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Thursday, 30 August 1973
Page: 681


Mr ANTHONY (Richmond) (Leader of the Australian Country Party) - I have listened for a few moments with interest to the honourable member for Macarthur (Mr Kerin). All I want to say is that his attitude towards dairy farmers, particularly those in the manufacturing area, is one of complete lack of sympathy, and it is an indictment on him to reveal the average income of these people and then to support the withdrawal of .the butter bounty. He knows only too well that the return to people in the manufacturing sector of the industry, those producing butter, this year will be the lowest since 1948 and that another 2 years of further reductions will take them down to a pitifully low level. These people are being, forced to reconstruct through hunger and starvation. That seems to be the policy of the Government.

Not only is this the first Labor Budget for 24 years. It is also, of course, the first time in 24 years that the Liberal and Country Parties have discussed a Budget from the perspective of Opposition. It seems to me that the task of the Opposition is not simply to attack or harangue, but to offer criticism that is constructive and to put forward alternatives - and to give credit where credit is due. I congratulate the Treasurer (Mr Crean) on bringing down his first Budget. No matter what comments I will make later about the content and direction of the Budget, no one will deny that every Budget is a most significant document, and any man's first national Budget is for him, and the nation, of special significance.

In many ways this is a remarkable Budget - not only in its content, but when viewed in the context of the economic circumstances to which it is supposed to relate. There is an unusually high level of liquidity in the economy. After years of torpid rural commodity prices a world commodity boom has been transmitted faithfully into supermarket price tags, and more succinctly into the consumer price index. The overall intensity of economic activity is unusually high. Yet the dominant feature of the economic landscape is towering inflation. The Treasurer has correctly pointed out that several aspects of our economic performance represent areas of substantial strength. But the areas of strength, and the buoyancy of the national accounts statistics, subside into a reduced perspective beside the dominance of inflation.

The extent and significance of inflation should not be minimised. On a quarterly basis it is at the highest level for 21 years. It is diversifying beyond the price of food into a broad spectrum of the economy. It is at a level where it ceases to be purely an economic phenomenon and becomes a force of great social significance. It is the overriding economic concern of the Australian people - and one would think it should be the overriding consideration of this Budget.

But the real tragedy of this Budget is that this insidious force has been not only ignored but encouraged. A series of economic palliatives have been deemed to be a substitute for effective action. Adjustment at the fringes has served instead of real action at the centre. The 25 per cent tariff reduction was not only indiscriminate but will be essentially ineffective in relation to its stated objectives. Its impact on rising prices will be limited in effect and duration; its restructuring aspects are tacked on as an afterthought. The Prices Justification Tribunal is, and will be clearly seen to be in the future, an exercise in futility, serving only to give official respectability to the price rises that are made inevitable by the neglect of this Government.

The facts are clear, Mr Deputy Speaker. At the time of the highest quarterly inflation rate since 1951-52, the level of Government expenditure will increase by the greatest amount since 1951-52. At a time of an international food shortage, the food producing industries are singled out for discriminatory attack. At a time when rural investment should be encouraged after years of depressed returns, it is discouraged. At a time when inflation is accelerating, the Government stimulates rises in air fares, Postal Department charges and petrol.

The tragedy of this Budget is not that it fails to provide enough money for the needs of the Australian people. Many of its objectives are laudable and of potential benefit to the people. The tragedy is that by sacrificing the control of inflation for social reform - and surely inflation is one of the worst of all social evils - the impact of inflation will quickly dissipate the intended effect of the Budget's programs. The objection is not so much that the Budget tries to do too much, but that it fries to do too much too soon in an economic environment calling for restraint, and leadership in restraint. In this I agree with the Minister for Tourism and Recreation (Mr Stewart) who has acknowledged that the Government is trying to move too fast.

The Budget provides for an increase of $340m in social welfare benefits but it is not in fact a social welfare Budget because its specific benefits will be largely offset by the effects of inflation. The increases in pensions will be completely eaten up by inflation.

It is not a defence Budget because defence spending in real terms is to be cut down. The Government, along with all other mortals in this country, cannot predict the future - yet it is willing to gamble with this nation':) security by predicting that the future will be free of the need to involve our armed Services in significant combat for the next 15 years. It is not a Budget for the industrialist, because it will encourage the inflation that distorts his business environment - and he is discouraged from investing by the removal of the investment allowance.

