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Tuesday, 14 September 1971
Page: 1263

Mr MAISEY (Moore) - I rise to speak on this Budget with very mixed feelings. I am not certain what sort of a financial structure its architects set out to design, and what I see I like but yet fear. I know that everyone, especially farmers, desperately need a break from inflation. But I also know that it is electorally disastrous to provoke substantial unemployment. I believe that this Budget will put a brake on inflation, but I also believe that it will be electorally dangerous to hold the damper on the economy till the end of the financial year. It will be good economics to give the economy a boost before then, and I think the Government will do so. Therefore I am satisfied with the Budget in tha overall sense.

The economists whose statements I read agree that inflation at this moment is not due to too much demand for goods. Cost pressures, they say, are responsible, especially wages, cancellation of by-laws, and some indirect taxes. The Budget works by cutting demand. and so one can argue that it has missed the point. However, the Treasurer (Mr Snedden) has explained that he expects the cost inflation to be fortified by demand inflation. The Budget, he says, should prevent this. In more general terms, a bit of unemployment in the cities should give pause to the unions. It will be more difficult to back wage demands by strike action. Jobs will not be so easy to get, and the rank and file factory workers will not want to take the risk of strike action.

I think cost inflation will get quite a jolt, and this is all to the good. The thing that worries me is that the Treasurer might be acting just a little too statesmanlike. We might be cutting off our nose to spite our face. For the first time since Chifley, we have a Prime Minister who has a liking for and an understanding of economics. He is even one up on Chifley as he has been fortunate to have university training in this subject. We want to keep it this way for many years to come, and I believe we will. I want to see the economy put back into position the very moment that the Budget has bitten deeply enough into inflation. We need a Labor government like we need a hole in the head. Members of the Australian Labor Party sound really good until we look at all their policies put together. When we do this they add up to a national disaster. To pay for their promises, they would have to tax the living daylights out of any Australian who through hard work, study, or taking risks has lifted himself above the average. I do not know anyone who would not like more money spent on the underprivileged or on education. But I know many who fear that Labor will kill the goose that lays the golden eggs by trying to do too much too soon. It will dangerously reduce the job opportunities for those who wish to work. The people who work the most in this country are those who work for themselves or are senior employees - the doctors, lawyers, farmers, grocers and the responsible executives in business and so on. If you tax away their incentive for hard work they will just coast along. In one fell swoop you have destroyed the motive power pulling the country. We must never allow a rookie mechanic to tamper, all by his little self, with a pretty delicate piece of machinery. Labor has no experience. It is committed to too many expensive promises. It is too hamstrung by internal hangers on. For these reasons it could not govern. For the sake of the welfare of Australia, this Government has no right to place itself at electoral risk.

I think there must be and will be a boost before next August. Tax cuts next August will be too late - that is if I read my Budget Papers correctly. In one of the supplementary statements the Treasurer tells us all about the long delays before new tax measures start to make their presence felt. If it works one way it must also work the other way. Therefore, if unemployment mounts, we must put the engine into forward gear well before next August.

I want to say something about assistance to the farmer. I really hate to call it assistance. Actually it is compensation for all those years of invisible subsidies to manufacturers. Farmers paid and still pay much of the tariff. They pay far more than their fair share of that $2,700m annual subsidiary to secondary industry. The compensation to primary industry has admittedly gone up by $64.5m, although I think, as does just about everyone else, that the wool grower will require more than the $60m which is budgeted for. One thing I find very interesting is that the increase in overall compensation to the wool industry, as budgeted, is really less than people imagine. This is because last year's emergency assistance has been withdrawn. The net increase is therefore only $42. 5m as budgeted. The biggest growth item in the field of compensation is expenditure partly designed to eliminate those to be compensated. The spending on general rural reconstruction and dairy reconstruction goes up by $44.5m - a significant increase.

Wheat industry stabilisation payments are expected to be down by SI. 75m. This has no connection with the current international wheat prices. The Government pays the Australian Wheat Board only when a pool has just about been finalised. This takes a few years. The budgeted expenditure on wheat stabilisation is therefor a piece of history. An unhappy situation is portrayed in the figures on fertiliser bounty. Expenditure on this item is due to fall by 82.75m. On the other side of the ledger we have the brand new $3m plan for apple and pear stabilisation. This industry is deeply troubled. The European Common Market developments will treat it unkindly. Even though this matter is more a question for Tasmania and Victoria it illustrates the universal plight of the agriculturalist in this country today.

