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Thursday, 2 April 1987
Page: 2054

Mr BARRY JONES (Minister for Science and Minister Assisting the Treasurer on Prices)(11.00) —The criticism by the honour- able member for Gippsland (Mr McGauran) of price increases for the marketing of the Royal Australian Mint's coin collector sets is not soundly based. He relies on a false analogy between the Government's declared aim to restrain prices for goods and services, in order to preserve the effectiveness of the prices and incomes accord, and the price charged for the Mint's coin collector sets. His analogies with the price of fuel and Telecom Australia charges are ludicrous. He resorts to personal denigration-an invariable indicator of a weak argument. I do not propose to follow his lead, except to say that I knew he was young but had not realised that he was childish.

Price restraint is essentially aimed at household, institutional and industrial goods and services for general consumption where the goods are used up or consumed or depreciate in value in markets for which there are relative degrees of competition, perfect or imperfect depending on the actual goods and where they are sold. The price of a packet of Kelloggs puffed wheat or ready-wheats does not appreciate after it is put on the pantry shelf. The goods are consumed. The value of garden hoses, children's shoes and biscuits will invariably decline, and so will the price of cars, except in special cases; for example, vintage cars which are collectors' items. So in the case of general goods the price is rarely determined by a scarcity factor; but I would not expect the prices of racehorses, old master paintings, French imperial silverware, rare stamps or Royal Australian Mint coin collector sets to be determined by the Prices Surveillance Authority or by State legislation.

The honourable member for Gippsland is not talking about general merchandise but about collectors' items-goods for which collectors are prepared to pay a premium because they calculate, or gamble, that the value will appreciate significantly. So, unlike puffed wheat, the scarcity factor is a major contributor to the price of collectors' items. It is notorious that collectables are rising in price at an unprecedentedly rapid rate. The sale of van Gogh's Sunflowers by Christies in London last Monday for $A57m, including the auctioneer's useful 10 per cent commission, is a dramatic illustration of this. That was three times more than the previous record price paid for a painting, Mantegna's Adoration of the Magi. No doubt the honourable member for Gippsland would have delivered some ill-judged remarks had the auction been held within my jurisdiction. Even more striking, in the case of Sunflowers, is that its 1889 selling price was the equivalent of $A65 and its 1934 selling price about $A5,000.

In establishing the prices to be charged for collector sets, regard is generally had to trends in their cost of production, packaging and marketing, trends in sales and demand and trends in prices charged for similar products by other countries. Overall, the objective is to achieve an optimal rate of return on taxpayers' funds employed in numismatic coin production. Within that broad criterion, the following considerations were particularly important in establishing prices for 1987: For proof sets, there had been a 10.5 per cent decline in sales in 1986, following a price increase of $4 per set in that year. As a result, it was considered optimal that there be no further price increase in 1987. For uncirculated sets, in distinction to the proof sets, costs of production, and in particular packaging costs, have increased considerably in recent years and have not previously been fully reflected in the prices charged.

A survey of relative prices charged for such sets in other countries also indicated that Australia's product has been significantly underpriced. In the United Kingdom and Canada, for example, uncirculated sets are marketed at around one-third of the price of proof sets, whereas in Australia they are selling for only around 10 to 11 per cent of the price of proof sets. For example, in 1986 the proof price, including postage, was $49; the uncirculated cost, including postage, was $5.50. In 1987 the proof price has remained the same, at $49, and the uncirculated price has gone from $5.50 to $9.70. There was a very high demand for uncirculated sets in 1985 and 1986, reflecting the fact that they were, along with proof sets, the only source of some coin denominations produced in those years. In other words, it is not as if one were buying something out of X million or X hundred million coins, but in many cases--

Madam SPEAKER —Order! The Minister's time has expired. As no other Minister has risen, he may continue.

Mr BARRY JONES —This is expected to be the case in 1987 and has resulted in a rapid increase in the price of the 1985 and 1986 coin sets in the secondary market where prices of up to $70 are reported to have been realised.

Against the background I have given, it was decided to increase the price of Australia's uncirculated coin sets in 1987. Far from being exorbitant, it would seem on the basis of the information I have given that even at $9.70 the uncirculated sets are still significantly undervalued. It is ironic that there have been complaints about the rise in the price of the uncirculated sets when the market value of these sets is up to seven times higher than the sale price. On equity grounds, it would seem reasonable that the Commonwealth should seek to capture at least a part of the scarcity premium attaching to these sets for the benefit of taxpayers generally who, after all, provide the resources necessary for their production.

Madam SPEAKER —Order! The debate having concluded, the House stands adjourned until Tuesday, 28 April 1987, at 2 p.m., in accordance with the resolution agreed to this day.

House adjourned at 11.06 p.m.