods or services, or both, exceeds $20m a year for one company or group of companies. There is no description of particular classes or types of goods or of services to which the justification of prices procedure is to be applied. The only construction available is that if the total turnover exceeds $20m, all prices must be justified for all goods and all services. The Bill therefore has a matrix of goods and services which are not described, yet the price a company can charge is circumscribed.

The legislation has a markedly populist flavour. It appears to get stuck into the large manufacturers and retailers whilst sparing the smaller businessman who may now be described ironically, in terms of this Bill, as being lc off a $20m a year turnover. How many have a turnover of from $5m to $20m whose prices directly affect the cost of living of the people of Australia and of all consumers? People might be excused for thinking that to be at all logical all companies should be included. I do not argue that they should be, except in the context of an incomes-prices policy which is thought out and is appropriate to circumstances. The Bill gives no guidelines about the amount of any price increase which could be allowable. There is no consideration of or direction about how frequently prices should rise. The Tribunal is left free to determine its own criteria and reach its own economic judgments in isolation from all the other interacting forces in the economy.

The mechanics of the Tribunal, as described in the Bill, are fascinating. The possibility of rich new growth of the bureaucracy is quite daunting. As the reader passes through the great amount of rigmarole of the Bill he comes to how the 'men from the Tribunal' are to operate. All intended price increases must be notified. Then there is a lag period of 21 days while the men from the Tribunal consider. Not surprisingly, there is no limit to the number of members of the Tribunal nor to the number of clerical staff, research staff, administrative staff or any other staff which the Tribunal can have. Coming back to the men from the Tribunal, they may agree or may further refer prices to an inquiry which has 3 months to reply.

In the meantime the backlog of proposed price increases will bank up, particularly having in mind the way that the prices are rising today under a Labor Government. Is it a correct biblical quotation to say: 'And then came the flood'? Meanwhile, the prices must be kept at the old level by the chosen companies, even though in the marketplace where the companies are bringing in their supplies costs may be escalating. In this context, the cost of labour which does not have to justify itself in terms of price before the Tribunal is likely to continue to rise also. On the other hand, while the large manufacturer or retailer is waiting for his price to be stamped justified', economic pressure is being exerted on him by the supplier of the goods. Whether manufacturers or wholesalers, if their turnover is less than $20m they are without restriction at all. The Bill is clearly discriminatory - 'but then, it was meant to be discriminatory.

A major problem that I see with the Tribunal is that its reaction time would be slow. I cannot see it dealing with all articles in any real sense. For instance, I am told that there are 4,000 to 5,000 different lines in a typical major food retailing outlet, and in a large department store there may be 50,000 or upwards. No doubt those companies would have a turnover of more than this requisite $20m. The Bill speaks of 'goods of a particular description'. I expect that this includes perishable goods such as meat, fruit and vegetables. They are subject to daily market price fluctuation, even to the large buyers, and it is hardly practicable for stockpiles of perishable foods to wait up to 21 days for decision by the men from the Tribunal. Perhaps they would all be approved. This is hardly in the interest of the consumer as that interest is represented in the Bill. If prices are raised without consent of the Tribunal, a $10,000 fine each time can be imposed.

It would need a large calculating machine to work out what the sum of the total fines might be, given the thousands of items handled by companies with a turnover of $20m. It adds literally to tens of millions of dollars. But the fines are payable only - I ask honourable members to listen to this brilliant piece of legislative thinking - if the price increase occurs before the Tribunal says that the company should not increase the price. The Tribunal can be ignored totally after it says, 'No, you should not increase it', without any penalty. If you make a mistake in timing the fine is $10,000 multiplied by the number of items; but if you can stand off for about 2 months there is no penalty at all. You just make the appropriate sign to the Tribunal and go ahead. All that the companies need to do is to tell the Tribunal what they are going to charge and they are immune from penalty, so long as they do not do it too soon.

I believe that the Tribunal will have to confine itself to a schedule of key goods and services which presumably will be stated later by regulation. What a wonderful way to do it! There is not a single mention of it in the second reading speech of the Treasurer. Otherwise the Tribunal would appear to need the services of a small army - probably a bigger army than the Labor Government is prepared to have as a professional fighting force for Australia. The Prices Justification Tribunal will be under indirect pressure from the consumer to protect him and also to arbitrate. This will be reinforced by the Joint Committee on Prices under the chairmanship of the honourable member for Adelaide (Mr Hurford). He has already indicated his determination to prevent prices rising. He does look like Canute, does he not? He is going to resort to unusual forms of sanction such as boycott. It will be recalled that the unions will be asked to co-operate in boycotting. The Prime Minister (Mr Whitlam) has just been chastising the unions for their actions in relation to French goods, but in relation to the Prices Justification Committee the trade unions will be turned loose with all the ferocity they can gather.

The Prices Justification Tribunal may try to move with a measured tread, but I do not think it will be able to do so. The Australian Labor Party policy speech stated: 'We will establish a Prices Justification Tribunal*. This is now being done. The Government considers that it has a clear mandate and that it should be allowed to have rope, not to hang itself but in order to prove the premise of this form of control. The Australian Labor Party policy speech also states that it will 'convince all sections of the community that responsibilities, burdens and opportunities are to be shared equally by all sections of the community'. Mr Orwell would echo those words. Some are more equal than others and there is a residue less equal than others. That is egalitarianism in the modern socialist sense. However, I feel it necessary in talking of prices to bracket them with wages. It is not popular to do so because a great deal of propaganda has been put about that prices are what it is all about. Does anybody for a moment believe that if costs go up prices can somehow magically be subsidised by pulling money off trees or finding it floating to the ground from the air? Of course you cannot separate wages from incomes. The Labor Party in government believes that it has a unique anointed role to make Australia the only country in the world where inflation is handled by looking at prices alone. Inflation is subject to the pressures of cost-push and demand-pull. In fact, this legislation in a description of the companies which will be subject to it states that the provision of services will be considered in the $20m benchmark. This mention of services emphasises the understanding that wages are an essential part of the conundrum. They put it in the legislation but they refuse to acknowledge it in words. What sort of abandonment of logic does that represent?

