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Tuesday, 14 September 1971
Page: 1242

Mr ENGLAND (Calare) - When the Prime Minister (Mr McMahon) spoke during the Budget debate last week he referred to those who relished playing the role of prophets of gloom. I gave some thought to whom he was referring and I think, with all kindness to the honourable member for Barton (Mr Reynolds), that we have found one. One, of course, has an interest in the future of the Australian nation as a complete entity, but in the time allotted to me I would like to deal with the Budget measures applying to the rural industries and the control of inflation.

In a country such as Australia where the annual Budget is used so predominantly to control both the direction and the rate of growth of the national economy, it is a most delicate operation to frame a Budget which will achieve just that purpose. The proper rate of increase in demand in a growing population is required to keep up economic growth - and importantly to maintain full employment of labour, which up to the present time has provided this Government with a tremendous record. At the same time the Budget must refrain from encouraging further cost increases with resultant higher prices. It is almost impossible to specify correctly all the causes of the cost and price inflation which exists in Australia at present.

Again, it is practically impossible to apportion correctly the degree to which each separate cause contributes to the end result. But it is all too clear that cost and price inflation is now running high. This is seen in the fact that in the last financial year the average weekly earnings rose by over 10 per cent compared with 8.9 per cent in the previous year. The consumer price index rose by 4.8 per cent as against 3.2 per cent the previous year and by the last June quarter the rate of increase in prices was over 6 per cent.

What is certain in my mind is that the effects of inflation fall heaviest on 2 groups of people. The first group comprises that growing number of the population who are on a fixed income. I refer mostly to those people who rely on superannuation and life savings in the form of bank deposits or insurances, to people on pensions and to people who rely on investments of principal at fixed interest rates. The second group comprises those people who, irrespective of the economic climate in which they produce their goods for sale, must take for their produce a price over which they themselves have no control; a price which the buyer elects to pay. Of course, this second group is made up largely of primary producers, and their state of prosperity has a very direct bearing on the trades, professions and services which depend on the primary producers for their standard of living.

But there is another growing section of the economic community in this group, and that is the manufacturer who depends on the export market for disposal of the bulk of his goods, or all of his goods, just as the primary producer does. The amount of manufactured goods being sold overseas ls growing, and it must be encouraged to grow; and as the total grows 1 see help at hand for the primary producing communities. In the parliaments of the land - and I refer to all parliaments - it is only too well known that the representatives of the primary producer are outnumbered. But as exports of manufactured goods continue to expand there will be a gradual increase in the number of parliamentary representatives who will represent more and more export income earning capacity within their areas. As no country can survive for long without trading internationally, surely this expansion of a trading potential in manufactured goods will lead to the breakdown or the blurring of the line which has existed during Australian history between the primary producer and the manufacturer, and to the blurring of the distinct picture of exports dominated by primary produce, and imports substantially made up of manufactured goods, partly manufactured goods and raw materials for manufacture. Surely this must lead to greater attention being given by both management and labour to the relationship between wages, salaries and conditions, on the one hand, and productivity, on the other hand.

One cannot tell primary producers, as a body, much about this factor because they have had to contend with it for all their working lives. Before the great trade drives of the 1960s when manufacturers depended largely on the home market, costs were loaded on to prices with comparative ease, and with success. But with open competition on international markets continuing to develop and with competition against cheap labour countries, as we have heard today in replies to questions, the manufacturing industries - again management and labour alike - will have to follow the economic path which the primary producer knows so well - the one demanding a constant watch on the relationship between cost and productivity. We know that the primary producer has done this and, as 1 often have said in this House previously, he has done it so well over the years that he is an acknowledged world leader in efficiency. In fact, it was only efficiency and expanding production which have allowed the primary producer to offset rising costs, particularly over the last 10 to 15 years. One of the effects of that, which we see in our statistics, is that there has been a 30 per cent increase in capital investment in rural industries in that period. Low world prices for some primary produce and unfavourable climatic conditions, particularly in States such as Queensland, coupled with cost price inflation, have once again led to a marked recession in rural areas.

At this stage I should like to refer to the Budget speech of the Prime Minister (Mr McMahon) last week, which I thought, when it is studied, gave an excellent answer to the Leader of the Opposition (Mr Whitlam). He referred to sustained economic growth, particularly to a 30 per cent growth in the work force over the last 10 years; to, increased national reserves, which I think , are now at a record level; to full employment; and to an economy with enormous and exciting potentialities for future growth. As a representative of a primary producing area I was disappointed that in that speech there was only one phase which referred to rural industries. The Prime Minister spoke in general about assistance to rural industries, in a speech which lasted 26 minutes. I know that all subjects cannot be covered in one speech, but I think that rural industries rated a little more mention than that. 1 took note of 2 references towards the end of the Prime Minister's speech. He said:

There are some people who seem blind to our economic progress, and the real nature of our problems. They relish playing the role of prophets of gloom.

Further on he said:

People who talk in this way seem to be mesmerised by the immediate problems of the day.

I am sure that that remark was directed at the Opposition and at the knockers in our community generally. I am not blind to the magnificent progress of Australia in many fields. T am not blind to the real nature of rural problems, either. There is a difference between being a prophet of gloom and putting forward hard, cold, unembellished facts concerning the economic problems of the people whom one represents. If I am mesmerised by these immediate problems, I think I can still distinguish between the every day parochial problems of a section of the community and the present problems of the rural community as a whole, which, if they are not corrected, will turn into a first class national economic smash, and a social smash as well.

