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Tuesday, 29 May 1973
Page: 2771


Mr KELLY (Wakefield) - It is no accident that most of the speakers in this appropriation debate should have spoken about inflation, because it is obviously one of the real Achilles' heels of our present situation. Lest people think that it is just a figment of our side of politics and that we have just suddenly become concerned about it, I think it would be worth while to quote a statement by Mr Chifley, when presenting his last Budget in 1949. Everybody should listen to this with the respect that any words from that statesman deserve. He said:

I am deeply grateful for the support that my colleagues have given me in my fight against the great danger of inflation. I know that some of them have not readily seen the force of many of the economic theories on which I have had to act, and that they were apt to regard my ideas as fossilised. But they have stood by me.

Mr Chifleyobviously realised the significance of the inflation problem - and it still matters, it is still overwhelmingly important. Everybody has been paying lip service to it for a long while. Why does it matter? Firstly, economically, of course, it imposes costs that are likely to price us out of export markets. Socially, it has another great problem in that it bears most heavily on people on fixed incomes, those who have saved for the future and have shown the desirable qualities that we have always looked for in our community. Morally, inflation really gives an opportunity for the quick buck merchant to make a lot of money at the expense of other sections of the community. So inflation is important, and we all agree on that.

I want to admit immediately that there are not any easy answers. Inflation is a problem which is bedevilling the world at the moment, particularly the democratic section of it. I am not going to castigate the Government for what it has not been able to do. I am just trying to look at the problem to see whether I can bring out some small part of the solution. Firstly, I think it is quite clear that we are getting to the stage of take-off. We have had a cost-push inflation. I dread that we will shortly have a demand-pull inflation that will compound our present problems. The Leader of the Opposition (Mr Snedden) mentioned that he dreaded a 10 per cent rate of inflation in the future. This indeed is what I fear. What can we do about it? We have just set up the Prices Justification Tribunal. I will not criticise this action. Over 2 years ago I mentioned that this is one of the things we could do. But it is really silly for us to expect too much of the Tribunal. We know that it may give us some solid ground to stand on when we are arguing or trying to talk responsibly with the unions when they are making what we think may be unreasonable demands. Having this Prices Justification Tribunal may give us some status to argue with the unions. But it is silly to expect too much of it.

I want to remind the House of something that I think is desperately important. It is an economic lesson I think we too easily forget, and that is the theory of constant shares. That is not my theory, of course, it is one that has been put up by economists all round the world. It seems to be the experience of every democratic country. It is that the proportion of gross national product received by the wage earning section of the community remains constant if one examines it over, say, 4-year periods. Indeed, if we look at the experience in the 4 years following 1955-56, the share of the GNP going to the wage earner or the salary earner sections of the community was 63.2 per cent. In the next 4 years it was 61.9 per cent. In the next 4 years it was 61.8 per cent, and in the following year it was 61.7 per cent. In other words the proportion of the GNP cake that goes to the wage and salary earning section of the community always remains approximately the same. If we really want to get a larger share or larger slice of the cake - as the wage earner and we all do - there is only one way to do it, and that is to make a bigger economic cake.

This brings us to the real crunch of the matter. Increased productivity is the key to getting a larger slice of cake for the wage earner. Indeed, if productivity does not rise and money wages rise, prices must rise. That has been the theory of all the world this century and it is still the fact. So we come to the crunch point that we have to increase the productivity of our people. Mr Deputy Speaker, you will be relieved to know that I will not speak at great length about tariffs. However, one of the reasons why our productivity rate is lamentably low is that we tend to use too many of our resources to produce things which we are not good at producing. To do that we need a high rate of tariff protection. But there are other matters that limit our rate of productivity. I will not embark on an exercise of union baiting, but I do say that the lack of responsibility in some sections of our unions, particularly the all-powerful ones, does limit productivity in a way which I think is quite alarming. I will quote from a paper which sets out the experience of what happened in Great Britain. It reads:

The crocodile tears shed by some about the fate of the low paid workers, the unemployed, the sick and the old are surely disingenuous. It is trade union action which, through wage-induced price movements, has created the basic problem.

That sounds like an old conservative speaking, a chap like myself.

Mir Scholes - It sounds like you.


Mr KELLY - The man who used that quotation was an adviser to Wilson when he was Prime Minister of Great Britain. I refer to the Chairman of the Fabian Society. The extract that I quoted appears in Fabian Tract 403. I am glad that the honourable member fell into the trap. That is what happened in Britain. I am anxious to see that the same thing does not happen in this country. Let us look at what can happen when there is unwise union pressure. I have recounted to the House the position with regard to idle time on the waterfront. We are paying $8m a year for the very strong membership of the Waterside Workers Federation of Australia to be able to stand the shipowners up and say: Now look, we are going to demand this kind of a payment from the economy.' This is an example of union power gone mad. We used to think that unions were necessary in order to protect - I guess they were - the small man against the big employer, but if we are not careful we will run into a different situation which will overwhelm us. I am talking about the power of combined unions which can - I do not say that they always do - stand a country up. They can pick off one industry after another. Let me give an example of this. I will read an article which appeared in 1970 in a Sydney waterfront publication known as Wharfie' and which described a dispute that took place on the waterfront between the Port Jackson Stevedoring Co. and the Waterside Workers Federation. After describing the dispute in some detail the article stated:

Previously, under the ASIA-

The Australian Stevedoring Industry Authority- the dispute would have seen the port rolled up within a few days. This tactic of isolating employers is a vital tactic, the lesson learnt in this dispute is valuable.

