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Monday, 13 May 1985
Page: 1803

Senator MAGUIRE(3.26) —Business deregulation has been raised by Senator Peter Rae as a matter of public importance. Contrary to Senator Rae's assertions, this Government is examining aspects of business deregulation to identify what benefits and costs are involved in so doing. I will elaborate on those in a moment. First, I think it is very important to ask just what the Opposition is seeking in this area. It is not clear what it wants. It is not clear what regulation the Opposition wants removed. Does it want deregulation for business, consumers or employees? That is just not clear from the terms of the matter which has been raised today.

It is certainly not the case that both business and others together will benefit in all cases from deregulation. That is the historical reason why, in fact, we have regulation of industry and business in developed Western societies-because regulation is very important in some areas in order to protect consumers, employees and particularly those groups in the community which do not have market power. Of course, in plenty of areas in the community it is very important that regulation exist to ensure that minimum safety and health standards are met. Many of those very important standards simply cannot be left to the business mechanism.

Deregulation is a sensitive subject within the Opposition parties. Of course, there are two clear groups within the Liberal Party of Australia-the so-called wets and the so-called dries. Members of the dry group, of which Mr Howard is a luminary, want to deregulate most things, including the labour market. They would like to deregulate the wage fixing mechanism-the wage setting system. I think it is very important to acknowledge that, in fact, there is some tension between those two groups in the Liberal Party-the so-called dries, the deregulators, and the wets-as to what approach should actually be adopted. Certainly it is not clear within the Opposition coalition-that is, the grouping of the Liberal Party and the National Party of Australia-just how the National Party lines up on this question of deregulation. If there are any speakers this afternoon who represent the National Party I will be very interested to hear just what they have to say about deregulation. Of course, traditionally--

Senator Peter Rae —Just look at the transport policy which was issued by the joint parties before the last election.

Senator MAGUIRE —We will see how long that policy lasts. Traditionally the National Party and the people it represents have sought protection for rural producers from big interests and big combines. The history books tell us that. There has been much regulation in the rural sector to ensure that the many small suppliers and small sellers in rural markets are protected from those with market power. Perhaps within the Opposition coalition there is some resistance to this deregulation. I would certainly be interested to hear remarks from National Party speakers in favour of deregulation.

We are now debating a matter which calls on this Government to act to deregulate industry and business. It is a matter raised by the remnants of a party which did very little, in seven or eight years of occupying the treasury bench, actually to deregulate. Very little action was taken to co-ordinate the various regulatory mechanisms of the six States and the Northern Territory. It is very hard to point to substantive areas where the Liberal Party when in government in Canberra co-ordinated States or proposed reforms in this area, particularly in the standardisation of State laws. The Liberal Party has a very poor record in this field. It has now come into this chamber and called on us to act.

Of course, it is very important to note that the rhetoric of the Opposition parties about States rights to some extent hems them in in this area. To a degree it makes deregulation difficult for them. Once one examines the essence of the argument calling for deregulation it is possible on many occasions to relate difficulties in deregulating to problems of differing State laws; for example, differing State standards and differing State requirements. I think that the rhetoric that Opposition parties engage in here and in the other place on a regular basis concerning States rights really hems them in and reduces their ability to act.

Of course, business makes it quite clear that it faces particular costs in particular areas as a result of differing State laws and State standards. The Liberals did very little in regard to deregulation but now in the Senate they demand not only that we act but that we lay down a timetable for deregulation of business in this country.

Let us see what has happened in the last four or five months. On 1 December this Government in a referendum put to the Australian people a suggestion to allow the interchange of powers between levels of government in Australia. The referendum proposed that the Commonwealth Government or a State government may exchange powers to improve public administration in this country. If passed, that referendum proposal could have had some impact in the area of packaging, which is a real problem for business in this country. The laws differ in regard to packaging in various States. If that referendum proposal had been passed on 1 December we could have had the situation in Australia in which constitutional power in relation to packaging laws could have been rationalised and sorted out between Federal and State governments. I highlight the importance of this field of packaging law because I have been supplied with information which suggests that in the area concerning manufactured foods-just one area alone-the cost of having differing State packaging and labelling laws might be about $50m a year. I think that that is probably an accurate figure. It was a figure I was rather surprised to see. I understand that members of the Opposition have seen that information.

Senator Peter Rae —Yes. It is our belief that it is accurate.

Senator MAGUIRE —It is clear that food manufacturing firms in this country would like to see uniform laws for the production, marketing and labelling of food. Often a product which comes out of a particular factory has to be changed marginally to meet differing State standards, thus adding to the costs of production through various extra production runs.

Senator Jack Evans —Consumers would like to see it too.

Senator MAGUIRE —As the honourable senator has just interjected, the consumers of Australia would like to see that as well. What did the Opposition do in regard to the referendum on 1 December? It opposed the referendum question to allow the exchange of powers between the Commonwealth and State governments. I believe that if the proposal had been passed business would have been one of the major beneficiaries of changes to Australia's law in this respect. However, the Opposition opposed that referendum question outright. Opposition members went around the country seeking a no vote in the referendum on this question of exchange of powers between the levels of government in Australia.

I think there is a pressing need in this country to examine just which government should have responsibility for particular areas and to decide which government is the most appropriate to act in particular fields. I think it is particularly pressing in a country such as ours with a federal system and three levels of government that we look at this matter. I think that one of the prices we must pay is that of having more regulation than in, for example, a country with a unitary system of government such as the United Kingdom. It may be that the federal system and questions such as States rights-the rhetoric we hear from the other side-inevitably lead to a situation of more regulation in this country than in other countries. Certainly we have more regulation in this country than those countries with a unitary system of government.

