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Wednesday, 16 March 1977
Page: 288

Dr KLUGMAN (Prospect) -We have just heard the honourable member for Forrest (Mr Drummond) tell us that everything would be all right in Australia if only the workers would work harder and take less money. The honourable member for Griffith (Mr Donald Cameron), who is the Deputy Whip of the Liberal Party, nodded ponderously when the honourable member for Forrest said that the only increases should be on the basis of productivity. He was one of the members of the Government members committee who made a submission to the Remuneration Tribunal. It is all very well for people to stand up and say that everybody else should work harder and make sacrifices and get benefits only when there is an increase in productivity. Honourable members opposite are never prepared to make sacrifices themselves. I am not suggesting that they should make them but why be so hypocritical about the matter and ask other people to make them? That is what I object to.

Mr Donald Cameron (GRIFFITH, QUEENSLAND) - Be honest.

Dr KLUGMAN -That is exactly what I am being. That is why I am calling honourable members opposite what they are. The honourable member for Forrest referred repeatedly to the benefits of revaluation. I assume that he was actually referring to the alleged benefits of devaluation and that he was not referring to the revaluations which have repeatedly followed the devaluation. I will be interested to look at Hansard after he has corrected his greens to see whether he was referring to devaluation or whether he was referring to the revaluations.

I think one of the important things about this Government and one of the depressing things about this economy is that we are getting a lot of big talk from the Government. We have heard from honourable members opposite before they came to power and since they have come to power how they are going to improve the economy and all the great things they are going to do. I do not agree particularly with their propositions but it is a defensible economic proposition that one tries to encourage the private sector by trying to slash the public sector. I am not one of those who support that proposition. But I will ignore that point. The important thing is that that is the Government's policy. It is the Government's belief that if it carries out that proposition it will in fact make the economy pick up.

One of the depressing things about the whole matter is that the Government has not done that. The Government has talked big, but whenever it has had to do anything about the matter, whenever the Treasury has tried to do anything about it, the Government has panicked. The figures to which I referred at question time today and which were published last week by the Australian Bureau of Statistics showed that civilian employment in Australia during 1976 increased by three hundred. That is bad enough because an additional 185 000 people over the age of 15 years were living in Australia at the end of December 1976 compared with 1 January 1976 but there were only 300 extra jobs available. But from my point of view of criticism of the Government, the important thing is that the details reveal that employment declined in the private sector but increased in the public sector. That is the impressive thing as far as I am concerned. We can criticise the Government from our political point of view as it is my personal belief that even if the Government carried out its policies they would not work. But the Government does not even carry out its own policies. It talks big. As soon as there is any pressure on the Minister for Environment, Housing and Community Development (Mr Newman), he caves in. As soon as there is any pressure on the Minister for Aboriginal Affairs (Mr Viner), he caves in. As soon as there is any pressure on the Minister for Education (Senator Carrick) from whom I consider to be rather pampered tertiary students in Australia, he caves in. As soon as any group in Australia, be it academics or students or other people in the community, puts pressure on the Government to give it extra money, the Government caves in. It does not even carry out its own policy. I do not know whether the Government really believes in it, because I think that deep down it really believes that the public sector ought to be restrained. It puts forward the proposition that people can spend their own money on the sorts of things that they want rather than give it to the Government in the form of taxation so that the Government can spend it on the sorts of things that it considers to be important.

The Government is not doing those things. I remind the honourable members of what the

Government introduced in the last Budget. It talked big about tax savings. Let us look at the real facts. This year the increase in payasyouearn taxation, which is the net tax paid by the wage and salary earners of this country, is estimated to be $ 1,775m. This is much more than we have ever increased taxation by. It is an increase of 25 per cent when inflation is running at a rate somewhere between 13 per cent and 16 per cent. The Government prefers the 1 3 per cent figure and we argue for the higher figure. But the Government is collecting 25 per cent more in taxation.

Mr Crean - At the same time it collects less from companies.

