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Wednesday, 5 December 1973
Page: 4292


Mr ANTHONY (Richmond) (Leader of the Australian Country Party) - Every member of this House, and every Australian, knows that we are suffering the effects of acute shortages of goods. Every housewife knows that supermarket shelves have empty spaces in them. People trying to set up home can get neither the building materials nor the furniture without months of waiting. Tradesmen cannot get parts and farmers cannot get supplies. Warehouses all over the nation are emptying and there is no sign of supplies coming forward to refill them. Shops have signs up apologising to customers for shortages caused by industrial disputes.

One would think that we were in a post war-time situation where industry had not been able to gear itself up to meet the demands of a free society. So serious is the position - and so much worse is it likely to become - that I think the House would do well to consider it. I do not propose to try to place all the blame for the shortages problem on the Government; the matter is much more complex than that. But I do say that the Government must carry a considerable amount of the responsibility for the development of a situation that has fostered and generated the shortages that are of concern to the whole community.

I issue this warning at the outset: If there is one thing calculated to worsen shortages, it is controls over prices and incomes. Why produce more when your chance to earn profits is interfered with by controlled prices? Why work harder to produce more when your wage packet is to be controlled? The Australian people should keep this in mind. Shortages are bad enough now, as every supermarket and warehouse shows, but they will be much worse if the Government depresses productivity even further by screwing down the lid on prices and wages.

The word 'shortages' is on everyone's lips. For example, there is a 7-week delivery period for refrigerators. A steel shortage has restricted supply to food canners and builders. Customers are waiting 9 to 10 weeks for supplies of fencing materials. Nails, and a whole range of building materials, are in short supply and are disrupting building programs. Delivery time for furniture is up to 20 weeks. Aluminium is in short supply. Clothing items and footware are in short supply. Grocery shortages in certain lines are the worst in 20 years - toys,' plastic goods, timber, joinery, so the list goes on.

The central force behind the situation is booming consumer demand. Retail sales in

October - except for motor vehicles and parts - were 20 per cent above the 1972 level. The figures show a tremendous upsurge in retail demand from the beginning of this year. The domestic boom in Australia has not been simply a national phenomenon; it coincides with, and draws strength from, an international boom. When this Government came to power, it inherited an economy heading for a boom and it inherited a strong external balance. The Government took the view that our oversea reserves were excessive in relation to import requirements and that our balanceofpayments position was excessively strong.

So, it revalued the dollar in an effort to reduce a payments surplus that was expanding foreign reserves and making more money available for spending in Australia. The idea was to control the money supply, and hence demand. Yet the money supply continues to expand strongly, and demand booms upward. For this, the Government deserves censure. It deserves censure for its failure to exercise proper economic management. It has failed in its task of national leadership. It was obvious at the beginning of this year that we were heading for a boom, yet for the first few months of this year the Labor Party failed to act. Because of an ideological mental block on this matter it ignored the evidence of excessive liquidity to which it was a major contributor. The advice to the Government was to increase interest rates by a comparatively small i per cent to 1 per cent, but the advice was ignored. Action was postponed as the money supply escalated.

Of course, the steam valve eventually blew open. Drastic action was demanded and, as a result of months of languid inaction, interest rates were pushed up to record levels. The short-term Commonwealth bond rate rose from 4i per cent in March to 7.7 per cent in September. And while all this was going on, strikes were undermining the capacity of industry to produce the goods people were seeking. Then the Budget introduced the largest increase in Commonwealth expenditure for 20 years. More than anything else, it was a consumer Budget. Bigger allocations to consumer interests were paid for by deficit budgeting and by the large-scale withdrawal of investment incentives to producer areas of the economy. The emphasis was shifted from production to consumption. We sowed the wind - or the Government did - and now all of us are reaping the whirlwind. There was a rapid consumer boom, and suppliers were overwhelmed, and they are still overwhelmed.

Production is increasing, but not fast enough. And what happens when people cannot buy what they want, and when they sense the possibility of a worsening position? They try to buy faster in an effort to beat coming shortages, and make things even worse. People pay premium prices to get preference treatment and graft creeps into the handling and supply arrangements. Those in remote areas from the point of production tend to be disregarded. Country industries and tradesmen, businessmen and farmers are certainly complaining about lack of supplies.

In circumstances such as these, one would have expected the Government to have acted much sooner, and differently, than it did. One would have expected it to have acted promptly at an early stage to limit demand. One would have expected it to encourage productivity and production. One would have expected it to severely limit its own demands on resources. One would have expected it to have tried to reduce the industrial strife that is a major factor in the shortages crisis. One would have expected it to try to restrain the trend towards shorter hours - the 35-hour week - and longer holidays, a trend that is making the situation worse. But it has done precisely the opposite.

