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Tuesday, 18 September 1973
Page: 1145


Mr SNEDDEN (Bruce) (Leader of the Opposition) - The Opposition opposes this Bill and it will oppose the referendum proposal. During 1972 the inflation rate in Australia began to fall after the high 1971 December quarter figure of 2.3 per cent. For the 4 quarters of 1972 it was respectively 1 per cent, 0.9 per cent, 1.4 per cent and 1.2 per cent. The total for the year was 4.5 per cent. The other day I heard the Treasurer (Mr Crean) and the Prime Minister (Mr Whitlam) say in this House that it was wrong to take any particular quarter and multiply by 4 to get an annual rate. I say to them: Multiply any one of the quarters of 1972 by 4 and you will still get a lesser figure than they get for this year. In the first 6 months of this year the rate is already 5i per cent. Australia was one of the few countries in the world where the trend was downwards in 1972.

Then came the deluge - the socialist Government. In the first quarter of 1973 the consumer price index was 2.1 per cent. In the June quarter it was 3.3 per cent. Already for the first 6 months of the year the total is 5.4 per cent. The acceleration has been blatantly obvious. The Treasurer has said that he expects the September quarter figure to be at least as high as and possibly higher than the June quarter figure. There is a threat of worse to come. In the third week of October we will know the bad news. In October the Commonwealth Statistician will release his figures for the September quarter. The Treasurer has said that he expects it to be worse than the figure of 3.3 per cent for the June quarter.

Clearly, the inflation rate has jumped alarmingly. It now represents a critical problem which should be tackled directly and quickly. The Prime Minister has himself acknowledged this in a statement made only 9 days ago. He said:

Inflation must be fought on all fronts.

Who will disagree with that? He said:

There is no panacea;

Who will disagree with that? He continued:

No simple solution achievable through one line of policy.

Of course that was said before he had any intention of holding a prices referendum. He went on:

But the fact that there is no simple solution to inflation does not mean that we can just throw up our hands in the face of H. On the contrary, we have to tackle it head on.

His method of tackling it head on last Sunday week was to increase the interest rates on Commonwealth bonds to a level still not known but already 21 per cent higher than the rate in December when the present Government came into office. It really was not head on but head down. Caucus gave him a sharp uppercut. He was rolled - abysmally, ignominiously rolled by his own Caucus. He then unfolded proposals for a bevy of constitutional amendments. He argued against a prices referendum. Again he took the count. Caucus directed him to take this action - to bring this Bill for the referendum into the Parliament. He is an unwilling' advocate, which explains why he is so unconvincing. He has bees rolled more times than a piece of dough in a cooking class. Even last night, talking to the electrical manufacturers he said:

For myself, I frankly confess that I have always had reservations about the value of price control powers - reservations I have publicly acknowledged and explained.

Yet he comes into this Parliament with the pretence that a prices control referendum will cure all. His words do not add up to his actions. Inflation is a pernicious social and economic wrecker. The people most harmed by inflation are the young and the old; those on fixed incomes; those who have saved; those who have only weak industrial power. Against this massive problem the Prime Minister wants the power to control prices. Yet he says 'Controls over prices are not a cure-all for inflation.' Hallelujah. How true that is. This is the most uncharacteristic understatement he has ever made.

The Prime Minister said that his Labor Government inherited stagflation but he claims that it has now produced 'this strong and basically healthy economic situation*. He is a man who can one day say that it is a basically healthy economic situation and the next day say that inflation is a serious problem which must be tackled by everybody. Let the Prime Minister claim a credit for the changed economic situation if he will. We will give him the credit if he wants it, if he claims it. But in doing so he must also accept the blame for the present critical state of inflation which he himself acknowledges. Gone are the days when every Labor spokesman insisted that to control prices would solve the inflation problem. Is there anybody in this House who has not heard the Labor Party say: 'Control prices and it is all finished'? Now the Prime Minister says that prices control is no panacea. 'Panacea' happens to be a direct translation from the Latin, meaning cure-all. He felt it necessary for us poor plebs to explain what panacea means.

