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Thursday, 10 March 1977
Page: 115

Mr KEATING (Blaxland) -The address written for Her Majesty outlining the Government's program was positive proof of a total lack of any policy direction by the Government. Apart from a few glib references to the productive area of the private sector, the Speech was characteristic of the intellectual bankruptcy of the Fraser Government. Australia's economic problems were dealt with blithely with this one line:

My Government is not only taking action to restore the economy . . .

Then the Speech goes on to waffle about the fundamental well being and freedom of the Australian people. The Speech characteristically dwells upon the miniscule housing voucher pilot scheme and the family allowance scheme which, it is worth noting, took money on the one hand from the bread winner of the family and handed it back to the mother without effecting a cost to revenue. Yet that initiative is promoted in the address as being a great social change. If the Australian people were looking to that Speech for any guide to the Government's economic policy they were badly let down. This Government has now made it clear that it has no policy whatsoever and that it intends to bluff its way through to the next election with an attack upon the work force on the wages front as the only basis of its political survival.

Let us take the opportunity of looking at the promises that won the Fraser Government power in 1975. We will note that, as I said earlier, characteristically they are absent from the Speech of Her Majesty.

During the election period the main plank of the Government's platform was to reduce inflation and unemployment. Another was to abolish rural poverty and to increase the real level of farm incomes. Then there was the promise to start some of the major mineral projects that have been waiting upon world markets for commencement. Not one of these promises rated a mention in the speech by Her Majesty. This was because the Fraser Government has been shown to be unable to honour the commitments that it made during that general election campaign.

The point is that the economic managers have failed to perform and none of these important commitments has been fulfilled. Yet the Prime Minister of this country (Mr Malcolm Fraser) was prepared, as a Leader of the Opposition, to tear up the social fabric of Australia, abuse the prerogatives of the Senate and to do anything to tear the Labor Government out of office so that his Party could, in its view, seal the doom of the Government which was destroying the economy. He was given the prime ministership of this country without a majority in the House of Representatives and elected to government to do as I said, that is, to reduce inflation and unemployment, to abolish rural proverty and to start some developmental projects in this country. He has failed on all 3 counts.

Let us consider the economy and some of the indicators which tell the tale of the performance of this Government. I refer to the production statistics. The latest production index of the Australian and New Zealand Banking Group Ltd shows production in Australia to be stagnant. The Australian Bureau of Statistics production statistics for January show falls in output levels exceeding rises at a rate of approximately three to one. In retail sales the picture is the same. The momentum appeared to pick up somewhat in November but fell off dramatically in December. When deflated for price rises, retail sales at the end of December were at the June level. Retail sales in January fell a further 2.5 per cent. Yet the Prime Minister wants to reduce spending power by reducing wages and at the same time is telling people to have confidence and to spend their money. On what basis can any Australian employer invest in productive capacity when sales are down and capacity is presently underutilised? Of course, there cannot be any improvement in the investment picture and, therefore, there can be no improvement in job creation.

Take the rate of inflation as an example because this was a single solitary policy plank harped on by the Fraser Government during the general election campaign. The consumer price index increased by 6 per cent in the December quarter, bringing it to the highest level since the Korean War in 1951, which was a record. The Treasurer (Mr Lynch) even claimed that this was not a true indication of the picture. He said that there was the Medibank blip. If he wants to refer to the Medibank blip, it is a consequence of the wilful policy of the Prime Minister who, on an ideological basis, broke another specific election promise, upset the Medibank arrangements and imposed this cost upon the community. In fact, it was a tax which led to an increase in the cost of living and showed up in the index. Now the Government is running to the courts trying to squeeze the Medibank component of the 6 per cent out of wages. In other words, it wants to let the person in the street carry the total cost of that without being compensated for it in their wage packets.

Even without the Medibank component prices rose in that period by 2.8 per cent. This was happening before the effects of the devaluation were even felt. In the last 6 months of 1976 the CPI rose by 8.2 per cent. Honourable members should compare that figure with the figure for the last 6 months of the Labor Government in 1975. The rise then was 6.4 per cent. So much for the economic management of the Liberal Party. Within 12 months of the Government coming to office there has been a 2 per cent increase in the CPI above the increase for the same 6-monthly period when Labor was in government. Of course, the Medibank blip to which the Treasurer referred will blip on all year. He will have the first quarter blip, the second quarter bhp- the blip will last a whole 12 months and we shall see a massive increase in the CPI. Yet the Government will have the temerity to say to the Conciliation and Arbitration Commission that if it passes on the 6 per cent increase it will jeopardise the economy. Now Mr Justice Moore has to try to work out a way out of the problem. He has to try to determine a new basis of assessing the index and to try not to pass on the 6 per cent.

