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Wednesday, 1 June 1960


Mr BURY (Wentworth) .- At this hour I do not propose to detain the House very long, but there are one or two matters that seem to call for some comment. Once again, the Leader of the Opposition (Mr. Calwell) has made great play with inflation. He realizes, as we must all admit, that the weakest point in this Government's administration is its policy towards the progressive deterioration in the value of the Australian currency and the ensuing price rises, and all the other distortions that come with inflation. To what extent any country can develop at the pace we have been attempting without inflation is open to great question. The Leader of the Opposition performs no great service in merely attacking the Government because it fails to cope with the problem. If he is to perform any useful service in this respect, he should produce a policy to combat inflation.

The honorable member for Melbourne Ports (Mr. Crean) replied to an interjection of mine that it is the business of the Government and not of the Opposition to contain inflation. If the Leader of the Opposition is to make any impression on the country in his claim that he would be able to cure the situation he will have to produce a policy setting out in concrete form the measures that he proposes. Indeed, the honorable gentleman is in a strong position to perform a public service in this respect. He has at his disposal, if he likes to seek it, expert advice from many people competent in these matters who are themselves most concerned about inflation. If the Leader of the Opposition, instead of making so many off-the-cuff statements ad lib about a multitude of miscellaneous matters, took time off to study the problem and produced a consistent policy to cure inflation he would be doing the country - and probably himself - a little more service.


Mr Uren - What about the suggestions of the Deputy Leader of the Opposition?


Mr BURY - He has been given some advice which he read out in the course of his speech this evening. I only wish the Deputy Leader of the Opposition (Mr. Whitlam) would take still more interest in these matters and give his personal opinions, instead of producing second-hand material. However, his remarks this evening certainly indicated a move in the right direction.

In this debate mention has again been made of pay-roll tax. It is all very nice to talk about the " iniquitous " pay-roll tax, or about any tax. After all, all taxation is unpleasant and could well be dispensed with but for pressing necessities. If payroll tax were abolished, as has been suggested, the revenue lost could be made up by increased company taxation. But that changes the incidence of taxation. Although it might be said that pay-roll tax is unfair in its incidence because it affects mainly big companies with large pay-rolls and State public authorities, the fact is that equivalent taxation on companies would shift the incidence of taxation, and many of those who now lend general support to the idea of abolishing pay-roll tax would not enjoy paying the equivalent in another form.

A number of honorable members have already made play with the complicated nature of these bills under consideration, and they have criticized the difficulty in eliciting to what extent we have or do not have a real surplus. In this matter the Government is the victim of circumstances. Two basic facts lead to this rather muddled accounting. One is that if the Commonwealth Government borrows for other than defence purposes it has to submit its claim to the Loan Council. Therefore, it has to resort to this particular dodge of charging extra defence expenditure to the Loan Fund. That is the hard fact with which the Government has to deal. The other reason is the provision in the Constitution by which any surplus Commonwealth revenue has to be returned to the States. In a complicated system of financial provision for the States that was never envisaged when the Constitution was drawn up this provision is archaic. However, it is there and constitutionally binding, so that measures have to be taken to get around it. The only possible way is the present method. If honorable members do not like that way it is open to them to suggest a better and clearer method of setting out the accounts.

The honorable member for Chisholm (Sir Wilfrid Kent Hughes) and others complained about the way the States are treated, how easy money comes to the Commonwealth and how difficult it is for the States to get money. All this is very true and well known, up to a point, but the fact is that the majority of States do not wish to get rid of uniform taxation which, with the consequences that flow from it, results in the net effect in transferring resources from New South Wales and Victoria to the other States. In practical terms there is almost no chance of reversing this process. If we did not have uniform taxation we would be obliged to have a grants commission on such a large scale that the smaller States would still be dependent on the revenue provided by the Commonwealth. If the money were not distributed under uniform taxation it would have to be doled out in another way. It is inevitable that in the process some financial sovereignty and sense of responsibility are lost to the States. This consequence arises not through any governmental action or inaction but as a result of the general feeling of the Australian people that education, social standards and other things should be reasonably uniform throughout the continent. If we are to transfer resources from the more populous States to the others - a process by and large supported by all Australians - we cannot have a system in which each State is completely sovereign financially. Everything flows from that basic proposition.

The Deputy Leader of the Opposition has complained about the Government's alleged policy of interference with the decisions of the Conciliation and Arbitration Commission. The fact is that the decisions of the commission do not limit the level of wages - they only set the standard which is applied quite widely. If the basic wage is not to be raised there would have to be rigid controls over the whole profit-making operations and other activities of private enterprise, which would have to be limited in some way. However, it is essential to realize that the decisions of the commission do not place a ceiling on wage levels. In fact, very few wages are as low as the basic wage. This also is something which is inherent in the system. If the honorable member for Werriwa suggests that there should be a vast increase in expenditure on public services of one kind or another he should tell us in detail how he proposes to bring about the result which he desires. If we increase taxation in a free enterprise economy such as we have, it is very doubtful whether we can devote a higher proportion of our resources to investment because the people of Australia will not willingly submit to any reduction in their standards of consumption. It is only by reducing consumption or by reducing private investment that you can free the resources necessary to carry out all these public works. If you reduce private investment in order to increase public investment you will inhibit development in other directions.

The high interest rates which are involved in the present expansion of private enterprise are very largely a by-product of inflation. The land boom and speculation in other spheres to which honorable members opposite have referred flow basically from the inflationary trend. Undoubtedly, the main cause of the inflationary trend is our attempt to develop in some directions at a faster rate than we are able to maintain. We do not develop any quicker by pressing ahead in any particular direction. We cannot increase our resources in that way. On the contrary, we get distortions and lack of facilities in many sectors of the economy.

If the process which has been advocated by the Deputy Leader of the Opposition were implemented, rigid control over the economy would result. There would have to be direct control over consumption and investment. I realize that the honorable member would not shrink from imposing those controls but, under the present system, it is extremely doubtful whether they would produce the resources to do the things which he wishes to do. It is all very well to point to some spectacular luxury expenditure, but coupled with that luxury expenditure are the incentives of many of the most dynamic elements in the Australian economy. If they are seriously tampered with, the pace of Australia's development in every direction will be reduced.

The case which has been put up by the Opposition, therefore, does not amount to very much. It can only make sense if rigid controls are imposed on the Australian economy and if the standard of consumption of the Australian people is rigidly curtailed. But the people most certainly will resent that. If this policy were implemented, it would result in further dislocation of the economy and would stimulate still further the inflationary process. Until the Opposition produces a clear-cut policy indicating what it proposes to do to stop inflation, it is useless for it to continue to make irresponsible charges against the Government.

Sitting suspended from 11.34 p.m. to 12 midnight.

Thursday, 2 June 1960







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