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Thursday, 8 March 1973
Page: 396

Mr HAMER (Isaacs) - The proposals which the Government has set before this House in the Governor-General's Speech, which they modestly describe as the most comprehensive program of legislation in the history of the Australian Parliament, are certainly designed to spend a great deal of other people's money. But they are still promises, not performances. It is necessary for us to examine critically their program to see whether it is economically feasible. The Organisation for Economic Co-operation and Development has recently published an impartial expert survey of the Australian economy - the first such survey ever. It is worth quoting some of its conclusions, because these represent the economic start point of the present Government. The OECD concluded, inter alia, that:

Australia entered the 1970s with an economy stronger and more dynamic in many respects than a decade earlier. . .

It said:

.   . through most of the 1960s full employment and price stability were well maintained, and the rate of economic growth accelerated.

The OECD survey went on to say:

So immense are the continent's natural resources, and so well geared to their development appear to be the skills and energies of the people, that the next two decades could well be a period of expansion more vigorous than the two that have passed.

But it added the timely warning that this will demand judgment and skill in national economic management.

This is the crux of the problem. The objectives of many of the Government's proposals are socially very desirable, although we would often question very seriously the methods by which they are to be implemented. But, if personal consumption is not to be reduced - and this the Government has said it will not do - the only way we can afford increased expenditure on education, social services, health, care of the aged, housing and urban renewal, improved transport and environmental control is through increased productivity. Even the Prime Minister (Mr Whitlam), who is certainly no economist, recognises the problem, and in the bill of goods he sold to his public last December he suggested a growth rate of 6 per cent to 7 per cent - but carefully made no mention of how he proposed to achieve this. The Minister for Overseas Trade (Dr J. F. Cairns) admitted 2 weeks ago that our rate of growth is not enough to support the program on which his Government had been elected. Some confession - and a clear vindication of what members on this side of the House were saying during the election campaign, when trying to bring the Labor Party's 'pie in the sky' promises back to some sort of reality.

Faced with this problem, one would have expected a sane Government to tackle seriously the problem of productivity. Yet what has the Government done? The Minister for Labour (Mr Clyde Cameron) is campaigning for - no, demanding - a 35-hour week. This is a 12i per cent reduction in the output of labour. What a way to raise productivity! He also wants another week's annual leave - a further 2 per cent reduction in the output of labour. What a way to raise productivity! The Minister for Labour has also foreshadowed amendments to the Conciliation and Arbitration Act which will have the effect of increasing the already excessive monopoly power of the trade unions, and this in turn can only lead to gross maldistribution of our productive resources. What a way to raise productivity! He also wants to encourage the shop steward movement. Shop stewards are an importation from Britain, and are quite foreign to the concept of our system of conciliation and arbitration. The shop steward movement has played a major role in reducing Britain's industry to a state of near chaos. And this is what the Minister for Labour is encouraging here. What a way to raise productivity!

I suppose, in theory at least, the crass ineptitude of the Minister for Labour could be compensated by a wise capital investment program for industry. What has the Government done here? Investment capital comes either from profits - the source of over half of our manufacturing investment - or from new investment which in turn is heavily influenced by profits. The. policy of the Government - although it is probably inadvertent, like most of the rest of its economic management - is to squeeze profits between the jaws of minimum wages and maximum prices. And between these limits, unions are being encouraged by the Government to use their monopoly power to extract crippling overaward wage increases. The result can only be a sharp drop in new investment from internal sources. Potential investment from external sources, the Treasurer (Mr Crean) proudly says, is told it is not required. What a way to raise productivity! In economic management, the present Government's right wing may not know what its left wing is doing, but one can always be very sure where its foot is.

It is very noticeable, that there is no mention in the Governor-General's Speech of any attitude towards wages and salaries. I should have hoped that the Government would have shown some interest in an incomes policy, covering both wage and salary earners. At least its party colleagues in Britain tried to introduce such a policy. Through our arbitration system we have, by world standards, a remarkable system of fair control of wage differentials. Rather than destroy the. arbitration system, a course on which members opposite seem determined, I should like to see us building on and extending the wage and salary system, so that eventually we achieve a proper incomes policy. But the extraordinary thing about the Government's policy is that while it refuses to tackle an incomes policy, it plans to control prices. At least that is something in which it is unique. No-one else would be so foolish. I am not opposed to prices justification in appropriate circumstances, but these circumstances are very limited, and only appropriate at all if combined with an incomes policy.

