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Thursday, 25 August 1960

Mr COSTA (Banks) .- The great challenge to Australia to-day arises from the need to stabilize our national economy. This is the concern of every citizen. Though we may say that our national income is becoming larger each year, I am quite certain that it is getting into fewer hands and many people are not getting their fair share. The Government claims that the Budget is the instrument that it uses to adjust this fault in our economy. The big problem is that prices and charges are rising all the time. The common term used to describe this condition is " inflation ". Inflation is a disease and a cure must be found for it. However, the Government is not applying any of the remedies that are available.

The Australian Labour Party believes that the way to stabilize the economy is to have authority in the Parliament to control prices and costs, as well as other factors contributing to inflation. We should have full power to control such monetary aspects as interest rates and capital issues, and to control companies and monopolies. We know that this power is not vested in the Government.

The Government is always talking about curing inflation, but it never applies any effective remedy. One of my colleagues said that the Menzies inflation is like a thief in the night, because the value of money is diminishing all the time. The value of money left in a savings bank is destroyed. If £100 were left in a savings bank for twelve months, its value would be reduced, even though interest may have accrued. Inflation also destroys the value of insurance policies. Many people, during their working lives, have insured themselves for an amount which they considered would keep them in reasonable security in their retired life. If one insured oneself for £5,000 40 years ago it is safe to say that that £5,000 would not be worth £1,000 to-day. Inflation destroys the value of wages, salaries or any other income, pensions, superannuation payments and child endowment, which has not been increased for at least twelve years; and it destroys the income of the primary producer by increasing his costs of production. As a result of inflation, people pay higher council and shire rates on their homes or property and fantastically high prices for homes and land, which are almost beyond the purchasing power of the ordinary person dependent upon wages or salary; the small shopkeeper or retailer has been forced out of business by take-overs, so that small businesses are becoming fewer and fewer and are falling into the hands of big monopolistic retailers who are destroying competition, until to-day competition hardly exists at all; people are paying record high postal and telephone charges and have to pay 5s., which they did not have to pay last year, for each medical prescription, and they have to pay record high fares to and from work. This scourge of inflation is forcing Australia out of the world markets upon which we depend so much. We are unable to compete on world markets because of the high cost of production of our goods.

I ask: Where is this going to finish? We know that the purchasing power of the £1 to-day is only about 5s., a quarter of its purchasing power in 1939. The Prime Minister (Mr. Menzies) and his Ministers claim that our economy is balanced on a razor's edge. I am certain that if the present position continues - and nothing is being done to improve it - a collapse must occur and our standard of living must decline still further. Our living standards will go down just as speedily when that collapse does occur as the cost of living is now going up. The Prime Minister, of course, boasted in 1949 that he had a plan. It is important to refer to what he said at that time, because those were his own words. Speaking about prices, before the election in that year and 'before he became Prime Minister, he said -

Make me the Prime Minister and all these ills which exist will disappear. . . . Perhaps our greatest charge against the financial and economic policy of the present Government-

That was the Labour Government under the late Mr. Chifley in 1949- is that while it has paid a great deal of attention to increasing the volume and circulation of money, it has largely neglected the problem of what and how much that money will buy.

That was the problem at that time, but it has not been solved by the Prime Minister. He said that the housewife knew how grievous the problem was; and she still knows how grievous it is. Then he said that the Commonwealth Statistician conservatively estimated that the purchasing power of the £1 of 1939 fell to only 12s. 2d. in 1949. He added-

But on the true cost of household requirements it would be nearer the mark to say that it is worth only 10s. The greatest task, therefore, is to get value back into the £1, that is, to get prices down.

Tt is claimed that the cost of living since then has increased by 98 per cent. If that is the case - I am prepared to accept the figures given by the Statistician - the pound note is worth practically nothing to-day; and we will soon be living on shadows. The Prime Minister also said, in 1949 -

High prices are not a cause; they are a result of an abundance of spending money and an insufficient supply of things to buy. ... A production policy, which I have already discussed, is therefore the essence of price control.

The right honorable gentleman said that his Government would increase production to a point where the regulating factor in the economy would be supply and demand; but we know that that has not been done and that the menace is still with us. He went on to say that the Labour Party at that time claimed that it was effectively controlling the economy by exercising the Commonwealth's defence power which authorized1 the Federal Government to control prices. Labour's opponents, of course, claimed that in 1949 the cost of living had increased by about 9 per cent, and said that fact indicated that price control was a failure at that time. However, it must be remembered that in 1948 the power of the Commonwealth to control prices was challenged in the High Court, and when that challenge was upheld monopolies immediately raised prices and costs, ignoring anything that any government could1 do, because they had the High Court on their side which said that this

Parliament had no power to prevent them from doing so. The Labour Party still claims that if this Parliament had that power we would be able to defeat the menace of inflation. Even if supporters of the present Government were sincere in their thinking in 1949 and wanted to stabilize the economy, they have failed completely in that respect. I am just as certain also that things are going the way this Government wants them to go, because they are going the way the monopolistic capitalist wants them to go, and this Government represents that section of the community.