It is, instead, a Budget that penalises rural industry to the extent of about S 150m a year when one of the most pressing priorities of the national government should be to encourage food production. At a time when a world food shortage is developing, the producers of food are penalised and discouraged. New-found and long-awaited rural prosperity - and perhaps transitory prosperity has been mistakenly equated with long-term wealth, and a sector of the economy, and of the Australian people, that has been through a lengthy period of depressed incomes and depressed outlooks is dealt a tremendous blow. The rural sector is carrying an enormous financial debt which will have to be serviced before it can benefit from recent seasonal conditions and improved commodity prices, the lag time before real benefits are enjoyed means that for many the benefits are still a long way off.

This blow to rural industry happened because we now have a Government which acts without thinking. It lashes out wildly in all directions, making savage attacks on the industries that produce the financial resources on which all advances in the welfare of the Australian people must be based. The Government simply does not understand this fundamental proposition. It fires broadsides at all sectors of, industry - but primary industry in particular. It blusters and fulminates against overseas industry in Australia. It talks of buying back Australia apparently on the grounds that this is an appealing slogan.

Surely the time has come when the Government should at least try to gain some glimmer of understanding of the basic importance of industry, and try to work with industry instead of against it. Take, for example, what has been done to primary industry in this Budget. In its determination to get at the so-called Pitt Street Farmer, the Government has cut, across the board, taxation concessions which have played such an important part in the encouragement of agricultural development in this country.

But what are the consequences of this action? Certainly the Pitt Street farmer gets his come-uppance, but so too does the genuine, traditional farmer. He is discouraged from new investment. He will delay or decide against buying new equipment - so the machinery manufacturer and the machinery sellers in cities and country towns will be hit. This is the kind of ill-advised, impetuous action which characterises this Government, and which spreads far beyond the victims against whom the attack was originally directed.

The rural sector has been shockingly dealt with in this Budget and I hope that when the Minister for Immigration (Mr Grassby) and the Minister for Northern Development (Dr Patterson) get up in this debate to defend their own decisions as part of the Government they will have some pretty convincing explanations to offer to the House and to their own constituents. After all its talk about regional development, we find the Government offering the States $33m in loans, and in loans so hedged about with terms and conditions that there is a real dinger that the States will be unable to accept the money.

But the whole approach of the Government is aimed at a siphoning-off of rural population and development into the cities. The withdrawal of support measures for primary industries, the sharp rises in telephone and postal charges which are especially damaging to rural industry and country people, the effects of the withdrawal of support for country air services and higher air fares and freight costs, the serious burden of the higher fuel costs on transport charges generally - all these things must work directly against the concept of decentralisation which we were told this Government supported. In any case, the Minister for Urban and Regional Development (Mr Uren) is frightening the life out of country towns with is aspirations for growth centres and with his very dangerous plans for the centralised control from Canberra of land development. The myth of Labor's concern for country people, despite some very persuasive and colourful presentation, finally has been laid to rest.

This is a Budget that does little for the home seeker, who is already the victim of frightening increases in land prices and housing costs. The graduated deductibility of mortgage interest may have some superficial appeal, but its practical benefit will be offset to a considerable degree by the added stimulus to housing demand and the consequent increase in prices. This nation is already beset by a massive inflation-inspired swing of resources into real estate, provoking a tremendous housing crisis. This Budget fails to appreciate its nature and extent. It is a Budget which imposes significant burdens on the mining industry. It has effectively increased taxes by 9i per cent for Australian copper, nickel, tin, bauxite and uranium miners. By dropping the 20 per cent tax concession, the Treasurer has effectively lifted the tax for those mines from 38 per cent to 47i per cent. For life insurance companies and their policy holders there is little joy in the Budget. The effect of the changed tax laws will be to reduce the annual bonus on policies by about 20 per cent per annum.

The Minister for Transport (Mr Charles Jones) told us, before the Budget, that it would contain some massive changes. In fact, I think he might have put it even more succinctly than that. But, when the Budget appeared, many people found that there did not seem to be as many changes as they were expecting. But let there be no mistake. There is in the Budget a fundamental philosophical change in approach to national economic management. This change, which the Treasurer freely acknowledges, involves a redistribution of resources from the private sector to the public sector - that is, the government sector. This is a socialist Budget, and there is not the slightest doubt that further Budgets brought down by this Government will be increasingly socialist and interventionist in nature. But what is not so freely acknowledged is that resources are to be redistributed from the most productive sectors of the community to the least productive. A socialist edifice is being built on the foundations of free enterprise, but those free enterprise foundations are being subjected to the weakening effects of Government policies and attitudes. What this Government must understand, and what the Australian people must understand, is that if this nation's free enterprise foundations are weakened too much the whole structure of the community and all the Government's welfare and other programs will be endangered.

