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Thursday, 9 December 1971
Page: 4425


Dr GUN (Kingston) - I enter this debate to discuss the last sentence in the Opposition's amendment. It reads:

The House regrets that the Government has not made provision to extend unemployment assistance to alleviate problems of growing unemployment in metropolitan areas with particular emphasis on the problems and placement of school leavers which can be accentuated as a result of poor employment conditions in the country areas. 1 am particularly concerned that the present measure, which admittedly is better than many of its type,, is based on an inaccurate diagnosis. The treatment is wrong, it is inadequate and the funds will be inappropriately applied. I would like to see a comprehensive programme extending over the whole economy because the problem in cities is a very great one, not just in terms of straight-out unemployment but in terms of under-employment. This is a particular problem in my electorate and in many electorates within the Adelaide metropolitan area where tradesmen in the motor vehicle industry and subsidiary industries have been retrenched. Many of them have got jobs back but they are now on the production line, which means a considerable reduction in their earnings. A great deal needs to be done in the metropolitan areas as well as in the rural areas. One instance which supports this view was brought to my attention only fairly recently. I have heard it mentioned by a fairly reliable source in South Australia that next year the engagement of apprentices will be down by about 33£ per cent on the usual intake. This will be due to the stagnation in economy which is the result, of course, of the economic policies of this Government.

The Government has made a completely erroneous diagnosis of the causes of the present trouble with the economy. Tt believed that after the 6 per cent wage increase which was granted last year there would be an increase in demand from which we might get a demand inflation superimposed on a cost-push inflation. It was this potential or latent excessive demand which had to be controlled and the measures to do so were contained in this year's Budget. However, its assessment of the likely situation was completely wrong. The Government is now trying to say that the increase in savings and the fall in demand will be followed by an increase in demand and that this will happen spontaneously. I do not think this is so. I do not think the fall in demand is an accident. It was brought about by inflationary psychology.

Business thinks it has to increase prices because it does not know how it will cover costs. So what do business people do? They do not engage people and this partic ularly affects, as I say, apprentices. This is creating a very serious situation. At the same time consumers are frightened about their future employment prospects and so they tend not to spend and everybody tightens up. The Treasurer (Mr Snedden) thinks everybody is going to overspend because of cost inflation. Perhaps that might be the logical thing to do because at a time of inflation the value of goods increases relative to the value of money, but the instinctive behaviour of people is not always in their own long term interests. What people are doing as an instinctive reaction is not to spend. As a result we have this stagnation in the economy. It is this psychology that is producing this great increase in savings, and for that reason I believe that the reduction in demand is no accident. I believe that the Government's assessment of the economy was completely incorrect.

We might ask what needs to he done in the present context, and 1 certainly would agree with those people who say we need the introduction of a supplementary Budget. But at the same time I think we must remember that this does not necessarily mean that we are going to restore full confidence in the economy. We have to remember that economics is not a precise mathematical science. It is really nothing more than an empirical study of past human group behaviour. I do not think we can predict exactly what is going to happen. But my feeling is that this reduction in confidence and in consumer demand might continue even if the economy is given a stimulus by the Government. I think the same thing has happened in the United Kingdom where the government is not applying particularly tight monetary or fiscal policies at the moment. In spite of that people are tightening up and nobody is spending. People are hanging on to their money and there is a rise in savings. I think we have to get right to the root of the problem and that is to control prices. I do not know why the Government backs away from this.

The Government cannot get at the problem unless it controls prices. If prices are not controlled this allows the Government and the employers to say that wage increases will affect the exporter, the farmer, the pensioner and so on and so forth. The Government is playing the farmer and the pensioner off against the wage earner. But if we have a context of fixed prices I believe that this playing off will not occur. What the wage earner is really seeking is to improve his lot against that of the employer - the profit earner. As far asI and the Labor Party are concerned, that is a highly desirable thing. We will not control the trouble with the economy, nor will we control unemployment until we get down and control prices because it is this inflationary psychology which is resulting not only in great inflation but also ultimately will increase unemployment. I have mentioned the problem of apprenticeships. I think that perhaps as an emergency measure we might have to do something to assist the intake of apprentices in the forthcoming year, because if the economy does improve for some reason in the near future we might find that apprentices will still not be taken in. The reason for this is that there have been retrenchments of tradesmen in the vehicle building industry in South Australia, and if the industry in up it will be those tradesmen who are taken on first because the apprentices are not immediately productive in the first couple of years of their indentures. So I would think that the chances are that if many of these boys are not taken on as apprentices in the next couple of months they will lose their opportunity of having a skilled occupation throughout their adult life. I think some emergency programme should be started to help the intake of apprentices.

But we must look at the whole cause of the trouble and set about controlling prices because this is what really matters. One other example of this psychology is to look at what people feel about the current wave of school leavers and how they are going to find jobs. About a month ago I visited a technical high school in my electorate. The headmaster said to me: 'How am I going to advise parents who are asking whether they should take their children away from school now?' He also said that everybody is so frightened about whether their sons or daughters are going to find employment in December and January that many of them are foregoing the final important part of their secondary education and leaving school in mid-term so that they can get in on the ground floor of the job market before the new year starts. I think this is a very sad state of affairs, but it is a pretty accurate account of how people feel about the state of the economy.

The main point I want to make is that it is just not sufficient - althoughI acknowledge that relatively speaking the problem of unemployment in rural areas is very great, it is still very great in the cities - to say that it is not just a matter of unemployment. There is also under employment, with people not working in the skills for which they have been trained. But these are the things that need to be done: Apart from the control of commodities and the control of prices, interest rates must be looked at quickly by the Government. I believe that in the present context high interest rates are not deflationary at all - that is if the Government is trying to bring about deflationary policies. I am not sure what the Government is doing at the moment because all that is happening is that high interest rates are being passed on as another cost, and this helps build up the inflationary psychology.

The final thing that really must be done-I might perhaps even have put this first - is to increase social service benefits, particularly unemployment benefits which are disgracefully low at the present time. I have said that consumer spending is low and this is one of the. things that has caused the Government worry. Surely these are the people who will increase their expenditure if we increase unemployment benefits because it is obligatory for them to spend the increased money that is made available. Many of them are living below the poverty line at the moment and ifwe give them extra money it will not only help them but also will give a fillip to the economy. I know that there are other honourable members who want to enter this debate so I will conclude by saying that I think some emergency assistance needs to be given to the State governments by the Department of Labour and National Service to assist with this great flow of school leavers who will enter the work force in the next couple of months. But most fundamentally we have to control the whole source of the trouble which is inflation. A Labor government will not shrink from the implementation of a system of Commonwealth price control, which is something that the Government has backed away from. We will give it the highest possible priority.







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