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Tuesday, 29 May 1973
Page: 2767

Mr McVEIGH (Darling Downs) - These Bills, which relate to the subject of Government spending, are very important because they deal with finance, and over the years political science has dictated that people in responsible positions must at all times be careful and deliberate in their spending of a nation's money. We can do what we like with our own money, but we must exercise responsibility in spending other people's money. It is somewhat disconcerting to know that at the present time we have as Prime Minister of this country a person who has stated publicly that he has no great interest in finance and who dismisses with derisive contempt all things financial. We honourable members therefore have placed on us an added responsibility to be the watchdogs of the Ministers and their departments because of the devolution of responsibility by the head of government. As always, we are fully aware of our responsibilities and, as has been proved by previous speakers from this side of the House, our contribution will be one of drawing attention to the salient features of financial irresponsibility and recklessness that are contained in the various Bills.

A government has a responsibility to legislate for the social, moral and cultural needs of all sections of the community and not just of a privileged few from the large centres of population. Recently in this House we have heard comments from such people as the Minister for Urban and Regional Development (Mr Uren) and the Minister for Social Security (Mr Hayden) which have overemphasised the circumstances surrounding living in the urban areas to the complete exclusion of rural and provincial city areas. I note that in Appropriation Bills Nos 5 and 6 certain sums have been set aside for the Department of Urban and Regional Development. The matter which causes the Opposition a lot of concern is the amount of compensation that will be paid for land resumptions for the purpose of creating growth centres. As a member of the Australian Country Party, I fully support the platforms and policies of that Party, based as they are on the solid philosophy of 'a fair go for all'. Our stance is for just compensation for all land resumed for the purpose of creating growth centres. We will not tolerate any land being resumed and frozen for endless years at a price which is not fair and reasonable. We are concerned at the Government's attitude to retrospectivity.

The Country Party can never be accused of standing in the path of progress. Ours, unlike the Government's, is not a path up the slippery slope of advancement which takes into account only one side of the problem; ours is a path of equal rights for all. We are concerned with justice. We are concerned with both sides of the question. It is worthless to do things by half; the other half might be the one that matters. I advocate that, where people are deprived of their assets in the name of pro gress, just compensation at realistic prices must be paid for the land resumed. A factor to be taken into account is the cost of resettlement and displacement compensation. These people may be unwilling sellers and, as such, their rights must be safeguarded. We are opposed absolutely to state landlordism. We uphold the right of private property and freedom of the individual.

Much has been spoken in this House recently by Government supporters who are desirous of pandering only to the cities of Sydney and Melbourne. But their tune was different when they were in Opposition. The honourable member for Macquarie (Mr Luchetti), who has given many years of excellent service to his electorate and to this Parliament, for which I compliment him, and who is a member of the present Government Party, said as reported at page 2932 of Hansard of 19 October 1972:

It is up to the Commonwealth to look at the development of the north and for once away from the dazzle and shine of the city. It should consider what it is costing the nation to continue developing the cities and then spend this money in the development of the inland of our country.

I ask: Why the change? Why the redirection of emphasis? We want to know this. At the best we can say that the Government is consistent in its inconsistency.

At the present time large areas of Australia, and Queensland in particular, are in the need of useful falls of rain to allow planting of winter grains, oilseeds and fodder crops. The age old enemy, drought, is hovering ever nearer, and people in rural areas and provincial cities are becoming anxious at the severity of the season. The recent announcement by the Minister for Labour (Mr Clyde Cameron) concerning rural unemployment relief grants has caused deep fears for the future viability of these areas. Already many farmers from the various shires in my area and in other areas are seeking employment with their local shire and city councils. The position is becoming desperate. I make a request that this Labor Government, notwithstanding that it is oriented to the metropolitan areas, continue the statesmanlike actions of the previous Government by making money available to alleviate unemployment in these areas. The list of people is growing rapidly. The conditions are deteriorating. Let us do something concrete now before it is too late.

