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Tuesday, 7 December 1976

Dr EDWARDS (Berowra) -The insincerity and opportunism of the Labor Opposition in bringing forward this matter are beyond belief. For months honourable members opposite have brought forward economic matters as matters of public importance for discussion in this House. They have cried that the mix of policy which we then had meant that the economy was on a disaster course. I know because I responded for the Government in these debates on a number of occasions. Now that there has been a change in the mix they tell us we are still on a disaster course and the Government's economic policies are in disarray. I say that is opportunism and is insincere. The matter of public importance proposed for discussion refers to the policies of the Prime Minister and the Treasurer, but the policies are the policies of the Government. They are said to be ad hoc. The Government's strategy is said to be in disarray. This is not so. I will not waste my time attempting to answer Opposition speakers point by point. Rather I will set out systematically the Government's economic policy.

That policy is to achieve for this country lasting-I stress 'lasting'- economic recovery, restored growth and thrust, and full employment. That is and always has been the overriding and dominant aim of the Government. To achieve this we have focused on the importance of beating inflation because inflation is a principal, if not the main cause, of unemployment. We have done this by attempting to rein in government spending, to get the deficit in the public accounts under control and also to implement an incomes policy.

But that has not been the only thrust of our policy. We sought by containing inflation indirectly- I stress, indirectly- to promote recovery and greater employment. But we also had measures designed directly- I stress, directly- to encourage thrust and investment which are at the centre of restoring employment. Let us remember that it is today's investment that creates the permanent jobs of tomorrow. Consequently, far from doing things to discourage investment, as the honourable member for Adelaide (Mr Hurford) said a moment ago, we implemented the 40 per cent investment allowance and other measures. So there was a mix of policy to combat inflation, and thereby indirectly to promote recovery and employment, and to foster investment and increased employment directly by the 40 per cent investment allowance and other measures.

There has been a change in that mix but not the overall strategy because of changing circumstances. The principal circumstance to which I want to draw attention is the increasing perception both at home and abroad of the very serious deterioration in this country's international competitiveness. The most insidious and potentially destructive legacy that this Government inherited from the previous Government was this significant deterioration in our economic competitiveness. This has proved a very great drag on the capacity of export and import competing industries to invest and to increase their activities and employment opportunities. As we know there has been an increasing movement of manufacturing activities offshore because of their lack of international competitiveness. Also manufacturing firms have increasingly become importers, and all at the cost of jobs in Australia. As I have said, there has been an increasing perception of this trend not only here but also overseas.

A report in the Australian Financial Review of 30 November referred to the calculations that had been carried out in a company in Americathis was done in many companies in America- in an attempt to quantify the deterioration in competitiveness. The report stated that the company's calculations put the decline in Australian competitiveness over the past 3 years at between 12 and 14 per cent. In these circumstances not only was a change in the mix of policy all but inevitable but also it was a proper adaptation to that changing circumstance. The benefit to Australians will be increased investment and increased employment opportunities.

With the devaluation of the Australian dollar the competitiveness of export and import competing industries is restored. It is not denied that devaluation means that inflation will not get down as quickly as it would otherwise. Nevertheless, our resolve to beat inflation is as strong as ever. Our efforts to do this will involve, among other things, selective tariff changes, and renewed efforts in the area of prices and incomes. That means resolute action by this Government to prevent undue price rises and profiteering and an effort to restrain the futile process of price increases following wage increases and wage increases chasing prices.

The honourable member for Blaxland (Mr Keating) a moment ago said that what will happen is that there will be an onslaught against the unions, that we will resort to bashing the unions. It has always been an essential part of our total inflation policy to rein in this futile process to which I have referred. I believe that a majority of the Australian people recognise and support that view. In 1974-75 real wages- not money wagesincreased by the order of 12 per cent. As Bob Hawke himself put it, that meant three or four years of normal growth in wages rolled into one year. That was the biggest factor contributing to the deterioration in the competitive situation which has brought on this change; it was the biggest factor contributing to an increase of 200 000 people unemployed. Now there has to be a breathing space. I believe that the majority of the Australian people recognise that. In pursuing this objective we have done various things to cushion the impact on the lower income groups. I am sure that other Australians will recognise the need for restraint.

Mr DEPUTY SPEAKER (Mr Lucock)Order!The honourable member's time has expired. The discussion is concluded.

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