Dr KLUGMAN - That is right. The latest statement of financial transactions which is dated 28 February 1977 reveals that outlays- the things that the Government was going to slash because it was the great government that was going to slash things- have increased from $13.9 billion to $15.8 billion during the first 8 months of this financial year. That is an increase of more than 14 per cent during that period, which is greater than the alleged rate of inflation. Where has the slashing been? This Government promised the people that it would reduce income tax payments to give people the choice of where they could spend the money. In the period to 28 February 1977, the 8 months of this financial year, net pay-as-you-earn taxation has increased from $4,066m to $5,080m- an increase of $1,0 14m. This is extra money that has been collected from the people. It does not include the Medibank component, or if it does it is only a very small proportion of it because the levy came in on only 1 October. So the first 3 months of this 8-month period did not include that component. So proportionately the amount of extra payasyouearn taxation will be even more as we come to the end of the financial year.

All I am suggesting to this Government is that if it believes in its policy, if it believes that it has to reduce government spending and encourage the private sector- it has even been completely unsuccessful with that- it should do something about the situation. It should do so on both counts; on the basis of resources because as I have pointed out, the number of people employed in private enterprise has dropped while the number of people employed in the public sector has increased, and on the question of money being taken by governments as distinct from being left in the pockets of private persons, I feel it is a pity that there is no representative of the so-called Workers Party or whatever it is called in this House. I think a John Singleton in this House could tear Government supporters to pieces because they are not doing the sorts of things which they promised to do and in which some of them at least believe. I am not sure whether the honourable member for Lilley (Mr Kevin Cairns) really believes the sort of stuff that his Treasurer (Mr Lynch) puts forward. Many honourable members opposite really believe those sorts of things yet the Government is not carrying them out.

Social security payments will be increased by 8.2 per cent from the first pay period in May. Now the Government is arguing against a similar increase in regard to wages. All I should like to hear from the Government is on what basis it can justify its argument. On what basis can it say that whilst it is prepared to pay social security recipients an 8.2 per cent increase in benefits it is prepared to go into the Conciliation and Arbitration Commission and argue that that increase should not be spread across the work force in general? There may be arguments for this approach but we certainly have not heard them in this House. In all the Budget Papers which we discussed at Budget time earlier this financial year, the predicted increase in the pension based on the estimated inflation rate was to be $3 a week payable in May. In fact the increase will be $3.60 a week- 20 per cent higher than predicted. Instead of rising to $46.50 the pension will rise to $47. 10. But the important thing is that inflation is 20 per cent higher than predicted. Yet we have the Treasurer coming into this House and saying in his first economic statement of the year on 15 February that the year 1976 was a year of considerable progress towards the aims the Government had set itself in bringing Australia's economic problems under control. What hypocrisy! Who believes the Treasurer? The Government makes predictions in the Budget, it exceeded the predictions by 20 per cent, and then it pretends that the situation is going according to plan.

Mr Martyr - Are we doing anything right?

Dr KLUGMAN - I am not criticising honourable members opposite on everything, I am just criticising them from their own point of view. The Treasury estimated a decrease of $55m in expenditure on unemployment benefit payments. It will be interesting to see during this financial year just how big the increase, not the decrease, is.

Surely if the Government has a plan, if it believes that certain things will happen, if it plans its outlays and its income, if at about Budget time for the financial year 1976-77 it makes certain predictions and if those predictions do not come true, surely it is ridiculous for the Treasurer to make in this House an economic statement in which the opening words are that considerable progress has been made and that everything is going according to plan. The Government attacks us and other people. Recently I heard Mr Eric Robinson, the Minister Assisting the Treasurer, criticise people on his side of the political fence, federally and in the States, for talking down the economy, for criticising the Government by saying that it is not being effective. The Government cannot treat all members of the community as morons, especially those who make decisions on investment. An investment manager or a person who had to make some decision would think twice about taking any definite steps which could possibly improve the economy if the Government was always telling them that everything was going according to plan and yet if its predictions on unemployment and inflation were wrong. The predictions were out by 20 per cent or more and if the shift has not been from the public sector to the private sector, if the opposite has occurred both in expenditure and resources, surely people will think twice about taking those steps.

Mr Cohen - They might decide to leave the country.

Dr KLUGMAN -Yes, if they had alternative incomes outside the country.

Mr Martyr - You are upsetting me.

