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Tuesday, 5 November 1985
Page: 1554

Senator CHANEY (Leader of the Opposition)(6.07) —I move:

That the Senate take note of the paper.

The Prices Surveillance Authority represents a rather odd part of the Government's armoury of economic management. The Authority's annual report for 1984-85 is before us. The report indicates that, whilst during that year the Government has been extremely vocal in talking about the need for deregulation, whilst the Government has been setting in place in the Department of Industry, Technology and Commerce mechanisms for reducing the regulatory burdens on business and whilst the Prime Minister (Mr Hawke) has been going along to meetings of businessmen and making splendid announcements about the need to reduce regulation on business, in fact, during that year the Government has extended further the scope of the Prices Surveillance Authority. At page 8 of the report we find reference to the fact that the Minister for Industry, Technology and Commerce (Senator Button) has extended the Authority's surveillance to beer, cigarettes, concrete roofing tiles, float glass, packet tea and tea bags and instant coffee. The Authority has already been supervising or perusing the cost of such things as petroleum.

The difficulty that the Opposition has with the Government's approach to this matter is that the Government seems to be saying totally inconsistent things. On the one hand, the Government is saying that it believes it was necessary to increase the profit share in the economy, and indeed the Government has been pointing with some pride to the recovery of the profit shares which has occurred over the last couple of years. Whilst there has been a degree of recovery of the profit share and whilst that is in the view of the Opposition a very important element in getting the fundamentals in the Australian economy into the right shape, it needs to be noted that the grown operating surplus share of corporations is still below the level that applied in the late 1960s and early 1970s. Although it is above the levels of more recent years it cannot be said that the profit share is in any way excessive. Indeed, it seems likely that, if we are to get the economic growth which we require, if we are to reduce unemployment in this country and increase employment at a fast rate the profit share should rise further. That can be regarded as an unpoplular thing to say because the spectre of profits is sometimes put forward as being something which is the evil side of capitalism but it is, in fact, the incentive for investment and for new activity and it is an extremely important element in the present degree of economic recovery that we have.

The situation is that in a number of respects the Government is ignoring its own advice. The tax changes which have been the subject of some debate in this place today and which will be debated again tomorrow have been clearly demonstrated by the Business Council of Australia and by various other observers to amount to a quite massive attack on the profitability of businesses in Australia. That is a matter of concern. When one adds in the economic illogicality which is contained in the Government's approaches to the Prices Surveillance Authority, it is a matter of some seriousness. If the Australian economy is to benefit from devaluation, for example, price changes caused by the devaluation have to be allowed to flow through into the economy; indeed, price rises which are necessary to restore profitability have to be allowed to flow through into the economy. What the Government seems to be trying to do by using this instrument is to put a squeeze on profit margins, and that is an approach which the Opposition does not believe is sound; it is one which we believe will rebound upon the Government.

I have made the point before that the whole of the Government's Budget strategy is based on the proposition that there will be an increase in private sector investment in the coming year. The Government seems to be doing little to encourage that increased investment with its taxation approach and its approach to prices surveillance. It is the Opposition's view that this is an area of regulation which is, in fact, over- regulation and the Government should be true to its rhetoric and see that there is some reduction rather than an increase in the degree of supervision. It would appear-many commentators have made the point-that the Prices Surveillance Authority is something of a sop to the unions, something of a piece of negotiating coin for the Government. In the view of the Opposition it is a very unwise piece of negotiating coin to be adopting.