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Thursday, 16 September 1971
Page: 1474

Mr GILES (Angas) - We have just heard another cynical approach to economic problems by my colleague from the Opposition, the honourable member for Oxley (Mr Hayden). He based his speech - although he did not rely on it so much as did the honourable member for Adelaide (Mr Hurford) or the honourable member for Kingston (Dr Gun) - on the fact that he feels that there should be more stimulus to the economy at this time. This spells out the very great difference indeed between the approach of the Opposition and that of the Government parties in this House. There are areas of Australia, my own electorate of Angas being one, where every small businessman, every small hotel, every small company, every small shopkeeper and everybody else who is in business and employs only a small amount of labour is now feeling the effects of the excessive rises in wage costs that have occurred in my own State under a Labor Government in the last 12 months, and, I presume, throughout this nation.

Mr Foster - What a lot of rubbish, and you know it.

Mr GILES - If the honourable member for Sturt would like buy in, may I remind him that one of the problems confronting South Australia at present is that for many years we have been exporting 85 per cent of our manufactured goods - being a frugal people - to the eastern seaboard, to bigger markets. But under the present government in South Australia the margin on which industry has to operate to sell to the eastern States is getting smaller and smaller. If this is another example of the philosophy we have heard put forward tonight that the economy needs some stimulus then I hope that those people listening to the broadcast of this debate appreciate the fact that there is a deep philosophical difference between the Government parties and the Opposition. All of the major economists that I have access to - and I suppose they might not be as evident as some other people - I do not know one who does not think that some heat should be taken out of the economy at this time. I do not know one who would say when some stimulus might be needed in the future, but, to return to my point, this is where we see the difference in approach between the Opposition and the Government.

In my electorate - and other members can talk about their own electorates - the most serious question that has ever faced the farming community, wineries and many other industries is that they will have to either increase production hand over fist, retrench or put up prices. Over and over during this debate we have heard

Opposition supporters try to skate around the issue of increased prices. It is not a fluke that prices have increased. It is not altogether the fault of the honourable member for Sturt, I suppose, that they have increased. It is not the fault of the Conciliation and Arbitration Commission, but it is, I maintain, the fault of the left wing of the Labor Party and the outrageous unions which are putting up demands for excessive wage increases at every available opportunity. This is the reason that my electorate today is feeling the pinch. How the honourable member for Riverina (Mr Grassby) can go into his rural electorate and try to pretend to the electors that this is not the core of the problem is beyond my comprehension. It seems to prove that the honourable member for Riverina has an almighty sway over some of his electors in some way or other. If that is so I give him credit for it, but if that is not so let us see what happens at the next election to the electoral figures in rural seats held by members of the Opposition who believe that the economy now needs some stimulus.

Mr Grassby - Of course it does. In the countryside we have unemployment.

Mr GILES - I wish the honourable member would tell me a little more because I should be delighted to listen to him. If a stimulus is now given so there can be no halt to the pressures on costs that affect all the people in this country. Time and again we have had examples of this.

Last week in South Australia we had a new industrial disturbance, for a change. This time it was a milk factory workers' strike. In the last 8 months the milk factory workers have had a 6 per cent rise, the 6 per cent national wage rise and another 8 per cent rise. They have now gone back to work in a pro tern fashion prior to putting forward another log of claims. I just ask in passing: Does this help the housewife or the family which wants milk? Does it help the dairy man who is not exactly in an affluent position, in spite of some Government subventions, at this time? Is it not about time that we had some regard for and some understanding of each other's problems? I hope that people from time to time can say they have some understanding, but I am getting very fed up with those people who are quite prepared to put the industry in which they are involved to the wall without any thought of the implications of these wage demands. I am not concerned, as I said a little while ago, about the actions of the Conciliation and Arbitration Commission because I think that these at least are meant to be founded on proper economic criteria. But what have not been founded on proper economic criteria have been the recent strikes at, for instance, the Uniroyal Tyre Service Factory and in 101 other places that honourable members will think of in terms of their own electorates. These things are not fair. These things are not, in my opinion, examples of proper Australian tolerance and understanding of the other bloke's point of view.

In his speech the honourable member for Adelaide referred to this Budget as 'a blueprint for stagflation'. As far as I can understand his own blueprint it was for excessive public sector expenditure, excessive wages, excessive costs and excessive centralisation. Both the honourable member for Adelaide and the honourable member for Kingston obviously had little time for the proposition that the payroll tax - this was mentioned earlier in the day - should go to the State Governments. They made it quite plain tonight that they believe in the centralised power of Canberra over all States. I am not prepared to argue whether it is right or wrong but I do say that intrinsic in this proposition and intrinsic in the remarks that the economy needs more stimulus is the fact that we must have larger and larger bureaucracies and larger and larger civil service numbers. Might I demonstrate this point? The honourable member for Adelaide said, amongst other things, that there should be a fairer share of the wealth of the nation going to the people who work. I suppose that here he is thinking sectionally. I would not really expect an accountant who talks of himself as being the watchdog and who has claims to being an economist to read a newspaper such as the Australian 'Economist', but if he did he would see that the honourable member for Wakefield (Mr Kelly), or some such character who writes under a pseudonym, has in articles over the years produced figures that surely illustrate a truism that is worthy of note. It is that over many, many years there has been no real difference in the proportion of profits that go to management, on the one hand, and labour on the other. Every now and again one may get a bit ahead - perhaps there is a difference in costs or prices - but there will be a swing back again. Over the years many left wing trade unionists have, I think, wrongly convinced the Australian people that they can get a larger share of profits from industry. In spite of all their efforts there has been no difference of note. Let us follow on from this. If there are to be increased wages for workers in industry and if the price of the article produced is not going to increase then one of several things must happen. There must be either increased productivity or, can we say, increased productivity will be illustrated by a falling off in the work force from an increase in automation and technology. The only way that the nation can progress is by getting wage increases that are valid and well substantiated.