One of the unfortunate by-products of the expansion of the public sector under Labor is the runaway expansion of the Commonwealth Public Service. The Prime Minister (Mr Whilam) has referred to a growth rate of 5 per cent, but the Public Service could well grow by 10 per cent this year - compared with 4 per cent last year - at a time when the total Australian work force is estimated to grow by 3i per cent. Not only are the numbers increasing, but the cost of operating the Commonwealth Public Service will increase much more, particularly in view of the staggering benefits proposed by the Minister for Labor (Mr Clyde Cameron). The Minister may attack the 'fat cats', but the Government is intent not only on increasing the feline reproduction rate but also on keeping them purring. At the end of June 1972 there were 876 Second Division officers. By the end of this year there will be more than 1,200, an increase of nearly SO per cent.

The Budget papers disclose that departmental and administrative expenses this year are expected to increase by $166m or 20 per cent. The figure is certain to be more than this. It is worth emphasising that the increase in departmental running expenses will be almost as great as the increase in health expenditure, will be greater than the increase in transport and communication expenditure and, indeed, will constitute the fourth largest single growth area of Commonwealth Government expenditure in 1973-.4. The Government has provoked an inevitable inflationary tug-of-war for resources by trying to enlarge its share of the national cake. It has served clear notice that, if anyone is to exercise restraint in the fight against inflation, it will not be itself. Implicit in the Treasurer's call for a national approach against inflation is a suggestion that, while the private sector exercises restraint, the Government sees no need to do so itself. Perhaps the Treasurer is thinking as King David did when he desired another man's wife. King David made sure that the husband was allocated the first position in the attack and was, predictably, killed. The Treasurer seems to want the private sector to lead the battle against inflation and be cut down so that he can use the resources it presently utilises. There is another name for this sort of approach, and it has nothing to do with the Old Testament; it is 'socialism'.

There is room for dispute as to the primary causes of inflation. There is room for dispute as to the origin of inflation and the degree of Commonwealth Government contribution to its acceleration. There can, however, be no dispute that the prime responsibility for its control and the responsibility for mobilising a national attack on inflation rest with the national Government. (Extension of time granted.) I thank the Leader of the House (Mr Daly) and the House for granting me an extension of time. If the principle were to be adopted that governments need not accept responsibility for developments which originate outside their direct areas of activity, the scope for evasion of responsibility would be almost unlimited. The Government must accept the primary responsibility for the control of inflation in this nation. The area most directly within its control and indicative of its intent is Commonwealth Government expenditure. I know it is easy to demand cuts in Government spending without being specific. Let me try to be specific. The advance of SI 07m to the Pipeline Authority should not be in the Budget. This is a job for free enterprise, not a socialist Government. In any case, this expenditure can hardly be justified in the present economic context, particularly when its cost-benefit basis is, to say the least, tenuous. The explosive and costly expansion of the Public Service should be curbed. The Government should realise that it is sometimes necessary to be unpopular, if unpopularity is the responsible course.

No-one questions the good intentions of the Treasurer in rapidly expanding Government spending on welfare services, education, health care and similar matters. Everyone wants to see these things improved as quickly as possible. But what is the use of spending money at such a rapid rate that the new benefits offered are sabotaged and virtually destroyed by the inflation stimulated by excessive government spending? This is the problem that dogs all governments, but it will never be solved by governments which substitute the pursuit of popularity or the attainment of party political ideals for economic responsibility. The present Government is a government of gimmick. It is also a government of almost unbelievable inconsistency. It calls for restraint, but supported an $11.50 flat rate increase in the national wage, and supports a 35-hour week. It talks about the benefits of a government allied to the trade union movement, but industrial unrest this year is considerably up on last year's level. It recognises the strain on resources in the economy, but proposes greatly to expand its own work force and spending at a time of labour shortage. What we are seeing in this country today is the classic technique of the socialist. A situation of severe inflation is allowed to develop. Opportunities for fiscal responsibility are passed up as part of a deliberate policy of fostering inflation by default. In this way an atmosphere is created which establishes an ideal breeding ground for the introduction of the socialist approach to economic management, and that is an approach based on controls.

