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Thursday, 2 December 1976


Mr Kevin Cairns (LILLEY, QUEENSLAND) -The honourable member for Port Adelaide (Mr Young) made an absolutely incredible speech. The speech was obviously written by someone who was not aware that the Government, after the election in December, decided to retain the Prices Justification Tribunal. The first half of the speech presumed that the Tribunal was to be abolished. The second half of the speech contained a great and growing misunderstanding of what the Tribunal was about.

It is said that every member of this place has it in him to make at least one good speech in the same way as every block of granite has it in it to make at least one good statue. I have seen many a good statue but I am still waiting for a good speech from the honourable member. It did not come from him this afternoon. In the first place, he has a quaint misunderstanding that the activities of the motor car industry will not be monitored by the Prices Justification Tribunal. That is just not correct. It was never intended and even the simplest person in this chamber did not misunderstand it in that way. Nevertheless, we heard that proposition from the honourable member. The second proposition that he put forward ought to be remembered. He wants the Prices Justification Tribunal in today's circumstances to maintain- I use his own words because I think they should be repeated over and over again- a policeman's role. His understanding of the policeman's role is of somebody who would pry, pimp, cajole and bully. He sees for the Tribunal the role which was understood to apply to it prior to December 1974. In his own words he wants it to return to that role.

In his third proposition he shows his complete misunderstanding. He does not realise that the first of the 2 principal amendments to the Prices Justification Tribunal Act- there are a number of minor amendments- merely raises the size of turnover by a corporation which has to abide by the notification procedures from $20m to $30m. That has been a perfectly reasonable, fair and sensible proposition. He does not realise that the other substantial amendment applies in respect of the subsidiaries of companies which are subject to the notification procedure. They are not subject to it again. The honourable member who comes from a State which has a large white goods and motor car manufacturing industry, fails to understand that thousands of subsidiary organisations will now be released from the procedures. By not understanding it, he does not realise that that is a boon and that the Tribunal is certainly not acting in the role of a bullying policeman. The honourable member for Adelaide, a front bench member of the Opposition, does not even understand these points.

One other proposition which runs through his speech ought to be exposed. It has been put forward in this chamber since 1973 when the Labor Government was looking for excuses for the rate of inflation. Over and over again it said that inflation can be brought down by use of the effective price control powers of the Prices Justification Tribunal. That attitude was abandoned subsequent to 1973 but it was the philosophy that motivated the speech of the honourable member this afternoon. That proposition will not work. It was never likely to work and I am sorry to see him returning to that theory of 3 years ago. Common sense would indicate that he should not return to it.

I turn now to recent price rises in Australia. I refer to the last consumer price index to illustrate the point because it needs to be made. The Prices Justification Tribunal of its nature cannot be an aggregate brake on inflation in Australia. It can deal with certain companies which in fact propose to charge prices that are not justified, but there is no way in which it can brake the aggregate role of inflation in Australia.

One only has to look at the consumer price index over a period to see the multitude of price rises which are not subject to and which do not come even within the ambit of control or interest of the Prices Justification Tribunal. Almost none of the prices that have risen very quickly since 1968 comes within the ambit of control of the Tribunal. Some examples are rents, rates, service charges, motoring service charges by public authorities, all charges by public authorities and statutory corporations and postal and telephone services. If one is looking for a brake on inflation by merely consulting the changes in the consumer price index over a period to see where the pressures have been on the baskets of goods for which people have to spend their household dollars, the Prices Justification Tribunal philosophically, economically and in every other way cannot and is not equipped to do the job. I ask honourable members to look at the mentality that was put forward here this afternoon on that point.

I was fascinated with the proposition put by the honourable member for Port Adelaide this afternoon. It was like going back to the first days of the Tribunal when front bench members of the Opposition who were then in government conjured up the events subsequent to the Vietnam war as accounting for the rate of inflation which they generated in Australia. This was done by members of the Opposition. They said that an international transmission of money as a result of that war accounted for the rate of inflation in Australia. There were the old propositions about imported inflation. They have not been proposed in this chamber for some time but they still animate the mind of the honourable member who lead for the Opposition in this debate. I am afraid that he has not gone ahead with the times.

There is one area in which this body, I believe, can do a very great and salutary piece of work under today's circumstances. Today's circumstances have been dominated by the \7Vi per cent effective devaluation of the Australian dollar. In going for that proposition the Government has quite clearly said that it wants to promote by that means increased economic activity in Australia. We know that it has acknowledged that that is going to cause -


Mr Young - Why does it not work?


Mr Kevin Cairns (LILLEY, QUEENSLAND) - The honourable member's Party has tried it in the past. He does not understand it. When his Party tried it in 1974 he did not understand it. It can be tried under certain circumstances of control and with the sense that our people have. The honourable member has never understood what he is talking about in this respect. He manifested that this afternoon for 30 minutes. I would like to test him on some of the clauses in the Bill. I would like to discuss some of these clauses when we come to the Committee stage. The honourable member has yet to prove himself.


Mr Antony Whitlam (GRAYNDLER, NEW SOUTH WALES) - I hope you do.


