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Thursday, 16 September 1971
Page: 1456


Mr HURFORD (Adelaide) - I restrain myself from commenting on the speech of the Country Party member for Kennedy (Mr Katter). I do this only because 1 want to make my own contribution to this debate. It was 4 weeks last Tuesday night since our latest Treasurer in this latest, make-shift Liberal-Country Party Government brought down this Budget. The document was out of date on the night it was brought down - made out of date not only by the irrelevant economic policies it espoused but also because of the Nixon proposals in the United States of America announced a few days beforehand. How much more can it be seen to be out of date now, because of the economic indicators which have been revealed to us since Budget day, 17th August.

The latest economic indicators are those staring us in the face in this week's newspapers. We do not have to look to the banks, or to W. D. Scott & Co., or to the Associated Chambers of Manufactures of Australia or to the Associated Chambers of Commerce for the clear message that there is a dangerous rise in unemployment and a marked drop in the level of effective demand and with it businessmen's confidence. We merely go home to an electorate like mine and listen to our constituents who have been put off work by such a company as General Motors-Holden's Ltd after years and years of good, skilled service. And we look at the unemployment figures and the job vacancy figures for August - before the Budget has had time to take effect. On the most conservative estimate we note, after seasonal adjustments have been made, that unemployment is growing at the monthly rate of 6.6 per cent. Also we note that registered vacancies are falling at the monthly rate of 4.2 per cent.

We look also at the table of quarterly figures for gross national product at average 1966-67 prices with its related tables, a new series of indicators recently released by the Treasury. Admittedly these figures are for the period to the end of last June - at a time when the Budget was merely being framed - 'but this fact illustrates my proposition that this Budget was sorely out of date at the time of its conception let alone now. It was aimed at a situation which did not exist at the time it was brought down. The quarterly growth of real personal consumption to March 1970 was 4.8 per cent; to June 1970 it was reduced to 4.2 per cent; to September 1970 it was down to 4.1 per cent; to December 1970 it was down to 2.8 per cent; to March 1971 it was down still further to 2.2 per cent; and to June 1971 it was down to the disastrously low figure of 1.6 per cent. The figures for gross national expenditure are just as worrying, with the growth in the quarter to June 1971 down to 0.7 per cent from 5.4 in the March 1971 quarter - the 0.7 per cent meaning that the growth is not actually keeping in touch with the population growth.

And so, Mr Deputy Speaker, I return to my theme. We do not have to look to the banks, or to the Scotts or the Associated Chambers of Manufactures of Australia for signs of this trend, for this message that unless there is quick appreciation of this problem - far quicker than it would seem is applying to this present Government at the present time if the answers of the Prime Minister (Mr McMahon) at question time this week are any indication - we are heading for a serious economic crisis with rising unemployment, even worse unemployment than we are experiencing right now. In fact, as some newspapers have written already, this Conservative Government is creating a pool of unemployment - an outworn policy, which will not cure the ill which is before us.

Why do I think it is so important to hammer home this message of the danger signals that are about us? It is because I and my colleagues in the Australian Labor Party realise that there is nothing worse than unemployment, nothing more degrading for our nation, nothing more depressing for the morale of our people. This Liberal-Country Party Government seems to be leading us into this situation - rushing headlong into it. Why? Because, in addition to all its other faults, so manifest in recent months, its members seem to be blind to these economic signs I have mentioned and they are prisoners of their own anachronistic economic theories. I am particularly concerned because my State of South Australia is the first one hit in the slightest recession because so many of our resources are bound up in the manufacture of motor cars, washing machines and other consumer durables - the first things hit in the slightest slump.

We in the Opposition do not quarrel with the diagnosis of the Treasurer (Mr Snedden) concerning inflation. We do not quarrel with the fact that he and the Liberal-Country Party Government to which he belongs are at last trying to do something about it. We despair because they seem not to see that we are suffering from a classic case of stagflation - that is inflationary stagnation or stagnation with inflation; an economic illness which has overtaken the United States and the United Kingdom, among other countries, in recent years. Stagflation requires different treatment to inflation. Reducing effective demand overall, striking a blow at businessmen's confidence, creating a pool of unemployment - these methods do not cure stagflation. The prices go on going up as the unemployment also goes on going up. In getting mesmerised by inflation for goodness sake we must not let this Government get mesmerised at the same time by old, outworn economic theories to cure it.