On Tuesday night the Leader of the Opposition (Mr Snedden) spoke of the need, as he saw it, for a short-term prices and wages freeze as a kind of shock tactic to drive home to the Australian community the seriousness of the situation we face. All of us are well aware that such a measure could be only a short-term one, designed to achieve immediate objectives. In fact, I have serious doubts as to even the short-term success of such action. Freezes are no substitute for continuing responsibility in economic management. Yet the situation is so serious, and holds out such frightening prospects, that we have to consider radical action. But what concerns most of us is that, under this Government, policies of control and restriction and straight-jacketing will not be used as temporary measures, but will become established, entrenched policies - policies which give effect to the political philosophy of the Government. The suggestion by the Leader of the Opposition has been described by the Treasurer as being 'supreme blasphemy'. But let us look at the circumstances in which the Leader of the Opposition made his suggestion. We have inflation increasing at a frightening rate. The position is worse than it ever was during those years when the Leader of the Opposition - and myself and many others - rejected the thought of any kind of price and wage control in what should be a flourishing free enterprise economy. Now we have an entirely new situation, and if we are to avoid serious harm to the economy, and to the whole Australian community, then something effective has to be done.

The idea of controls is abhorrent to me, as it is to anyone dedicated to the free enterprise philosophy. I have very real doubts about their effectiveness anyway, even though I agree that there is a need for some kind of action that will shock people into an awareness of the mess this country is going to get into if the Government continues to run away from its responsibility. Whatever we might think of controls and freezes or anything else, one thing is very clear; the Opposition is at least prepared to grapple with this problem. The Government is not. So I would hope that the Treasurer might devote a little less time to trying to score easy political points off people who, unlike himself and the Government, are trying to tackle this country's most serious problem. I hope he will spend a little less time telling us, as he so frequently does, that inflation did not begin at midnight on 2

December last year, and tell us what he is going to do about the rapidly worsening situation. Of course inflation did not begin last December. We know that. What we do not know, and see not the slightest indication of, is when this Government is going to start acting like a Government that understands where its responsibility lies.

This Budget imposes further strains on the nation's economic capabilities at a time when resources are already fully utilised. (Honourable members interjecting)

Mr DEPUTY SPEAKER (Mr Scholes)Order!I suggest to honourable members of the Country Party that if they want to hear their Leader speak they should remain silent and not converse.


Mr Nixon - What about the honourable member for Melbourne? Be fair.


Mr DEPUTY SPEAKER -Order! If the honourable member listened I would be able to finish. If honourable members do not listen they will not hear me. I suggest that if honourable members of the Country Party wish to hear their Leader finish his remarks they should remain silent. I suggest to honourable members on the other side of the chamber that they should allow the Leader of the Country Party to be heard in silence.


Mr ANTHONY - The Budget is a socialist blueprint both in the direction in which it is taking us, and in its immediate objective of redirecting private resources to the government sector. The Prime Minister speaks with pride of being a socialist Prime Minister, and his Government has its eyes set on the destination of socialism, but 1 fear the journey will be hazardous. It normally could be expected that in the absence of fiscal responsibility, the monetary policy aftermath would be very severe. As a result of this Budget we normally should expect a Treasury inspired policy of tighter money and higher interest rates. If that were to happen it would put into a new perspective the budgetary objectives of helping home-seekers and various other people in the community. But I fear that even this unpalatable alternative may not eventuate. This Budget may well be the forerunner of government imposed controls to rectify a deteriorating economic condition.

It is not idle speculation when I predict that inflation - already running at an annual rate of 13 per cent - could well reach an annual rate of 20 per cent by the end of the year. If that happens then we must fear not only for the economic health of this nation, but also for its social stability. That sort of condition carries with it the breakdown of our traditional wage-fixation procedures and a general threat of social and economic anarchy. What I fear is that the build-up of these forces may well provide the justification for this socialist government to employ the tools of socialism - direct controls. That sort of approach, given the nature of this Government, would be the ultimate political result of unchecked inflation. The real significance of this Budget is to be found in the attitude of mind it embodies and, perhaps more significantly, in the consequences to which it could lead.







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