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Tuesday, 30 November 1976
Page: 2956

Mr HURFORD (Adelaide) -Yes, I second the amendment which expresses want of confidence in the Fraser Government. This Government deserves grave censure because of its appalling economic performance. I speak now and do not reserve my right to speak later because, following past performances, the Liberal and National Country Parties will arrogantly downgrade the debate in this Parliament and allow only 2 speakers from this side. In spite of the grave nature of a want of confidence motion -not a step which the Labor Opposition takes lightly- we found on the only other occasion of such a censure debate in the past year that this was the tactic used. In a similar vein of arrogance, about which the Australian people have a right to know, the Prime Minister (Mr Malcolm Fraser) often walks out of this chamber when the Leader of the Opposition (Mr E. G. Whitlam) is speaking. The Prime Minister did this on the last Thursday this Parliament was sitting when the Leader of the Opposition was replying to the Prime Minister's statement about the dismantling and dismembering of the Treasury. In a similar arrogant vein we find junior Ministers put up to answer urgency motions and to reply in discussions of matters of public importance. We witnessed such arrogance today when notice of a censure motion was not accepted by the Government. This is the first time, as far as I am aware, for many years that such arrogance has been displayed in this Parliament.

The Conservatives have followed their performances of a year ago of disregarding conventions, of grabbing power by any means, with a disregard and a downgrading of Parliament. The Opposition will use every means to resist this. It is because I am speaking now and not after the Prime Minister that I have asked the honourable member for Oxley (Mr Hayden) to use the 30 minutes available rather than for me to use that 30 minutes. I throw the cry from honourable members opposite back in their faces. I repeat that I asked the honourable member for Oxley to do this so that there would be at least 3 Opposition speakers in this debate.

The Australian people will not be denied the opportunity today of hearing more in this Parliament about the disastrous economic performance of the men who, in their own estimation, were born to rule. I repeat that at least there will now be 3 Opposition speakers unless, unprecedentedly, the motion moved by the Leader of the House (Mr Sinclair) that the honourable member for Oxley should have 30 minutes to speak is not adhered to. The Government stands condemned for this massive IVA per cent devaluation. By any test and on any standard it has failed- and failed abysmally. Just 12 months after it usurped power on the pretext that it could handle the economy better than the Labor Government could, its economic policy has fallen into complete disarray. Both the Treasurer (Mr Lynch) and the Prime Minister have destroyed their own credibility and that of their Government. We witness already a call from their own back bench for the Treasurer's resignation. The Government has now admitted defeat of its economic strategy in a move which has been appallingly handled. There is confusion as to why the decision was made. On the same day- almost in the same breath- on the one hand the Treasurer says that the move was forced upon the Government and on the other hand the Prime Minister contends that it was a measure designed to stimulate the manufacturing sector and save the mining and rural sectors from an unreasonable burden in the fight against inflation.

The Government was not forced to devalue. It is an incompetent decision taken by a government after a year of incompetent economic management. The free market system which it champions with unabashed zeal has judged its policies and found them wanting. The recent capital outflow has, if nothing else, been a massive vote of no confidence in the Government's ability to manage the economy. In this context, the Treasurer's announcement of devaluation is the Government's recognition that the general thrust of its economic policy has failed miserably. And failed the conservatives' economic policy certainly has. The plethora of economic statistics revealing sluggish consumer demand and stagnant production are there for all to see. Even the Treasurer has admitted that consumer spending is flat. The statement and the assertions he has made to the Parliament today are dishonest, to say the least. They were not supported by any statistics.

If there was insufficient data before that the general tack of the Government's economic policy had failed, last week's investment figures should have provided conclusive evidence. Seasonally adjusted new capital expenditure by private businesses in Australia in the September quarter was 6 per cent lower than in the June quarter. Investment in the September quarter of this year was only 5 per cent higher than in the September quarter of 1975. These are the people who grabbed power on to the excuse that they could manage the economy better. Allowing for inflation, this must mean that private sector investment was about 8 per cent lower in the first 3 months of this financial year compared with the first three months of the last financial year. These figures confirm the estimates of business expectations announced in recent months. They were announced last week when this House was not sitting. They provide further confirmation of the seriousness of Australia's recession after a year of this conservative Government. Only on rare occasions has investment been a leading factor in stimulating economic recovery. This is clearly what the Prime Minister and the Treasurer were stupidly advocating when they spoke in their election campaign speeches of the need for an investment-led recovery strategy. That concept also lies in tatters as we in the Opposition saw earlier this year that it would.

The Liberal and National Country Parties apparently expected investment to increase autonomously in a vacuum. This was their hope and it was completely naive. The encouragement promised and given to potential investors through the excessively generous 40 per cent investment allowance and the deferment of quarterly company tax payments are clearly ineffective in the absence of increasing overall effective demand. The Australian Labor Party has said correctly all along that what we need and must achieve is a consumer-led recovery. The Prime Minister and the Treasurer apparently felt that simply the existence of a LiberalNational Country Party Government in power would be sufficient to increase business confidence and so facilitate growing investment. I repeat that this was quite naive. Businessmen have more good sense and do their sums more carefully. They know that unless effective demand increases, growing investment will simply lead to growth of idle capacity. The motivation to invest does not exist unless economic recovery gets under way.

