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Wednesday, 26 September 1973
Page: 1533


Mr LYNCH (Flinders) - It is a reflection on the manner in which the Government has treated this debate that the Prime Minister (Mr Whitlam) should be followed not by one of the senior front bench members on the Government side but only by the honourable member for Phillip (Mr Riordan). One wonders where all the Australian Labor Party's tall poppies and the fat cats are while this issue is being debated. The honourable member for Phillip would have made a very good mob orator in the 1930s, in the depression days.


Mr Graham - And in the 1890s.


Mr LYNCH - My colleague, the honourable member for North Sydney, takes me back further to the period of the 1890s. However, all that the honourable member for Phillip said in this debate was totally irrelevant to Australia's inflationary experience and to the remedies which should be applied, not in 6 months time come a referendum - and I do not predict that; I suggest that the referendum will be defeated - but now.

This Bill represents a further example of the ad hoc nature of this Government's economic decision making. It has been presented to the Parliament without any indication of the manner in which income powers would be used. It indicates the Government's intention to use income controls as a long term redistributive instrument rather than as a short term anti-inflationary instrument. It seeks long term powers when they are not required. It ignores the immediate danger of the inflationary problem and those measures which ought to be taken now if that problem is to be redressed. It neglects the pressing need for consultation with the States concerning an urgent referral of constitutional powers. It again highlights this Government's lack of interest in consultation; it is interested only in confrontation. The Bill has been introduced with the endorsement of Caucus but not that of the Treasurer (Mr Crean) whose absence has prevented his strong opposition to income controls being considered. It is perhaps not irrelevant that the pretender to the title of Federal Treasurer, the Minister for Social Security (Mr Hayden), should be following me in this debate because, undoubtedly he will pursue a line which he knows is totally contrary to that which his more senior colleague the Treasurer holds.

This Bill seeks an extension of central economic powers in circumstances in which the Government deliberately has avoided the use of significant powers which are available for immediate application. It represents a request for additional economic powers by a government which has already shown its willingness to abrogate public trust and confidence for sectional and ideological considerations. The Prime Minister has brought before this Parliament a Bill which was conceived in haste, introduced in haste and is now being debated in similar haste. This Bill represents a further stage in the cycle of Government decision making on matters of major economic consequence which now revolves on a 24-hour basis.

The Government is asking the Parliament to authorise a referendum to give it power to control incomes. But in so doing, it has not been prepared to describe the manner in which these powers, if granted, will be used. As the Opposition has made clear on previous occasions, it is neither responsible nor honest to seek this type of power without outlining the reasons for requesting the power or the manner in which the power is to be implemented. The Government clearly is introducing this Bill to give some form of legitimacy to its price control proposals. It is clear that the major quid pro quo for the Caucus acceptance this week of the proposal it rejected last week is an assurance that powers over incomes will not be used until measures have been taken to control prices - and then only in a token form. I challenge the Minister for Social Security, who is to follow me in this debate, to make clear to this House in a precise form which allows of no misrepresentation whether this Government is prepared to guarantee that the incomes power will be used along with the power to control prices.

The attitude of the Australian Council of Trade Unions is abundantly clear. I believe that the Prime Minister sought to mislead the Australian public by saying that the trade union movement would co-operate fully in the restraint of wages and incomes if the Government were able to moderate price increases through the application of additional constitutional powers. On 17 September, the Prime Minister, having been questioned further about that assurance, admitted that his discussions with the President of the ACTU on the question of wage controls had in reality been a mere 'passing reference'. The fact that no assurance had been or, in fact, would be obtained by the Government was clearly outlined by Mr Hawke in a series of public statements which were a complete denial of the Prime Minister's former position.

If the Government is to request a referendum to control incomes it should also, as a minimum condition, give an undertaking that any such powers it receives will be implemented. But the Prime Minister consistently has refused to make his position clear on this question and to give that undertaking. On 18 September, the Leader of the Opposition (Mr Snedden) put the following question to the Prime Minister:

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 would cover as broad a range of incomes as the prices policy would cover a range of commodities and services? Will he give an unqualified undertaking that there would be an acceptance by the Commonwealth of any powers for a strictly limited period agreed with the Premiers?

A thorough examination of the Prime Minister's answer to that question shows that he totally avoided answering the first part of the question on incomes policies.


Mr Edwards - He always does.


