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PM's economic analysis incorrect



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PRESS RELEASE BY THE LEADER OF THE OPPOSITION, THE R T . HON. B.M. SNEDDEN, Q.C., M.P., - SUNDAY, 26 JANUARY, 1975.

Mr Whit lam now lays the \ b 1 ame/t o r unemployment and inflation on wage claims . He concedes at long last what has been stated continuously by the Liberal and Country Parties. He has torpedoed his excuse that inflation is imported. Let us not hear that from him ever again.

However, Mr Whitlam's economic analysis remains incorrect. Wage claims are not the sole cause of today's economic crisis. The massive expansion of public spending in the past two years in pursuit of Labor's stated attempts to achieve a massive transfer of resources from the private sector to the

public sector is equally to blame. .

Mr Whitlam's incorrect analysis has inevitably produced his policy failures.· Unless he understands the urgent need for positive action on both government. · spending and wage claims, the next economic down turn will be even more "severe than our current difficulties.

The facts are that in the first half of this financial year, government spending increased at the explosive rate of 43 per cent, far higher than the record rise of 32 per cent budgeted for in September. In the absence of determined action, Australia is facing a budget deficit of $1,850 million which is many

times higher than any deficit in our history.

Labor's own wagepolicies have been the principal factors underlying the explosive incomes thrust in-the Australian economy. These policies have fueled the forces of cost inflation.

They include: the creation by Ministers of unrealistic and economically unattainable wage expectations; the use of the Public. Service in-a «pace­ setter role; the failure to argue "public interest" submissions before wage tribunals; the systematic erosion of the authority of the Arbitration Commission; support for an increase in the share of gross domestic product going to wages and salaries with a consequent decline in profits; the -sfirmu-la.-

tion of high wage demands by higher and higher incomes tax rates; and support for wage indexation.

If Mr Whitlam is serious he will immediately instruct Mr Cameron to alter the,Commonwealth's submission in the national wage hearing due to be presented this coming week from its present position of support for wage indexation which would only further aggravate the inflationary impact of wage claims.

That must be the test of his newly found and most welcomed concern with wage demand after two years of damaging permissiveness.