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Wednesday, 12 September 1973
Page: 912


Mr JARMAN (Deakin) - Probably my first memory of a political crisis occurring was in 1939, when the then AttorneyGeneral in the Lyons Government, R. G. Menzies, resigned from Cabinet because he claimed that the Government had not honoured its election promise to bring in a national superannuation scheme. Thirty-four years later we now see the beginning of such a scheme coming into effect in this Budget with the abolition of the means test for those over 75 years of age. I have been one who, during my time in this House, has consistently advocated the abolition of the means test and the setting up of a national superannuation scheme, a scheme to which all will contribute during their working lives and from which all will benefit in retirement, not as a handout, but as a right. (Quorum formed)

I should like to thank my friend, the honourable member for Burke (Mr Keith Johnson), who was obviously so ashamed that the Labor

Party Benches were empty that he called a quorum so that his colleagues could come to hear what I have to say. I am sure he did not do it in order to take up the time to prevent my being able to get over all the points I would wish. I know how hard it must be for the honourable member for Mackellar (Mr Wentworth), who was the former Minister for Social Services and who fought so hard for the introduction of such a scheme as has been brought in by the present Government. It must give him considerable satisfaction, however, to see a scheme, of which he is the virtual author, introduced by this Government. I am glad that the honourable member for Mackellar has come into the chamber. I know how much effort he put into bringing forth this scheme and I am glad to see that the Labor Party has learned from his example and has emulated it. Both the former Government and the present Government promised in their policy speeches that the means test would be abolished within 3 years. I congratulate the Government upon taking this first step in honouring that promise.

However, like most other honourable members, I was concerned that this Budget made no attempt to deal with the fundamental problems with which this nation is now faced - those of runaway prices and crippling inflation. When the present Government took office last December inflation was running at about 4.5 per cent per annum. It was not the best of situations but it was one with which we were able to live. Now, after 9 or 10 months of Labor administration the rate of inflation is estimated at about 13.5 per cent and some people predict that by the end of the year it could well reach 20 per cent. Inflation has certainly reached alarming proportions and firm steps should have been taken in the Budget to combat it. Inflation is not peculiar to Australia. It is a world wide problem and it would be unfair to blame the rapid increase solely on the actions of the present Government. However it is true to say that the policies of the Government have done little to constrain inflation and have, in fact, aggravated it.

One can well understand the frustrations of the Government and of various Ministers, such as the Minister for Urban and Regional Developmen (Mr Uren), Ministers who have been in Opposition for so long and who suddenly find themselves in a position to achieve those things which they have desired to do, but this does not excuse the bringing down at this time of a Budget which does nothing to contain inflation and which, on the contrary, will add to inflationary pressures. The Budget papers themselves forecast wages to rise by 13 per cent in 1973-74 whilst productivity is expected to grow by only 3.5 per cent, which implies notionally an inflation rate of 9.5 to 10 per cent over the year. Apparently the Government has decided quite deliberately to live with a 10 per cent inflation rate in order to promote its policies and it has framed the Budget accordingly.

One finds it hard to understand the Treasurer presenting such a Budget at this time. As a graduate in commerce he must know that in times of inflation the proper application of Keynesian economics demands that increases in government expenditure should be kept to an absolute minimum and that there should be a considerable domestic surplus in government accounts. This Budget has been framed in the worst inflationary period for 20 years, yet it provides not for a surplus as the Keynesian theory requires but for a record deficit and the biggest increase in Government expenditure for 20 years. Obviously the Government decided against using the Budget to fight inflation, at least until after the Senate election early next year. The Government apparently reasons that by that time the economic situation will have become so dire that a horror mini-Budget, with all that that will ential, will be unavoidable. Having refused to take orthodox steps to fight inflation in the Budget, what has this Governement done or what does it intend to do at least to restore the economy to the position it was when it took office?

One measure introduced in the Budget was the 25 per cent arbitrary across the board cuts in tariffs. The Government's announcement came like a bolt out of the blue following the release of figures which showed inflation running at 13.5 per cent. One leading businessman was quoted as saying: 'Someone in Canberra must have pressed ali the panic buttons at once', and that is exactly what happened. No one would argue had the Government, following a proper inquiry, reduced tariffs on specific items designed to increase competition and reduce prices of products in industries which, were largely responsible for the prices spiral. To cut all tariffs across the board without due heed to the effects may have 'been spectacular action, but it also bordered on the irresponsible. Reductions in the prices of imported cars, imported television sets, textiles and similar products will do little to counter the soaring meat and food prices, fares, rates, building costs, service charges and prices in all the other areas where inflation is running strongly. There is little doubt, however, that the tariff cuts will irreparably damage a number of Australian industries, such as the textile and footwear industries, which will find it impossible to compete with similar products from low wage Asian countries. This decision will throw thousands of employees in these industries out of work. It is all very well for the Government to say that these people will just have to readjust and find employment elsewhere. Readjustment is not easy, particularly for older employees who may be trained in no other trade. Readjustment may even mean selling one's house and moving to another area to gain employment. The whole manoeuvre was a panic one which will not only do little to alleviate the problem of inflation but which gives no consideration to the personal effect on the workers and the small businesses involved. To put people on unemployment relief is poor compensation for upsetting their lives.

The 5 per cent revaluation of the Australian currency announced on Sunday will have the effect of reducing the prices of imports and of increasing the quantity of imports. It will also increase the price of our exports to other countries, reducing the amount of goods which we export and hence reducing our overseas balances. Once again, it was an ad hoc panic decision to make it appear that this is a government of action. But what was the effect? The Melbourne 'Sun' carried this headline yesterday:

Black Day For Shares- $800m Down." Share prices fell sharply in a black day on the Australian stock exchanges yesterday.