I refer here, for instance, to the reasons which brought to Canberra last week a deputation from the central west and west of New South Wales. It comprises busy men, and men connected with local government, from 4 electorates: Calare, Darling, Gwydir and Riverina. All of them are facing the same problems. They referred to deficiency payments for wool; to the 'rural crisis' - and I am using their words; and to the need for the provision of more funds for the rural reconstruction scheme, for long term finance, for rehabilitation, for assistance to local government for the relief of unemployed persons in their areas, and for assistance with rating, tariff, freight and inflation. These were the matters about which the deputation came to Canberra to speak. Unemployment exists; it is not yet big in rural areas, but it does not have to be big in country towns to have a substantial effect on the economy of those towns. That is the backdrop against which this Budget has been framed.

So at the one time this 1971 Budget is stepping up the Government's long established practice of providing compensation payments for primary producers and is adopting or continuing practices which are designed to minimise growth in cost and price inflation. Make no mistake: There has been a great lift in assistance to rural industry. I think that enough assistance has been provided to indicate that the Government recognises the very serious difficulties which face primary industry. In the wool industry there is continued support of the Australian Wool Commission and its own price averaging plan. There is the provisio of deficiency payments, which, was a most significant decision. They will have favourable effects not only on the wool growers but also on country towns in general and on all who make up the rural community. As one who exerted all the pressure he could and who expressed all the thought he could before the Budget was for mulated, I congratulate the Government on this move which will provide not only economic assistance but also some relief in terms of time to primary industry.

I can go on and refer to rural industry in general without going into great detail. An amount of $40m has been provided for rural reconstruction and an amount of $10m, which is not a large amount, for the Australian Development Bank to be used for farm build up purposes. There has been a continuation of the provision of super phosphate subsidies and of assistance to the dairy industry. Legislation concerning the apple and pear industry has been promised. All in all, the Budget provides S275m for rural industries, which I think is 32 per cent more than was provided last year.

Returning to the primary producer, the position for him is very different this time. He has found himself in this position on several occasions previously, lt is almost inevitable that there will be peaks and troughs in the level of rural prosperity. But the difference this time is that on previous occasions the primary producer has had the rest of the community following up and down in the peaks and troughs of prosperity with him. The reason for that was that the total national economy was so dominated by the return from rural exports. But now we have what some people term a split level economy with the primary producer and that large group on fixed incomes in straitened circumstances and, generally speaking, the remainder of the community doing very nicely. Most secondary industries are working at full pressure. There appear to be ample markets. There is difficulty in maintaining a steady and experienced work force. Tertiary industry and the services are absorbing all the labour which is available to them.

The anti-inflationary measures which are introduced in this Budget commence with the act of budgeting for a bigger surplus than last year. This year the surplus will be $630m. Public authority spending has been restricted. The emphasis here has been to try to curb demand inflation. Departmental spending has been pruned. The projected longer term planning of departmental estimates is a most beneficial move. In raising revenue the income tax field has been used rather than sales tax. Indirect taxes have been avoided and this, of course, is to prevent their being just another addition to the consumer price index. The Government is to limit the growth in the number employed full time under the Public Service Act. All these measures are anti-inflationary and all have been made public but some of the critics seem to have forgotten them.

Outside the Budget, but very' appropriate to any discussion of measures to combat inflation, the Government is reviewing the Commonwealth Conciliation and Arbitration Act in an effort to find the means of giving economic considerations more weight in arbitration cases. Those were the Treasurer's own words. This is not aimed at any section of the community and it is certainly not aimed at the wage earner because what body in the community is more affected by economic considerations. It is the wage earner just as much as management and the investor for whom continued provision of job opportunities in a sound economic community is so vital. While speaking of Government measures to combat costs and prices it is as well to recall the Government's announcement of an impending major review of tariff levels to be carried out by the Tariff Board. There is reason to believe that when this review is completed lower levels of protection in most instances will apply. But for the beleagured primary producer who not only needs relief from cost pressures but needs them urgently, the results from a tariff review are, in my opinion, bound to be slow. I cannot see what can be done about this at the moment but I draw attention to the fact that in the recently introduced Tariff Board Bill there is provision for another member to be appointed to the Board as well as provision for the use of one member Boards. So it is apparent that the Government and the Minister for Customs and Excise (Mr Chipp) are aware of the need to do all possible to assist the Tariff Board to expedite its review.

I have referred to the relief to the wool industry through the deficiency payment scheme. The wool industry in its newly found cohesion and solidarity will realise that this deficiency payment is not a full answer at all. It has been approved for only 12 months anyway and it is only part of the answer. The industry must reta.n its cohesion so that its leaders can devote every effort to making the necessary changes or the changes which it is hoped will open the required gap between the cost of production on the one hand and the prices received on the other, and to making these changes in the time which can be secured for the industry by those in this Parliament who are battling for the industry. Despite' the millions of dollars which this Government provides for rural industries in this Budget, such as $40m for rural reconstruction and $10m through the Development Bank for farm build up, the long term credit arrangements for the man on the land are not solved. I know the Government is working actively on this scheme through the Rural Loans Insurance Corporation but it appears that at this time it is not a goer. The Government cannot wait much longer on this. If nothing is available through traditional lending channels the Government must come in through its own lending authority. We hear talk of a mortgage bank and this type of thing but I fee] there are enough instrumentalities already. For instance there is the Commonwealth Banking Corporation. What is needed is a policy direction and capital.

If the rural industries continue on their present trend without further sustained effort to provide the remedy required the position will right itself, but the process will be painful and destructive to many. It will right itself the hard way. We must surely have passed the point in commercial and human relations where we can tolerate drastic and explosive solutions to economic problems. Our current problem concerns Australia's greatest export earner. Management and labour seem to be squarely confronted and the bard line appears to be predominant. Surely there, should be more effort towards conciliation in the nation's interest. It will mean moderation on the part of industrial forces. It will call for the exercise of tolerance, reason and understanding on ali sides. I call for these things before it is too late for this nation. I support the Budget proposals. .

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