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Tuesday, 22 April 1980
Page: 1659


Senator COLSTON (Queensland) - When I joined the Senate my major regret was that my party was not in government. Although I stood for the Senate in 1970 and 1974, and although I presented myself unsuccessfully, to the Parliament of Queensland in 1975, subsequently in 1975 I was elected to the Senate. When I was elected I had not experienced any service in government. Now, four and a half years later, I foresee that I shall not have to wait long before I have the opportunity to serve in government. The Government is not accepted by the people of Australia. Except for a minor hiccup recently, polls consistently have shown a preference for the Australian Labor Party. Even with that minor hiccup, the assessment on that occasion was that the Labor Party would win government narrowly.

A major reason for the Government's lack of popularity is its handling of the economy. That is seen by the people of Australia to be quite ineffective. Certainly, the present Government, before it came to power in 1975 and in 1977, made many promises. But those promises have not been backed up by performance. Even when the Treasurer (Mr Howard) brought down a statement on the economy last month, newspapers throughout Australia could not hold back their anger at the incompetence of the Government. We saw such headlines as this: The Treasurer's Three-card Trick', 'When A Tax Cut is Something Else', 'A Lightweight Tax Package'. Another headline, with a sub-headline read: 'Howard Niggles Wives Who Work. Last week was the week of the tax cuts that weren't'. In my State of Queensland the Courier-Mail, referring to the tax rip-off at the petrol pump, carried the words: 'T'anks a lot for nothing, Mr Howard'. The Treasurer opened his speech by talking about inflation. He said:

At the time of the last Budget we expected inflation, as measured by the consumer price index, to rise by a little above 10 per cent for 1979-80. On the evidence so far, this prediction remains unchanged.

That statement, on the surface, appears reasonable. But let us look at some of the statements on inflation which the Government made before then. I go back to 1975 and read from the policy speech of the then caretaker Prime Minister. He said:

The Government's economic strategy will bc designed to bring down the rate of inflation.

The Prime Minister (Mr Malcolm Fraser) followed that up with another statement on the matter in his 1977 policy speech. In the light of those statements made in 1975 and 1977 and the many statements which have been made in this chamber, it is interesting to consider the Government's record on inflation. We would be churlish to say anything other than that the rate of inflation did drop for a certain time after this Government came to power. It started to drop in 1976, but only slightly. The main drop came in about December 1977, when it dropped from 13.1 per cent to 9.3 per cent. Then, in 1978, it dropped to 8.2 per cent. It then dropped to an all-time low for this Government's period in office in June, September and December, when it was 7.9 per cent, 7.9 per cent and 7.8 per cent respectively. (Quorum formed). But in 1979 the inflation rate started to rise again. It rose from 7.8 per cent in the December quarter of 1978 to 8.2 per cent in the March quarter of 1979. In the next quarter it was 8.8 per cent. The September quarter showed an inflation rate of 9.2 per cent. In the December quarter the inflation rate again went into double figures at 10 per cent. Throughout 1979 there was a steady and sure increase in the rate of inflation in this country. What does the Government do now that the rate of inflation is increasing? I refer to what the Treasurer said about this in March. He said:

Honourable members will be aware of the sharp rises in inflation overseas in recent times . . . It was, of course, impossible to isolate the Australian economy from this development, which was a major reason why prices rose faster in 1 979 than in 1978. These overseas pressures persist.

In a paper presented to the Forty-sixth Australian and New Zealand Association for the Advancement of Science Congress on 22 January 1 975, on this very topic, Mr Fraser said:

I do not believe that men and women are governed by inexorable events beyond control. When political leaders say the present situation cannot be helped, it is part of a world situation, they are expressing the futility of their own leadership when if they were men of real stature, they would be saying 'we can overcome'.

Mr Howardwas obviously saying that overseas pressures were increasing the inflation rate in Australia. But Mr Fraser was saying in 1975, admittedly before he was the Prime Minister, that one cannot use that type of excuse to explain the increasing inflation rate. Mr Fraser was saying that one should do something about it. The Government cannot have it both ways. The public is looking for consistency from the Government. If Mr Fraser's statement in 1975 about what we should be doing if there are overseas pressures is correct, let us keep to it. If Mr Howard's statement that overseas pressures increase inflation is correct, let us keep to that. But let us not dodge from one to the other as Mr Fraser and Mr Howard have so obviously done.

I use this occasion to look at the employment record of this Government. Again, it is probably worth while to have a look at the statement by Mr Howard in March of this year. In part he said:

In the Budget Speech, I said that I did not expect unemployment to improve in the year ahead ... At the end of January 1980, approximately 440,000 people, or 6.7 per cent of the labour force, were unemployed compared with 7 per cent in January 1 979.