Mr LYNCH - He always does, and his consistent avoidance of this proposition can lead only to the conclusion that the Commonwealth has no intention of instituting a complementary incomes policy together with the price control mechanisms which it clearly desires to introduce.

Like the Constitution Alteration (Prices) Bill, we believe this Bill to be unnecessary. What is required is that the Prime Minister should call the States into urgent consultation for immediate action in the context of a temporary reference of powers. But of course, the Government is not prepared to do that because it believes in a policy of confrontation and not co-operation. In spite of this the Prime Minister has chosen to press on with proposals for constitutional change. In view of his refusal to examine seriously the question of limited powers, the conclusion can be drawn that powers on prices and incomes are considered necessary for the political and ideological objectives of his Government and not, in fact as additional instruments to curb inflation. The real objectives have been outlined by the President of the Australian Council of Trade Unions in a number of public statements. An article in the 'Australian Financial Review' of 18 September stated:

But Mr Hawke went on to put, as a major consideration in any union decision to opt for such restraint- that is, wage restraint - the condition that the Federal Government had to come up with a plan to 'actively redistribute' income within the community.

Thus the quid pro quo for Caucus and union endorsement of this Bill and the referendum which it entails is clearly that income control instruments are to be used in a redistributive manner rather than in an anti-inflationary fashion. The Opposition firmly opposes any such use of an incomes policy. Fiscal instruments together with the social security system provide ample scope for the Government to achieve greater equity in distribution of income and wealth. To engage on an incomes policy for other than -


Mr Hayden - Increased tax and unemployment benefits?


Mr LYNCH - The honourable gentleman really would not know. If he pretends to the job of Federal Treasurer let him first ensure that he is adequately briefed. To engage on an incomes policy for other than anti-inflationary reasons has been proven to be an inefficient and wholly undesirable method of achieving social objectives. Once again the Prime Minister has introduced a proposal,in the context of anti-inflationary action, which appears to be and which in fact is an isolated and unrelated response to Australia's major economic problem. The Opposition parties have consistently advanced the need for a multi-policy approach to curbing inflation. The Government for its part has consistently refusedtoputbeforethisParliamentandthe people of Australia a comprehensive antiinflation policy. Therefore, the question can legitimately be asked: Why should the Australian electorate cede additional powers to the Commonwealth Government if it refuses to utilise the considerable powers which it already possesses? As the Minister for Social Security, who I understand has studied economics knows all that this Government has been prepared to put down is an isolated ad hoc, fragmented and piecemeal approach to the problem of inflation in this country.


Mr Duthie - There is no power over prices, and you know it.


Mr LYNCH - The honourable gentleman who is interjecting ought to have more concern for the people in our community who are disadvantaged, because he is a party to the shabby manner in which the position of these groups has been further eroded because of his failure to stand up and be counted. The honourable member for Wilmot is such a powerful man in this Parliament that I could not even remember what seat he represents. But let him stand up and be counted. Let him tell the pensioners, the superannuitants and those on fixed incomes in his electorate why he has not been prepared to make a contribution to an effective inflationary policy. As the honourable gentleman might know, the Economic Policy Committee of the Organisation for Economic Co-operation and Development said this in a report in June 1971:

Those countries which have consciously adopted a multi-policy approach have stressed that while primary reliance has continued to be placed on demand management policies, supporting action of various selective or sectoral kinds can increase the response of prices to the pressure of demand management policies, and can serve to reduce the painful social side effects of such policies and thereby make it less difficult politically to sustain them. In addition to such direct benefits of co-ordinated multi-policy action some countries have drawn attention to the beneficial psychological impression made on public opinion that no opportunities are being neglected in the search for remedies for inflation, and that the Government's policies are not unfairly hitting one or other group in the economy.

As you know, Mr Deputy Speaker, from your knowledge of the Corio electorate, this Government's policies are hitting at one group or another in the Australian community.