The people who own these shares are the little people who live in electorates such as Deakin and Corio. These are the people who are suffering by these arbitrary acts of the Government. It is said that most of these unhappy panic decisions could probably have been avoided had the Goverenment adopted a sound economic policy in the Budget. Another step taken by the Government was the setting up of the Prices Justification Tribunal. What value has this body, other than making it appear that something is being done? Even the President of the Australian Council of Trade Unions has said that the organisation has no teeth. It can deal only with corporations with a turnover of more than $20m a year and it has no power to enforce its eventual decisions. It is just a costly propaganda exercise to make it appear that the Government is doing something. At the very best, the Prices Justification Tribunal can defer but not prevent price rises.

Having refused to use the Budget to fight inflation, the Government now has the temerity to ask the States to hand over the power to control prices. As a rider, the Prime Minister (Mr Whitlam) has said that the Commonwealth would accept also the power to control incomes but he has carefully refused to commit the Government to using that power. It has since been leaked to the Press that legal experts are said to have told the Prime Minister that constitutional problems would prevent the successful exercise of controls over wages. We are told that it would conflict with the Commonwealth industrial power under which the arbitration system was established. One can well understand a Labor government which relies so heavily on the trade union movement for finance and support refusing to take any steps to control wages. But wages are a large part of production. The Budget Papers predict a 13 per cent rise in wages in 1973-74. If wages continue to rise at that rate, and prices are pegged, the situation will become chaotic. Black markets will develop and all sorts of shady practices will occur.

A prices and incomes freeze is a drastic remedy for inflation. It can create more problems that it remedies and at the best can have only a short term effect. The Dean of Economics at Harvard University, Professor Galbraith, who is at present visiting Australia and who is a world authority on economic matters, has . stated publicly that a wage-price freeze would not miraculously cure Australia's inflation. Professor Galbraith has said that the 2 elements needed to combat inflation are increased taxation to dampen demand and a system of wage-price constraints. But the present Government has not taken the initiative either to dampen demand or to control wage costs. All it talks about is price control. Anyone who lived under the last socialist Labor Government from 1945 to 1949 with its rationing and its controls knows the evils inherent in such a policy.

Inflation is a great social evil, and this Government will stand indicted for all time if it refuses to take action to contain it. Every sector of the community likes a wage gain and higher incomes, even members of Parliament, but what is the use if the increased income buys less and less, as is the position under the present Government? What does it profit the pensioners to receive a measly SI. 50 rise in the Budget only for it to be eaten away by inflation even before it reaches their pockets? What about those on superannuation or small fixed incomes who during a lifetime of work saved to provide for themselves to live in reasonable comfort in their retirement, only to find rising costs eating into their small resources? The heavy increases in this Budget of indirect taxes and charges on such things as petrol, cigarettes, soft drinks and spirits will hit the low wage earner, the pensioners and those on fixed incomes just as it will hit the wealthy. The only difference is that the wealthy are better equipped to absorb such charges. These charges are adding to the cost of living and are thus contributing to the inflationary spiral. We are already being told that, due to the increased petrol taxes, air fares and taxi fares will rise.

Private companies which have been singled out to pay higher taxes will naturally pass these charges on to the consumer, again contributing to inflation. The higher tax on insurance companies will mean that the small person with an insurance policy will receive less by way of bonuses. Of course, the Labor Party probably does not care about these people who like to provide for their own comfort in their old age and do not want to be a charge on the state. Coupled with runaway inflation we are experiencing runaway bureaucracy. Already the boosting of ministerial and departmental empires is causing public concern. The proliferation of boards and committees which are flourishing under this Government all have to be staffed and serviced. Every minor matter now seems to be examined by some committee or other set up specifically for the purpose. While the work force will grow in the private sector by only 3i per cent in the coming year it is estimated that the Public Service will grow by somewhere between 7 per cent and 10 per cent. At the same time it is estimated that the total Public Service salary bill will increase by 24 per cent. It may be hard for a socialist government to accept, but it is a fundamental economic fact of life that the private sector of the economy generates the wealth which allows the public sector to expand. If the public sector outstrips the private sector, productivity suffers. Greater productivity is the most successful weapon against inflation

The Australian people are paying a high price for the centralist doctrinaire socialism of this Government. Probably the worst example of this ideology is the allocation of SI 07m to nationalise the Gidgealpa to Sydney gas pipeline. Apparently the remaining $100m needed to complete the project will be allocated next year. At a time when the nation should be restricting public spending as part of the battle against inflation, this Government is outlaying $207m of taxpayer's funds on a pipeline that private enterprise was building anyway. When reviewing the Budget, Tony Thomas, the economics writer in the Melbourne 'Age' said:

This pipeline was going to be built in any case by the Australian Gas Light Company, but the Minister for Minerals and Energy (Mr Connor) preferred to use public funds. He offered nothing to justify his choice but some socialist rhetoric.

He ends his article with the statement: 'This disastrous Budget has. a quality of its \ own.' Perhaps the most pertinent comment came from Allan Barnes of the Melbourne 'Age'. He said that the Budget was 'unashamedly socialist'. The Opposition has moved an amendment attacking the Budget on 8 grounds, any one of which by itself provides sufficient reason for passing the amendment. This Government stands condemned because, with inflationary pressures intense, it has failed to adopt any policy to bring inflation under control. I support the amendment moved by the Leader of the Opposition (Mr Snedden).

Motion (by Mr Hayden) put:

That the question be now put.







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