I would like now to examine some of the happenings which are contributing to inflation at the present time and which will help it continue into the future. One of those factors is that take-overs and restrictive trade practices are operating within our community. This Government poses as being in favour of free enterprise and competition, but every housewife and every other person who does any purchasing anywhere knows that competition does not exist to-day. One finds that the price of a pound of butter, a tie, a pair of boots or a pound of steak is the same in all shops everywhere. There is no such thing as competition. Business concerns are growing and are making bigger and bigger profits. In this respect we invariably refer to General Motors-Holden's Limited. That company was supposed to come into being in order to produce an Australian car at a price which almost every Australian could afford, but it is not really in competition with other motor manufacturers. It could sell its car at a much lower price, but it does not wish to compete in order to make prices reasonable. The Broken Hill Proprietary Company Limited is making bigger profits now than ever it did before. Then we have the hire-purchase companies, which are making huge profits. The latest statistics show that the known hire-purchase debt in this country is £416,000,000. That does not include the hire-purchase debt to retailers who finance their own hire-purchase transactions with their customers. So it is safe to say that the hire-purchase debt in Australia would be about £500,000,000. The people who have bought goods on hire purchase hold them only while they have jobs and are able to make the repayments. If they lost their jobs to-morrow the facilities or amenities which they have in their homes, and which they have bought on terms, would disappear if they were unable to keep up the payments. The Government takes no action to control the activities of the hire-purchase companies.

The private trading banks are also engaged in the hire-purchase field. It is well known that they hold many shares in hire-purchase companies. One of the Government's remedies for inflation at the moment is credit restriction. This kind of restriction, we know, applies in respect of normal banking activities, but there is no restriction on the hire-purchase activities of the banks. People who are refused credit in what used to be regarded as normal and legitimate banking transactions are referred by the banks to their hire-purchase sections or one of their subsidiaries in the hirepurchase field. Of course, when they borrow in that way the customers of the banks have to pay interest at the rate of 10 per cent, per annum on the loan. This is an almost impossible rate of interest foc anybody to pay and, because it is at a flat rate over the full period of the loan, the borrower ultimately pays in interest almost 20 per cent, of the amount of the loan.

Another monopoly which is growing up in this country is Hooker's.

Mr Peters - -Crooker's

Mr COSTA - -Crooker's if you like. Hooker's is becoming the biggest monopolist in the field of land speculation. In the metropolitan areas in particular the company controls land for home building that is needed by the workers. A person wanting to purchase a block on which to build a home, or a newly married young couple wanting a block on which to build their first home, and having only the husband's wages as income, cannot do so for less than £1,000.

Another sorry aspect of these monopoly companies is that the bulk of the great profits they are making go overseas, because the great majority of the shareholders are foreigners. The profits do not remain in this country, although they are made here. They go to people who reside in other countries. To judge from the arguments of members on the Government side, profiteering is a virtue. But they regard a claim by the trade unions, on behalf of their members, for an increase of wages based on the increased cost of living, as disclosed in the C series index, as a crime. So there you have iti Profiteering is a virtue, and a claim for wage justice has become a crime.

In the ten and a half years in which this Government has been in office it has not achieved one beneficial effect from its plans for stabilizing the economy. It just shifts its ground from one place to another. It robbed Peter last year to pay Paul. Last year it reduced income tax by a flat rate of ls. in the £1. This year, as the honorable member for Barton (Mr. Reynolds) mentioned, it is re-imposing that ls. in the £1. So Peter is getting back what was taken from him last year. It is now going back into the " peter ". But Peter will find that next year his pockets will be emptied again. I say this deliberately, because next year is an election year, and I am certain that the Government is planning for a surplus in the present Budget so that in next year's Budget, which will be brought down before the general election, it will be able to give concessions to the taxpayers and the recipients of social services in order to buy their votes. This will be done in order to keep this iniquitous Government in power. The Government's planning for a surplus this year could, I think, properly he described as preparation for an act of bribery. This year's surplus will be used next year as a bribe. Admittedly the pensioners will obtain, next year, the justice that they are not getting this year.

I should like to read a few passages from the Treasurer's Budget speech. He said -

In its Budget for this year the Government aims to achieve a surplus of total receipts over total expenditures. To make this possible it fs keeping expenditure commitments to a minimum and it proposes also to increase taxation and charges sufficiently to yield an additional £40,900,000 in a full year and £36,900,000 in 1960-61.

Thus, in the matter of the Budget, the Government is following through the broad programme of economic policy measures announced by the Prime Minister last February.