The disadvantages of across-the-board price control are well known - a swollen bureaucracy, the impossibility of setting fair prices for new products and misallocation of new capital investment. True competition is a much more, efficient system of price control than is government price control, and it is worth noting that this competition does not necessarily have to be internal. With judicious adjustment of tariffs, external competition can be created to compete with an internal monopoly. I believe that a price fixing or price justification system is only appropriate for industries and products where for some reason the competition is inadequate and, if tariff and restrictive trade practice policies are effective, such inadequate competition should only be temporary. I should like to refer also to the extraordinary action of the Government in announcing the intention to use Government contracts as the vehicle for its political program, rather than weighing the cost and value to the community. This subject was well covered in a debate in the House this morning, so I shall do no more than point out that the Government's new policy would be a major disincentive to industrial efficiency. What a way to raise productivity. A community cannot have more by working less or less efficiently.

The present muddle-headed policy of the Government is heading us towards inevitable economic crisis. So too in our defence and foreign affairs, this Government, to use the words of the present Prime Minister, lurches from crisis to crisis. In part, of course, it is caused by the fact that the Prime Minister is also, on a part time basis, the Foreign Minister. Insofar as he took this portfolio himself in order to prevent the present Minister for Overseas Trade from claiming the Foreign Ministry I understand his problem and agree with his decision. He has a poor bunch of Ministers to choose from, and he has had obvious difficulty in placing some of 'them. But Australia is now paying the price for the administrative incompetence of the second Whitlam Ministry. We cannot afford these days a part time foreign policy run by a part time Foreign Minister.

Let us look at some of the things that have been done. The Prime Minister has been trying to peddle a vague, naive scheme for South East Asia as a zone of neutrality. This has been treated with scorn or polite amusement by the countries in the area. They realise that a desire for neutrality - even a guaranteed neutrality - is ridiculous unless they are willing and able to defend themselves. The fates of Laos and Cambodia are well known to all of them. Our Government says that when the neutral zone is introduced we will cease our military commitment to the area - at the very time when it would be most important. No wonder the countries of South East Asia view our present Government with suspicion and concern. I draw the Prime Minister's attention to the examples of Sweden and Switzerland, which have been able to preserve their neutrality for more than a century because they never neglected their defence.

Then there is Thailand. The Prime Minister has outraged that friendly country by picturing it as a potential Vietnam. Reactions in Thailand range from the mild remark of their Foreign Minister saying that Thailand is not Vietnam and that the Prime Minister should have visited Thailand before making such a statement, to a newspaper editorial suggesting that the Prime Minister should mind his own bloody business. What a way to keep friends in South East Asia. Then there is America. There is an almost pathological anti-American strain running through the Labor Party. For many members of the Labor Party America can do no right - and China can do no wrong. Three Cabinet Ministers insulted the President of the United States and were not disowned by the Prime Minister. Our relations with the United States have sunk to the lowest level since the last Labor Government was in power.

Then there was the Prime Minister's gross indiscretion over the intelligence base in Singapore. I do not know whether the Prime Minister regrets his action, but I am sure he is very, very sorry that he was found out.

And let us look at the gang he was trying to appease by his gaffe - the so-called socialist left of his Party. They are not a negligible group; they still control the Victorian Branch of the Labor Party, and have several sympathisers in the Cabinet. They do not share the Prime Minister's vision of a neutral South East Asia. They want a communist South East Asia. Do honourable members remember the clamorous applause they gave to the overt communist invasion of South Vietnam? They do not want good relations with America. They want to poison our relations with America, and are delighted at the success the present Government has had in achieving this aim.

Mr Deputy Speaker,the damage that the Prime Minister has done is not limited to the reported drying up of our intelligence exchange with America, very serious though this is. How can any country trust us, if our Prime Minister is likely to blurt out gross indiscretions in order to appease a dissident group of his own party, regardless of the international consequences? International trust is slow to build, but it can be destroyed frighteningly quickly, as the Government is doing. Some of the things the Government has done since 2nd December have been good, but in the key areas of economic management and foreign affairs its actions are being disastrous. It is a ramshackle, sectional party. Honourable members opposite call themselves the political arm of the trade union movement. It is time they realised that, for good or ill - and it seems likely to be mostly for ill - they are the Government of the whole of Australia, and should adjust their policies accordingly.

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