When we said some time ago that the Government needlessly had upset the Medibank arrangements, that it should leave Medibank alone in line with the clear promise the Prime Minister gave, he pooh-poohed the scheme and introduced this abortion of a thing we have now. People, of course, now have to pay the money out of their back pockets. This is showing up in the index. Yet the Government, which said it would stand by the principle of wage indexationanother clear promise- is now backing off from that principle and wants to refuse the work force adequate adjustment, which it was given under this indexation arrangement.

To add insult to injury, the devaluation was the final policy step which capped and sealed the doom of the Fraser Government, in economic terms at least, within the life of this Parliament. This decision, hastily entered into for the benefit of a couple of sectors of the economy, when added to the mixture of prices, will see Australia settling down to a level of hyperinflation during this year. Of course, this will have consequences in interest rates, inflation and, therefore, unemployment. So after 15 months of government all that we have seen from the great economic managers- the representatives of the establishment, the big banking and finance men- is the prospect of a bout of very high inflation. When one considers that the Labor Budget was thrown out because it was said to be such a bad Budget and not able to deal with the problems of inflation one can see the phoniness of the people who oppose us in this chamber. No political party in this country has ever survived politically the ravages of unemployment and inflation. I am now of the view that these problems will not be solved during the life of this Parliament.

The level of unemployment has reached a post-war record. At the end of January it represented 5.8 per cent of the population or 354 600 people. Of course, that is a very low figure because a lot of people are not registering as unemployed and overtime is falling away. Overtime hours worked fell to 2.2 hours in December, which is back to the low levels of 1976. Work force participation increased by 100 000 people fewer than in the previous year. With this level of unemployment there is again an absence of people spending because they are not employed. They are not receiving adequate incomes, therefore there can be no consumer recovery. Without consumer recovery there can be no investment. Without investment there can be no job creation. So we have a vicious circle. But when the Labor Party when in government tried to introduce a wage indexation policy to slow down wage increases on the one hand and a slow cutback in the growth in government expenditure on the other- a happy mix in the Budget which would have reduced and brought these distortions into some sort of harmony- the Budget was thrown out because of the political tactics of our opponents.

We find that under the restrictions of the other arm of the Government's policy, that is, its monetary policy, building society finance for home purchases and construction fell by 15.7 per cent m January, reflecting the severity of the Government's monetary policy. Property developers are falling over one after the other. All of the finance companies in Australia are writing off huge losses which came from the property boom earlier in the 1970s. But this is a symptom of the monetary policy of the present Government. It is sticking to a rigid rate of growth in the money supply, though the Treasurer is not admitting it. The Government has forced upon Australia by stealth a credit squeeze of fairly massive proportions which probably will lead to an increase in interest rates and a severe curtailment of the amount of money available in the community for lending. So the building industry and other industries which survive upon the availability of finance will have no opportunity whatsoever to get themselves off the ground and to get started again. Of course, the severity of this squeeze is affecting some States more particularly than others.

If one looks across the board at the monetary policy of the Government, unemployment, inflation and the performance of the Government one sees a dismal failure by the Government with no prospect in the life of this Parliament of any improvement at all in the economic indicators. We will have a crude policital ploy by the Government to tough it out, to brave face the indicators and to say, as the Minister for Post and Telecommunications and Minister Assisting the Treasurer (Mr Eric Robinson) said, that the unemployment figures are a myth. The Government will take this line of approach and turn the whole attack back on to the work force. There will be confrontation with the unions about the industrial bureau and the like and pressure applied to reduce the real level of wages. This will be the Government's policy approach which it believes will carry it through successfully to the next general election. It will need a lot of luck for that to happen because one thing that the dismissal of the Whitlam Government did for the Australian community was to raise very sharply the level of political awareness of this community. The community will not tolerate these broken promises of and lack of performance by the Government, particularly when it was elected on the basis of those promises. We recall the ruthless manner in which it came to office on the specific promise of reducing inflation and unemployment. It failed in those specific areas.

I turn to the question of resources. As I mentioned earlier there are 3 areas of undertaking: The economy; the restoration of rural incomes and the abolition of rural poverty; and the improvement on the resources front. After 3 years of attack and vilification by the present Government upon the former Minister for Minerals and Energy, Mr Connor, for failing to start new projects, the present Minister for National Resources (Mr Anthony) and the Government have not one new major project off the ground in 15 months- not one! Yet this alleged failure was again one of the reasons why the previous Government had to be thrown out. The export approvals which had been given by the previous Government have been repeated. The Government has said that it will allow the Norwich Park company to export its coal. It has given the same kinds of approvals in respect to a couple of other projects. But in fact no commencements have occurred in this respect.