He speaks favourably, even longingly, of the United States freeze which was on prices and incomes. He speaks longingly, with his red face, for the US solution on prices and incomes. Is he game to say to the trade union movement that he wants a freeze on incomes and prices? Is he game to do it? He has been invited to do it time and time again and he refuses. He does not have the courage. Since coming to office the Labor Party has postured about tackling inflation but has done nothing effective. Firstly the Prices Justification Tribunal, a new bureaucracy, was created in the days when the Prime Minister still argued that a prices policy was all that was needed - he has abandoned that line recently. He believed then that limits could be put on prices while allowing labour costs to escalate without any attempt to contain them. In some magical way, he believed, prices drop. They had not.

Then we had the trumpeting of the Parliamentary Joint Committee on Prices. It has not influenced a single price. If it ever does try to do so, the application of Government pressure or granting of privilege by tariff discrimination, as is proposed by the Government, would be improper, as we all know. We had some minor reduction in the money supply and a whisper to the banks to be less generous in their lending. This, too, has had little effect. With political pressure building up on inflation after the June quarter consumer price index of 3.3 per cent, which is an annual rate of 13.2 per cent, suddenly, without the knowledge of the Government's economic advisers - the Reserve Bank and the Treasury which, in fact, were excluded from any consideration in the taking of advice - and with no proper consideration of its effect on industries, there was an across the board tariff cut of 25 per cent. The impact of that decision on prices was very marginal. It pretended to be a major assault on inflation. It scarcely touched the problem. The Government, while attempting to give an impression of concern, was fiddling about on the edges of the problem.

Then came the Budget. Responsible Australians hoped that the Budget would be used as part of an anti-inflationary attack on prices. Mr Crean, the Treasurer, said in his Budget Speech:

With resources under strain we would be foolish to overload them further.

That was a correct statement. Then, the Budget proceeded to do the very opposite. He significantly overtaxed resources by increasing Government spending by nearly 20 per cent. Then we had the incredible fiasco of the interest rate measures. The Reserve Bank, before the Budget, had said in its annual report:

There is scope for further tightening in financial conditions but the gathering strength of private demand suggests it would not be prudent and probably not sufficient to rely only on monetary policy to achieve the desired restraint.

The Government acted totally against that advice and threw an unreasonable burden onto monetary policy. This means that we are threatened with a disastrous and unnecessary credit squeeze. The Government has even bungled this proposal. It is confusing not only to the investing community, the business community and private citizens who are borrowing or lending, especially for home mortgages, but also to the Government and to the Reserve Bank themselves. Nobody knows what is going on. Certainly the Prime Minister and the Treasurer do not. The Prime Minister disclosed what everybody knew - a total incapacity to understand the most elementary economic principle - in the questions that he did not answer in this Parliament. Then we had the Treasurer hectoring us with this nodding way of his like a school master, or like a woodpecker as a colleague comments. All they want to do it to avoid strife with the unions. The Caucus wants to avoid strife with home owners.

The prices referendum is the last of the great non-measures. The Prime Minister tells us:

We share at present with every comparable country a problem of price inflation.

It is true that other countries have higher inflation than they have experienced in the past, lt is equally true that there was high inflation in 1971 and 1972 throughout the world and that Australia's record during those 2 years was outstandingly good compared with that of other countries. There is no reason why it should not be so in 1973 as it was during those years. From being in the position where we were envied by other countries because of our low rate of inflation, we are now pitied by other countries because of our high rate of inflation.

The period that inflation lasts in Australia will depend on the time for which the Government continues to refuse to take comprehensive measures to control it. The Prime Minister admits that controls over prices are not a cure-all for inflation, yet by this proposal he puts overwhelming importance on this part of the treatment. He is correct when he acknowledges the limitations of a price control. He steadfastly refuses to take responsible economic action for proper demand management which is assessed by the leading economists of the world as essential. He refuses to acknowledge that if wages exceed productivity there will be cost inflation. An incomes-prices policy is a supplement to demand management, but a very important supplement. It is a circuit-breaker on inflationary psychologyIt interrupts wage and price increases which are higher than they need be. In a period of high inflation they anticipate cost or price increases which may occur before the next wage or price rise. Prices are a measurement of inflation. It is certainly where people feel the pinch, but there is not a school boy in Australia who does not understand that prices go up because costs force them up. Excess wage increases are not the single cause of inflation and I have never alleged that. But they certainly are the major cause, as I have consistently said.

