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Thursday, 5 April 1973
Page: 1197

Mr CREAN (Melbourne Ports) (Treasurer) - in reply - I thank the 3 gentlemen who have spoken in this debate, all of them former Ministers of the Crown at various times, for their support of the measure. I am somewhat astonished that they seem to think that inflation is a new problem. I would remind them that over the whole life of their Government inflation existed at an average rate of over 2i per cent. What happened in the last few years of their term in office, according to the Consumer Price Index and taking December as the reflex point, in 1969 inflation was running at 2.8 per cent, in 1970 it was 4.9 per cent, in 1971 it was 7 per cent and when the previous Government left office in December of 1 972 it was still running at 4.6 per cent.

Mr N H Bowen (PARRAMATTA, NEW SOUTH WALES) - It was coming back under control.

Mr CREAN - Well, it was coming back, but it had gone a long way. I am intrigued by the way honourable members opposite sought to extrapolate on the basis of the March figure, that is to be announced next week, which could well be 2 per cent. They are prepared to accept that that means, multiplying that figure by 4, that inflation is now 8 per cent to 9 per cent a year. I think, to begin with, that that is a gross distortion of statistics. As those honourable members know, there are very good reasons for the figure rising in the March quarter. This has a lot to do with the prices of foodstuffs, particularly the price of meat. These movements will be reflected in the figure for the March quarter which will be released shortly. But there is no suggestion that that necessarily will continue in the June quarter or the September quarter.

I suggest with all respect that those honourable members are being a little glib in suggesting that inflation is now running at 8 to 9 per cent a year. If it is it is little worse than it was 2 years ago when it was running for a complete year at a rate of 7 per cent. I, like everybody else, believe that inflation is a serious problem. As I have said in this place on several occasions when I have had the opportunity to do so, 1 think this problem demands the co-operation of the Opposition and the Government to try to solve it. One can be clever and suggest that all of the fault is with wages and none of the fault is anywhere else. I think that is an over-simplistic description of the situation. As I said yesterday, rightly or wrongly the public believes that governments can do something about the price situation.

May I just ask for a little less noise from the Opposition side of the House, if honourable members over there do not mind. The honourable member for Boothby (Mr McLeay) has his back to me and is talking to his colleagues. I find this a little irritating. If honourable members want to talk they should do so outside the chamber. I suggest that members of the Opposition in particular ought to be listening to what I am saying. I have listened to them and I think I am entitled to a certain amount of courtesy in endeavouring to give them a reply.

Mr McLeay - You sleep all the time.

Mr CREAN - I do not sleep. If the honourable member slept it would not matter; if I sleep it does. I listened to what was said by the honourable member's 3 colleagues. If he wants to be cheap and try to score that way he should at least be honest.

I was endeavouring to say that the problem of inflation is a serious one and that the public believes that governments can do something about it. When the public is asked which government, they believe it is the Federal government. I repeat again that inflation is not a new problem. I suggest that attempting to grapple with the regulation of prices is a new approach to this problem. The previous Government did not adopt this measure. I say again that rightly or wrongly the trade union movement in Australia believes that wages are regulated. If one works for General MotorsHolden's Pty Ltd one cannot fix one's wage and one has to go to arbitration about it. But those who make the motor car can fix their own price without having to justify that price to anybody. At least this has been the case.

I believe that ultimately all western capitalist societies will adopt what is called an incomes policy. I agree that the introduction of an incomes policy in Australia will be a very difficult matter. But the minimum condition of getting agreement on the introduction of such a policy is that the trade union movement be willing to accept it. The trade union movement believes that the first condition for any acceptance on its part of such a move is that something should be done about fixing prices. Starting ab initio since the war, we find that except for the States, South Australia in particular, which has done better than anyone else, and except for certain rudimentary arrangements in the fixing of prices of products such as milk, bread and to some extent even beer, there has been virtually no systematic attempt to fix prices in Australia. Because we are a federal system we have constitutional difficulties. But we are approaching this matter on a 3-tier basis. We are attempt-, ing through the prices justification legislation, which I hope will be in this House after the Easter break and which has been much more difficult to draft than we had imagined, to look after what might be called the big boys as far as price fixing is concerned.

Mr N H Bowen (PARRAMATTA, NEW SOUTH WALES) - That is the tribunal.