Let us hope that confidence in these areas generated by an injection of finance will allay some of the fears that are being experienced. This money will not be wasted. It is for the provision of essential works. It is for productive work which aims to improve the quality of life in the areas. I hope Cabinet will act readily in this field and that by united decision and co-ordinated action it will overcome the confusion occurring and the drifting of people from the rural areas into the metropolitan zones. Hope is expressed that local government will have some latitude in deciding how to spend any money that is allocated. We want less centralistic control and more control on the local level where decisions can be more readily made according to the exigencies pertaining on the spot.

My colleague, the honourable member for Canning (Mr Hallett), this morning spoke about the future of building societies in the economic life of the Australian community. The Treasurer (Mr Crean) has gone on record, as the honourable member for Canning stated earlier, as saying where he stands on this issue of great fundamental importance. The Treasurer's statement about the financial policies of the societies was unfair as it contained a somewhat veiled innuendo as to the solidity and righteousness of their actions. On the Darling Downs, as in Western Australia, as the honourable member for Canning pointed out, some building societies have been in existence for almost a century and have fulfilled a service to the community for which there has been a most pressing need. I refer to the service of supplying housing finance and a method of investment by local people who wish to contribute to the solidity of their community. It is true to say that many homes would not have been built or owned but for the finance provided by these building societies. We on this side of the House seel; to ensure that they continue, as they have in the past, on a path of initiative, development and satisfying clients.

Many have expressed the view to me that the present Government seeks to nationalise these societies, to take over their assets, not by an overt act but by the underhand manner of placing impossible controls and restrictions on their activities. We fear a continuation of socialisation by stealth, as was evident in the recent Australian National Airlines Bill. My colleague, a member of the Country Party, the honourable member for Gippsland (Mr Nixon), drew the attention of the Parliament and the nation to the insidious proposals contained in that piece of obnoxious legislation in its original form. As the Treasurer is in control of the nation's purse strings, we seek a declaration from him without equivocation, without any evasion of the issue, as to what he intends to do in this direction. People, whether investors or borrowers, wish to know what the Government's policies are in this area. We do not want a display of superb political manoeuvring or the shady arrangements of the back room deal, the clever compromise that neither resolves disputes nor settles issues. We want a clearing of the air, a statement of fact.

Any examination and scrutiny of the economy, which I submit is the exercise in the debate on these Bills, must deal with inflation. This problem has been covered excellently by previous speakers on this side of the House who have exposed the Government's policy to the fullest. It is time, as we approach the winter recess, when the Government will not have to endeavour in this House to defend the indefensible, to consider the financial security of this country. In this regard I submit that since coming to office the Labor Government has committed the Commonwealth to an additional expenditure of $186m during the current financial year, 1972-73. This will result in an estimated Budget deficit in excess of $900m, representing about 10 per cent of estimated revenue. This represents the most expansionary Budget since 1967-68. The cost during 1972-73 of some of the major expenditure commitments undertaken by the Labor Government include: Increased social security pensions, $57m; increased war pensions, $8; defence Services pay, $28m; Aboriginal Advancement Trust, $llm; defence service homes, $5ra; State housing assistance, $6m; and State employment grants, $26m. It is evident that these expenditures may give rise to a situation of demand-pull inflation that will be additional to the current rate of inflation of around 5 per cent per annum.

The rate of inflation is likely to increase despite the measures to curb inflation that the Labor Government has impotently implemented so far, of which the most important are three in number. The first is revaluation of our currency. In regard to controlling inflation the main benefit of revaluing the Australian dollar in December 1972 was that it avoided a situation whereby it would have been extremely difficult to curb inflation due to the continuing inflow of overseas capital and the consequent increases in the supply of money. In other words, by revaluing the Australian dollar the Government facilitated the task of curbing inflation rather than implementing a policy that would have a substantial direct effect on the rate of inflation. I submit that rather than tackle the problem of inflation all the Labor Government did by the realignment of the Australian currency was talk about it. I would submit that in the present economic situation in Australia we want deeds not words.

The second measure to curb inflation was the increase in the ratio of statutory reserve deposits to total trading bank deposits. On 9 April 1973 the Governor of the Reserve Bank of Australia announced that the SRD ratio of the major trading banks would be increased from 6.6 per cent to 7.6 per cent of deposits. This measure obligates the trading banks to lodge additional assets with the Reserve Bank equivalent to 1 per cent of deposits held by the trading banks. This immediately reduces the trading banks' ability to make additional advances to customers, but in the longer term without any complementary action the overall effects of a rise in the statutory reserve deposit ratio on stabilisation objectives, such as full employment and price stability, are likely to be small.