I have argued for an incomes-prices policy which is based on a 90-day freeze of both, followed by a guideline period of moderated wage and price increase. I have suggested 6 per cent for wages which I expect would result in 3 per cent price increase similar to the rises of the 1960s. It has been on these terms - that is, as a circuit-breaker - that I have argued it. I have consistently and positively said that price control cannot be a permanent feature of economic management. Nobody would expect it to be able to continue forever as an economic regulator which excused governments from economic responsibility. There must be a unanimous opinion on this point because even the Prime Minister admits that price control has limited value in limited conditions. The Prime Minister said that I argue now for an incomes-prices policy, but that I opposed it when I was Treasurer. Any other man would recognise in these words a misrepresentation - but we are accustomed to misrepresentation from the Prime Minister which no other man would use. In October 1971 in an address to the Committee for Economic Development of Australia I discussed the whole subject of incomes-prices policies. I concluded with these words: the stage may be reached where the community would accept the controls entailed in incomesprices policies as a necessary price to pay to restore stability.

What I then said is the same as I now say. In 1972 inflation was going down; in 1973 it is rising alarmingly. We did not take this drastic step in 1972, but the time has now come when people are wanting action - not a halfbaked prices only scheme, but the full range of policies.

It is worth making the point, too, that in a departure from his published speech yesterday the Prime Minister said that these underMinister for Labour and National Service I argued for a prices justification scheme. The Prime Minister knows that that is false. What I said was that there should be room for a prices notification scheme and I have since said exactly the same thing in terms of a guideline policy. I said it in this House in my speech on the Budget, but we will continue to have these misrepresentations from the redfaced Prime Minister.

In speaking last week of the prices referendum the Prime Minister made it clear that he relied upon guarantees and undertakings given by Mr Hawke that there would be cooperation of the trade union movement in restraining wages, incomes and prices.


Mr Edwards - 'Full trade union cooperation' was the expression.


Mr SNEDDEN - As Leader of the Labor movement he had this guarantee. Yesterday the Prime Minister said that when I was takings were a passing reference among other subjects. What an extraordinary reliance to place upon a passing reference, in the midst of other subjects, to justify a referendum. Where did the Prime Minister say it? He said it in the electorate of Parramatta, to influence the Parramatta by-election results.

In fact, Mr Hawke who was sitting in this House yesterday when I asked the question, called the Press together in the afternoon. He has revealed the Prime Minister's misrepresentation. There could be no clearer words used by any man than were used by the President of the Australian Labor Party and President of the Australian Council of Trade Unions about what were the words put in his mouth by the Prime Minister. Mr Hawke said that he cannot guarantee wage restraint from the trade unions any more than the Prime Minister can guarantee the outcome of Caucus consideration. This is no guarantee at all when one considers that only last week the Caucus a number of times took the management of the country out of the Prime Minister's hands. It converted a Cabinet of 27 into a Cabinet of 90. It will not be the first, second, third or fourth time. It will be a continual situation with the Caucus trying to run the country on the basis of political popularity instead of the Government trying to run the country in term of responsibility.

Mr Whitlamsaid to this House that there will be complete co-operation from employees' associations. He said: 'I speak for the whole Labor movement'. Mr Hawke, with 2 caps- President of the Australian Labor Party and President of the Australian Council of Trade Unions - said raspberries to that statement. The Prime Minister can give no such assurance. It is not true. He is cynically attempting to mislead the House and all Australians. Just as extraordinary was the Prime Minister's statement that wage restraint would not occur until after the Government's efforts to contain inflation within a reasonable limit had failed. First of all you would try to contain inflation within a reasonable limit. When that had failed, according to the Prime Minister, the Labor movement would co-operate. How far into the distant future this would be and how desperate inflation would then be can only be guessed. It is not statesmanship - it is political blather.