The blunt instruments of monetary policy such as stringent control over the limits to the supply of money and the high cost of that money, namely, high interest rates - these policies alone do not cure inflation. They are blunt instruments which help to cause stagnation. In the same way such fiscal or budgetary policies as large domestic budget surpluses, such as the one planned in this Budget of $630m, the siphoning off of funds from the community by higher personal and company taxes and by higher charges for such items as postal and telephone services, broadcast and television licences, petrol and other fuels, the doubling of the patient's charge for pharmaceutical benefits from 50c to $1 - a wicked charge for so many, particularly young families on lower incomes and in many cases large young families at that - are but some examples of the methods of this Government in this Budget. I repeat: These policies, whether separately or collectively, are no cure for inflation these days. If used so heavy handedly as they have been they are a blueprint for even worse stagnation. Are not so many of these charges anyway passed on in higher costs to the community? Are not in so many cases the company taxes passed on. the postal and telephone charges passed on. the petrol and oil charges and so on?

Let me remind this Liberal-Country Party Ministry that it is much, much harder to revivify a sagging economy than it is to regulate an excessive boom. One would think that this lesson would have been learnt at the time of the Governmentinduced 1961-62 recession. At this point let me put on record that I object also to the way that cuts have been made in Government expenditure. The share of gross national expenditure going through Government hands is still far too low in order to provide adequately for the community's needs in such areas as education, health and welfare. So many of my colleagues have touched on these subjects in this debate that I will not repeat their points. But we should be thoroughly ashamed of ourselves as a country of affluence - this lucky country - to be prepared to put up with these inadequacies inflicted on our education system and with the poverty suffered by so many of our people, particularly the pensioners and large families of our nation.

This is not to say that we must not cut out wastage, that we must not see in this sphere of Public Service expenditure, as in every other sphere of activity in this nation, that Parkinson's Law must not apply and that a fair day's work must not be given for a fair day's pay. Of course these things must apply. Wastages and inefficiencies are a dead loss to us all, to each one of us in this nation. These matters are direct attacks on our standard of living. But this is a far cry from postponing the improvements to the Alice Springs Hospital and from postponing the provision of some badly needed schools. There are so many other examples that I could give of desperately needed government expenditure being cut or postponed.

I am vitally interested in this whole field of government expenditure. As ViceChairman of the Joint Parliamentary Committee on Public Accounts, indeed so I should be, because I am one of the watchdogs of the Parliament and thus of the people in trying to ensure that the people's money is well spent, that we get value for the taxation funds which are taken from us. Frankly, I have my own ideas as to how the work of the Public Accounts Committee could be improved, could be made less stereotyped and more flexible and thus, I believe, of more value. T hope I shall be able to put these suggestions to the House on some other more appropriate occasion after I have had the opportunity for due consultation with others on both sides of the House. I think we may be able to take a lead from the terms of reference of the new Expenditure Committee of the British House of Commons - suitably adopted for our Public

Accounts Committee because we do not want a proliferation of committees in this Parliament.

But this is not the only way we can improve the value of our money in the matter of government expenditure. The Treasurer said in his Budget Speech:

It is proposed to initiate within the Government a review of the existing functions and activities of departments.

This could be well worth while. I withhold my judgment until I see by whom this review is to be made. Surely, anyway, this has been the continuing function of the Public Service Board. If there was a rationale for another independent inquiry, surely the independence of that inquiry might best be achieved by appointing reviewers from outside the Commonwealth Public Service. There need not necessarily be appointments exclusively from firms of management consultants in private enterprise. Why not also have more cross fertilisation of ideas by arranging the interchange of senior public servants from State governments too, or even, perhaps, from the governments of other English-speaking countries of the world?

Mr Deputy Speaker,I have digressed from the subject of economic policy for stagflation. I intimated earlier that Keynes's theories, in my view, are not right in this day and age. The behaviour patterns of people have changed in these areas in the last 3 decades. With strong unions knowing that there is so much further to go before they get wage justice, a fairer share of the cake for their members; with so many large impregnable international companies; with institutions, financial and others, which are vastly different from what they were 30 years ago; with the growth of hire purchase and other similar forms of term lending and with savings in arrears; is it any wonder that these behaviour patterns are different? We need new economic theories, new policies to meet these new challenges.