The third anti-inflationary measure is in relation to prices. The Government has set up the Joint Parliamentary Committee on Prices and we have the proposed Prices Justification Tribunal. The inquiries and recommendations made by these bodies may well shame some firms into stabilising prices but acceptance of their directives will not be compulsory. Overseas experience, as previous speakers on this side of the House have said, indicates that voluntary price guidelines and in particular price policies that are not combined with guidelines for wage restraint are unlikely to have a significant impact on the rate of inflation.

That the Labor Government recognises that the rate of inflation may increase significantly in the absence of significant policy changes in the near future is probably best illustrated by the appointment of the so called task force headed by Dr H. C. Coombs, former Governor of the Reserve Bank. The task force has been specifically requested to recommend areas in which Government expenditure commitments made by the Liberal-Country Party Government can be reduced to enable the Labor Government to make further commit ments according to its order of priorities. It is evident that to avoid an increase in the rate of inflation it is likely that expenditure reductions will have to exceed new commitments, at least in the short term.

The Government appears to be under a delusion that the only way to right a floundering economy is to use as a deliberate instrument of fiscal policy a single edged attack on the items causing the problem. It completely ignores any restraints in the wage factor component of costs. In fact it deliberately encourages wage increases and union ' pressures. It advocates a 35-hour week, which would have disastrous consequences for our export industries because of increased costs. We heard in this House recently a statement by the Minister for Northern Development (Dr Patterson) concerning the price of wheat. What the Minister did not say - and in the charity of my mind, knowing the breadth and depth of knowledge of the learned gentleman, I know he is aware of the truth of what I am about to say - is that the cost of slicing and packing a loaf of bread is greater than the cost of the wheat necessary to produce the flour to make that loaf. Yet the Government says that labour is not a cause of inflation. How does the Minister reconcile this with the fact that it costs more to slice and pack a loaf of bread than the cost of the raw materials involved in its production. Does the Government not know that if there were an increase of 2c a loaf in the price of bread and this were passed on to the farmer, the farmer would have an increase of approximately 30 per cent in this section of his income. The same applies to the barley industry and to the butter industry. Is 'the Government aware of this? Does it not understand elementary economic reasoning?

We have witnessed increases in freight costs and butchers' wages, which were contributing factors in the recent consumer price index rise of 2.1 per cent between the December quarter of 1972 and the March quarter of 1973. But a significant reason for the increase in meat prices was the wages factor. It is worthy of note that an analysis of the movements in the consumer price index from the December quarter 1966 to the December quarter 1972 shows that the rate of increase in the price of all types of meat, with the single exception of beef, has been significantly less than the rate of increase in the consumer price index. On behalf of the meat producers of Australia who were being singled out for attention by the Government I desire to inform this House and the nation of the following facts: Where it is popular to make a hue and cry in order to gain political capital anyone can invoke the theme 'the culprit is obvious', and it is easy to isolate and implement direct and specific controls to eliminate the pseudo-problems. However, it is important to understand the underlying causes of the sudden increase in meat prices and to recognise that the causes are largely unrelated to the general factors causing inflation in other sectors of the economy, that the recent rates of meat price increases are likely to be short-term, and that the imposition of direct controls to stabilise meat prices in the immediate future is likely to aggravate the free market responses that are likely to stabilise meat prices in the longer term. I submit that the propaganda that was directed against the Australian meat producers was unfair. I am opposed to moves which emanated from the Government side of the House which sought to implement policies to deny the meat producers of Australia the same standard of living as the rest of the community. These moves are most unjust and unfair. The Australian Meat Board summarised the reasons for the sudden increases in lamb, mutton and beef prices as follows: The recent lamb price increases are a result of a substantial reduction in supply due to 3 factors.

Mr DEPUTY SPEAKER (Dr Jenkins)Order!The honourable member's time has expired.

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