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Thursday, 31 August 1972
Page: 1025


Mr Kevin Cairns (LILLEY, QUEENSLAND) (Minister for Housing) - This Budget- any Budget - has to attempt to do several things. These may be divided into 3 categories. Any Budget has to be formulated having regard to its impact effect on the economy - that is, the overall direction which it is designed to give to an economy - being either an expansionary Budget or a retractionary Budget. Correlated with that are certain assessments concerning the money supply that must accompany the working out of a Budget over a year. In the second place, a Budget has to have special regard to the redistributive effects of the resources for which it is responsible. That is the area which we have come to know over the years as the area of direct and indirect social services involved in a Budget. But underlying all these factors, and more important than any of them, has to be the attitude of a Budget and of financial measures towards the people of a nation in their request for and their right to full employment. On the 3 aspects on which this Budget deserves to be considered, it deserves to be supported. It will be supported in this chamber later today.

Before I examine those points it is worth recollecting the last one - the obligation which a government and a Budget have to full employment. Let me quote from that very famous document of 27 years ago, the White Paper on Full Employment, lt said in paragraph 5:

The policy outlined in this paper is that governments should accept the responsibility for stimulating spending on goods and services to the extent necessary to sustain full employment.

That was the philosophy of that very famous paper in 1945; it remains the philosophy of this Government: it remains the philosophy of this Budget.

Let me refer to the impact of the Budget. In what directions does it move the economy? Without entering into a plethora of details 1 will merely recount 2, because they are appropriate. In Statement No. 7 attached to the Budget Speech, and in the table which indicates the receipts and the outlay of the Commonwealth Budget in national accounts form. it is perfectly clear that the deficit to be contrived in this Budget as a proportion ot the total outlay of the Budget shows a substantial increase over the deficit over the previous year. Tn the previous year that deficit represented 2 per cent of the total outlay as part of the Budget; this year that deficit has been increased to 6 per cent as part of the total outlay. So in that respect it is quite clear that the Budget is an expansionary one. But rather more precisely, Statement No. 7 on page 61 of the Budget Papers shows the increases on the previous year with respect to both expenditures and receipts in the Budget. One will see that in 1971-72 the adjusted increase in expenditures was 14 per cent, the adjusted increase in receipts was 13 per cent, making a ratio of nearly one to one. In this year the adjusted increase in expenditures is in the nature of 12.6 per cent and the adjusted increase in rates is in the nature of 8 per cent - a 150 per cent increase in the ratio of each to the other compared with the previous year. That statement probably exemplifies more precisely than any other the philosophy of the Budget, as it is appropriate that it should so do.

If one turns to the second requirement of the Budget - its attitudes in the area of social services - one will see that 2 features have been stated very precisely by the Minister for Social Services (Mr Wentworth). The increases in pensions and the concern with the means test and with social welfare are greater increases obsolutely and proportionately than have ever been sustained in a previous Budget. When it is borne in mind that a number of these increases are the fourth over a period of 18 months one realises that that is a situation which is unique also in its own right. These increases have been repeated in the area of repatriation. There are also very great indirect social service benefits to be sustained by the Australian people in respect of the changed taxation rates appropriate to this Budget.

The third point about the Budget is its concern with full employment. This needs to be examined because a whole philosophy of attitude is involved here. The Government, in its attitudes on full employment, has a record over more than 20 years which is probably unequalled in the world. People in Australia should be grateful that the targets that were set and aimed for by leading members of the Labor Party during its last years of administration have been exceeded consistently by this Budget. They should be grateful, for example, that Mr Haylen's target for unemployment has been rejected by governments on this side for more than 20 years.


Mr McLeay - What was that?


Mr Kevin Cairns (LILLEY, QUEENSLAND) - Four per cent or 5 per cent. One ought to remember also that a former very close adviser to the Labor Party on unemployment, Professor Arndt - he seceded from it after the kowtow in Peking in 1971 - made it clear in 1963 that a registration of 80,000 people for employment was to be judged as an appropriately full employment situation. Given the size of the work force today, that target has been exceeded. The third aspect of the concern with full employment should be appreciated and realised. Wherever there is a Labor administration in Australia today in the States one can say that there is high continuing unem ployment. If one were to put it in economic terms, one could find a 100 per cent correlation between the existence of a Labor government and unemployment. One could go a little further and state with a 100 per cent degree of confidence that a Labor administration means high unemployment.

Sitting suspended from 1 to 2.15 p.m.


Mr Kevin Cairns (LILLEY, QUEENSLAND) - Prior to the suspension of the sitting I was discussing the record of Labor administrations concerning levels of unemployment in Australia. The very firm principle can be stated that wherever there are Labor administrations in Australia there are high levels of unemployment, in fact the highest in the nation. This is exemplified not only by statistical data but also by the perceptible migration of the work force out of some Labor States because of that fact. That reflects clearly the attitude of Labor administrations in this area.

The third aspect of unemployment to which I want to refer relates to 2 analyses, one of which has been made by the honourable member for Hindmarsh (Mr Clyde Cameron). The honourable member tried to indicate on some very imprecise data that because the work force will grow over the coming year by about 2 per cent or a little less, we can look forward therefore to a very great increase in unemployment in 1973. Other Labor authorities have said that we can look forward to anything from 150,000 to 200,000 men being registered for work next year. That very statement is based on incorrect information but, once made, it entices the solution which Labor poses for the Australian economy. In fact, the statement is designed to cause the very event which Labor says it does not want to occur; and the Opposition knows this. In another way the solution which is proposed is interesting to examine. The Australian work force grows by something in excess of 2 per cent a year. A suggested solution to the problems of the growth of the Australian economy is that the Australian work force and the Australian people ought to grow by 1 per cent a year. That proposition has been made, along with others, by for example, the shadow Minister for Cultural or Urban Affairs; I do not know what positions he fills at various times. In other words, the solutions to growth in the Australian economy are to be sought by deliberately embracing prospects of stagnation. The effects of that, I am sure, will be realised by the Australian people.