The greatest demonstration of the ineptitude of the Government and particularly of the National Country Party was the dismal performance of the Acting Minister for National Resources, Mr Nixon, on his recent visit to Japan. Mr Nixon and Mr Sinclair, 2 of the senior Ministers on that delegation, failed to exact any important commitments from Japan in the minerals area whatsoever. They chased only minor agricultural concessions and allowed the Japanese once again to reassert their bargaining dominance in the mineral resources area. They achieved a small increase in beef quotas and chased some school lunch franchise. These 2 Australian Government Ministers lead a major delegation to Japan and come back with some increase in the beef quotas and school lunch franchise. Mr Nixon attacked the work force in the Pilbara. He obligingly accepted the assurances on export tonnages for coal and iron ore which were given by the Japanese and which blind Freddie knows will not be honoured. Of course the Japanese saw him coming and gave him the line which, of course, the Labor Government had refused many times.

It was also interesting to note that Mr Nixon on returning to Australia said that he was happy to accept the premise of the Ninayama agreement of 1975 for increases in the amount of coal to be sold from Australia to Japan. When the

Labor Government announced the agreement between Nippon Steel and the Australian Government, it was pooh-poohed as a confidence trick, as a phoney ploy, to take attention away at the time from the loans affair. Now of course the Government falls back on the agreement and says that in reality it does exist and the Government will depend on it. There was no discussion of natural gas exports and there was no resolution of Japan's interest in the natural gas question, which I thought was one of the prime considerations. Of course the Government has been silent on the information which we should have gained on what commitments it made with the Japanese on uranium. Overall the delegation retreated from Australia's hard-won negotiating position of recent years and failed to establish any significant advance in the trading relationship between Australia and Japan.

The Press had the hide to report that the trip was successful and was a new step along the way in building relations between Australia and Japan. What happened a couple of weeks ago? The Japanese resource negotiators came here to try to convince Australian companies and the Federal and State Governments that they could not afford price increases and that there would have to be reductions in tonnages. The whole visit turned out to be a complete and total flop. Again these great business managers, these men of finance, banking and commerce, went up to the industrial colossus in Japan and were sent packing back to Australia empty-handed. Now the Australian extractive industries are saying: We might not have liked Connor but at least we got profits out of him'. The coal price increased 350 per cent in 3 years of the Labor Government. We went to Japan and made it clear that Australian resources were to be sold at world parity prices and no less. Now the industry is calling on the Minister for National Resources to do the same and to stop persisting with the foolish notion that it is a commercial transaction with the Australian companies dealing commercially with Nippon Steel or with the Japanese steel mills. The Japanese steel mills are a cartel. They have Nippon Steel and Sumitomo negotiating for the whole of the industry. The Government backs them right to the hilt. Anyone who speaks of 'Japan incorporated' is certainly very much to the point. One must admire the Japanese for it. They are sensible about the way they do their business. This Government persists with the notion that some south coast coal producer can go to Japan and negotiate a commercial deal. The steel mills just devour them one after the other. These producers cave in on prices and of course the whole industry loses. On 30 000 tonnes of coal the amount involved would be $60m. In iron ore we are losing up to $150m a year in income because the Government will not exercise its proper authority under the export control powers. The industry now has had a gut- ful of the Government and its nonsense about commercial enterprise and the rest. The industry wants some performance. There is an adage that in the days of the Labor Government there was no confidence but plenty of business; in these days there is plenty of confidence but no business. After a while it starts to hurt. Industry in Australia requires this Government to produce the goods that it promised in the days when it was in Opposition.

I deal briefly and lastly with agriculture. For 3 years we heard the constant bleating by the National Country Party and the Liberals about the state of Australian agriculture. Yet in 15 months not one substantial thing has been done for the agricultural industries in this country. We heard a debate last week about beef. In 15 months the Government has extended the States grants beef assistance legislation by $ 15m only. In the Labor Government's term of office $47m was given to the beef industry. The Government lifted the export levy charge on beef and gave it back to the exporters. The industry received nothing from the levy. Throughout the 3 years of Labor Government the Country Party encouraged extra beef production.

Last week I read all of the speeches of the Leader of the National Country Party (Mr Anthony) urging the beef industry to increase production. This week he is talking about withholding beef from the market so that the price will go up. The Government has done absolutely nothing. The Bureau of Agricultural Economics estimates on net farm incomes are catastrophic. They indicate a complete social crisis in the countryside. I will refer to what the Bureau gives as projections for 1977 of net farm income as a return for capital investment, management and labour per week. In 1 974-75 the figure was $ 1 86; in 1975-76 it was $162.33; and the projection for 1976-77 is $125.87. The labour projection is $169.48. One can see quite clearly the dramatic fall which is taking place in rural incomes and one can witness the fall in property values in this country.

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