At this stage, Mr Deputy Speaker, with the concurrence of honourable members - I have already received the permission of the Deputy Leader of the House (Mr Chipp) to do this, because I expected that he would be in the House at this stage, I incorporate in Hansard the clauses of the economic platform of the Australian Labor

Parly, from the A LP's Platform, Constitution and Rules, as approved by the 29th Commonwealth Conference of the Party held in Launceston in June of this year:

ECONOMIC PLANNING

1.   Institute indicative planning and programmed budgeting for economic growth and social justice by the Commonwealth, in co-operation with the States, local authorities and organisations of employees and employers; this planning to be consistent with the maintenance of full employment and the conservation of natural resources.

2.   Balance the functions and finances of the Commonwealth, States, regional and local authorities to ensure that resources are adequately developed and services adequately provided.

3.   With the object of achieving Labors socialist objectives, establish or extend public enterprise, where appropriate by nationalisation, particularly in the fields of banking, consumer finance, insurance, marketing, housing, stevedoring, transport and in areas of antisocial private monopoly.

4.   Identify, publicise and otherwise expose unfair prices or practices and the exploitation of consumers and in conjunction with the States to operate Australia wide price control. This policy to be supplemented by the use of power of government to purchase goods and place orders.

5.   Legislate against monopolies and strengthen existing trade practices legislation.

6.   Assist small primary producers, retailers and others to adjust to changing economic conditions by expanding Agricultural Extension Services, by using Rural Reconstruction Boards, by establishing a Small Business Administration and by instituting programmes to retrain and resettle small producers and retailers.

7.   Regulate hire purchase, fringe banking and other credit-creating institutions, in order to control effective demand.

8.   Use selective interest rates, particularly in areas such as housing.

9.   Sever the Postmaster-General's Department from Public Service Board control.

10.   Establish clearer guidelines for overseas investors, for the benefit both of these investors and of the Australian community. Overseas investment in Australia to be encouraged only where it introduces new technology and expertise, includes plans for Australian participation in the enterprise, and/or otherwise shows itself to be in Australia's national interest. 11. (a) reserve income tax exclusively to the

Commonwealth Parliament,

(b)   Review the Australian taxation system, especially in order to -

(i)   reduce taxation on lower and middle incomes;

(ii)   adjust the system of deductions to avoid inequities;

(iii)   prevent avoidance of taxation oy formation of companies, trusts, partnerships, or in any other manner;

(iv)   re-define 'Income' for taxation purposes so that a fair share of taxation will be paid by those who benefit from the accumulation of assets;

(v)   tax company income at graduated rates;

(vi)   redress the incidence of indirect taxes on essential goods.

12.   Protect Australian industries, where necessary, by tariffs, import controls, and/or subsidies in order to safeguard Australian living standards and to develop Australian resources. The use and level of, and choice between, means of protection to be determined after examination and report by an independent, fully equipped, government authority which will consider, among other things, efficiency, growth prospects, trade practices and pricing policies.

MrDeputy Speaker, I draw to the attention of the House particularly clauses 1, 4, 5. 7, 8 and 12. These clauses collectively form a blueprint for a war on stagflation. Let me firsty direct special attention to price control. We have not written into our policy anything which requires a change in the Constitution before it can be implemented. In fact, it is possible that we may want to do more in the way of direct control of prices. In that case we shall seek the necessary powers from the people to do these things which we consider so necessary for the proper control of our economy. We have merely at this stage talked in terms of some mechanism such as a prices justification tribunal to be operated, we hope, in conjunction with the States or the standing committee on prices of this Parliament mentioned in the Budget speech of the Leader of the Opposition (Mr Whitlam). And we believe that such methods of inducement to price restraint will be effective - very effective - particularly when supplemented by the Government using its power to purchase goods and place orders in such a way as to favour those who are efficient and are not seeking exorbitant profits.

