Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Full Day's HansardDownload Full Day's Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Tuesday, 9 October 1973
Page: 1795


Mr LYNCH (Flinders) - The estimates debates do not allow the opportunity to develop in depth any major economic point and therefore I will simply utilise this opportunity to make some general observations on the role of the Treasury as the central arm of economic advice available to the Federal Government. One of the most disturbing features of the economic policies adopted by the Labor Administration has been the manner in which major economic policy departments have been ignored. The Treasury of course should be the fundamental source of policy advice. This does not preclude alternative avenues of policy advice. Naturally, there are other government departments which are vital areas of interest in the nature of economic policy. Equally, the private sector can provide valuable counsel.

Nor should it be assumed that the Treasury is the total repository of economic wisdom in this country.

However, against that context I believe it is increasingly obvious that decisions of major economic consequence are being made by a small cabal of economic advisers and consultants. The expansion of the economic policy functions which are occurring in both the Department of the Prime Minister (Mr Whitlam) and the Department of the Special Minister of State (Senator Willesee) provides a salient indication of the Government's apparent desire to divest itself of any reliance on the Commonwealth Treasury. A further undesirable factor which apparently is now emerging is the pre-eminence of the Labor Caucus in economic affairs. No one seriously argues with the proposition that the Government should be able to determine the nature of its economic policy within "the framework of its parliamentary party. However it is clear that any form of rational economic management is impossible when Caucus commences to overrule specific policy decisions for purely political reasons. But this certainly has been the case during the course of the past 3 weeks.

The most published avoidance of Treasury advice occurred in the decision to impose an across the board 25 per cent tariff cut. According to well-founded newspaper reports, which have not been contradicted by Government sources, this decision was based on a report by a committee established by the Prime Minister on which there was no representative of the Federal Treasury. The formulation of the Budget itself was a further area in which the Treasury advice apparently was not accepted. The whole thesis of the Treasury White Paper was in contra-distinction to the nature of the Budget which subsequently was brought down by the Treasurer. In fact, the White Paper was an understatement of the Treasury's views but even so, its comments on the effects of Government spending were clear.

In the area of international finance the Treasury's advice appears to have been negative. The Treasurer was able to state to the Committee of Twenty at the International Monetary Fund in Washington that Australia was not in favour of allocating special drawing rights to underdeveloped countries, nor of an automatic adjustment process based on objective indications. However, the Prime Minister has indicated that he subscribes to quite different policies in these areas. Presum ably, his brief is different from mat provided by the Treasury. As the Treasurer is aware, I have placed questions on the notice paper directed to him for answers on this point and he may be interested in taking this opportunity in the Estimates debate to provide an explanation of the apparent discrepancy between his comments and those which have come forward from the Prime Minister.

Further evidence that proper advice is not being taken by the Government has been gained from the number of ill-considered comments which have been made by individual Ministers. The fiasco of the Treasurer's comments on building societies is one particular example of this. It can only be hoped that the Ministers of this Government, particularly the Treasurer, are beginning to learn that unthinking remarks on matters of major economic policy do have direct and consequent effects on the business community as a whole. The restricted nature of this debate does not provide an opportunity to make detailed comments on the role of the Treasury in the decision-making process. Nor do I believe that this question is an appropriate one in which to seek political advantage. I do not seek such advantage in making that comment but I would invite the Treasurer to reassure this House that the Federal Treasury is still the major policy making department subject, of course, to the decisions of the Government itself and also to the wishes of the Federal Caucus.

There is one simple proposition that does need consideration. If taxpayers' funds are to be appropriated towards the maintenance of the very high levels of competence which undoubtedly exist within the Commonwealth Treasury the Government must be obliged to utilise that competence fully. There can be little justification of that expenditure if the Treasury is to be ignored, or its advice not sought, on matters of major economic consequence.

Similar comments can be made in respect of the Reserve Bank. Because of the fiscal irresponsibility of the Budget and the refusal by the Government to utilise a number of available policy instruments to control inflation there is now an unprecedented burden on monetary policies. I would ask the Treasurer in this context to make available to the Opposition Parties the advice which he has received from the Reserve Bank in respect of legislation to control non-bank financial institutions.

National economic management is a complex question. In spite of the severe nature of our current inflationary problem the Treasurer has failed to make a major statement to the Parliament on the economy. In spite of the Prime Minister's several speeches seeking to reassure Australian business the Government has failed to spell out in detail its intentions for combatting this essential question in the future. Today we are experiencing a growing erosion of confidence in the economic policies of the Government. A major part of this erosion of confidence is occurring because of the inability of the Government and the Treasurer to communicate effectively with the many sections of the Australian community which are directly involved by major economic decisions. Each iniative undertaken by the Treasurer has been notable for a lack of consultation. Before the election the present Treasurer espoused the concept of government planning and the establishment of guidelines for economic development. The measures taken by the Government have not been in conformity with that type of planning which was previously advocated. New measures have been reactive. They have been ad hoc and they have been fragmented.

The absence of a major policy statement by the Treasurer has been compounded by the conflicting statements of other Ministers. An assessment of Government economic policy largely depends on which Ministers can be believed and which Ministers have the influence to achieve an acceptance of their views in the Caucus. The Opposition Parties believe that the Treasurer should make an immediate and detailed statement to this Parliament on the economy.

The Budget Speech could not be regarded as a statement of this type, nor were the Prime Minister's pathetically short speeches on the incomes and prices referendums. Of course there are a number of significant economic issues which require detailed answers by the Treasurer, not on an ad hoc basis but rather in the form of a comprehensive statement. What action is proposed to ease the labour market? What action has been taken to review the increase in the Public Service? Ls it proposed to shelve the pacesetter principle now applied to the Public Service? What action is proposed to restrain wage and salary increases? What is the proposed role of competition policies? What are the limits to the present increase in interest rates? Is this Government prepared to provide effective national leadership to curb the inflationary impact of increased industrial unrest? What is the Government's view on an incomes-prices policy? Has a systematic review of expenditure commitments been carried out to develop a set of priorities? What is the Government's policy in respect of natural resources development.

I believe that it is very much in the interests of this Australian community that these questions be answered not ad hoc, not piecemeal, not fragmented, but in a comprehensive statement. It is in the context of the absence of that statement that we see the erosion of such confidence not simply in the business community but throughout the nation at the present time. I believe that confidence in this Government will continue to diminish until effective national policies are clearly outlined, are articulated in this Parliament and become the vehicle for a debate in which all parties of the Parliament can play an effective and meaningful part.







Suggest corrections