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Thursday, 25 August 1983
Page: 332

Mr LUSHER(8.50) —I congratulate the honourable member for Casey (Mr Steedman) who has just made his maiden speech. I wish him well in his endeavours to rectify all those wrongs. I just hope that he can do it in three years. If this Budget were subject to the same scrutiny that any private enterprise prospectus or annual report is subject to-that is, by the National Companies and Securities Commission-I suspect that the whole of the Cabinet would be in gaol. I wish to put this Budget into some sort of perspective.

Mr Steedman —Do I have the right to interject now? Sit down, you mug.

Mr LUSHER —You are welcome. I have taken on better than the honourable member. I wish to put this Budget into some sort of perspective because it is Act IV in the Labor tragedy. Act I was the scene setter. The incoming government picked up the bogus forward estimate of the deficit and, at the same time, attempted to discredit the former Government and to condition the electorate to a large deficit. It was a tolerably good performance and the audience was dazzled by the new superstar. The Government obtained community acceptance for the big spending policy that it wanted and it succeeded in transferring the political odium to the former Government.

Act II was the National Economic Summit Conference. This was the climax but it broke all the rules of good drama because the climax came too early and the Government had nowhere to go but down. But it served a short term purpose; business was flattered, consensussed and outmanoeuvred into endorsing the prices and incomes accord, including centralised wage fixation based on full indexation plus productivity increases, and into accepting a $8 1/2 billion deficit. But the more time passes, the clearer it becomes that the Summit was a total sham. It was wonderful short term theatre but disastrous for Australia.

Each of the two central features of the Summit will have significant long term effects that will drag the Australian economy back into the mire and destroy what international competitiveness we may have left. The rejection of scenario C which was the high growth, low unemployment, low inflation option was a tragedy for Australia. The Summit was told that this was an industrial relations impossibility, and weakly accepted that proposition. The decision to reject scenario C has committed Australia to long term high unemployment, high inflation and low growth. All this is in the interests of industrial peace, in the interests of powerful, sectional interests and certainly not in the interests of a strong competitive Australia.

Act III was the May economic statement; and this was to lay the framework of the priorities of the new Government. What were the priorities? The first was to belt the incentive of the thrifty-those who were doing their best to provide for themselves in their old age-by the introduction of the iniquitous superannuation tax, then to wipe out the two best job creation, national infrastructure programs in the form of the Alice Springs to Darwin railway project and the national water resources program, and then to knock the heart out of the rural sector by destroying the income equalisation deposit scheme and tax averaging, on top of cessation of drought relief. Yet the Government is relying on the rural sector to provide one-third of the growth that it is estimating will occur in the economy this year. The Government's priorities emerged in the form of Medicare and the community employment program-tired socialist priorities!

We now come to Act IV, the Budget. Mild, the critics called it, after the first night; but already the performance is starting to fall apart. The Budget confirms the priorities of the Government: Big spending, higher growth, more welfare, more borrowing, and no regard for growth, investment, profits or jobs. So we have the perspective. We have seen the four acts in the Labor tragedy. What will Act V when it arrives hold for Australia?

Having established a perspective of the events which culminated with the Budget we can examine the reality and effect of Labor's economic priorities. The first point is that this is a high spending, high deficit government. It is a government that is prepared to mortgage the future heavily and to build up debts for future taxpayers. I mention in passing that public debt interest this year is estimated at $4.1 billion.

Mr Anthony —At $4.1 billion?

Mr LUSHER —At $4.1 billion, or 17 per cent of total outlays. It is one of the biggest single outlays. In fact, it ranks fifth after defence, health, education and welfare. There are already $39 billion worth of Commonwealth and State securities on issue, equivalent to about 70 per cent of Government spending this year. The Caucus debate about the economic irresponsibility of a high deficit was as much of a sham as the Summit was. There was never any question of a low deficit. It was simply whether it would be very high or ridiculous, and very high it turned out to be.