Before leaving the question of the difficult rural crisis and the problems of bringing relief to this disaster area, I would like, in the short time at my disposal, to devote some time to a consideration of the proposed deficiency payment scheme for the 1970-71 wool clip. Perhaps its more accurate title would be the temporary cost compensation scheme. It is interesting to note that approximately 3 million bales of the Australian wool clip can be categorised into 16 different basic groups of types. These 3 million bales embody from the best to the worst types of merino wool, embracing fleeces, pieces and bellies. It is within these 3 million bales that the hard core of the Australian merino sheep industry exists. If we are to look at any form of compensation for the wool industry, there must be some foundation on which this protection can be firmly based. Firstly, it should be said that the scheme outlined by the Government does not have such a base and is designed not as a real protective measure, but merely as a temporary palliative. Indeed, the scheme has been designed to operate on the premise that on the one hand there will be a realistic price support afforded by the Australian Wool Commission while on the other hand a deficiency payment will ensure a firm national level for the whole clip. The big squeeze will be on the wool buyers. They will be the meat in the sandwich. Mr Deputy Speaker, how long will this situation remain workable? Hopefully I will suggest that, for one basic reason, it will not last long.

Wool as an apparel fibre is far from the ultimate in processing simplicity. It requires many and varied processes to bring it to a satisfactory level in the end product. It is quite unlike man made fibres in this regard. AH of the world's leading textile apparel processors are well aware of this fact and clearly do not need any added discouragement in the use of wool. I would suggest that continued pressure by agencies of the Federal Government aimed at forcing a false value into wool will inevitably lead to less confidence in the future of wool generally. This should not be taken to refer to deliberate actions against buyers, but more specifically at actions which give growers of wool a completely false grasp of the true situation. The present cost compensation or deficiency payment scheme, I feel, does follow this path by encouraging production in a general sense to achieve the highest possible average price at auction, (indee the present free auction system of marketing this scheme will prove far from satisfactory, even in the short term, to wool users. But perhaps even more importantly still, it will prove of less value to the future of pure merino wool production in Australia. It is a well accepted fact that the downturn in production of better types of merino wool was not precipitated by rising costs. Rather it had its beginnings within the auction sale room where a slackening in demand for all wool weakened competition for the better types available. It followed that the lower the wool market came, the poorer the competition for these better types became. Growers can hardly be blamed for following this trend by compensating for their lower returns with higher stocking rates from more average types of sheep, and short-cut methods of flock management.

In plain terms, Mr Deputy Speaker, the Government's proposed system of deficiency payment will certainly not promote the production of better types of wool and will rapidly drag the merino wool industry down to the level of its overseas conpetitor producers. Australian merino wool had a distinct advantage and still retains a slight advantage for its fine characteristics. Textile processors are clearly finding already that the product they once bought with confidence now has only limited advantages over other fibres. To my mind the only corrective measure which can be employed to retain confidence in the large scale use of wool is a compensation scheme offering sufficient incentive to all growers for the production of higher quality better grown wools. If the proposed deficiency payment scheme is implemented under the methods already indicated by the Government any long or short term intentions directed at eventually acquiring the entire clip may well find insurmountable problems and in fact this plan could make the task of acquisition an extremely dubious proposal. I believe, Mr Deputy Speaker, that the Government has every reason to institute immediately a complete acquisition concept to all wool, regardless, so that while we still have an industry it can be put into a more economic and stronger competitive position, with the benefit of central direction and the proper incentives to present a quality wool. If we do not take this course it may well be that even after this present costly and heartbreaking experience - in, say, 18 months or 2 years from now - the production of merino wool will be fragmented into an irretrievable position.

Now, Mr Deputy Speaker, may I turn to another matter which is causing me the gravest concern. It is a very serious and rational reservation which I have about this Budget. I refer to the failure to increase financial aid to independent schools in the face of very steep rises in teachers' salaries as well as quite substantial increases in other costs. The failure to increase assistance is false economy. It not only could, but most certainly will, result in closures of Catholic schools. It will accelerate the enrolment of Catholic children in State schools simply because parents will be unable to pay the higher fees which must be levied to keep the independent schools semi-solvent. During the last 8 years, Mr Deputy Speaker, I have maintained a firm and consistent attitude on this matter and not, sir, on account of any philosophical bias. Supporters of State aid say that they pay through taxes for a system of education which they do not patronise. They pay again for the system of their choice. This they regard as inequitable. Opponents of state aid argue that Catholics are free to enrol their children in State schools and if they elect not to do so then they must be prepared to pay again. No one can pronounce either argument as being completely wrong. My view is the practical one. Take secondary pupils, for instance. This year the annual cost of educating one secondary pupil in a State school will be about $600. Total grants from Commonwealth and State Governments, together with tax concessions, barely cover a third of this amount. So any student who is forced out of a Catholic secondary school and into a State one costs that State about $400 a year extra.