To turn to a further point, since we are speaking about the effects of the 1945 White Paper on full employment, its effects on the philosophy of development and of economic growth on this country, and revaluation in terms of its effect on employment in Australia, we could well ask why it has been proposed at this stage that revaluation ought to occur. Has an analysis been made of the circumstances under which it occurs? What is a suggestion such as that designed to produce at this time, not only in terms of the revaluation but in the uncertainty of the expectations which it must engender? it is not the first time that tragically incorrect solution has been proposed for an economy. In 1925 when Britain went back onto the gold standard the timing was incorrect. There was an incorrect reading for Britain's position vis-a-vis her principal competitors in the world. Persistent levels of unemployment had been sustained in that nation. There was an effective upward valuation of the British currency and, largely as a result of that decision, the British economy deteriorated during the late 1920s and unemployment rose. The position continued to deteriorate until intercepted by the depression years.

Inadequate timing can be disastrous. It is in the same respect that the Leader of the Opposition has not calculated at the present time what his proposition means for this nation. But the very suggestion and the expectations which it arouses are like asking the Australian people not only to contemplate a guillotine constructed by the Leader of the Opposition but also to take pleasure in the coming months in the thought that he may drop it. I do not believe the people of Australia could be party to that. Expectations in an area of currency changes can be extremely dangerous.

I mention one other. The competitive devaluations which occurred throughout the world during the 1930s engendered their own expectations, engendered unemployment to a level higher than it would otherwise have been and were responsible, as we all know, for exporting unemployment from one nation to another. Surely a person who aspires to be a Prime Minister must take account of these effects or, if he has advisers who for one reason or other want him to do these things, he might discount their views upon occasions. We can ask one other question - a very appropriate and very pertinent question - concerning this matter. Why did he do it? The Deputy Prime Minister (Mr Anthony) indicated the contradiction in what the Leader of the Opposition had to say concerning the Australian dollar. The Leader of the Opposition said:

I think the Australian dollar is undervalued but as long as that remains it will promote inflation in Australia.

Since when has he been concerned about inflation? Later he said:

But you ask me. I am convinced that the Australian dollar ought to be appreciating in value.

Then he went on to a tariff argument. He can create uncertainty concerning the national currency. We ask why he has done it. To whose advantage is it that the Leader of the Opposition should advance this proposition? Who would benefit by it? What sources in business enterprise or elsewhere would benefit from the proposition? We know that when the German Deutschemark was under some expectations in 1969 there was an argument as to the extent to which it would be revalued - 2 per cent, 4 per cent, 5 per cent. Do a calculation, firstly, of the direct effects on a number of exporting industries as a result of such a measure. They are multitudinous. Then look at the indirect effects on those centres of population whose activities are related to the vitality of export industries and of supporting industries. The effects of revaluation improperly considered at the wrong time can spread very quickly through an economy. Anyone would know that. But this is the proposition that has been made.

I ask a further question, the most important one that I ask. I do not proffer the proposition: Is a matter of Danegeld in reverse involved? That is for others to decide. I cannot answer that question. But when the Leader of the Opposition speculates concerning the Australian dollar note the answer to a question on a certain television programme last night when the same gentleman was asked under what circumstances he would think that he ought not disclose the whole truth on matters, and quite correctly he indicated that he would not tell the truth under certain circumstances if he were the Prime Minister. His answer to the question was:

Again, if, for instance, you learnt the Japanese were going to revalue, appreciate their currency, next Wednesday you couldn't reveal that.

That is a very firm stance with respect to the Japanese yen, but contrast it with the expectations aroused with respect to the Australian dollar just days before. It is so very important. Why the distinction? The attitude about the Japanese currency was correct. Why was such an attitude not adopted with respect to the Australian national currency? How many men in Australia are employed directly with the Japanese yen compared with men employed directly with the Australian dollar? These are questions that deserve to be answered because it is pertinent that they be answered. Let it not be thought that a proposition such as this is made without authority. There are those on the back bench of the Opposition who would override the authority of the Leader of the Opposition. He does not concede that. From the first day he became Leader of the Opposition he declared that the authority became his. He overrode his Federal Conference; he changed his Federal Executive. He changed their structure. His authority is almost complete. The fact is that 2 years ago in another speech in Brisbane the Leader of the Opposition had this to say:

The fact is that anything I say on any matter is likely to be field to represent the Party view.

They are the words from his own mouth; they are his own words. So, Mr Deputy Speaker, I put this proposition: For reasons of party politics there are many different attitudes that could be taken in this nation. For reasons of party politics there are legitimately different points of view. Do those points of view extend to creating expectations of uncertainty concerning a national currency? That is something which ought to extend beyond parties because it involves at a very basic level, at the basis of the existence of their domestic activity, many hundreds of thousands of Australians. The ultimate question which has been asked and which needs to be asked again is: Why did the Leader of the Opposition do it? What advantages were there in doing it? Who would be advantaged? But most significantly, why the contrast between the attitude concerning the Austraiian dollar and what he proposed concerning knowledge of an expectation of change in an overseas currency? Many Australian citizens would like to know the answers to those questions.

Debate (on motion by Mr Jacobi) adjourned.







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