It is one thing for the honourable member for Phillip to talk glibly and loosely in this House about fat cats. He knows that the fat cats in the Australian community are being advantaged by policies of this Government which are producing, providing and fuelling our inflationary problem. It is the lean cats who are disadvantaged and who are suffering. The Minister for Social Security who, I hope, has a real sense of concern for equity in the Australian community, might tell in this debate, for the first time in the presentation of what the Government has been saying about inflation - what the facts are, we must be prepared to come clean with the facts. The Prime Minister, as recently as yesterday, asserted the proposition that the bulk of Australia's present inflation is caused by overseas influences. If the Minister for Social Security wants to make a real point about his capacity for economic understanding let him talk to this House about inflation as an imported phenomenon. The clear inference of this proposition is that there is little the Government can do to restrain the level of inflation because the determinants are beyond its control. It is true that international economic circumstances do have an impact on the level of domestic inflation. It is also true that the impact has intensified over recent years. But it is an absolute falsehood to assert that the major part of our present inflation can be so attributed. The last economic White Paper I recall-


Dr Gun - It is an absolute truth.


Mr LYNCH - The honourable member is a poseur.


Mr Hayden - That is nasty.


Mr LYNCH - If the honourable gentleman looks back at the Treasury estimates of this matter he will find that they put down the question of imported inflation, as I recall it, at 12 per cent. That is far from the totality of the problem. The kind of argument made by the Prime Minister is an attempt by him to abrogate the Government's responsibilities and to excuse the Government's lack of effective action. The Treasury White Paper published in 1972 referred to the impact of international influences in these terms:

To sum up these international influences, those that operate via a strengthening of demand, as further discussed below, may have played a limited role in the origins of the current inflationary trend, but can hardly have had much relevance to its recent persistence. Similarly the direct effects of impart prices appear to have been modest although they may have been somewhat more important if more indirect relationships are considered. There is little evidence of the export-growth industries having contributed much to the inflationary trend by way, of pace setting in general wage determination. Thus while some of the momentum behind the recently intensified inflationary trend does seem to have originated overseas, much the greater part of it is left to be explained in terms of domestic influences.

I believe that that puts categorically to one side the Prime Minister's loose assertion that one can over-stress the question of imported inflation as some explanation for the spiral which we are now seeing in this country.

The battle against inflation must take place primarily on the domestic front if the current trend is to be arrested. This Bill merely foreshadows a further attempt by the Prime Minister to procrastinate. Australia's inflationary difficulties are rapidly reaching crisis pro portions. Even if the referendum received public endorsement - and that, of course, I neither accept nor predict - the additional powers would not be able to be implemented in any rational form until 1974. The Opposition's proposal is that of a total incomes-prices freeze in the context of consultations with the States wherein this matter can be examined fully. The Government's refusal to accept the concept as outlined by the Leader of the Opposition clearly means that it regards incomes-prices policies as long term instruments for economic management. The Opposition is firmly opposed to the use of an incomes policy in this way as a permanent feature of Australian economic management. A long term application of such policies would have serious effects on the economy as artificial barriers are set up to hold back the interaction of market forces. The misallocation of resources, the inefficiencies and the artificial distortions resulting from the long term application of incomes-prices policies are a matter of record. The Minister will recall many statements by the Organisation for Economic Co-operation and Development which bear on this.

The real danger is that the Labor Government, with its belief in a socialised economy, would seriously misuse prices and incomes powers as part of a general program to abolish Australia's free market economy. This is a danger which does not exist when incomes and prices powers are ceded to the Government with appropriate conditions as to their length and manner of application. Put simply and frankly, the Opposition parties do not believe that this Government can be entrusted with powers over incomes and prices when it is not prepared to have conditions attached to these powers. This is a Government which has not only shown its extreme ineptitude in managing the economy but also has shown a preparedness to cast aside public undertakings to suit its own immediate objectives. Far from examining the price implication of its policies, the Labor administration has negligently disregarded the economic consequences of numerous decisions. It has persisted with its pursuit of the pacesetter principle in the Australian Public Service. It has persisted with its endorsement of fiat wage increases. It has refused to review the immigration program in spite of the continued tightening of the labor market. It has rejected the principle of a 3 per cent growth limit for the Australian Public Service. It has given an unprecedented impetus to wage and salary demands in the private sector at a time when there is a clear need for restraint.

Our policy is a matter of record, and it is clear from the massive rejection of this Government's economic policies by the voters in Parramatta that now is the time for a total reconsideration by the Government. But it is equally clear that this Government is not prepared to review its policies. It is clear also that what has been done by the Government represents no policy for Australia, and we reject the proposition which has been moved by the Government.

Mr DEPUTY SPEAKER (Mr Scholes)Order!The honourable member's time has expired.







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