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Tuesday, 23 May 1972
Page: 2907

Dr J F Cairns (LALOR, VICTORIA) - This Bill gives effect to the proposals to increase the size of the Tariff Board by the appointment of 2 additional members. I said much about this proposal on 13th April when the House debated the progressive review of the tariffs under a ministerial statement. I do not intend to cover that ground again. Now we have reached the stage of considering legislation and the Opposition welcomes this Bill for the appointment of 2 additional Tariff Board members. There is one thing wrong with it: it should have been introduced 2 or 3 years ago- but that is not bad for this Government.

Of course, this Bill does very little to help develop the system that is needed for effective tariff-making in Australia. Tariffmaking is not just an economic matter, not just a matter of statistics or econometrics. It is a social process and the most important one available to the national Government in Australia for the development of Australian industry and, thereby, social life. Tariff protected industry is about 70 per cent or more of all Australian industry, and much of the rest of employment and, therefore, of our way of life, depends directly and indirectly upon this 70 per cent or more of industry that is protected.

What is done within this vital section of the economic system will set standards, patterns and even customs for economic life, and for much of social life as well. It will determine the environmental conditions in which we live. I want to stress that point because this is more than a matter of just economics and statistics. It is a matter of building an environment that we are concerned with when we are concerned with tariffs, because with tariffs we are concerned with the development of industry, the pattern and the type it will be. It is time some radically new concepts were introduced into the field of tariff-making, for it is through this that Australian industry - and especially industrial relations and relations between government and industry and workers- can be advanced both in efficiency and in social democracy. Unless emphasis is laid on social democracy, there can be little advance in efficiency or productivity.

Given the proportion of the gross national product that is used for capital in Australia, Australia's productivity is one of the lowest among comparable countries in the world. I do not believe that this is because of a lack of capital or a lack of up-to-date capital. I do not believe that this is because of lack of intelligence. I do not believe it is because of a lack of hard work. People can and do work hard in Australia, but I think it is wise to note that hard work is not usually associated with high productivity. I think the low productivity in Australia, despite the favourable conditions, is the result of a social pattern of relations in industry in which conflict has been unduly institutionalised. Tariffmaking is not just an economic matter, not just a matter of statistics and money. Tariff-making is a process of social engineering and development. At present both the Tariff Board and its staff and advisers are far too strictly economists. Economists have been educated or, better still, trained in a discipline that has become narrow and unreal. It is not the economics of Adam Smith or Alfred Marshall; it is the economics of numbers, curves and equations, and if a thing cannot be measured it cannot be taken into account at all. This simply means that the most vital and important things are completely left out. We certainly must ascertain and know everything that can be measured accurately. We also must know those things that can be measured only approximately. But, much more importantly, we must know the difference between them. We must know the many things that cannot be measured at all.

The making and unmaking of tariffs in Australia has always been far too much a narrow economic matter. It is even more so now than in the past. The making of tariffs is an important matter in the making of society in Australia. Society is far more than an economic affair, despite the fact that economics is allowed to dominate far too much of it. The Labor movement and, indeed, the people in Australia were well aware that Australia was a country favoured bv nature and circumstances, lt became the ideal of the Australian people to establish in Australia a standard that was not to be determined solely or mainly by economic or social conditions in the old world. Australia was fortunate enough to be a new country and the Australian people believed that they could establish here standards that were better, not because we were better people but because we had far more favourable opportunities. In a significant sense the Australian people have succeeded in establishing those standards.

In the past, protection of Australian industry was a crucial and critical factor in the establishment of those standards, and I believe that today it is a crucial and critical factor in the maintenance of those standards. But in some things Australian standards are not high. In some things standards are higher in other countries, and we in Australia should be more discriminating and more ready to learn than we are. But we have established a material standard, with many good social consequences, which has justified the ideal of seeking to do so. Our starting point in making tariffs should be that we must be determined not only to maintain that standard but also to improve it. I believe that any approach to the question of making tariffs, by the Tariff Board or anyone else, which starts from anywhere else is misguided. Our starting point in making tariffs should be that we must be determined not only to maintain the standard that has been established in Australia but also to improve it. We can do so. I emphasise that our capacity as a nation to maintain and improve that standard is greater today than ever before. If we are to hold to our determination to maintain and advance our material standard and to accentuate its social advance, then we cannot allow the price of goods on our market to be significantly determined or influenced merely by the price of goods produced elsewhere at standards far lower than our own. At no stage in the past would we have succeeded in establishing either our material standard, such as it is, or our population if we had been willing to do so. At present we cannot maintain our standard or our population or, as another way of putting it, full employment if we simply have regard to that factor.

One of the vital factors necessary ro maintain and advance our standards >s protection of the standards we have. This must be the starting point for any acceptable trade and tariff policy in this country, and it is certainly the starting point for the policy of the Australian Labor Party. Furthermore, no party in this Parliament can do other than start from the principle that it will never consent to the disemployment of any Australian worker unless it is satisfied at least that a number of conditions exist. 1 shall point out now some of those conditions. The first is that any such worker will have at least a living wage in any change from one job to another. The existing unemployment pittance, called a benefit, is completely unacceptable as an income for a worker moving from one job to another as a result of the application of public policy through a decision of the Tariff Board because an industry is held to be insufficiently efficient or economic.