The honourable member for Adelaide also referred to price policies and wage policies. I was hopeful for a while. I thought to myself: 'We are going to hear something a little new'. But very soon the honourable member called it price control and got back to the antediluvian piece of antiquity, founded on this dreadful philosophy of a rigid cost-plus system; one which destroys incentive and one which would penalise the small fast-growing firms which need to finance their capital requirements out of their own resources. It would also reduce the general flexibility of the economic system. In a nutshell, it would retard economic progress. I would hope for something a little better than that.

If I might return to the Budget, the fact that I think we should all absorb at this stage is that the Government, through this Budget, has tried to take some heat from the economy. It has tried to sop up some of the liquidity. It has aimed, where possible, to try responsibly to control or to bring controls to bear in order to ensure the economic competition that should apply between one firm and another and between one individual and another. The Government has aimed to cut down on the rate of increase in public sector expenditure, which is a very important side of this Budget and one to which I have noticed the Opposition has not referred during this debate. Yet at the same time the Government has continued to provide increased finance to State governments. This is a very responsible Budget in that regard, and in all of the years I have been a member of this Parliament I believe that this Budget has attracted less criticism than any other Budget I can remember.

Of course, the reason for this is quite plain. Whether the Opposition likes it or not, the reasons for the stringencies in this Budget are well recognised by the Australian people. They know of the tremendous times we have had with average wages increasing by 20 per cent in a year, and higher increases in some States. This cannot continue forever without unduly penalising those people on fixed incomes and some people in the rural sector whose returns are based on export parity. Unless the price for their goods moves upwards, these people have a very hard road to hoe. That is the reason why this Budget has been fairly well received by the community at large and is not to the satisfaction of honourable members opposite. In the short time left to me I shall continue on this theme about the present state of liquidity in the economy which was demonstrated, I thought very well, by the Prime Minister (Mr McMahon) today when he referred to an increase of $157m in trading bank deposits for the last month, to give some idea of the potential for increased expenditure let loose in the economy.

I should like to make a suggestion that I think deserves some thought. I refer now to private sector investment. I believe that it is wrong thinking to suppose that an increasing number of Australians should not become involved in investment in Australian mining and other ventures. More specifically, I refer to mining for petroleum, both oil and gas, and for minerals. I suggest that section 26a of our current income tax legislation is not, as presently worded, capable of giving the type of interpretation which today's needs dictate. It is a restrictive section which breeds doubt in the minds of investors and conveys a state of affairs that bears no relationship to the requirement of a modern dynamic society. I beseech the Government and the Treasurer (Mr Snedden) in particular to have a look at the vast potential that exists in the ordinary Australian's pocket today, which could be used to help that Australian become a partner in Australian enterprises. I refer more particularly to the developmental ventures, or as they are commonly termed, risk ventures. A nation such as Australia today needs to utilise all available resources for efficient economic growth and development. Not only is this so, but it is becoming increasingly obvious that Australian investment is slowing down, and the reasons for this are not too difficult to see.

Principally, it can be summed up, in the few moments remaining to me, in these words: Any small investor - and let us face it, we are a nation of gamblers and speculators in our own right - can hope to become the equivalent of the shareholder in Broken Hill Pty Co. Ltd of 80 years ago. Of course, more and more Australians over the years, particularly up to the time of the decline in the value of Poseidon shares, were prepared to do just this. But it is a statistical fact that for every 50 small companies mounted to invest or to explore the potential of these ventures, only one is ever effective. If a person resells shares at a profit, under section 26a of the income tax legislation, it is very difficult to prove to the Taxation Office that that person ever invested for any reason other than speculation. If that person did speculate, then according to his income he can be taxed at a rate up to 30 per cent on the difference between what he paid for the shares and what he sold them for. This is having the effect of depreciating the amount of private capital invested in small Australian firms.

I should like the Treasurer, when he gets his notes on the speeches that have been made in this Budget debate, to look at this question because I do not know that industry always comes good with the right corrective ideas in relation to this matter. There are problems concerning what happens to a capital loss if we are going to allow capital depreciation. There are problems which have been easily overcome in other countries but in respect of which we seem to have become quite bogged down, with our traditional taxation law. I believe that this is something at which the Government, in a relatively young and dynamic, nation such, as Australia, must look very carefully, because we have pride in our ownership of shares, houses, land, clothes and cars - as a nation we are probably second to none in this regard. If we ignore this question we do so at our peril and we will lose some of the dynamism that should go towards promoting this nation and the type of development that we need in the future. On our shoulders - on the Government's shoulders at this time - rests the destiny, in a very large way, of future generations of Australians. I hope, even if the Opposition does not do so, that future generations have the freedom, the surplus money and the means to invest in this nation so that it will progress towards the type of society that I know fundamentally all of us in this chamber tonight want. I voice my objection to the amendment and support the Treasurer in his first Budget with all the pride I can muster.

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