How can we become complacent as Mr Howard obviously has when probably more than half a million people are unemployed? The figures to which Mr Howard referred and to which I will refer shortly relate to those people who are registered as unemployed. We know only too well that many people in the community who are unemployed do not register as unemployed. I remind honourable senators again of Mr Fraser's 1 975 policy speech in which he spoke about employment. We know only too well that he said:

Only under a Liberal-National Country Party Government will there be jobs for all who want to work.

What was the record that followed that statement? In December 1975 when Mr Fraser made that statement 329,000 people were unemployed. In December 1979 441,000 people were unemployed. Over 100,000 more people became unemployed during that period. Yet in 1975 Mr Fraser said that his government would provide jobs for everybody who wanted to work. The latest figure I have noted shows that 462,000 people are unemployed. That figure is for February 1 980. We must remember all the other people who have opted out of the work force. The participation rates are becoming lower. Many people in the community have decided that it is not worth while going out into the work force and they have opted out. They are either staying at school or they are married women who are staying at home. They do not register as unemployed.

Finally, I look at the taxation record of this Government. Taxation was also mentioned in the policy speech of Mr Fraser in 1975. Australians are taking an increasing interest in the Government's tax policy. After all, each time they fill the petrol tanks of their cars, they are providing revenue to the Government. The Government has made many promises on tax indexation. In 1975 Mr Fraser said:

We will fully index personal income tax for inflation over three years ... It will make government more honest with your money. They will no longer be able to rely on the secret tax increase of inflation.

In 1977 Mr Fraser reiterated in his policy speech the Government's commitment to tax indexation. He said:

Tax indexation saves every Australian taxpayer more money each year.

But what has happened? We certainly do not have tax indexation in the way Mr Fraser suggested in 1975. We do not have 100 per cent tax indexation. If we are to have indexation it must be 100 per cent indexation to mean anything at all. Again I refer to the speech of the Treasurer of March this year. He said: . . Government has decided to apply 50 per cent indexation of the personal taxation scale . . . with effect from 1 July 1980.

As was noted by many newspapers, the results of this will be that from July millions of Australians will have an extra 85c a week. Let us look at what followed after Mr Howard said that there would be 50 per cent tax indexation. I claim that if we have only 50 per cent tax indexation we really cannot call it indexation at all. Mr Howard said:

We might assume that the average CPI figure for the four quarters ending March 1980 will be about 9.5 per cent - . . Discounting that figure for the effects of indirect taxes and the first two stages of the move towards parity pricing for all . . . would produce an indexation factor of about 8.1 percent.

The full increase in the consumer price index will not be used. First of all we will take out increases because of the first two stages of the move towards parity pricing for oil. Therefore, this will artifically reduce what could be a 9.5 per cent CPI figure down to 8. 1 per cent. But the discounting does not finish there. The Treasurer also said that it is the intention of the Government to discount for health insurance charges. So any increase arising from those charges will not be used for tax indexation purposes. The fourth factor by which to discount the CPI will be the further impact of the Government decision to move to full import parity pricing of crude oil. Those two factors will reduce the CPI figure another 0.9 per cent. Instead of having a CPI of 9.5 per cent for tax indexation purposes we are down to 7.2 per cent because we have discounted for four separate items. Even that figure of 7.2 per cent will not be used for indexation. We will use only half of that discounted figure. The figure of 3.6 per cent will be used for indexation.

Let us suppose there is an increase in the CPI of 9.5 per cent. We will not even use half of that figure, which is 4.75 per cent. We will be down to 3.6 per cent. That is the figure which will be used for indexing taxation. It is a charade to say that taxation is being indexed if we have a consumer price index figure of 9.5 per cent and we index taxation at a figure of 3.6 percent. No wonder we saw headlines in newspapers the following day which said that millions of Australians will get an extra 85c per week and that that extra 85c will come in July. Of course, by that time the value of that 85c will have well and truly disappeared because the price of petrol will have gone up again. The 85c will probably go in a week's tankful of petrol. Other prices will have increased, too. So in itself the 85c is illusory. Even though it is illusory it is supposed to disappear in another way, too. I would like to quote another section of the Treasurer's speech. He said:

As a result of these changes millions of Australians will receive an increase in their take home pay. Against this background the Government expresses the very firm hope that the Conciliation and Arbitration Commission will take full account of these tax reductions when making both its indexation and work value determinations.

He was saying that even though there was indexation at the rate of about 3.6 per cent, the

Conciliation and Arbitration Commission was expected to take this into account so that workers would get less when their claims were being determined by that body.

Few of the Fraser Government's election promises have been fulfilled. This evening I have taken the opportunity to mention those promises in the fields of employment, inflation and taxation. Between now and the next election, whenever that may be, we of the Australian Labor Party will be reminding the electorate of all these failures. So too will we be outlining Labor's alternative policies. Four main areas have been submitted already to the electorate, showing policies for health, housing, employment and energy. Given the Government 's sorry record and the excellence of Labor policies, I look forward to seeing Labor in power next year.

Question resolved in the affirmative.

Bill read a first time.







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