In the Bill there is no discussion whatsoever of the extent of the powers which the Government believes would be given to the Commonwealth by inclusion in section 51 of the simply 6-letter word 'prices'. There is no opinion from the Solicitor-General or other counsel. Clearly it was rushed in without preparation. There was not even a Cabinet submission. The only advice Ministers had was the verbal advice of the Prime Minister and the direction of Caucus. It is no wonder that there is no clarity. The Government does not even know. Does it extend to interest, which is the price of money lent; to services, which is the price of repairing a car or television set; or to wages, which is the price of labour? Does a power over prices mean that the Government can fix a price at a ridiculously low level and thereby effectively prohibit production of selected goods? If it does include a power over wages, will it empower a government to virtually direct the way in which people will conduct their work and what sort of work they will do by controlling how much they can be paid for it? Every employed person in Australia should be told the answer to these questions. But not a word about it is contained in the Prime Minister's speech - not a single word. The Prime Minister comes here to advocate a cause but tells the Parliament not a word about it.

Also there is no indication whatsoever of the intentions of the Government as to the way in which it will exercise the power if it is given to it. How big will the bureaucracy be? How many inspectors will be needed to police the price restrictions? Will it apply to all goods or only to selected goods, and if so, to which ones? What will be the penalties for failure to comply? Will prices control be a permanent feature of this Government's economic management? Are we to distort the economy forever with a system which fixes prices at a profitable level for the most inefficient and allows others to profit mightily? The Prime Minister yesterday was all in favour of profits. Is that why he is arguing for prices control? This happened the last time we had Commonwealth price control - in 1948 and 1949 under a Labor Government. Inflation under that Labor Government with price control was 10.1 per cent in 1948 and 10 per cent in 1949. That is what prices control does for you.

The problem of inflation is one of economic management. With a Labor government it will last well into the future. Present day events do not justify the Commonwealth Government asking for a power of massive proportions for all time when it is designed to cure a present problem. There has been no attempt in the Bill to limit its scope or duration. In fact the power would give the Commonwealth an immense capacity to order social and economic events to suit its own ideology and that of the unions. One needs only to look at the platform and policy of the Labor Party and identify certain parts of it which will be able to be developed with this power. Two examples will suffice to show the intention and the capacity to completely socialise Australia which is inherent in this proposed power. Labor's platform states: . . with the object of achieving Labor's socialist objectives, establish or extend public enterprise, where appropriate by nationalisation, particularly in the fields of banking, consumer finance, insurance, marketing, housing, stevedoring, transport and in areas of anti-social private monopoly.

Under Labor, the Government will:

.   . compete actively with private enterprise in interstate transport by sea, air or road.

How can a private organisation compete with a government competitor which can draw from the public purse to carry losses while fixing prices to drive others out of business? The Prime Minister said yesterday that nothing in public or private responses of the Premiers of New South Wales or Victoria gives the slightest room for hope that they are prepared to refer such a power to the national Government. I quote Sir Robert Askin at the Constitutional Convention: the Prime Minister has asked the States to give something - to wit, the power to control prices. Subject to the control of prices being linked with an effective and agreed-upon control of incomes policy - and I regard this as indispensable - I am willing to recommend to the New South Wales Government the reference of power over prices provided the Commonwealth does a bit of giving, not just taking all the time, and agrees to the states receiving a much more equitable and guaranteed share of income tax, sufficient with our other sources or Income to make us self-supporting under normal conditions.

I share the views of Sir Robert Askin in the second part. On the following day, I said: . I believe there would be great value in the appointment of a working party to examine a proposal that a predetermined share of the revenue collected by the Commonwealth should go to the States. I would welcome such a proposal.

But this is a separate question. Sir Robert made it clear that if there were to be an effective and agreed-upon control or incomes policy he would recommend his Government to refer power over prices. I am specifically authorised by him, Sir Robert Askin, to say that on the following night at Kirribilli House at a dinner given by the Prime Minister, Sir Robert said he would not press the requirements for a greater share of income tax for the States if this was a bar to the achievement of a proper comprehensive policy to tackle inflation. The question of a greater share of revenue he still intends to pursue in other ways. He still stands by the rest of the statement.

Mr Hamer,said at the Convention:

.   . We are prepared to play whatever part is required of us in fighting inflation and taking part in a comprehensive attack against it.

If there is an overall pattern which involves real control of some of the causes of inflation, including a wages and incomes policy as well as a prices control policy, we would consider it favourably. We would play our part in resolving one of the worst problems confronting Australians, rising prices.