Sitting suspended from 1 p.m. to 2.15 p.m.


Mr ANTHONY - And because it has done the opposite, the people of Australia are experiencing a crisis of shortages - a crisis which will take on a new meaning as Christmas demand mounts. The Government has shown a lack of courage and statesmanship in failing to place the real interests of Australia ahead of its own spending commitments. It sowed the seeds of monetary severity by postponing action on interest rates. The crunch was much worse when it came. By raising Commonwealth spending by 19 per cent in one year at a time of boom, our resources were overloaded. Inflation was intensified. Demand has been built up and is now frustrated. It cannot be met.

The problem, and the causes of it, are identifiable. But what are the solutions? Firstly, we have to understand that the worth of the Government's social welfare programs is being largely negated by the inflation they intensify.

There is little point in spending heavily on social welfare if that spending is simply going to generate inflation that takes away the increased benefits. There is little point in big Commonwealth spending if the pressures on resources are going to worsen inflation and create greater shortages. And to get rid of shortages it would be logical to provide incentives for producers, both rural and industrial, to respond to the situation by increasing productivity and production. But instead of holding out new incentives the Government has eliminated even the existing ones. Food prices, as measured by the consumer price index, rose by 18 per cent between the September quarter of last year and this year. Yet, faced with food shortages, both present and prospective, it is strange logic indeed that compels this Government to eliminate incentives to agricultural productivity and production and then to reallocate those resources to the consumers of foods.

It is obvious too that labour shortages are a serious bottleneck in the path of increased output. An increased migrant intake may be worthy of consideration. It is by no means clear that, even if the migrants were available, they would relieve the short-term strain on our resources to a greater extent than they would impose additional strains. But at least we ought to look at the situation. It is undoubtedly time to broaden our outlook on the use of labour. There is considerable scope for increased involvement of married women in the work force. Their increased participation, particularly on a part-time basis, should be encouraged. The Jaguar car company in Britain is proposing to introduce a scheme whereby retired workers may continue employment on the basis of different working hours, wages and tasks. There is no reason why years of accumulated experience should be completely lost to the community. We should consider such proposals in Australia.

The number of working hours lost in 1973 in industrial disputes has increased by nearly 30 per cent on the 1972 level. This is a major factor in the shortages crisis. This Government, before the election, promised industrial harmony. It was given a mandate to introduce industrial harmony. It has presided over industrial anarchy. The Government, using its affinity with labour, should act to prevent the perpetuation of situations in which industry is being prevented from meeting shortages through continual strikes and stoppages.

There should be a major change in the Government's attitude to business and industry. Instead of antagonising industry and sapping its confidence so that investment in productive capacity has so seriously dropped, the Government should do all it can to encourage investment so that industry can equip itself to achieve higher production. The Public Service should be subject to close examination in view of its expanding numbers and financial requirements at a time of labour shortages and spending pressures. The number of fulltime civilian staff engaged under the Public Service Act has increased by 4.1 per cent in the 9 months between November 1972 and August 1973 - a very high rate of increase.

The Government's inquiry into tariff by-law policy should be expedited. It should be possible to have a system under which physical supply constraints are alleviated by duty-free entry of necessary imports, without causing any damage to our own industries. But such procedures must be flexible and selective. The 25 per cent tariff reduction was neither, and could rebound in our faces if the forecast severe international recession eventuates in 1974.

In summary, the problem of shortages is a deep-rooted one. The solutions must be comprehensive and broadly-based. I have outlined some of the remedies that should be applied. But their implementation will require political courage and statesmanship. It is unfortunate for the Australian people that this has so far been lacking by the Government at present in charge of the affairs of this nation.

But what I must repeat, and emphasise, is that as bad as shortages are now, they will get far worse if a system of price control is imposed. Nothing is more likely to reduce the supplies of goods in the supermarket and the store than price control. Nothing is more certain to reduce the range of goods than price control. Nothing is more certain to destroy the incentive of manufacturers to try to catch up on production than price control. Nothing is more certain to discourage people from investing in industry, and from starting new industries, and from expanding existing industries, than price control. In the present situation of serious and worsening shortages of goods of all kinds, the worst possible thing the Australian people can do on Saturday is give the Government power to control prices. This is a very serious situation. One would think that we were living in a post-war era at the moment, where a free enterprise system was just starting to operate. One would never believe that the situation could change so dramatically in a period of 12 months as it has done, with people in almost every section of industry being delayed and prevented from increasing production because of a shortage of goods created largely by the actions of this Government.







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