Mr Deputy Speaker,it makes no sense at all to court fiscal disaster by engaging in financial brinkmanship with the hard pressed Catholic education system. There is a perfectly sound and unexceptionable financial argument for a substantial increase in Commonwealth assistance to independent schools. It would be economically irresponsible and indeed politically ridiculous not to do so in the next Budget and sooner should the opportunity arise. A convocation of Cathlic bishops in Sydney some 3 weeks ago went on record as criticising this serious budgetary omission. Anyone with the slightest doubt about this financial plight ought to do the rounds of the parish schools in his electorate. It takes a lot for a mild-mannered and highly respected churchman - such as Archbishop Young of Tasmania - to come out as he did the other week after the Tasmanian Budget was presented and to say the things that he said. With the Tasmanian Catholic school system in tatters, the State Government raised its grants by $4 per pupil per annum. It was given ample documentary evidence on the scope of the problem but it chose to ignore this quite blatantly and with total recklessness and irresponsibility. This extreme provocation had a predictably explosive sequel. The Archbishop said that he would close some schools. He further stated that the selection of these schools will be deliberate and judicious. I quote from a newspaper report of his remarks:

The impact will be felt in politically sensitive and crucial areas'.

All that I can conclude, Mr Speaker, is that the Premier of Tasmania has taken leave of his senses. He must have the most highly developed suicidal tendencies in Australia, apart from being an utter political amateur and fiscal mismanager. He will be annihilated at the next State elections and I would not risk a dollar on him, Mr Deputy Speaker, even if he starts at 100 to 1. Treasury advisers and economists must have told the Government how much the Commonwealth saves by keeping Catholic schools afloat. I am completely confident that the next Budget will give this the recognition it deserves. I only regret again that this Budget did not do so.

Perhaps. Mr Speaker, this is another matter which the Government could do something about before next August. What concerns me deeply about this Budget is the continued growth in departmental spending. Despite all public statements implying the contrary, we have a mushrooming bureaucracy. As one who is concerned with efficiency, I recommend a thorough housecleaning in this area of government. I am sure the whole place is riddled with people looking after people, that is, people employed because someone has to control people employed. I know that grass roots supporters of both the Liberal Party and the Country Party have little love for Public Service empires - great bottomless pits working under cover of secrecy.

Finally, Mr Deputy Speaker, it is appropriate at this time to look back over our shoulders and to note the things which we have achieved and which have happened since the introduction of the previous Budget. For me the most exciting event has been the long overdue recognition that the Tariff Board is a body of men who knew what they were talking about and that the recommendations made in their annual reports were matters of substance and vital to the wellbeing of the Australian economy. This was one of the things of which I dreamed and said: 'Why not?' 1 welcome with open arms the decision of the Government to implement the Board's recommendation that there be a general review of the whole tariff structure. I pray that the Board will be reconstructed and developed in such a way that this work may proceed as a matter of great urgency. I plead that economies on Government spending be not used as an excuse and a subterfuge to delay further and frustrate this essential basic economic reform. I note the departure from the political scene of the high priest of protection and the general acceptance of the abandonment of the futile philosophy of protection all around. I recognise as of academic interest only the question of whether the philosophy failed because of the departure of the high priest, or whether the high priest departed because of the imminent failure of the philosophy. I look back on my Budget speech of almost exactly 3 years ago with the thought that perhaps the effort and thought put into it were not, after all, just another wasted exercise.

I pause now, Sir, to think of the exporting industries on which we rely so heavily for the wealth on which our prosperity depends, and to my own State of Western Australia which has paid so dearly as a result of the over-generous protection given to the industrial complexes of eastern Australia. I anticipate with great expectancy the revival of growth and discovery of further export potential of Western Australia, with an invasion of even more export markets with basic commodities, competitively priced, and produced against the background of a sane cost structure. 1 do not despair of the future, either immediate or long term, and believe that adversity will bring to the surface again those desirable characteristics of the great mass of Australian people; and the things of real value in our way of life will again assume their rightful place.

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