Mr Beazley - lt is about one-third of Canada's benefit.

Dr J F Cairns (LALOR, VICTORIA) - That is right. It is completely unacceptable and nobody on this side of the House will give any consideration to accepting a policy concerned with the public interest if it has that consequence to the employed worker.

The second condition is that any such worker must be offered an effective course of training to improve his productivity and earning capacity. Fitted into changes that must come about as a result of changes in tariffs and their application must be an effective system of retraining in this country because hardly anyone who is disemployed as a result of a decision of this kind could not be improved considerably in efficiency and earning capacity if a sensible scheme were available. But here in 1972 we have nothing like it. We have a kind of unemployment pittance which, as the honourable member for Fremantle (Mr Beazley) interjected a moment ago, is about one-third of the unemployment benefit paid in Canada. We have no effective retraining scheme for a situation of this kind, lt is totally unacceptable in 1972. Nobody on this side of the House is prepared to accept recommendations by the Tariff Board for a reduction in tariff which will disemploy perhaps hundreds of people, unless we have those 2 conditions met.

A third condition is that no reduction of tariff can be accepted unless it is preceded by a thorough and adequate inquiry. I say in passing that an inquiry by the Special Advisory Authority is not a thorough and adequate inquiry. It is a makeshift, ramshackle, horse-and-buggy provision that is not adequate for a temporary purpose. I believe that Sir Frank Meere, within the scope of what he has to do, submits some extremely well worded and, within the limits of them, effective reports. But this kind of procedure is used far too frequently to justify such an inadequate inquiry as a basis of a decision which can be widespread in its effect. There must be a thorough and adequate inquiry. By 'an adequate inquiry' 1 do not mean one limited only to economic facts. Industry, employment and productivity are social matters. They have a social relationship, and facts other than bare economic facts must be ascertained and fully taken into account.

At the lowest level, of course, there are external economies and diseconomies. Sometimes an industry, especially if it is one which has reached a high degree of concentration, will benefit very considerably from something which is done outside the industry and for which it pays nothing at all. On the other hand, there can be significant external economies both of an existing situation and especially of any change in tariffs.

A clear case of external diseconomies are the effects of pollution and economic contamination. The costs of pollution and economic contamination must be met. They are not being met now, and they must be met by the industry concerned alone or with assistance from the State, from the community or from the Government. We must build into the kind of research that is being done a procedure which will result in recommendations being made to deal with the question of pollution and economic contamination by industries that we are protecting. At the present time we have no regard to this. In effect, we allow them to be protected and to pollute freely. What should be done about this has to be reported by the body that inquires to ascertain whether tariff protection should be given, and that body must report what is necessary to deal with such things as pollution, economic contamination and other external diseconomies.

In order to do this the inquiry body and its fact-finding research sections must be more than a body of economists and statisticians. What I would call the industrial research bureau must have economists and statisticians, but it also must have sociologists, ecologists and behavioural scientists, and it must be environmental. Their job is not just to find out how people can work in industry, but to find out how people can live with industry. Unless far more is done along these lines Australian productivity will continue to be low on comparable world standards, because it is the absence of many of those things that are giving us the low productivity record we now have. Some countries achieve better productivity records because wages are low or because compulsion can be more effectively used than it is here. But we are caught between 2 worlds. The worker in Australia is sufficiently independent to have won higher wages and to be somewhat invulnerable to compulsion, but we have not yet worked out a way, as they have in some countries and in some industries in Australia, to be able to do without compulsion. The more industry relies upon compulsion, the lower is its productivity.

The Industrial Research Bureau of the Department of Secondary Industry would be staffed by people not of a narrow econometric range of training but of a comprehensive range of education that would allow the protection commission or industrial development commission, whatever it may be called subsequently, and the Government to be given facts and advice that would allow industry to be treated as a valuable social process and not just a place for making money. The productivity problem will remain with us for a long time; it will remain with us until we can change our attitude in this way and make this change effective.

Yet another significant factor in the question as to who is to carry costs is the one that arises when people lose their jobs, and I have mentioned this already. We must guarantee that such people will have a living wage very little different from that to which they have been accustomed in work. I personally, and I am sure the Australian Labor Party, would never accept any report from the Tariff Board or anywhere else that would put people out of work unless at least these provisions exist. One point that deserves emphasis here is that it is most important that we make efficiency and improvement of productivity in Australian industry a top priority objective. We can be sure that if we are unable to do this it is not only our living standards and full employment but our capacity to conquer poverty and create a better society that will come to nothing. We need efficiency and we cannot get it without change. Change is the law of life.