The Government has repudiated use of its major weapon of fiscal policy for stimulating recovery. It has deliberately sustained the recession by reducing Government outlays. I have said before but I must repeat again that Government outlays are actually being reduced. In the package announced at the time of the massive devaluation, we were told that we must suffer more of the same wrong policies. Excluding family allowances, which are largely offset by higher taxation, Government outlays are likely to fall by at least 8 per cent in real terms in 1976-77 compared with the previous financial year. This estimate takes no account of the results of the further review of expenditure announced by the Treasurer on Sunday. That is, the Government is deliberately, as a matter of policy, sustaining Australia's worst recession since the war by reducing Government demand.

One of the longer term consequences of this policy is seen in the investment figures to which I have drawn attention. A low level of investment now delays not only economic recovery but also the growth of the industrial capacity and, therefore, the longer term rate of economic growth. This is one of the causes of the loss of confidence at home which has spilt over into a loss of confidence abroad which has had such grave consequences and which has led to this devaluation. Investment is crucial to economic growth. A low level of investment over the last 9 months since the Liberal-National Country Party policies began to bite means that increases in the capacity and efficiency of Australian industry have been retarded. The Government apparently thought that by destroying parts of the public services, gaps could be created which could be filled by the private sector. We said that this was wrong. We said it all along. Now it is seen to be wrong. The economy is a dynamic system and not a box. If one part of that system acts as a brake, this tends to bring the rest of the system to a standstill or at least makes it very much more difficult for the rest of the economy to keep going.

Throughout the last few months it has been progressively the previous Labor Government, the unions, the Conciliation and Arbitration Commission, and last night the Government's Public Service advisers which have apparently been the excuse and have been made the scapegoats for Liberal-National Country Party failures. I must draw attention again to the Prime Minister's speech in Adelaide which I consider to be despicable. He used the Public Service advisers as his excuse for this massive devaluation and massive alteration to Government policies. It is incredible that the Treasurer expects us to believe that it was the decision of the Arbitration Commission to grant a 2.2 per cent full indexation rise at its last hearing that tipped the scales and forced devaluation. The Budget Papers themselves were framed on the assumption that wages would rise by 12 per cent in the fiscal year 1976-77. A rise of 2.2 per cent in the September quarter was not incompatible with that forecast. I assert that this absurd criticism of the Commission was retribution for the thoroughly justified criticism of the Government's economic policies it made when handing down its last decision. But it is part of the threats which conservatives are developing against the Conciliation and Arbitration Commission and of which all Australians should be aware.

I turn to a consideration of the massive devaluation itself. It is perfectly reasonable for a government to deny that it intends to devalue. But, as the Leader of the Opposition has said, this Government has taken that tactic to an absurd extreme. The Prime Minister, in an address to the Stanford Research Institute on 15 November, stated that external policy was being used 'to create an environment where businesses can plan ahead '. He added:

If reserves cannot be used without causing concern they are of little use.

He also stated that Government borrowing should be taken as a sign of strength'. The business sector that believed the Prime Minister and planned accordingly has now learnt the lesson that all believers in constitutional conventions learnt last year. This man cannot be trusted. The cry of 'we will not devalue ' must now have a very similar ring to that of 'we will not refuse Supply'. The confidence of the community has been shattered. The credibility of this Government in Australia's capital market is nil. This loss of respect is gravely harmful for our future prospects. For instance, this will affect our opportunities for raising loans. We have from Cabinet leaks the information that the Prime Minister has been the main proponent of devaluation. Obviously, his ideological predilections have led him to reject the advice of his public servants. I draw attention again- I wish I had more time to quote this material in length- to some of the comments made by the Prime Minister in his speech in Adelaide last night.

The Government has subjected many Australians to hardship in the cause of its antiinflation policies, from which it consistently said it would not be shifted. Any advantages which might have flowed from that hardship have been callously sacrificed. Up to 5 per cent will be added to the rate of inflation by this decision. The actual increase will depend upon the extent of the success that the Government has in depressing living standards of wage earners by preventing them from recouping devaluationinduced price rises. This is a miserable policy. In essence, it is squeezing the wage and salary earners and the small and medium sized businesses of this country for the benefit of the large mining companies. As I said when I first was given the news of this devaluation, all ordinary Australians have a right to be angry at the decision. I experienced that anger in the Sydney capital market yesterday. Certainly there will be nothing but further hardships for the beef, dairy and fruit industries as a result of increasing costs in those industries, without any hope of increasing the benefits as a result of revaluation. To deal with that farming sector very quickly, I point out that those are the sections of primary industry which are most hurt by the recession that Australia is suffering at present.

This package, which inevitably goes with devaluation, is an horrendous one. Interest rates will now rise. The money supply will be squeezed. Such a credit squeeze hurts the medium and small businesses in particular and not the blue chip concerns. Wage and salary earners take a cut in their standards of living, as I have already said. In other words, the ordinary man in the street will be the loser. Now, not only will he pay higher prices for imported goods but also he will pay more for his housing loan. Those who expected to borrow to purchase homes will find that the supply of credit has been cut off. The ordinary Australian is to be sacrificed to those speculators who will make millions out of this devaluation decision. The Government has spoken glibly of the benefits which will flow from increased foreign investment. The Treasurer mentioned $7,000m, yet there has been no announcement as to how this flow will be controlled. The Treasurer resisted such an announcement today. Mr Speaker, Sunday's package spells disaster for our country. The Government's anti-inflation strategy is in tatters. We have more of the same wrong policies- cutting Government spending, confronting the unions, creating industrial disharmony, further credit squeezes and higher interest rates- continuing to be perpetrated. There is a grave loss of confidence in our Public Service. There are very few of our citizens who stand to gain more than they will lose out of this devaluation.

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