Dr KLUGMAN - I am being perfectly serious about this. I think that if the Government wants the economy to improve- I assume that all of us do, because a significant number of people are suffering since the economy is not improvingthe community must have some justified faith in the sayings of the Government, the Treasurer, the Prime Minister (Mr Malcolm Fraser) and the others who normally make statements on behalf of the Government. I emphasise that word 'justified'.

Mr Martyr -Would you give us a hand with the Budget?

Dr KLUGMAN - You are trying to be very clever and funny.

Mr Scholes - He will not get a say either, so it does not matter.

Dr KLUGMAN -That is true. Hopefully there are people in his electorate who have sufficient intelligence to ask him at some stage: 'Now, exactly what is the policy of your Government?'

Mr Martyr -I will refer them to you.

Dr KLUGMAN - I hope you do. Then you will not be a member after the next election. Surely a member of Parliament must have sufficient intelligence to look at the sorts of things that governments, whether it is a coalition government or an Australian Labor Party government, are doing, to see whether governments are getting anywhere. Honourable members opposite should have the guts to stand up in their Party rooms, or wherever they raise matters in their Party committees, and ask their leaders, advisers, etc.: 'What can we do about it? What alternative methods of dealing with the economy are available to us? Should we really try to enforce the policy which we pretend we are carrying out of shifting things to the private sector, or should we give in to what our people like to call the big spenders and go ahead and spend more money?'

If the Government intends to spend more money, hopefully it will do so in such a way that it will be employment-producing, not spend it in areas where the claw-back to the Government may be greater but certainly is not employment producing. It always shocks people when I say to them that from a fiscal point of view it is better to give money to doctors than to pensioners, because more of it, about 60 per cent, comes back if it is given to the doctors. Very little of it comes back directly if it is given to the pensioners, because they do not pay tax.

Mr McLean - That is a nice piece of rationalisation.

Dr KLUGMAN - I am not arguing in favour of it. All I am saying is that the net cost to the Government, to the Treasury, is different, depending on whom the Government gives the money to in the first instance.

Mr Groom - That is not very logical.

Dr KLUGMAN - All right. 1 put it to the honourable member that the Government's policy is not working. I must admit that I had a vague feeling during the last year that we were in power, 1 975, that maybe what honourable members opposite said was correct- that there was a lack of confidence in the community and that the people with whom the present Government superficially at least had more empathy, the people who control our business enterprises, felt that a change of government would improve the position and that they would have more confidence in the Lynchs and the Frasers than they did in the Haydens and the Whitlams. It was a possibility. I am one of those who believes that the psychology of the people is quite important. I really felt that it was a possibility, that this could happen. It has not happened. It is obvious that it has not happened. If anything, the contrary has happened.

The Government has taken certain steps, and the result is that the position is even worse than it was before the Government got into power. Surely it is time now to look at the Government's attitude and policy, to see what is going wrong. Why are people not spending more money? Why are they scared? Why are Ministers attending luncheons each day, speaking on every radio station and every television station, telling the people that things are on the improve, when nobody believes it? Why is that happening.

Mr Cohen - Would you buy a used car from these people?

Dr KLUGMAN - No, but there is more to it. The reason why people do not buy used cars is that they have been caught buying used cars before. The cars have not been very good cars. Surely it is up to a government, when it makes a prediction that inflation will run at a certain rate, to see that it is not too far out. When it makes a prediction about unemployment it should not be too far out. If it is out significantly it must have the guts to say: 'Look, certain things have gone wrong.' It was a ridiculous performance by the Treasurer to say in the House that this is exactly what the Government planned. The Government cannot have it both ways. All I am asking of a reasonably intelligent group of people is that they put pressure on their Treasurer, their Prime Minister and whoever the so-called planners in their Government are to make up their minds. Should the policy be changed, or if the Government still believes that the policy is the correct one, should it be enforced more?

Mr Groom - What do you suggest?

Dr KLUGMAN - It is up to the Government. I disagree with its policy, so it is not for me to say. At the beginning I said that I did not believe its alleged policy that slashing public sector expenditure and putting faith in the private sector would work. There are all kinds of reasons why I believe that, but I have not time to give them. Honourable members opposite believe it. Yet, believing it, they still do not carry it out. Then they get the wrong results. Hopefully somebody on the other side will try to reply to me.

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