But one other point is vital: Those who see that tariff changes will help very much in getting better efficiency and productivity and with maintaining our living standards must realise that the old semi-laissez faire method of trying to reduce tariffs will not succeed. If the old semi-laissez faire method is used - and by that I mean the method that all Australian governments have used up to now - then the resistance, and the justified resistance, to tariff reduction will be so great that tariff reductions will not be brought about or, if they are, it will be only at great cost and with unnecessary difficulties. Tariff reductions will be essential in Australia for many reasons. Perhaps the most apparent reason and one given most emphasis is that discussed by the Chairman of the Board, Mr Rattigan - perhaps with greater precision of accuracy than the evidence justifies, but generally in a correct manner.

I think that 2 more points ought to be made. The first is that the Government has been most uncomfortable at the prospects of a comprehensive tariff review by the Tariff Board because it feels sure that in some cases there would be recommendations for tariff reductions, and the Government itself does not know how to handle the resistances that would come if those recommendations are put into effect. I believe that for that reason there has been a lot of dilatoriness about this comprehensive review. Secondly, the Board believes that the tariff review would increase the rate of growth and solve other problems. I say to the Tariff Board and to the Government: If that review is done as it has been done in the past, and with the limits of today's assumptions and practices, it will make little difference in the next 10 years to economic growth and to the solution of these other problems.

It will not be enough to recommend reduced tariffs. We must have the social, industrial and government machinery that can handle the situation that results from such a policy. We do not have it today, and we cannot afford to wait much longer. Unless we have this machinery the resistances to tariff reductions will be so great that we will not be able to get them in the interests of what is economic and efficient. 1 stress that as 1 have stressed it now for several years. It is only in recent times that I have begun to notice in the speeches of the Chairman of the Tariff Board any reference at all to such things as retraining. After so many years I have not begun to notice them anywhere at all in speeches of Ministers or honourable members opposite.

Mr Street - Would you accept adult tradesmen?

Dr J F Cairns (LALOR, VICTORIA) - Yes, of course. The scheme has to be one that is thoroughly acceptable to those involved. I know that the honourable member is aware of the resistances that would be given to this, but these resistances have to be overcome. It is our responsibility, when we are considering the making of tariffs, to set up ways and means of overcoming these resistances. This, I think, is not the end of it. I have given emphasis for a long time now to what the Tariff Board has been saying, that there are wide areas of industry where tariffs have not been reviewed for over 40 years and where those tariffs are excessive. I stress that the fault lies with the Government for nol having, until now, brought about the machinery necessary to tackle a comprehensive review in less than 20 years, and now it is down to 6 years. But having said that, that is not the end of it. lt is correct to emphasise the extent of excess and unused protection. Unneeded protection would be a better term, for one is never sure whether the Tariff Board and others are talking about unused protection or protection that is unnecessary but is nevertheless used, and that is even worse.

It is correct to have a comprehensive review, and it is correct to equip the Board so that the review can be completed within a reasonable time. But I submit that that has not been done yet. The present appointment of 2 additional members to the Tariff Board does not achieve that result. Even if the membership of the

Tariff Board is increased still further the staff of the Board below the level that is necessary to undertake that task is not there. In my opinion, it cannot be done. But there are other matters that need emhasis equally as great, and it is on this point that I wish to conclude.

Important sections of Australian industry are now, and will be in the future, subject to intense competition from overseas, and existing protection will not allow them to survive. Apart from the goods that may emerge from socialist or communist countries, to which capitalist cost of production has no relevance at all, but which can be negotiagted by agreements - like the one with Czechoslovakia, which was announced today by the Minister for Trade and Industry (Mr Anthony) so that things can be kept under control - there are the goods which more and more will come from countries in which wages are low but in which America and Japan have already introduced the most up to date equipment; and capitalists always seek the lowest wages. When techniques are able to use the low wages of Korea, Taiwan, Hong Kong, Singapore and South Vietnam - one of the important purposes of fighting the war in Indo China always has been to bring Japanese and American capital together with low wage workers - the result is one with which Australian industry cannot ever compete. At present several Australian industries are directly affected, namely, textiles, footwear, plastic products, apparel and a part of metal manufacture. The part of these industries affected would have had a value of production in 1970 of not less than S 1,400m, or about one-fifth of total secondary industry in Australia.

Just as it is necessary to take action to see that excessive and unused protection does not continue, it is equally necessary to warn the nation that large and important sections of industry probably will not be able to continue operations beyond the next 2 or 3 years with existing levels of protection. But it is essential that much of this industry be preserved. The belief that large sectors of industry such as these could be allowed to disappear and still allow full employment and alternative employment to be maintained in Australia is a dangerously naive view. It must not be accepted. It will not be accepted by the

Australian Labor Party as a government. Australian industry today faces a new era. lt is as important in its development as the epoch making one of the 1870s, when industry was established or that of the first decade of this century when industry was extended. Australian industry faces today vast new opportunities and threats equally great. We need a national policy to require Australian industry to take full advantage of the opportunities and to protect it from the threats. We do not today have that policy; nor do we have the means to apply it. We cannot afford to wait much longer.

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