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Tuesday, 12 November 1974
Page: 2226


Senator CARRICK (New South Wales) - I speak upon a growing practice by the Government, specifically by the Leader of the Government in the Senate (Senator Murphy), of seeking an alibi for inflation by claiming that in Australia all our woes arise from the importation of inflation. It seems to me that the Leader of the Government now has one tune that he sings in answer to every question at question time. He blames the importation of inflation for the evils that have beset this country since the Australian Labor Party came to office. I wish to place briefly on record these facts: The Organisation for Economic Co-operation and Development, whose findings, I believe, both the Government and the Opposition accept, had on record that throughout the 1950s and the 1960s, for some 17 years, Australia had the lowest rate of inflation of any industrialised country in the free world. Australia was subject to pressures from the outside world during that time, and inflation was imported during that time. Under a Liberal Government inflation ran at the lowest level in the industrialised world. So we start from quite a clear point of view. It is possible to protect Australia from imported inflation. During that time in Canada, England and America inflation ran at something between 6 per cent and 8 per cent while in Australia it ran at an average of 2.5 per cent. So it was possible to stop its importation.

Let me test this matter about which Senator Murphy has been very verbose. Firstly, we measure inflation by the consumer price indexthe CPI. Almost all the ingredients in that index are goods, services or commodities that originate in Australia. Incidentally, those that do not are for the large part, commodities which have suffered from the tariff cuts of the Government and are therefore affected by importations. These include footwear, clothing, furniture and items of that nature. We have an extraordinary situation. On the one hand the Government says that if goods are brought in from overseas inflation is imported. On the other hand, it says: 'We cut tariffs by 25 per cent so we could buy goods cheaper overseas than we could make them in Australia.' Even Senator Murphy in seeking every day to delay question time with his little essays cannot co-relate these 2 things- that we cut tariffs to get goods such as footwear, clothing, furniture and automobiles cheaper from overseas and yet somehow or other when we import these goods we are importing inflation. That takes a little unravelling.

About 80 per cent of all the goods, services and commodities in Australia have absolutely no direct or indirect connection with the influence of prices overseas. The residual 20 per cent are not all goods or services that are imported but they are also those that are affected by trade because clearly such commodities as wheat or wool take their character from the costs of international trade as well as from the local market. So 80 per cent of all items registered to make up our prices are Australian in origin. Yet Senator Murphy says that we import inflation. If it were dearer to import from overseas than to produce in Australiaif Australian costs were lower in generation than those overseas- clearly we would not need tariff barriers. One could tell that to the textile workers, the clothing workers or the automotive workers. The tariff barriers stand as proof that at this moment those industries inside them are producing goods dearer than they can be produced overseas.

I think that even Senator Murphy must have heard an extraordinary change in argument by his Government over recent months because until 6 months ago the Government argued that inflation was caused in Australia and was caused by profit. In other words, the Government and Senator Murphy said it was a demand inflation caused by excessive profits put on by Australian manufacturers. This was the story for the first 14 months of this Government- not that we had imported inflation at all but that high prices were due to profits. The Government had its little day with the Prices Justification Tribunal, then it changed its tune. It agreed with the Opposition that the fundamental cause of inflation in Australia, as articulated by the Prime Minister (Mr Whitlam) and every other Minister, was cost-push- the frenzied chasing of nominal wages to overtake prices. Nominal wages went up because of over award demands. The Government said: 'If we could control over award wages we would control the main cause of inflation in Australia- cost-push.' Let us get the situation quite clear in our mind. Let us have no more little lectures from Senator Murphy about imported inflation. During the 23 years of the previous Liberal-Country Party Government we had the lowest rate of inflation in the world and were unaffected by imported inflation. This Government cut tariffs because of its argument that by importing goods from overseas we would obtain them cheaper, and that was demonstrable. Yet it has said repeatedly that inflation in this country is caused by cost-push.