Mr Kevin Cairns (LILLEY, QUEENSLAND) - Let the honourable member for Port Adelaide defend himself. The honourable member for Grayndler can look after himself. He is big enough to do it. This is a serious proposition. When there has been a change of currency throughout the world in the past it has generated a sticky situation. A change then in the balance of payments of the country which devalued its currency existed for quite some time. There was also the situation in which the effect of imported goods on the degree of inflation in that country was muted for some time. It did not occur immediately. But with a quicker reaction on the part of entrepreneurs, buyers and sellers as a result of communication with changes in the price of goods, the effect on inflation will be rather quicker on this occasion than it has been in the past. Dr Perkins of the University of Melbourne pointed that out in an excellent article in the Australian Financial Review earlier this year. This means that the Prices Justification Tribunal will have the very salutary and important task to separate out the cost- price changes to goods presently landed in Australia from the cost-price changes to those which are bought by the new devalued Australian dollar. It has a very important role. It certainly is not a policeman 's role.

Let me take care of one other proposition under which the honourable member for Port Adelaide still labours. He has obviously used his argument at many meetings. He said it is important that the Prices Justification Tribunal should be strong. He said that because a union has to go to an arbitration commission to obtain a pay rise it is equally important that a company, corporation or somebody charging a price for a good in the field should go to the Tribunal in order to have that price accepted. The 2 situations are altogether different. When an arbitration commissioneven the one in the honourable member's own State of which I hope he would have some knowledge- determines a wage rise it becomes mandatory and an absolute right.


Mr Young - And a rninimum.


Mr Kevin Cairns (LILLEY, QUEENSLAND) - That is right. It becomes an absolute guarantee. But when a company goes to the Tribunal and obtains a price variation there is no guarantee as to the viability of that company in the future. There is no guarantee as to its profitability. There is no guarantee as to its ability to employ people. So the 2 situations are altogether different. The honourable member for Port Adelaide ought to appreciate that they are quite different. After all the people who showed in Australia how to cause both inflation and unemployment at the one time and who introduced the new word of negflation into the Australian vocabulary were the members of the Opposition. It is due to serious misunderstanding such as I have mentioned that they were able to do so.

I would like to draw the Minister's attention to one part of the Bill about which I have some doubts. It is an alteration to the functions of the Tribunal. I do not doubt for one moment that the proposal has been brought in with the greatest goodwill and sincerity. That is obvious from reading this part of the Bill. But I doubt that it in fact can work. I refer to clause IS which states:

(2)   In exercising its functions under sub-section (1), the Tribunal shall have due regard to the need for the company or companies concerned to achieve a level of profitability that is sufficient to enable the company or companies to maintain an adequate level of investment and employment.

That clause is very similar to one that was introduced as an amendment to the Conciliation and Arbitration Act earlier this year. The former amendment was designed to see that when the Conciliation and Arbitration Commission made a determination the effect on inflation and employment would be taken into account. In this case the level of profitability as it affects investment and employment can be overridden completely by the state ofthe economy at a particular time. In the former case the effect of a wage determination can be overridden in its effect on inflation and employment completely by the state of the economy at that time.

I merely suggest to the Minister that he might consider having a similar amendment made to the clause so that the state of the economy is considered at the time. There could be 2 equal situations in which a price rise might be awarded. One might be awarded when the demand through the front door and on the factory floor is too low. A similar price rise might be given when the demand through the front door and on the factory floor is much higher. In the second case the ability to be able to maintain an adequate level of profitability for investment and employment purposes would be much greater than it would be in the former case. So the Prices Justification Tribunal must and ought to take these matters into consideration.

The intention of this Bill is quite clear. Its purpose is to keep a promise that was made by the Government. The Government made a promise that it would keep the Tribunal substantially in the form in which it was towards the end of last year. To that end, it has introduced 2 principal amendments and a number of smaller amendments. It is absolutely absurd to say or to contend or even to misunderstand that the Tribunal effectively has been done away with. Many members of the Opposition say that the Prices Justification Tribunal was effectively emasculated towards the end of 1974 when there was the famous letter to the Tribunal by the former Prime Minister. It was not but the Opposition misunderstood the position in that way and it is misunderstanding in a similar way what has been proposed now. I believe that the Prices Justification Tribunal ought to be understood for what it can do, not for what it cannot do. It is not a prices control body. It is not a policing body. It is not a bullying body. It will substantially become a prices surveillance body. It is able to work in conjunction with the Trade Practices Commission and the Act. It will be able to work also with the Industries Assistance Commission. They will have complementary roles and not roles that substitute for one another and not roles that negative the effects of one another.

I believe that the Bill deserves an opportunity to work and ought to be looked at in that way by the Opposition. It ought not to be seen as the principal means whereby inflation in Australia can be brought under control. That was never the case. We have never said that that would be the case. It will have a limited role in relation to companies of various sizes and it will maintain its surveillance role. It will be able to do that to the satisfaction of the Australian people only in so far as there is total equilibrium within the Australian community and total equilibrium within the economic community. In the absence of aggregate equilibrium of the main ingredients of national production any tribunal such as this will not be able to intercept price rises that will just have to occur. That is where the most serious misunderstandings occur. We cannot pull off excess weight merely by pulling a belt in and we cannot puff down price rises merely by giving to the Prices Justification Tribunal the kind of policing role that was proposed for it by the honourable member for Port Adelaide (Mr Young). That will not work. It has been tried in the past and I hope that we would not revert to the role for the Tribunal that was reserved for it by members of the Opposition during 1973 and early 1974.







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