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Friday, 18 August 1989
Page: 414

Senator LEWIS —I refer the Minister representing the Prime Minister to the effective demolition of the Hawke-Keating Government's economic policy contained in the annual report of the Reserve Bank of Australia. In particular, I refer to the bank's comment that Australia needs a major shift of resources into the traded goods sector to increase exports and replace imports. I quote:

This cannot be achieved if domestic demand is growing faster than productive capacity; but simply slowing demand is not enough either. There is also a need for greater productive capacity, improved productivity and a better overall price performance, at least as good as our competitors.

Now that the bank has exposed the one-dimensional nature of the Government's economic policy, I ask the Minister: Why is the Government refusing to take effective action in critical areas of the economy such as the industrial relations system, the waterfront and coastal shipping, which could make major contributions to improved productivity in this nation?

Senator BUTTON —The Reserve Bank was concentrating very much on the current situation in what it had to say.

Senator Lewis —What are you concentrating on-the next decade?

Senator BUTTON —If Senator Lewis will let me try to answer his question, I will answer the point that he has just made. It is very easy-this illustrates the absurdity of some of the debate which goes on here-to telescope issues into one month and one year. The Opposition talks about the Budget and the coming six months or whatever and then asks what the Government is doing about industrial relations, the waterfront and all these things. If the Government fixed up the industrial relations climate in this country and made it perfect like the Japanese one from the point of view of efficiency in business and so on, I suspect that the effects of that would not be seen for several years. Senator Lewis should not pretend in here, as he does when he trots around the country, that the solution to all these problems is to be a bit macho in industrial relations, that then all the problems will go away. They are multifaceted problems. They are very complex, and they are not going to be fixed by any magic wands waved by this pathetic Opposition.

The Reserve Bank report was written long before the Budget. It did not know the size of the surplus and did not know the Forward Estimates.

Senator Alston —What an insult!

Senator BUTTON —Senator Alston can interject about it being an insult. What I say is absolutely correct. Has Senator Alston seen the Reserve Bank report? It has probably been at the Government Printer for a month.

Senator Puplick —If you had fixed up the problems in the Printing Office, you would have got it sooner.

Senator BUTTON —If Senator Puplick ever becomes a Minister, he will fix up the problems of the Printing Office overnight! That is something that people can be assured of. The Reserve Bank did not know the Budget forecast, the size of the expected slowdown in spending. I refer to one particular passage of the Reserve Bank report which is totally consistent with what has been said in the Budget. It is stated on page 13 of the report:

Retention of the present stance of policy should produce more significant restraint of spending as 1989-90 progresses. Whether this will also be sufficient to lay the groundwork for winding back the current account deficit is uncertain; there are risks that it may not. These risks will be much greater if there is a substantial slowing of world growth and a decline in commodity prices.

That is a pretty good quote.

Senator Lewis —If there is a commodity slowdown, Australia would be in trouble.

Senator BUTTON —If the Opposition sat down and read it with care and thought about it a bit, it would understand. Senator Lewis has just interjected that if there is a commodity slowdown Australia will be in trouble. Honourable senators opposite would know all about that. What did they do about it in 1982, having presided over seven years of inflation in excess of 10 per cent? These lessons of history should appeal to Senator Lewis. They certainly appeal to this Government.

Senator Lewis specifically raised the question of whether there is a need for a greater shift of resources into the traded goods sector. That is a question very relevant to levels of investment. Honourable senators opposite presided for seven years over levels of investment in this country of less than 2 per cent. There was less than a 2 per cent increase in investment, and that included the resources boom. What is the Budget figure for the last five years? It is 10.8 per cent. That is very relevant to a shift of resources into the traded goods sector. There is room for disagreement about where the investment is going. Undoubtedly, some of it will be going into the service sector and some of it into increasing capacity, but the relationship between the service sector and the manufacturing sector in this country at present, as in all countries, is so interchanged, so interwoven, that improvements in productivity and performance in the non-traded goods sector, particularly in a whole range of computer services and things like that, are extremely important.

Senator Chaney —Seventy-five per cent of the economy output could deal with the costs of the traded goods sector.

Senator BUTTON —Of course. I agree with that. That is the point I am making. A lot of that investment is in the non-traded goods sector, which will bear on the performance of the traded goods sector in the future. In answer to the question, the investment which has taken place and is now taking place is very important and cannot be ignored.