The important part about this is that it does show that there is a power in the union system that can be used to pick off one section of an industry after another. What would have happened in that case if the ship owners had stood up to the employees? Under the present arrangements they would have been picked off. They had 2 possible solutions. One was to pay the extra charges. The charges could be recovered by the shipowners who could build them into the freight charges, in which case the economy would pay. The other solution was for the shipowners to take their ships elsewhere. There was an inevitable force acting on the shipowners which made them give in. Unless we introduce a greater sense of responsibility in some sections of the union's system we will run into this kind of economic blood bath, which I can see ahead of us, where there will be this inevitable pressure on prices. I must admit that I am very glad that the Minister for Labour (Mr Clyde

Cameron) has left Australia to look at the situation in Sweden. The Swedes do seem to have some ability to be able to have a much more sensible and responsible attitude towards their labour industrial relations than we have in this country. I have always had the uneasy feeling, which one would expect of a conservative, that socialism dampens the fires of incentive throughout the whole community. This may be so in many cases, but I still come back to the experience of Sweden which I should think is even more socialised than we are but which is responsible enough to think that working hard and well is the sensible and responsible way to behave. I think Sweden would have more to teach us than most other countries and I am glad to see that the Minister for Labour has gone to look at the situation in that country.

I do not think anybody will argue against the proposition that productivity is the key to obtaining a bigger economic cake, that it is the key to keep down prices and that it is the key for all our hopes in the future. I think that as a country we should start to have another look at our past ideas about incentive payments. I think that within the union system there is a kind of assumption - a toogeneral assumption - that incentive payments are automatically bad. Speaking about an area which I know well, I cannot help thinking of the manner in which shearers behave in shearing sheds. You see well run shearing sheds with people working enthusiastically together. Generally speaking there will be a yoick or two every now and again, but shearing sheds are pretty exciting places if they are well run. Many sheds are very well run. This is because of incentive-payment by result. This can be made to work.


Mr Martin - You would admit that it is pretty hard work.


Mr KELLY - Yes, it is hard work, and shearers are well paid for the hard work they do. Some of the best people I know are shearers and I often think that many of them could buy me out. We should start to have another look at the incentive payment system. lt does not necessarily follow that it will be abused as it may have been previously. I think we have some reason to examine it with more care. I hope that the Minister for Labour will be doing that. I was attracted by what the Minister for Labour said that he has in the back of his fertile mind in regard to paying some of the educational expenses incurred by union officials. I think this is a sensible approach. I think we definitely need a much more responsible union leadership in many cases. One way to achieve this is to help the leaders understand the economic problems. We have other responsibilities. I am not saying for one moment that all the fault is on the union side.

Recently in South Australia there was a report which advocated more union involvement in the running of companies. I think that this is a sensible idea. If we are going to say 'We are not going to accept any changes', we will have to face the inevitable disaster that we will deserve. I go back to my farm experience. When I was on the farm I would never have dreamed of saying: 'Now look chaps, we will do this and that'. If I had they would have said: 'Come on Kelly, you must have gone soft in the head to think that this is the way to do it. We would be better off if we did it this way.' We would always have a discussion about the way something ought to be done. Maybe it is more difficult in great big units but I can see a lot of sense in a different attitude between union leadership and management in this regard.

We have to have responsible union leadership. This will be achieved in time if the leaders are aware of the economic facts of life and if they realise that the only thing that matters really - and I come back again and again to this - is getting a bigger economic cake. Once we have this we can argue about how the cake will be cut. Our main goal should be first of all to get a bigger economic cake. For goodness sake, as a country and as a Parliament we ought to concentrate our thinking on how to increase the size of the cake. There are so many things that we could do. I repeat that if we ran our farm like we run this country we would have gone broke years ago. Let us concentrate on one thing. I admit that there are other considerations besides the economic ones. I accept this. But when we are dealing with economic considerations we should concentrate on one thing - achieving a bigger economic cake. We can argue later about how that cake will be cut up.

Mr Deputy Speaker,you will remember that during the war plans were known to be afoot by the Germans to flood the English countryside with bank notes dropped from the air in an attempt to disrupt the British economy. The point I want to make is this: Any system which just says that we will have bigger money wages without any increase in productivity will have the same result. If I were a dictator and wanted to destroy the fibre and the structure of a country I would not have a revolution - I would just double wages every month. I think that this would have the same effect as it was hoped the dropping of bank notes would have had on England. I believe that this approach would destroy the whole fabric of our society. Let us come back to the basic consideration. If we are to have the kind of economic cake that we all know we ought to have there is only one thing that really matters, and that is to increase the productivity of our people. There are a number of ways in which productivity can be increased. I have mentioned only in passing the subject of tariffs and increasing the productivity of the work force. But there are other ways. If we spent less time abusing one another and more time on concentrating on the size of the economic cake I think that we would have a better chance of achieving this aim.







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