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Wednesday, 28 March 1973
Page: 789

Mr HAYDEN (Oxley) (Minister for Social Security and Acting Treasurer) - In the course of the speech of the Leader of the Opposition (Mr Snedden) which for some strange reason seemed to be largely irrelevant to the real issue to which his remarks should have been addressed, at least some light relief was provided by the way in which he discoursed. When he referred to breaking the back of inflation between 1971 and 1972, I could not help but think that it would have been more appropriate for him to have said that he had broken the back of the economy with the disastrous economic policies that he introduced in 1971, against the advice of every economic authority in Australia, outside of the Treasury, I understand, certainly against the advice of the Reserve Bank, academic and practical economists, and industrialists. To achieve what? To break the back of inflation? Rather he created massive unemployment, a complete flattening out of demand and a complete destruction of the rate of growth and investment in the economy. So, that was the back-breaking that occurred in this period.

The Government's move to set up the joint Committee on Prices is so obviously sensible that it is only possible to wonder why it has not been done before. Any criticisms which the Opposition may make of the proposal should be considered in this light. For years we have been talking in this House about inflation and rising prices, arguing about the causes and effects of inflation, defending or attacking large firms like the Broken Hill Co. Pty Ltd when they raise the prices of the commodities that they sell. Nobody has questioned, or could question, the fact that it is the proper function of Parliament - indeed one of its major functions - to consider such things. Who then can object to a move to enable Parliament to deal with prices in a more profound and better informed fashion?

The terms of reference proposed for the Joint Committee have been drafted deliberately so as not to restrict the inquiries of the Committee, which will have the power to discuss any matter relevant to prices, and to receive expert evidence from economists, accountants, lawyers and others, from within the Public Service or elsewhere. Inevitably, some of the evidence which the Committee will hear will support Government policy, and some will be critical of Government policy. It will be for the Committee to decide its collective opinion on such evidence, and in doing so it will be helping to raise the level of discussion in the Parliament, and assisting the Government in the formulation of policy. We, the Government, have no fear of criticism, still less of the provision of information for public use. Why the previous Government did not wish to encourage the informed discussion of issues of great public importance it is not necessary to discuss now; but members of the Opposition might well feel some sensitivity on the subject.

The proposed Joint Committee will have the dual function of considering complaints about prices from the public in specific cases and, as the Treasurer (Mr Crean) pointed out when he moved the motion to establish the Committee, of considering 'standard barometers' such as the consumer price index and the various components of that index. That is, it will be able to move freely from the general to the particular. Rather than being in the position of not being able to see the wood for the trees it will, to stretch the metaphor, be able to consider the wood and the individual trees, separately and together. This function of considering complaints might be criticised as being a waste of the time of the Committee or, on the other hand, as being a kind of political public relations gimmick. But such criticisms would be misconceived.

There is obvious merit in the establishment of a committee of Parliament to which the public can address its grievances about movements in the prices of particular goods, the pricing practices adopted by manufacturers or retailers, or even the pricing practices of a particular shop. In many cases such complaints will be better dealt with by consumer protection bodies, or perhaps the Trade Practices Tribunal. If so, the staff of the Committee can pass on the complaints to the appropriate authorities. But the fact that the complaints have come to the Committee will mean that it will be better informed about the multitude of business practices which are relevant to price movements. It is quite clear, for example, that a major contributing factor to inflation in Australia, and indeed elsewhere, is the ability of sellers to avoid absorbing cost increases or to avoid looking for ways of increasing their own efficiency as a response to cost increases. They can avoid this because of the existence of high levels of unused protection against imports in certain sectors of the economy, the prevalence of monopolistic and oligopolistic market structures, and restrictive trading practices generally.

It will not, of course, be the function of the Committee to investigate all complaints received by it. Nevertheless the fact that the Committee will exist and will express its willingness to receive and to take note of complaints will be a valuable contribution to increasing the responsiveness of the Parliament to public concern on price movements and pricing practices. As well as considering complaints, the Committee will be able to consider on its own initiative any particular price, or price structure, or pricing practice. It is hardly necessary to stress the potential importance of the proposed Committee. The study of the movement of the prices of some groups of commodities relative to others, and the study of movements in the general price index level as expressed in such indicators as the consumer price index, embrace virtually the whole scope of the discipline of economics, and impinge on every area of economic policy. To a large extent that answers some of the concern which has been contrived by the Opposition in the amendment which it has moved. The amendment states that the Opposition feels that the Government has wilfully and malevolently excluded the public sector from consideration. This is not so, and I will indicate later further reasons why this is not so.

