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, 22 February 1977

Mr CREAN (Melbourne Ports) -The matter of public importance brought forward by my colleague the honourable member for Adelaide (Mr Hurford) states:

The actions of the Fraser Government which have increased the cost of living.

The only fault that I can find with that wording is that it should have said: 'have increased and are still increasing the cost of living'. Most of the debate has centred on what I might colourfully describe as that archaeological exhibit- the December consumer price index. After all, the December CPI, which was only published today, 22 February 1977, reflects for the most part the prices of items at about the middle of November. In some cases it reflects the price of motor vehicle components as far back ago as October 1976. All that the December issue of the index does is to carbon date the changes that have already taken place.

There has been some intriguing dissection of the figures to take out what is supposed to be a once and for all effect. It is suggested that once we have done that the underlying trend shows a decline in the rate of inflation. In fact the honourable member for Curtin (Mr Garland) went so far as to say that the Medibank component of the CPI had nothing to do with the inflationary pressures in the Australian economy today. I would suggest to him that what the Medibank levy does is to make the majority of people less able to meet the consequences of inflationary pressures because they now pay a levy in the face of an inflationary situation. I had questions thrust at me not much more than a couple of years ago and I would say that 12 per cent inflation was better than 14 per cent but not as good as 10 per cent. But any of those figures are unsatisfactory.

This Government is in office virtually because it painted the economic picture so gloomily and attributed the whole of its consequences to the Labor Government's 3 years in office. The Fraser Government has been in office for fairly close to half its term now. The fateful 11 November 1975 was the date it came to power, and it is now 22 February 1977. How much longer is it to lay the blame for what is happening now upon what happened under Labor? I suggest it is time to look a little more systematically at the situation. The Treasurer (Mr Lynch), to his consolation, may believe that the underlying trend in inflation is a downward trend. It seems to me very hard to say that 2.9 per cent is very much better than 3.2 per cent or that 2.5 per cent is much better than 2.7 per cent. The Government can score those points if it likes, but if for the purposes of argument the Medibank component is separated, the underlying trend is defined by a figure of above 10 per cent. I think one of the great boasts was to bring it to less than double digits.

Mr Lusher -By June this year.

Mr CREAN -By June this year. The purpose of this matter of public importance is to suggest what the Fraser Government has done and, I add, is still doing will not bring this figure down. As I have suggested already, there is a lot in the pipeline for the March quarter. In fact, mostly the March quarter figure is determined now because we have passed the middle of the period, which is 14 or 15 February. So the March quarter figure will show prices now. Would anyone suggest that prices have fallen between the middle of November and the middle of February? I suggest the contrary.

This is the point I want to make: If there is an overall decline in the rate of inflation I suggest the reason is the indexation of wages. What did the Treasurer say here the other evening when he delivered a famous economic homily? He said that the Government would go into the Australian Conciliation and Arbitration Commission and argue that indexation should cease- not that wages should be adjusted for the full CPI increase but that they ought not to be adjusted at all. If this is supposed to gird the workers to cope with inflatio.1 that has already taken place, again it mystifies me.

There has been no mention yet of the action taken after 15 November to devalue the Australian currency. Surely no one on the Government side would argue that devaluing the currency will reduce prices in Australia. What has it already done to the price of the motor car, the price of which for the purposes of the CPI was the price in October or November? What happens to all the producer goods that are to be imported? A very large component of Australia 's imports is still producer goods. Are they to be cheaper? Will they not be dearer because of the effects of inflation? What about the redistributive effects of increased incomes in one section on exports. The tendency will be to pass the increases round the rest of the economy in the only way possible; that is, in higher wages.

I suggest that it is time we got away from scoring the points to which I have referred. We have this ominous day when we publish the quarterly consumer price index figures, which are by then out of date, as I have suggested. Why are we not smart enough in this country to have monthly figures? If we had them maybe it would bore us to death to go through this agony every month instead of only every 3 months, but it might help to focus out minds on the real issue. We have one monthly figure-the figure for food. According to the new index, food is now a smaller component than before. The food component is now 2 1 per cent. If my memory serves me correctly it used to be something like 27 per cent. Now only nearly as big in the determination of the CPI is an item called 'transportation'. Food is 21.026 per cent and transportation is 18.453 per cent. I doubt whether there are many sections of the Australian community, particularly those on minimum wages- the minimum wage at the moment is about $135- whose food component is as little as 27 or 28 per cent. In other words, perhaps the index is false as far as they are concerned and it underestimates the true impact of inflation in the community.

I submit that rather than the Government trying to justify what it has done it is time it began to accept some responsibility as custodian of the economy as we find it in February 1977, not as it was or as the Government claims it was prior to the beginning of 1973. There are problems to be solved. I believe they are structural. I do not believe that the Government has yet grappled with these problems; nor, if I may say so with respect, did the previous Government. But if we do not begin soon it will be at our own peril.

Suggest corrections