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Thursday, 15 March 1973
Page: 627

Mr CREAN (Melbourne Ports) (Treasurer) - I move:

(1)   That a Joint Committee be appointed to inquire into and, as appropriate, report upon -

(a)   complaints arising from prices charged by private industry;

(b)   movements in prices of goods and services in particular fields or sections of private industry, for example, as measured by price indices; and

(c)   such other matters relating to .prices as may be referred to the committee by resolution of either House of the Parliament.

(2)   That the committee consist of four Members of the House of Representatives nominated by the Prime Minister, two Members of the House of Representatives nominated by the Leader of the Opposition in the House of Representatives, one Member of the House of Representatives nominated by the Leader of the Australian Country Party in the House of Representatives, two Senators nominated by the Leader of the Government in the Senate and one Senator nominated by the Leader of the Opposition in the Senate.

(3)   That every nomination of a member of the committee be forthwith notified in writing to the President of the Senate and the Speaker of the House of Representatives.

(4)   That the members of the committee hold office as a joint committee until the House of Representatives expires by dissolution or effluxion of time.

(5)   That the Prime Minister nominate one of the government members of the committee as Chairman.

(6)   That the Chairman of the committee may, from time to time, appoint another member of the committee to be the Deputy Chairman of the committee and that the member so appointed act as Chairman of the committee at any time when the Chairman is not present at a meeting of the committee.

(7)   That the committee have power to appoint subcommittees consisting of three or more of it member and to refer to any such sub-committee any of the matters which the committee is empowered to examine

(8)   That the committee have power to send for persons, papers and records, to move from place to place and to sit during any recess or adjournment of the Parliament.

(9)   That the committee have leave to report from lime to time and that any member of the committee have power to add a protest or dissent to any report.

(10)   That five members of the committee constitute a quorum of the committee, and two members of a sub-committee constitute a quorum of that sub-committee.

(11)   That in matters of procedure the Chairman or Deputy Chairman presiding at the meeting have a deliberative vote and, in the event of an equality o voting, have a casting vote, and that, in other matters, the Chairman or Deputy Chairman have a deliberative vote only.

(12)   That the committee be provided with a' necessary staff, facilities and resources.

(13)   That the committee recognise the need for cooperation between the Commonwealth and consumer protection bodies in the States.

(14)   That the foregoing provisions of this resolution, so far as they are inconsistent with the standing orders, have effect notwithstanding anything contained in the standing orders.

(15)   That a message be sent to the Senate acquainting it of this resolution and requesting that it concur and take action accordingly.

I would like to amplify the document as it is before the House. As is well known, the Labor Party as part of its propositions during the recent election campaign suggested that because of the wide concern in the community about inflation, and arising out of our belief that wages are not the only factor to be considered as leading to inflation - we believe that prices should also be considered - we would establish certain mechanisms to assist in the regulation of prices and to try better to adjudicate the social equation as between prices and wages. The Joint Committee on Prices that is now proposed is one of those mechanisms. The other aspect concerning us is the passage of legislation later in this session to establish a prices justification board. A further aspect of the mechanism, in addition to the committee now under consideration, is that we should strengthen what are called consumer protection agencies. All of these would be elements in an endeavour to grapple with this very difficult problem.

In listening to questions and debates in the House in recent weeks one would almost think that inflation in Australia was an entirely new phenomenon that had never been experienced before. I remind the House that it is clear from the whole history of Australia since statistics about prices have been kept that we have had inflation at an average of over 2i per cent per annum for .about 70 years. That certainly was the average of inflation in Australia over the last 10 years or so. In that time it has been a minimum on average of 2i per cent. Sometimes it was a little more; unfortunately, very rarely was it a little less. Inflation ran at a rate of 6 per cent per annum 2 years ago and 7 per cent per annum in the period to June 1972. For the 2 recorded quarters in 1972-73 inflation is still running at the rather undesirable rate of near enough to 5 per cent.

The presumptions are that when the figure for the March quarter is published in 3 or 4 weeks' time it will show an increase of from 1.5 per cent to 2 per cent because of the impact in that quarter of food prices, and the price of meat in particular.

Mr Wentworth - That is in your time.

Mr CREAN - As would be expected, the honourable member will blame the Labor Government.

Mr H N Bowen (PARRAMATTA, NEW SOUTH WALES) - Only when it is proper to do so.

Mr CREAN - If it is proper, exactly. I am saying that to suggest that inflation did not exist prior to this Government's coming into office seems to be flying in the face of facts. We believe, and I hope the Opposition will co-operate with us, that something has to be done about prices; that it is no good simply saying, as the previous Government seemed to be disposed to say, that the only thing that matters is wages. If prices rise, and the whole history of recent times has been that they have risen, and if there is something that is called correctivity - that with a given set of inputs you get a greater output - labour is entitled to its share of that productivity. How does the wage earner, in the absence of lowering prices, maintain his status, not only to account for rising prices but also to get his share of productivity, unless his wages rise at least as much as prices plus productivity?

Such other factors as taxation can be considered. In 1954 when the present rate structure of income tax was laid down - the present progressive scale - the average weekly earnings were about $34. If a wage earner's weekly wage was increased by $1, tax took 17c of that dollar. In 1973 when average weekly earnings have increased to about $100, an additional $1 received attracts a tax rate of over one-third. That factor also has to be taken into account. My Party believes, and the public, by and large, believes, that as a matter of equity and social justice something ought to be done about prices. As evidence of our bona fides we are taking this first step of setting up the Joint Committee on Prices. I hope that the move will have the cooperation of the other side of the House.