Thus, for the first time in the Australian Parliament, the Government is proposing that facilities for the Parliament to concern itself directly and on a continuing basis with the

Important economic questions of the day should be provided. But let it be understood that the Government does not claim that the Joint Committee will be a major instrument of Government policy in combating inflation. The main use of the Committee will be to enable the Parliament to inform itself and the public on price movements. If the resulting publicity which may arise concerning price increases in a particular industry, or by a particular company, is such as to make companies hesitate before raising prices, or even to forego price increases, this is all to the good. We shall be delighted if the effect of the deliberations of the Committee is along these lines. But we do not intend to depend on moral force alone, strong though that may be in the new context of a Government concerned with the welfare of the community.

We have under way a body of legislation and administrative action which will provide the framework for a tough and efficacious anti-inflationary policy. We began, of course, by recognising the realities of the international monetary system and our own enormous balance of payments surpluses, and revaluing the dollar. The correctness of this decision has since been generally acknowledged. For example, Professor Paul Samuelson of the Massachusetts Institute of Technology, currently visiting Australia, who is winner of the Nobel Prize for economics and one of the best-known and most respected economists in the world, has expressed his agreement with the Government's decision. He was, in fact, pictured in a newspaper this morning with a smiling Leader of the Opposition, which no doubt confirms that gentleman's private agreement with revaluation, and his tacit acceptance of the correctness of a move which the Country Party would not allow him to make during his own less than glorious term as Treasurer. The revaluation will act to relieve existing and potential inflationary forces originating from overseas, and will reduce costs for Australian industry.

Further, we are establishing a prices justification tribunal which will be able to investigate and to act upon proposed price increases in a particular industry or by a particular company. The relationship of this tribunal to the Joint Committee on Prices will, of course, not be direct. Nevertheless, the existence of both bodies and their mutual knowledge of each other's activities will undoubtedly contribute to the effectiveness of the Government's anti-inflationary policy. But this is not the occasion for discussing the proposals for the price justification tribunal. It is sufficient to point out that the Government is not going to stop at the setting up of the Joint Committee on Prices. What it is proposing in the present resolution is a quite epoch-making addition to the operation of the Australian Parliament. It is proposing the establishment of a joint parliamentary committee which has the potentiality, with the goodwill and effort of the members of both Houses, of becoming a body comparable to the highly respected Joint Economic Committee of the United States Congress. Surely this is an aim in which all members of the House can concur. Finally, we reject the amendment which has been proposed by the Opposition. What is being proposed in the amendment, if it is interpreted in its broadest context, is that this committee, for instance, would investigate the fiscal and monetary policies of the Government. The fiscal and monetary policies of the Government are regularly subjected to assessment and intensive scrutiny within this chamber. This is part of the functioning of this chamber. It would be pointless writing in such broad terms of reference as would allow such an unnecessary duplication to take place in the operation of this parliamentary system.

Again, one could conceive a situation where an effort could be made to sidetrack the whole effort and value of this committee by proposing that an investigation should be made of a public undertaking, for instance such as the Post Office. This can be done separately, and is in fact being done currently by this Government. If the Opposition does in fact harbour this sort of suspicion and concern then a legitimate question arises in one's mind as to why it did not act in the past 23 years if it is so concerned about the contribution of the public sector to inflation to prevent any unnecessary inflationary tendencies from that sector. Of course, what the Opposition says is spurious and of course it has merely been put up as a debating point by probably the most debatable debater in this House, the Deputy Leader of the Opposition (Mr Lynch).

The very fact that the economic components of the consumer price index, for instance, can be subjected to scrutiny would give a wide-ranging opportunity to the committee to assess not only the private sector but also the public sector at least to the extent - and it is a considerable one - that there are components of the public sector in the regimen of the consumer price index. The committee in the final analysis anyway has considerable power of determination because a power of authority is given in section (1) (c) of the terms of reference which reads:

Such other matters relating to prices as may be referred to the committee by resolution of either House of the Parliament.

That is an authority which is fully and always available to the committee. If the committee is of the opinion that some section of the public sector is such that it deserves the committee's attention, then the committee accordingly has full authority to act on its own judgment to ensure that adequate analysis is made in that direction.

I support the motion which has been moved by the Treasurer and I reject the amendment which has been put forward by the Opposition. The amendment contributes nothing to the very valuable proposals that have been embodied in the Treasurer's motion, and given the stringent and, one would say, acidic criticism of this proposal by members of the Opposition, one cannot genuinely believe that those members want to improve the effectiveness of this committee in any way.

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