The Treasurer (Mr Keating) himself has acknowledged that, in the Budget-making process, a total of $1.8 billion was carved off the spending programs of the former Government. Even on that basis, we could have had a significantly reduced Budget deficit. But no; having reduced expenditure by $1.8 billion, the Government has increased it by $2.5 billion. Without that $2.5 billion of extra spending, we might have had a deficit of around $6 billion-and that is a figure we have heard before. But what is worse is that the $8.5 billion includes a significant addition to the structural deficit, and the Department of the Treasury acknowledges that this will make it all the harder to get the deficit in future years down. It is worse than that because so much of that structural deficit increase does not start until later in the financial year and will impact only for a couple of months, but the impact will really be felt next year and in the years ahead. If we are stuck with big deficits, we are stuck also with big interest rates, big taxes, low profitability and high unemployment.

The Government is taking 32 per cent of gross domestic product this year-a huge grab. The deficit is a huge 4.7 per cent of GDP and the public sector borrowing requirement will be up by one-third, from 6 per cent of GDP to 8 per cent of GDP . But it is all somebody else's money and, according to the cerebral giants on the Government side, it does not matter. This huge deficit will have an adverse effect on interest rates. Even the Budget statements acknowledge that fact. The statements use words such as 'some pressure on interest rates' and 'there should be no significant increase in interest rates'. Let us not forget that, by the Treasurer's own admission, $2.5 billion of the $8.5 billion represents this Government's own spending additions-this Government's priorities-and that fact should put an end to all the nonsense about an inherited deficit. This is a Labor deficit. This Government made all the decisions, and the Budget represents the priorities of this Government.

Mr Barry Jones —What would another Fraser Budget have been like?

Mr LUSHER —The honourable member was not able to enjoy the pleasure of another Fraser Government Budget. This country was saddled with the first Hawke-Keating Budget, and what a disaster that will turn out to be for all Australians. The projected $8.5 billion deficit remained the same over the last six months when we had a whole range of gross domestic product growth forecasts. Different growth estimates were made for 6 March, for the National Economic Summit and in the Budget. The range has been between 0.5 per cent and 3 per cent, which is a significant variation. I want to know how good is the 3 per cent that we are using at the moment. Will it prove to be any better than the earlier rubbery estimates? Whatever the ultimate result, growth will be too low. The reality in Australia is that we need GDP growth of at least 4 per cent before we have any impact on unemployment, and the converse is that anything less than 4 per cent will result in higher unemployment. The Budget Papers acknowledge this. Budget Paper No. 1 says that there will be an edging up in the rate of unemployment. My guess is that it will be far more than an edging up, and my reasons for this are based not only on low growth but also on the wage increases.

I want to dwell for the moment on the implications of centralised wage fixation because I am of the opinion that this is the most critical area facing policy formulation in this country. Centralised wage fixation operates for the benefit of the industrial relations club-the high priesthood-particularly the Australian Council of Trade Unions, the Confederation of Australian Industry, the Department of Employment and Industrial Relations and other institutionalised participants in the industrial relations process.

Mr Campbell —Don't tell us, tell Macphee.

Mr LUSHER —The honourable member should listen to me and see whether he can get what I am saying through his thick head. Wage fixing is fundamental to the Australian economy and to the people he is supposed to represent who will lose jobs as a result of the policy of this Government. He should listen to me because he may learn something.

If centralised wage fixation were to become institutionalised in this country it would raise questions about the longer term role of State and other industrial commissions and tribunals and what would be the role of individual unions that are seen to be superfluous or ineffective as far as the individual needs of their members are concerned. In order to be seen to be effective it is often necessary for union officials to be seen to be disagreeing with centralised wage fixation. Centralised wage fixation does not require the principal parties to take any responsibility for decisions. That falls on the Australian Conciliation and Arbitration Commission. Nor does it require the parties to defend decisions. It is easier for individual unions to break away from decisions because they were not specifically involved in the process.