I do not believe that the mere fact that a task looks difficult is a very good reason for not essaying the task. Nobody will acknowledge that regulating or trying to control prices is an easy process. On the other hand, there is a great deal of obligation on the part of those people who claim to believe in market forces as a regulator of prices. A great deal of responsibility rests on their shoulders to explain in the presence of those so-called market forces why prices still continue to rise. One could chide the previous government, but I suppose that there is scarcely an example anywhere of a western democracy that has been very successful in holding the line as far as prices are concerned. We get all sorts of interesting economic theories as to why inflation takes place, varying all the way from high economics to abstract psychology. But, of course, in the end result prices are not matters of accident. In many cases they are a matter of deliberate making on the part of people whose decisions at the moment are beyond any challenge and who do not have to bear any responsibility for those decisions. The contrary is the case with wages; wages have to be negotiated. We have a long history of arbitral functioning in Australia. I point out again that I do not believe anyone thinks that the existing arbitration system is satisfactory. But at least we can point to something like 64 years over which time this system has evolved.

Mr Edwards - Will the Minister have a joint committee on wages?

Mr CREAN - These are some of the matters one has to get to. All I say as far as these joint committees are concerned is that we will not get in Australia anything that can be described as an incomes policy - there is a whole area of debate about whether incomes policies are possible or desirable - if we do not have as a minimum condition agreement between employer groups and employee groups. At least the Government can act as an honest broker in that process rather than was the case under the previous Government of taking one side only, namely that of trying to keep wages low.

We believe that we should take this first step of doing something about prices, and this is not an easy step to take because there are a great deal of difficulties in the way. One ought to acknowledge that we virtually start ab initio in Australia in this situation. Nothing systematic has been done about the regulation of prices in Australia since the dismantling of the war-time mechanisms. The war-time mechanisms operated in an entirely different situation. They operated in terms of rationing of materials, shortages of resources and so on. I know that sometimes there are unscrupulous attempts to prove that price control during the war years failed and therefore it is foolish to try it again. I submit that is not a very convincing argument in the face of the situation of the 1970s. I believe that the way economic forces are mobilising in an economy in which we are getting larger and larger aggregates of economic ownership and greater concentrations of employment within those larger industries, it is becoming very difficult to identify with any degree of rationality what an individual's contribution is to the economic process. How do we decide on any national basis that a judge is worth $30,000 a year and somebody else is worth $3,000 a year?

It is getting harder to establish what people do by their physical output, even if we could measure physical output. There are large areas in which it is hard to identify physical output. After all, one does not think that a teacher who teaches 50 children is responsible for greater productivity than a teacher who teaches 25. What we think about is the low quality of education. These are some of the difficult problems facing us and it is for that reason that I hope members on the Opposition side will at least believe that the Labor Party is sincere in its endeavour to tackle a very difficult task.

I was not very consoled by the words I read in a paper this morning which were attributed to the Leader of the Opposition (Mr Snedden) who said that the proposal to set up a committee to inquire into prices was a cosmetic act or a sham. 1 reiterate that we take this situation seriously. We believe that the establishment of this committee is a significant step which ought to have been taken some time ago. After all, one need only look at the kind of political areas that have existed from time to time in the countries with which on occasions we like to compare ourselves. The United States some 18 months ago while appearing to abandon its policy of compulsion has been acting more on the yoyo principle that it can come back again if the voluntary principle does not work. More recently we have seen the Conservative Government in the United Kingdom introduce a prices and wages board.

I accept the point raised by my colleague on the other side that maybe there should be control of both wages and prices. But we on this side of the House believe that we have had control of wages in Australia for a long period but we have not had control of prices, and this is the mechanism that we are now proposing to create. We realise the enormity of the task and in some ways the terms of reference of this committee have been left very broad because we believe that the committee to a great extent has to find its own way as it goes. It is not intended that this committee should be a fixing body itself. If one may describe it, it is supposed to be a channel of communication in one sense and a sounding board for complaints on the other. One surely knows that there are enough complaints from the public and that often the Mrs Joneses and the Mrs Smiths of the community in the face of rising prices do not know precisely where they can go about their complaints or where they can go to seek an explanation as to what is wrong. This is why we are establishing this mechanism. No doubt we will receive letters from all sorts of people who have odd views. Representations will be made also by people with quite sound views. It will be the job of this committee to try to sift the evidence that it will receive.

The committee will be able to look at some of the standard barometers we have for deciding whether the price situation is rising more than it should. I have already quoted as one example the consumer price index and the various components within it. Sometimes by looking at the components, or the individual parts of the components, one can see that the cost of food in one quarter is rising more than it should, that housing costs are rising more than perhaps they should or that prices in clothing or some other areas are rising more than they should. The committee will be able to say: 'Well, we ought to be having a look at these areas'. I suppose that one of the greatest expenses in any individual's life is the purchase of the home that he wants to live in. When buying a house an individual is beset with items such as the price of the land, building costs and the awful burden of interest rates. The same sort of situation applies to the motor car which is probably the second biggest single item of expenditure for an individual. We hope this committee will integrate the process that we think is necessary in Australia if we are seriously to grapple with many of the economic problems that beset us. We have bodies like the Tariff Board and the Trade Practices Tribunal. We have legislation dealing with foreign takeovers. But in many respects all these authorities work separately and independently rather than coherently. I am minded that, as far back as 1959, the Constitutional Review Committee, work of which had the unanimous support of both sides of this House, in its interim report pointed out the inability in Australia to pursue what could be called an integrated economic policy. We believe that an essential part of an integrated economic policy in Australia is that, in the social equation as between prices and wages, the prices question must be grappled with seriously. To grapple with it certain mechanisms are needed. The proposed committee is only the beginning of what we regard as those necessary social and protective mechanisms.

Debate (on motion by Mr N. H. Bowen) adjourned.

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