The policy measures must have been very unimportant, because I do not think any one can remember what they were. The Treasurer continued -

Honorable members will recall the main courses of action then proposed. One was to strengthen resistance to the rise in prices and costs and, in particular, to prevent large increases in the factors which affect costs generally. That was why the Government intervened in the basic wage proceedings and advised the Conciliation and Arbitration Commission of some of the consequences of granting further large wage increases before the economy had had time to absorb those made not long before.

In effect, the intervention of the Government in that case was a straight-out direction to the court that it must not increase wages, although the C series index clearly showed that the cost of living had increased. While on the one hand the Government is doing nothing to prevent prices from rising, it prevents wages from doing so. Last night I heard a Government supporter say that the increases of prices and costs were not entirely due to the wage structure. He said that there was great inefficiency on the managerial side. This year a convention of business men from all over the world met in Canberra. One of those men said deliberately that in Australia the wage factor in the cost of living was not the real cause of increased prices - that there was inefficiency and bad management occurring in industry.

One of the Government's remedies for the menace of inflation is, in order to draw off spending power, to take back more than £40,000,000 in taxes that were remitted last year. The Government also proposes to ask the banks to restrict credit. It also took the action that I mentioned, to peg wages. I suppose that that will continue. Its other action was to remove import licensing so that more goods could come from overseas to flood the Australian market thus, according to the Government, keeping down the cost of goods and services of local origin. As I pointed out, that will not prevent prices from going up, because the prices paid by the consumer are controlled by big business, which has a monopoly in Australia. Competition, as such, does not exist. So I say that these devious means that the Government is proposing in order to reduce the demand for goods will not succeed. I believe the whole proposition to be very ridiculous.

In the few minutes left to me I should like to point to some of the things that are occurring in regard to taxation. As we all remember, the parties now in office promised in 1949 that, if elected, they would reduce taxes. The Prime Minister said in his 1949 policy speech that he would review taxation in every field, both direct and indirect. We know that that did not occur. The national income has increased, and naturally there would be an increase in the tax yield, in figures. That, however, does not obscure the fact that after having made that statement in 1949 the Government, in 1950, in the first Budget it brought down, increased taxes. The harvest in that year was £471,000,000. According to the Budget, the total yield from taxation for the current financial year will be over £1,200,000,000, or more than double the amount to which I have just referred. Total revenue collections provided for in the Budget of 1950 were £532,000,000 and in this one the corresponding figure is a record amount of £1,800,000,000. So we can see that the Government has not kept its promises, even in respect of reducing taxation.

Let us look at the incidence of indirect taxation and compare the present position with that of 1950. In 1950, indirect taxation represented 34 per cent, of total taxation. In this Budget, indirect taxation represents 44 per cent, of total tax income. It will be noticed how these figures have increased. In 1950, customs duty amounted to £60,000,000. This year, it is estimated at approximately £98,000,000. In 1950, excise duty amounted to £64,000,000 and in this Budget the figure is £263,000,000. Sales tax was maintained as a temporary measure by the Labour Party to help finance the war effort and to defend Australia. The figure for sales tax in the 1950 Budget was £35,000,000 but in this Budget it is £180,000,000. So it can be seen that in that field taxation has increased very steeply.

In the 1950 Budget the figure for payroll tax was £22,000,000 but in this Budget it is £60,000,000. The Labour Party believes that this tax is being unfairly applied in certain fields. We believe that local government bodies and State railways should not have to pay pay-roll tax because those instrumentalities do not operate for profit but merely to render a service to the community.

The amount of indirect taxation provided for in the 1950 Budget was £181,000,000 but in this Budget it is £601,000,000. This increase has mainly affected wage and salary earners. These people are being socked for their recreation and their relaxation. Those who enjoy a glass of beer are paying £112,000,000 in excise duty and I think it is mostly the workers who have a glass of beer. The whisky drinkers are paying £9,000,000. Those who like to smoke pipes are paying £14,000,000 and those who prefer cigarettes and cigars are paying £66,000,000. It is unfortunate that it is the same group of people who are being most affected by all forms of taxation.

According to the last report of the Commissioner of Taxation, people earning wages and salaries of up to about £2,000 per annum - in other words almost the full range of wage and salary earners - are paying about 95 per cent, of total sales tax. These people also contribute the greatest proportion of income tax revenue. Unfortunately, they are in spheres of occupation in which they cannot pass on taxes to others. So the wage plug not only has to pay most of the direct taxation but he has also to pay the greater part of indirect taxation which is passed on to him by the retailer or wholesaler.

I would like to finish by repeating my opening remarks: The Menzies Government was elected in 1949 to cure inflation. Figures quoted from every authority on this subject show that the Government has failed completely to do this. The Government admits that our national economy is balancing on a razor's edge and that this represents a threat to our standard of living. I feel that because of the failure of the Government to take the proper action our standard of living and social security are standing in jeopardy.

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