There can be no doubt that the Premiers of these 2 States are not only willing but anxious in the national interest to play their part. I have been in contact with Mr Bjelke-Petersen, Premier of Queensland, who has assured me that if the Commonwealth called a conference of the Commonwealth and State Governments to deal with the problem of inflation Queensland would co-operate in the conference. Dr Eastick, the Leader of the Opposition in South Australia - it will be recalled that the Prime Minister said that whatever poor Don said he did not control the Upper Houseauthorises me to say that his party would support in the House any co-operative action agreed to at a conference by Mr Hamer and Sir Robert Askin. He would prevail on the Upper House to follow this course. He adds that it would be desirable to have the Leaders of the Opposition around the table as well as the Labor Premiers. I have today had conversations with Mr Ren De Garis and he confirmed it. Dr Eastick adds that it would be desirable to have the leaders of the opposition parties around the table as well as the Labor Premiers. The proper course of action is for the Commonwealth to call a conference with all the Premiers forthwith. The conference should develop a course of co-operative action which would call upon the Commonwealth and the States to use the governmental and legislative powers to tackle the problem of inflation. The government can have action within weeks, not months, on 2 conditions only. To refuse these conditions is totally unreasonable. (Extension of time granted!.)

The 2 conditions are: Firstly, that an incomes control is established alongside the prices control and guarantee to do so is given in clear terms to exercise an incomes-prices policy; secondly, that the measure is not a device to achieve permanent vast powers to the Commonwealth at the expense of the States, that the co-operative action will be accepted on a temporary basis to control our current serious inflationary problem.

This morning in question time the Prime Minister said that the Commonwealth would accept a temporary reference of powers for control of prices and incomes from the States. He obstinately and deceptively refused to answer the question of whether or not the Commonwealth would use powers over incomes. What he says is: 'I want prices'. The States say: 'You cannot have prices unless you have the composite of prices and incomes'. The Prime Minister then says: 'Just give me prices and incomes. I will exercise price control and do nothing about incomes'. Nobody will be deceived by this action. It is unreal. It is not an economic solution. It is not an honest solution. This morning after the Prime Minister's answer to the question asked by my colleague the honourable member for New England (Mr Sinclair) I asked him:

Will the Prime Minister give an unqualified and unchangeable guarantee that he would have an incomes policy as a companion to any prices policy and that the incomes policy would be enforced with the same sanctions as the prices policy and that it would cover as broad a range of incomes as the range of commodities or services covered by the prices policy?

Will he give an unqualified undertaking that there would be an acceptance by the Commonwealth of any powers for a strictly limited period to be agreed upon with the Premiers?

He said in an off-handed way that he would accept a temporary reference. But what about the question I asked: Will he give an unqualified undertaking to adopt an incomes policy as a companion to a prices policy? Honourable members can search Hansard from now till doomsday and they will find that, just as he has done so often, he avoided answering that question. We have a fundamental issue before the people of Australia and he will not tell them what his attitudes are. Here in this forum of the Parliament he was asked a simple question permitting a simple answer, and he deliberately refused to answer it. He has not yet had his instructions from Mr Hawke. He gave his usual windy, dodging reply, but he can dodge the question no longer. I repeat the question: Will the Prime Minister give an unqualified and unchangeable guarantee that he would have an incomes policy as a companion to any prices policy and that the incomes policy would be enforced with the same sanctions as the prices policy and that it would cover as broad a range of incomes as the range of commodities or services covered by the prices policy? If he would give a simple yes to that question he would have quick direct action and would avoid many pre-emptive rises in prices that he was worried about this morning. This is the only thing standing in the way of co-operative action. The only thing in the way is the Prime Minister himself. It is the only thing preventing a prices - incomes policy from being adopted within weeks and a major assault on being achieved. He needs only to say yes to that question and he agrees entirely with me in what I have been putting for months. Trade union power is preventing inflation control because it refuses to let the Labor Government have an incomes policy. If the Prime Minister frees himself from these shackles, if he gives the guarantees that he will enforce temporary incomes control with prices control - as every other country has done - then the referendum is not necessary and the States, the nation and its people will co-operate. Until the Prime Minister and the Labor Party take this genuine action they cannot be regarded as wanting really to tackle inflation. The Labor Government should be seen as wishing to appear to the public as sincere but be known by the trade unions to be supine.







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