I think it very important that those honourable senators on the Opposition benches who parade around this country on a platform of States rights sort out their views, remove the rhetoric from them and get some consistency of approach because I suspect that their championing of States rights, so called, inevitably leads to more regulation in this country than probably is desirable. I think that in Australia we probably have more regulation than do some other countries with comparable federal systems because we have a relatively inflexible way of changing our Constitution. Every time a change is proposed some group gets up and opposes it outright, making it very difficult indeed to rationalise our system.

I think it is very important to get the matter of deregulation into some perspective. I think that deregulation as an issue has been raised only within the last decade. It has been raised in the context of a depressed world economy-since the 1973 Organisation for Petroleum Exporting Countries oil shock and the second oil shock of 1978. Deregulation is very much a response to a depressed world economy rather than something which can be seen necessarily as having great advantages within itself. In the 1970s many industrial firms around the world experienced declining demand for their products. Arguments were then put that in order to contain costs and improve profitability the focus should be switched to examining the cost structure of industry in the belief that cost cutting would restore business profits. Undoubtedly there is some truth in the proposition that one can improve profitability by reducing cost structures. However, I think that the Liberal Party in the late 1970s and early 1980s did a great deal of harm in the Australian community because when it was in government it tried to convince business that its poor profits were to a large extent due to overregulation. That argument was put very actively in the late 1970s and early 1980s by some members of the Liberal Party whom I heard speak on this subject. They were trying to deflect attention from the fact that their economic management had resulted in depressed demand in the community, depressed output and depressed business turnover, which really caused the problem. The Liberal Party's own stop-go policy of economic management led to that depressed economic situation. I think the Liberal Party was really trying to pull the wool over the eyes of certain people in the business community by suggesting all their problems were due to the regulation of activity.

I was appalled several years ago to read a major survey of business activity in South Australia- my State. Some of the respondents to the survey actually blamed their problems on overregulation by governments. However, when one looked at the other criteria in the survey it became very clear indeed that the problems of these people really related to poor turnover, poor sales and being in unprofitable areas. I think it is most unfortunate that the Liberal Party in the late 1970s and the early 1980s portrayed deregulation as a panacea. It actually portrayed deregulation as a policy approach which would solve business problems at a time of depressed business activity which in fact had resulted directly from the policies of the Liberal Party.

I think one of the other great disadvantages in regard to any serious attempts to deregulate arises from the fact that in recent years the deregulation case has been greatly oversold. I refer to one survey published several years ago by a major business group in Australia and which I was forced to read in the course of my previous occupation. That survey contained an estimate of the cost to Australian business of deregulation. A vast sum of money was mentioned in that survey as purporting to measure the cost of regulation of business in Australia. When I looked at that survey I found that the major single element was in fact the cost of tariff protection. A value for tariff protection was actually put into this survey and it was said that this was the cost to business of a regulated economy. I am one of the first people to acknowledge that there are problems with tariff protection, but I can see that some businesses in Australia are the major beneficiaries of tariff protection. So there was a survey purporting to show that business was faced with enormous costs as a result of tariff protection when, in fact, the business sector as a group is one of the major beneficiaries of that policy of tariff protection. I think that the case for deregulation has been portrayed too much as a panacea. It has certainly been oversold when programs like tariff protection are built into the cost of the policy.

I am not clear whether all business groups in this country are in favour of deregulation. That is one of the assumptions that have been made today by Senator Rae. I am not quite sure that all business groups would want to see deregulation in this country. I simply refer to a Press release by the Master Builders Federation of Australia Inc. dated 6 May. The Federation called on the Government to delay the deregulation of housing interest rates until 1986. That was one Press report on the subject. The Federation is a very specific interest group which is calling on the Government not to deregulate in a particular area-I must say that I am not aware of any commitment or proposal by the Government to deregulate in that field-and which sees itself threatened by a possible policy change in that area.

I can also instance the domestic air transport industry. That industry has been subjected, justifiably, to a lot of public complaint about the high cost of air transport in this country and the crazy system which we have of parallel air schedules. There are problems in that industry. I am not sure that the major private supplier of services in that industry-I refer to Ansett Transport Industries Ltd-would be in favour of deregulation. Proposals for changes to the Australian dairy industry will come into this place shortly. A large part of that so-called Kerin plan to improve the efficiency of-rationalise, if you like-the Australian dairy industry involves a substantial degree of deregulation. I am not quite sure how members of the Liberal Party and members of the National Party will line up in this chamber on that matter. This is another proposal to come in here which has a very substantial element of deregulation in it. I must say that I have real doubts about how those on the other side of the House will respond to that policy proposal.

The Hawke Government is involved in deregulation. It is looking at this question. It is looking at the costs and benefits of deregulating, including not only the costs to business but also the costs and benefits to consumers and employees. The Hawke Government is also looking at any efficiency advantages for the Australian economy as a result of any moves towards deregulation. We have taken some steps already. We have deregulated the foreign exchange markets. The Australian dollar is now a floating currency. We have substantially deregulated the financial sector. We have substantially deregulated the banking system. We have announced moves towards a partially deregulated market in crude oil, which may occur in Australia as early as 1988, when Australian producers of crude oil will be able to sell their product in a modified free market way.

There are some very important initiatives in this field by the Government. In October 1984 we appointed a task force to review business regulation. The Prime Minister (Mr Hawke) has consulted with the four major industry groups in Australia and the Australian Council of Trade Unions to identify those government regulations which are believed to impose unnecessary or substantial costs on them. We are also seeking the views of those groups on actions which could be taken to reduce the cost of deregulation. The Fraser Government did nothing. It did not appoint a task force on deregulation. Now its remnants call on us to act in this area. In conclusion, I point out that the Government will discuss any proposals with industry organisations and the ACTU which come of this task force into deregulation before the proposals are finalised.