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Thursday, 7 October 1971
Page: 2051


Mr WHITLAM (Werriwa) (Leader of the Opposition) - Last year's Treasurer spent on his Department S86.2m; this year's plans to spend $104m. Economic mismanagement has seldom asked so high a price. Inflation and unemployment occurred under earlier Liberal governments alternately; under the McMahon Government they occur simultaneously. The latest Treasurer (Mr Snedden) has produced in his first Budget a formula not for reducing prices but for reducing employment.

This is a judgment which is not mine alone. It is shared in quarters to which normally the Government looks for uncritical support. W. D. Scott and Co. asserted in its business forecast for this year that the Government had decided for the first time since 1960-61 to generate unemployment in excess of 2 per cent - not in December, as Government spokesmen endeavoured to argue by way of mitigation, but in March. The Prime Minister's reaction was to telephone them. They have heeded the facts but not he. Three days ago its bulletin reported:

The likelihood is a continued increase in unemployment at least running into the first months of 1972.

On 9th September the Associated Chambers of Manufactures of Australia - Bank of New South Wales survey disclosed that 7 out of every 10 manufacturers were operating under capacity for lack of new orders. On 10th September the Statistician revealed that growth in personal consumption had fallen steadily over a 15-month period from 4.8 per cent to 1.6 per cent.

The Liberal Chief Secretary of Tasmania's Liberal State Government on 14th September said that the unemployment statistics for that State were 'alarming'. In a leading article the following day, the 'Sydney Morning Herald' summarised the whole underlying strategy of the Budget' as 'creating a pool of unemployed to moderate wage demands and price increases'. Mr Maxwell Newton, playing as usual Svengali to the Prime Minister's Trilby, confirmed in 'Incentive' on 22nd September that the Budget was designed to bring more and more pressure on the working classes', precipitate 'some very serious strikes' and thus provide a pretext for repressive legislation with which 'to split the ranks of the Labor Party and the union movement and bring to the forefront of public thinking the whole issue of industrial anarchy'. I repeat that these are the views not of Labor spokesmen or supporters but of the Government's associates, employees, patrons and friends.

Confronted with evidence so incontrovertible of their intent to generate unemployment, the Prime Minister and the Treasurer have fallen back on economic obscurantism. The Treasurer told a television audience on 14th September that budgetary restraints on spending were necessary because savings were at an all time high and might therefore produce an upsurge in demand. The Prime Minister made the same point on 14th September in reply to a question from my colleague, the honourable member for Melbourne Ports (Mr Crean), and on the following day in answer to me. These propositions are incorrect both in fact and in theory. It is a favourite Federal Treasury bogy that savings are potentially a source of inflation. Savings expressed meaningfully as a percentage of gross national product stood in 1970-71 at their lowest level for the last 5 years. There has not been a year in which deposits declined since 1961-62, when people had to spend their savings to support themselves. No reputable economist regards savings as an index of demand pressures either actual or potential. The Assistant General Manager of the Bank of New South Wales, Mr Russell Prowse, told the 'Financial Review' on 17th September that the Prime Minister and the Treasurer had been putting forward a 'totally spurious argument' in which he hoped few people would put faith. 1 quote once again exposure of the Government not by an opponent but by a friend.

Let me now illustrate how the Government creates or condones price increases in areas over which directly or indirectly it can exercise control. My colleague, the honourable member for Reid (Mr Uren) on many occasions recently has pointed out how the Government could mitigate increases in prices in housing and housing land. I shall mention some other aspects, commencing with health services. General practitioners increased their incomes between July and December last year by 7 per cent but in April this year the present Prime Minister approved a further 15 per cent fee increase to which his predecessor had offered resolute resistance. Public hospitals have had to increase their charges by 50 per cent because the basic Commonwealth hospital benefit has not risen since 1958 and the Commonwealth will not meet its share of the rising cost of treating pensioners. For every Si paid in public ward fees in 1952, after the Menzies Government cancelled the free hospitalisation provisions in all States except Queensland, patients now pay $8.33. Hospital insurance contributions have been increased since last December with Government approval by up to 34 per cent and the Government has increased the cost of visiting the chemist for drugs which it provides as pharmaceutical benefits by 100 per cent. What private company would dare contemplate increases half as sudden or as drastic as those imposed this year by the McMahon Government in the price of ill-health?

I now turn to indirect taxes. Last year's Budget imposed increases in direct charges and indirect taxes which accounted for half the 7 per cent cost of living increase in the last December quarter. Postal and petrol increases in the current Budget will inevitably produce an identical effect, as will payroll tax passed to the States to satisfy their demands for a growth tax and increased by them forthwith from 2i per cent to 3i per cent. There will be immediate rises in costs to all consumers and there will be the inevitable flowthrough as these charges are passed on later in the year. All these rises could and would have been avoided by a government which genunely sought to hold prices down. How can we take seriously the rhetoric of Ministers on inflation when the Government makes so consistent and comprehensive a contribution to the rapidity with which living costs increase?

Interest rates now stand at their highest level in our history. They are a crushing burden on State, local and semigovernment authorities which, unlike the Commonwealth, finance their capital works not from revenue but from loans. Between 1954-55 and 1967-68 the number of cents taken in debt charges out of every dollar received in local government rates rose in New South Wales from 17.6 to 22.2, in Victoria from 9.9 to 15.8, in Queensland from 29.8 to 33.2, in South Australia from 7.8 to 12.7, in Western Australia from 10.2 to 16.7 and in Tasmania from 21.5 to 33.8. Every increase in interest rates is passed on inevitably in higher State taxes, local government rates and semi-government charges which can no more be avoided by ordinary Australians than higher prices for food. For every $1 paid monthly in interest on State savings bank housing loans 20 years ago borrowers now pay $1.32. For every $1 paid in council rates even 2 years ago they now pay $1.15. Sewerage and other local services provided 20 years ago by municipalities at government interest rates are now financed by developers at an average cost in Victoria of $2,850 a block. Interest rates are used by the Government as a means not of combating inflation but of concentrating its cost upon those sections of the community which can least afford to pay.

Fees for university degree courses have risen since 1957, when the Murray Committee reported, in the case of Arts from $489 to $1,239 and of Medicine from $1,477 to $2,432. For every $1 paid in university fees even 2 years ago students this year paid $1.25; next year they will have to pay more. By offering the States $1 for every $1.85 raised locally the Commonwealth ensures that fees are regularly increased. For $14. 5m all fees at universities and colleges could be abolished but the Government prefers to connive at placing higher obstacles in the path of able students who fail to secure scarce Commonwealth scholarships. University fees exemplify very clearly the way in which the Government increases prices even in areas where it can completely control prices.

The Government cannot expect from employees a restraint in pricing labour which it neither exercises in pricing public facilities nor requires of proprietors and corporations in pricing commodities of other kinds. It cannot simultaneously seek co-operation from unions and employee associations and coerce them with the bludgeon of an unemployment pool. Employees are no less interested than other sections of the community in ending inflation but they expect anti-inflation measures to embody equality of sacrifice. They are aware that their share of the nation's wealth was reduced between 1955 and 1970 and they will accept no further reduction.

The DEPUTY CHAIRMAN (Mr Corbett) - Order! The honourable member's time has expired.







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