The Conciliation and Arbitration Commission is becoming an instrument of economic policy through the application of centralised wage fixation. This is not and should not be its role. The former Government took the view that it had no more right other than to go to the Commission and put a case before a national wage hearing, and this Government has been conned into the same sort of ridiculous proposition. The longer we all go on with this situation of saying we have no say in wage fixation and that the Arbitration Commission will lay down how much money will be paid to workers regardless of the profitability of particular industries and sectors the worse off we will all be. The alternative is to reduce the importance of the Conciliation and Arbitration Commission by decentralising its wage fixation function and weakening its economic role. Government members ought to appreciate that fact. Only 57 per cent of the labour force is unionised and most of those employees are in low growth industries. Yet centralised wage fixation extends to all industries and certainly acts to the detriment of emerging growth industries, export industries and import competing industries.

The Minister for Science and Technology (Mr Barry Jones), who has just left the House, is concerned about technology and sunrise industries. He ought to have some concern about this matter because those industries will be saddled with wage rates that bear absolutely no relationship to the conditions or profitability of those industries the longer the Government sticks with this centralised wage fixation stupidity. It can be argued that the Conciliation and Arbitration Commission is irrelevant because in good times unions will always move ahead quickly, if not through wages then through conditions, over-award payments and the like. The Commission cannot stop the market place working. However, in bad times the Commission puts a floor on wages and creates distortions. Therefore the unions get it both ways.

Centralised wage fixation works to the detriment of the export industries which are exposed to world fluctuations. Centralised wage fixation takes no account of conditions in those industries which must remain competitive and bouyant if our economy is to be healthy. I repeat that the Government is relying on the rural sector of those export industries to provide one third of the growth that it is looking for this year. Unions are unresponsive to high unemployment. It has been demonstrated amply that they continue to pursue high wage increases even when unemployment is high. Centralised wage fixation does not encourage a breakdown of this insensitive approach. We must get away from centralised wage fixation and as long as I am in this place I will argue for that.

Wages are the critical area of this Budget. If the prices and incomes accord does not hold up, neither does the Budget. I believe that a 4.3 per cent wage increase will add to unemployment but if the increase goes beyond that unemployment will be much worse. The fundamental reason why recovery is starting to take place in this economy is that the wage pause that is still in place six months after the election of this Government-the wage pause that was put in place by the previous Government-has worked.

That, together with the tax cuts of the last Fraser Budget, the end of the drought and the emergence of recovery in the United States of America are the only reasons for some hope of recovery in this economy. The Government cannot take the credit for any of that. What it has brought down in this Budget will undo the good work that has been done. It will put this economy back on the road to ruin in the same way as the unions blew the last boom by grabbing the benefits before they materialised; so they will blow the recovery by exactly the same means. Budget Paper No. 1 states:

. . . sustained recovery remains a hope for the future rather than a present reality.

The Department of the Treasury has been through it all before. It put together the document of which the Treasurer read every line but never wrote a word. This Budget is a Budget of lost opportunities. This Government had an opportunity to do something about sustaining the recovery that may be emerging in this country, of taking advantage of what is going on in the world and of being able to provide some increase in the standard of living for Australians by getting back some growth into the economy. But what has it done? It has squibbed it. The $8.5 million proposition that was floated through the Summit and was conned on to the Australian public included all the soft options. There was no need for any hard options in the Summit. This Government did not want to consider hard options; it wanted acceptance from the Australian people of a big spending policy, and the Government got it.

Mr Campbell —We inherited it from you.

Mr LUSHER —I have dealt with your inheritance argument, my son. It is absolutely a shallow argument.

Mr Campbell —Mr Deputy Speaker, I raise a point of order. This is an outrageous assertion. The honourable member suggested that in some way we are related.

Mr DEPUTY SPEAKER (Hon. Les Johnson) —Order! The honourable member will resume his seat.

Mr LUSHER —There is $2 1/2 billion-worth of new expenditure in this Budget that the Treasurer freely acknowledges he added to the deficit. If we knock that off, there is a deficit of $6 billion in my language. Honourable members can argue with me about that if they want to. This is a Budget of lost opportunity. There was an opportunity to do something that would have progressed this economy, which would have done something for the citizens of Australia, and the Government has blown it.

Mr DEPUTY SPEAKER —Order! I ask the House to extend the usual courtesies on the occasion of a maiden speech. I call the honourable member for Macarthur.