There is a growing anxiety in the community to combat inflation. For example, the growth of consumer protection groups who are worried by rising prices at all levels reflects that anxiety. The general community concern is important in considering the adoption of any policy which encompasses both prices and incomes. It is important that the community be prepared to accept direct governmental influence in the level of prices, wages and probably other income as well, if there is to be a real attack. The community must be involved. People must understand what the problem is and they must be prepared to participate in solving it. The criteria to be used must take account of the various institutions which now directly or indirectly modify, maintain and determine costs and prices. Let us not delude ourselves. The Prices Justification Tribunal at best can work in only one segment of the field. While the Labor Party in government refuses to acknowledge the other segments it cannot work effectively.

Other countries have experienced price justification and notification systems. In Canada a Prices and Incomes Commission was set up in 1969. Business firms voluntarily agreed to give the Commission advance notice of intending price rises, but the Commission had no powers. Another essentially voluntary plan was started in the United Kingdom with a National Board for Prices and Incomes. More recently the Conservative Government has proposed a Prices and Wages Board following a 90-day wage and price freeze last December. The original Board contained representatives of management and labour and was provided with a relatively large research staff. Where is there any attempt on the part of the Australian Labor Party to understand the reality of this problem? It is prepared to allow inflation to run because the only chance the Government has of putting into effect its promises is to feed off inflation and to collect the additional take from personal, company and sales taxes and excise duties. That is what the Government has in mind.

Constitutionally, the Commonwealth may be able to legislate with respect to company prices. I do not know; that will need to be determined. But the Commonwealth may be able to employ or threaten to employ other powers such as taxation and tariffs and other powers to stop unjustifiable price increases. However, I believe that the force of consumer opinion is such in Australia that if the wage component is dissected from the price of goods, the consumer would not allow the Government to concentrate solely on prices. In other words, if the consumer understood it, he would know that the Government's approach to this problem is a false one. This is the danger in considering the proposed Prices Justification Tribunal as the panacea for all problems relating to inflation and consumer protection.

In Australia, our arbitration could offer a ready made framework for an incomes policy. It does not do so now. It sets minimum wages, not maximum wages. The wages it sets are always exceeded in fact. In contrast, whoever heard of a prices tribunal setting a minimum price with a penalty for charging below it? That is what the Commonwealth Conciliation and Arbitration Commission does. It is not the co-efficient. The arbitration tribunals are completely independent of government, whereas a fully fledged incomes policy, I believe, would require that they be integrated within the Government's general economic and social policies. With Australia's system of independent arbitral tribunals, a complete incomes policy would be possible only if the Government in the public or the consumer interest intervenes and requires tribunals to make decisions which accord with established criteria. The Arbitration Commission is not the incomes component to an incomes-prices policy. The proposed Prices Justification Tribunal will not be the prices component of an incomes-prices policy. There is no such policy of the Government. There are only stabs in the dark.

The successful use of the wage freeze by President Nixon in 1971 was a circuit breaker in a vicious cycle that was going around and it was successful for the period it lasted but already the United States again is running into serious problems in relation to inflation. It is important that we continue to assert the link between wages and prices and that an attack on one must necessarily be accompanied by an attack on the other. A recent report of the Organisation for Economic Cooperation and Development related the experiences of prices and incomes policies in Austria. The report emphasised the need in any prices and incomes policy for social cooperation and interdependence by all parties within a community. However, the machinery of any wages and prices policy which may arise during the next few years must be considered overall in terms of the interests of the consumer in combating inflation and reducing it to an acceptable level, and ensuring that the Australian economy remains on a stable footing over the next few years for its growth to proceed unabated and not be subject to disruptive 'stop-go' tactics which inflation produces.

I have great reservations about the Prices Justification Tribunal as it is stated in the Bill. (Extension of time granted.) I am fully aware of the need for the rights of the consumer and I am most concerned with the present galloping inflation, as would any Australian be. I hope that the concept of a Prices Justification Tribunal will be of assistance, but I have stated my strong doubt that the actual detailed description as laid out in the Bill will achieve the purpose for which it is designed. The Labor Government has made the pudding; it will have to eat it.

Mr ARMITAGE(Chifley)- Mr Speaker, I wish to make a personal explanation.

Mr SPEAKER -Does the honourable member claim to have been misrepresented?

Mr ARMITAGE - Yes, Mr Speaker. The Leader of the Opposition (Mr Snedden) in a spiteful moment in the early part of his speech referred to me as 'the temporary member for Chifley'. I would point out to the House that my majority in the electorate of Chifley in the last election was 27,000.

Mr SPEAKER -Order! The honourable member has not been misrepresented. This is not a debate as to how many votes he received at the last election.

Mr Snedden - The honourable member for Chifley said that I misrepresented him. I should make it plain that what I had in mind was not his majority at the last election but his performance in this House and the likelihood of him being replaced by someone of better quality.

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