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Tuesday, 27 October 1970

Mr Kevin Cairns (LILLEY, QUEENSLAND) - It has been an interesting experience to listen to the Opposition's proposal for discussion of this as a matter of public importance this afternoon. It has been interesting because for almost the first time we have had an example of the honourable member for Dawson (Dr Patterson) intruding into fields which are a little foreign to him. We saw in his intrusion an essential contradiction between his understanding of the economic process and that understanding which we would hope would have been shown by the honourable member for Cunningham (Mr Connor) and the honourable member for Adelaide (Mr Hurford). The contradiction has been interesting for a number of reasons. This would be the first debate concerned with alterations in prices which has not touched upon the employment obligations of a country. It is the first debate initiated by the Opposition for many years in which Opposition members completely ignored the effects on employment and unemployment of following the policies that the Opposition would ask the Government to follow.

I was intrigued to hear the honourable member for Adelaide still affectionately holding the theories of Professor Galbraith. I find this intriguing because I would challenge the Opposition, if it embraces Professor Galbraith, to indicate whether it will embrace his wages and income policies and whether it will embrace the wages and income policies in Canada, the country which the Opposition so often invokes but which it understands so little. Honourable members opposite invoke Professor Galbraith's theories time and time again in respect of economic considerations and matters. Let them embrace Professor Galbraith in his understanding of the employment obligations of a country, and realise that those countries which have followed his advice have suffered incredibly great unemployment distress.

Let me go further. The essential condition in any consideration of the change in price levels is related to production. It has a relation between production and the demand for those things which are produced. Put in its simplest terms it amounts to that. While we are concerned with inflation we ask ourselves: Is the Opposition concerned with inflation? During the Budget debate earlier this year I challenged the shadow treasurer, the honourable member for Melbourne Ports(Mr Crean), who understands these matters in contradistinction to the 3 gentlemen who have spoken this afternoon, to indicate what was his policy concerning inflation. He has never stated it. The honourable member for Dawson fled this afternoon from stating any policy concerning inflation, as did the honourable member for Cunningham and the honourable member for Adelaide. But their mentor, the honourable member for Melbourne Ports, had this to say about inflation in his speech on the Budget 2 years ago. It is quite a revealing comment. He said:

I suggest that there is in Australia an undue obsession with inflation.

There we have his words. They have been forgotten by those gentlemen who spoke this afternoon. During a later speech on this year's Budget the honourable member had this to say, in refuting the concern with inflation that clearly underlay the Government's Budget strategy:

I want to say something about some of the things that are not being looked at. The word inflation' seems to be becoming the most used word to describe the situation as we find it.

That was uttered with sarcasm and contempt.

Mr Hurford - That was 2 years ago.

Mr Kevin Cairns (LILLEY, QUEENSLAND) - The second one was this year. The honourable member is a little out of date. So there was supposed to be a continuing fund of knowledge available to the Opposition, but it has not acted upon it. The honourable member for Dawson this afternoon in concerning himself with inflation said nothing about banking policy in terms of the philosophy of money and money supply in the community. He said nothing concerning overall Budget strategy. In fact in regard to a Budget which was concerned with inflation he has been responsible for opposing almost every revenue measure which was part of the social service programme and which were part of the Government's attitude towards inflation. After having tried to wreck and erode a Budget which was concerned with inflation the Opposition in this House says: 'Well, let us forget all this; we are now concerned with inflation'. The other matter to which I refer is the overall economic policy of a government. A government has to be concerned with production. If we do not have production we will assuredly have inflation - that is the lesson of history - unless we have grave depression. With respect to production, the attitude of the Opposition is to say: 'Let us reduce overall working hours by one-eighth'. The Opposition would reduce working hours by one-eighth, by over 12 per cent. This is how it would destroy the production side of the equation that is always concerned with inflation. The Opposition went through a type of rationalisation which had no relation ro the matter of public importance. I was a little disturbed. In referring to consumer prices and the alteration in consumer prices it is quite clear that the Opposition has not examined the ingredients of the latest variation in consumer prices. The ingredient which has caused the highest rise in consumer prices in any capital city in Australia is fares. The ingredient of fares in the consumer price index in Brisbane rose by .6 index points. That fare rise was imposed by a Labor council. Then we look at the other ingredients in the consumer price index with the highest rise and we see mattters such as rates. In both these ingredients the Labor Party has shown itself more capable of increasing the index points, of increasing prices, than have other parties.

The Opposition comes into this House and raises a matter of public importance. On top of its misunderstanding of economic policy and banking and monetary policy, it has not even gone to the trouble of examining the basic data upon which a matter such as this should depend. There is an excellent reason for this. I go to one last point which is appropriate, that is, the matter of wages. An article by Mr Sheehan of the Australian National University has been quoted by the shadow Treasurer, the honourable member for Melbourne Ports, with great approbation. The article, which appears on page 12 of the 'Australian Financial Review' of 13th October, makes it perfectly clear that if wages get out of hand we can expect to see rises in prices in the subsequent quarters. Mr Sheehan in his article quotes quite clearly an article by Professor Pitchford in the 'Australian Economic Papers' of 2 years ago. Then Sheehan says:

May be we would be justified in expecting the rate of increase of prices to abate by the end of the year . . . Without going into this whole difficult question of how to assess the impact of the Budget on the economy, two points can be made which are consonant with the general theme of this article.

For this reason I think the problem which needs to be focussed on now concerns the potential movement in economic aggregates in real terms rather than prices. That is a simple way of saying 'production', lt is in its attack on production that the Opposition is culpable. As long as it makes an attack on production it will make inflation worse than it otherwise would be. After all, the experience of its own people in office, of Democratic Socialist parties in office, makes it quite clear that the Opposition has a love of inflation which this Government has not had. This Government has had a policy to keep it low. At the same time, and most significantly and importantly, it has tried to accompany that obligation with one significant point - the policy ignored by the Opposition this afternoon.

Mr DEPUTY SPEAKER (Mr Lucock - Order! The honourable member's time has expired. Discussion on the matter of public importance is now concluded.

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