The main cause of inflation overseas is, of course, the quadrupling of oil prices in the last 6 months by the Middle East states. That has had almost no effect on Australia. Indeed, the Minister for Minerals and Energy in another place, Mr Connor, takes pride in resting on the previous Government's record of ensuring that all automotive fuel found and refined in Australia is unaffected by overseas prices. I think that the total cost of imported heavier crudes is about $400m. It will rise of course to $ 1,200m. It is still a small figure. If we have imported inflation why have we moved from being the country with the lowest rate of inflation in the world to the country with about the second highest rate? From whom are we importing it? Are we importing it from only one country, the country with the highest rate of inflation? Let us have some logic in this kind of argument. West Germany does not seem to be besotted by this problem. Of course we look towards Japan at this moment. It has been the victim of the quadrupled oil price. Its rate of inflation exceeds ours at the moment, but we are overtaking it. The simple fact is that built into the Budget was an acknowledgement that that Budget and the forces within it would produce an inflation rate of something like 26 per cent in the financial year.

I rise on this first reading in the hope that even the Government would not have the gall in the future to use that alibi in this Parliament. Is the Government denying that tariff cuts bring cheaper goods from overseas? Is it denying its arguments on cost-push? Does it now reject the findings of the Organisation for Economic Cooperation and Development and all its figures? Does it deny that in the 1 950s and 1 960s we had the lowest inflation in the world? Does it deny that we now have the second or third highest in the world? And if we import it, how the devil is it that with something like 100 nations in the world from which to import inflation we have so concentrated on the one or two that the whole of our inflation comes from? This is absolute nonsense and it is time that the Leader of the Government in the Senate was taken to task on it. The simple fact of the matter is that the consumer price index figures are almost totally for goods and services produced in Australia. The others that are imported are largely those in respect of which the Government cut tariffs. Its pretext was to cut tariffs to get costs down. If all goods and services in Australia were taken into account we would find that 80 per cent of them were quite unaffected by the outside world.

This Government simply cannot escape the fact that by its own actions and by its own Budget it has created this situation. Incidentally, we are told that the Budget must be regarded as something which is changeable, something which we can change from time to time. The Leader of the Government in the Senate gave us a little lecture this morning and said that perhaps we ought to have a 5-year plan. My goodness! The Government cannot have even an 8-weeks plan because it is less than 7 weeks since this Budget came into the Parliament and it is to be changed radically tonight. It was changed three or four times in the course of that 7 weeks. The simple fact of the matter is that there is no such long range plan and by its own actions in the Budget the Government has caused inflation. Let me fist some matters, and let the Government deny them.

Was it not the Government which by its action in January last year virtually eliminated the European selective immigration scheme and cut out 50,000 workers, all of them scheduled to go into the steelworks, the building and automotive industries? Was it not the Government which had deliberately set out by that action to create over-full employment in those industries and therefore a scarcity of men and materials for those industries, a scarcity which emerged within 3 months? Was it not the Government which by that action made the simple 3-inch building nail scarce to the point where there was a 3 months delay on them? This is one effect that it had. Was it not the Government which through the Minister for Labor and Immigration (Mr Clyde Cameron) urged upon the country the proposition that the trade unions should bypass arbitration, go in for collective bargaining and yell for and obtain above-award wages? Was it not the Government which then called upon the unions to do the very things it now says they should not do? Was it not the Government which, when the bond rate at the lowest level was still yielding sufficient money for loan funds, put up the bond rate by 2 per cent and increased interest rates to the highest they have been in Australia? Was it not the Government which switched 10,000 workers from the private sector to the public sector and thereby denuded the private sector? Was it not the Government which cut out tax incentives and subsidies to agriculture and thereby forced up the price of food? Was it not the Government which went in for the greatest credit squeeze we have seen in this country? If it set out to promote inflation that is precisely, step by step, what it would do.