Mr Deputy Speaker,I go so far as to say that this direct intervention of government or this Parliament into the field of price control, in conjunction with the implementation of a national plan and sensible tariff, and restrictive trade practice and fringe banking policies, is not only the most effective but also the only way to tackle stagflation; the only way to tackle inflation without causing stagnation. I am reinforced in my views by what 1 have learnt of the views of the Right Honourable Aubrey Jones, formerly a Minister in Conservative governments in the United Kingdom and more recently Chairman of Labor Prime Minister Harold Wilson's Prices and Incomes Board which attempted unsuccessfuly to implement an incomes policy in Great Britain to overcome stagflation. Incidentally, Aubrey Jones is visiting Canberra next week to talk to the Canberra branch of the Economic Society of Australia and New Zealand. I am only sorry that the Parliament will not be sitting next week so that we could have him come to this place to discuss these most important matters with our appropriate committees. However, I am told that with all the experience he has had in these matters his views are that you cannot have proper restraint, you cannot have any sort of success with an incomes policy - let alone these blunt instruments being used by this Government - unless you first have some form of price control, ensuring that not only one sector of the economy, namely, that covering wage and salary earners, is being restrained.

Let me emphasise that we in the Australian Labor Party do not envisage a mighty bureaucracy controlling all prices. Not only would that be ineffective, but it would not be acceptable to the Australian people. What we do envisage is using power over key prices. In the meantime, we intend to use inducement, so that businessmen who have these great powers over prices are 'persuaded', and indeed induced, to justify their level of prices. This is not a bird-brain idea arrived at intuitively by me and some others. This is a well thought through theory of that eminent economist John Kenneth Galbraith which I outlined in the simplest possible terms I could command in my Budget speech last year. Mr Deputy Speaker, I have not been able to obtain permission from the Ministry to incorporate in Hansard the 3 appropriate paragraphs on this subject from my speech on the Budget last year, which appear on pages 738 and 739 of Hansard of 28th August 1970. The view expressed in those paragraphs - it is fully documented - is a complete justification for the policy of price control. This is the lie to those in Government, including the Prime Minister, who are saying that we are not concerned about inflation. Of course we are - not only this year, but also last year and the year before as any perusal of the Budget debates of recent years would show any interested person who was not intent to make cheap political capital out of untruths. I think I can be called an Australian Labor Party economic spokesman in these matters. I have directed my speeches to this most important matter of the stabilisation of the economy on more than one occasion. The Leader of the Opposition and the honourable member for Melbourne Ports (Mr Crean), among others, covered this subject of economic stability in their speeches on the Budget. Indeed, it forms part of the amendment moved by the Leader of the Opposition, which I support. The Leader of the Opposition has been criticised, on the one hand, for speaking for too long - I think 65 minutes was the time mentioned - and on the other hand for not saying enough about inflation. He certainly cannot have it both ways.

The Standing Orders allow me only 20 minutes to make this speech and so I must draw my contribution to a close. 1 have no time to talk further about the misallocation of our resources which is taking place, about the lack of leadership being given to our primary industries to get to the crux of the real problems facing the country people - the Wool Commission, the 36c per lb of wool, the rural reconstruction proposals so far brought before the House. These are only temporary sedatives. We have to look at the ways the United Kingdom, the United States and Western Europe have tackled these great rural problems which have overtaken us 20 years later than them. I have no time to talk further about the injustice and inequity of this Liberal-Country Party Government allowing exorbitant profits to be earned by so many companies in our community, particularly finance companies, and which then has the hide to blame inflation on the workers of this country in the lower income groups because those workers seek wage justice through the Conciliation and Arbitration Commission or by other means at their disposal. Do these Ministers not realise that the 6 per cent awarded last year was to a large extent only enabling those who received it to catch up with cost increases?

Mr Deputy Speaker,this country is being sorely mismanaged economically as well as socially. These people who govern us do not believe in planning, as the Minister for Customs and Excise (Mr Chipp) pointed out to his colleagues in his Budget contribution earlier this evening. They do not believe in controlling the level of investment. In the meantime, millions of ordinary Australians suffer because of a shocking Budget like this one. As my time is ending I had better sit down before my blood pressure goes up any further. I support the Oppositions amendment. Otherwise I oppose this Budget and all it stands for.







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