Was it not the Government which in 2 years harvested 95 per cent more income tax in Australia and therefore caused an amount for tax to be built into the price of all goods and services? Was it not the Government which introduced a wide range of indirect taxes right throughout commerce and industry and forced up prices? Was it not the Government which forced the States, by denying them funds, to put up more and more indirect taxes and charges? Were these things imported? Did we import those dozen items I have listed? How could anything overseas have affected that array? It is very important that on the eve of another disastrous mini-Budget or two- God knows how manythat we should remind ourselves of 2 things: That the Government should not be allowed to get away with its alibi of importation, and it should have sheeted home to it that step by step in respect of a dozen items of deliberate action it has produced a situation where Australia today has the worst unemployment since the depression years. We have a seasonally adjusted level of 3.2 per cent. The Minister for Labor and Immigration said that he would not stay in the Government if it reached 3 per cent- and no doubt his resignation will be announced tonight. He is on record as having said that. It will be an interesting test of the ethics and morality of this Government and of the collective operations of the Cabinet to see whether a Minister, the Minister for Labor and Immigration no less, having said that he would not be prepared to associate with the Government if unemployment went beyond 3 per cent, will now announce his resignation when the current statistics show 3.2 per cent.

The Government which we are looking at now went into office saying: 'We are the Government of full employment; we are the Government which will reduce industrial strikes.' Yet it has the worst industrial record of any Government in history. It has forced up prices. The Government said: 'We are the low interest rate people'. Mr Crean- I wonder where he is and whether he is still the Treasurer- said that he did not think interest rates should be more than 3 or 4 per cent, yet people are paving 14 to 16 per cent today. This morning Ministers were reminded that the Government went to the people of Australia and said: 'We are opposed to anything but Australian ownership; we are opposed to foreign investment.' The Government opposed it and indeed stopped it by applying a 33 per cent surcharge on imported capital. It said: 'We are the people who believe that inflation is caused largely by the multi-nationals.' The Leader of the Government in the Senate speaking here this morning had the gall to defend the multi-nationals when time after time when the Opposition appealed to the Government about the rise in prices the Government said: 'It is the multi-nationals which are causing this'. Suddenly because Dr Cairns is in full flight around the world desperately looking for money the multi-nationals are good and foreign investment is good. The Government ran down overseas reserves at a time when every penny of trading money is vital to us. This Government is now trying to catch it up by chasing and begging money around the world. What an interesting thing it is that the man who says that he is going to change the system, Dr Cairns, has gone to the home of free enterprise on his knees begging for capital. This is the incredible situation with which we are faced. The people who pervert question time day after day are now speaking in double talk, putting forward a thesis the opposite of the one they put forward some 3 months, 6 months or a year ago.

I rose only to put the record straight. There is only one reason in Australia why we have this record inflation which will grow worse no matter what steps are taken tonight. The Government has destroyed investment capital in this country. There is only one reason and it lies in the deliberate policies of the Government which are aimed at shifting massive spending from the private sector to the public sector so that socialism - democratic socialism as the Government calls it- should come to this country. If honourable senators want to see the formula for that transposition let them listen to the figures for the past 10 years that I shall cite. Ten years ago, in 1964-63, the total national Budget was $4,000m, or US$4 billion. In the next 7 years until 197 1-72 on the eve of this Government taking over, the national Budget had crawled from $4,000m to nearly $8,000m. There was a gain of almost $4,000m in 7 years. In the next 3 years, mostly in the 2-year period of this Government, it went up by $8,300m. In 7 years the national Budget went up from $4,000m to $8,000m and in 3 years it rose to $16,300m. Australia has changed from a tax system whereby in 1972 we were reducing taxes to a system which this year will harvest 95 per cent more income tax. That has happened in the 2 years of this Government. This Government will harvest 46 per cent more income tax this year. Those are the reasons and do not let us have any more of this nonsense. Is not the Government willing to stand by its policies? Is not the Government willing to defend what it has done?


Senator Wriedt - Sit down and we will.


Senator CARRICK - There is a chance you will? You do not know which are your policies from day to day.


Senator Wriedt - Sit down. You have been going long enough. You have made your point. Give us a go.


Senator CARRICK - I am sorry that the Minister for Agriculture (Senator Wriedt) is embarrassed. It should be on record that the Minister said: 'Sit down. You have been going long enough. You have made your point. ' My goodness, it is a delight to hear the recognition that we have made our point. I rose in the hope that at least in the future Government members would have sufficient honesty and sufficient sense of humour never again at question time or otherwise to get on their feet and talk such ludicrous nonsense as has been talked in recent days.







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