Mr CREAN - Exactly; that is the tribunal, and it will be concerned with prices that have the effect of flowing on into the economic structure. One pretty good example of this is the dry run we had before the legislation in relation to the price of steel. Secondly, the Government will set up in this House the mechanism of a committee that will be a sounding board and a channel of communication from the public to the Parliament and from the Parliament to some sort of solution of the difficulties. Thirdly, we believe that something must be done at the retail level. The best means of doing this is for the Commonwealth to provide finance, for the States to strengthen their agencies of consumer protection and to have voluntary bodies in the community which can help to monitor the system. In the end, the main complaint about prices comes from the housewives and shoppers of the nation and, mainly, from the 2 capital cities of Melbourne and Sydney.

It is a reality that two-thirds of the population of Australia is in the 2 States of Victoria and New South Wales, with nearly half the population living in or within 50 or 60 miles of the 2 big cities of Sydney and Melbourne. To some extent the problems in those 2 States are different. We believe that, for there to he effective regulation of prices, it is necessary to have co-operation between the States and the Commonwealth. I have said repeatedly in this House that I hope we will get the co-operation of the 2 States of Victoria and New South Wales in this matter, even though politically they happen to have governments of a different complexion from this one. They are the central areas and I make the plea, believing that the public wants something done about it.

I realise, as a student of economics over a good number of years and now as a very serious practitioner in a very particular place, that there are difficulties in regulating prices. But on the other hand I believe that those who claim to support market mechanisms in the interests of justice have a lot to answer for in regard to the present situation. If those people will heed and listen to exhortation and do justice as well, we may not need as much regulation as now seems necessary. A few days ago I came back from that great countryand it is a great country and it is still the strongest single economic entity in the world - the United States of America, which claims still to be almost the apothosis of what is described as free private enterprise. Even in the United States there now exists a demand to return to what was termed'phase 2', and even to return to price regulation.

Again, I indicate to those on the opposite side of this Parliament who may want to be sceptics on the subject that there is a very real belief on the part of the public that something must be done about prices other than letting market forces determine them. It may be a difficult task, but merely because it is a difficult task is no reason why we should refuse to take it on.

Mr Garland - An amendment will be moved in the Senate.

Mr CREAN - I hope you do that, and I will be interested to see the attitude of the Opposition when an amendment comes back from the other place. If honourable members opposite just want to play politics in this matter, fair enough. But I would have hoped that that motion on the prices committee would have been through both Houses by now. It is through this House but it is not through the other place because members of the Party to which the honourable member for Curtin (Mr Garland) belongs have chosen to side with a minority group in trying to play politics. The politics that are being played are to try to insert into that motion the requirement that something should be done about the pricing of public enterprises. I make the point that, after all, public pricing is subject to examination in the parliaments of the nation. The Post Office tariffs cannot be altered without the alteration coming here. The electricity tariffs in Victoria cannot be altered without the alteration going to the Victorian Government. But for some curious reason, again in the name of thinking that 'private' should be treated in the same way as 'public', members of the Opposition want to add a rather curious amendment to the motion for the prices committee that the Government intends to set up.

I say in all seriousness that public pricing is subject to some sort of scrutiny, but private pricing is not. That is the purpose of the proposed prices committee. Someone else earlier this evening-I think it was my friend, the

Treasurer of some years ago - spoke about the vast increase in the volume of money in the community, again implying that such an increase had taken place only since 2nd December. Some people seem to think that that is the day that inflation started. 1 have been trying to suggest that inflation has been with us for a long time and that this Government is the first one that has tried seriously to grapple with it. I notice that one of the newspapers this morning was trying to quote the latest monthly figures from a Treasury document and, as often happens, the newspaper misquoted them, saying that the amount of money in the community was now $ 1,684m, while 12 months ago it was $l,206m, implying somehow that that indicates an increase in inflation of about $400m and suggesting that it has all happened in the last 2 or 3 months.

I point out that the biggest single figure contributing to that situation is the issue of Treasury bills and again I would suggest that those who want to read the figures honestly should have a look at the figures at least since the beginning of the current financial year,1st July 1972. They will see that that vast increase in Treasury bills began under the previous Government, as did the vast increase in the volume of money. It is a serious problem to regulate an economy in total and it is always a serious problem when the biggest single means of income distribution in a community is the wage system. If we did nothing about prices, it is inevitable that wages at least would try to keep pace with prices. If we believe, as everybody does, in raising standards and in something called productivity, the only way in which we can maintain the standards of the wage earners and give them their share of productivity in the face of prices not falling is to increase wages.

In the ultimate, the greatest problem that a democratic community must face is the problem of equity in the distribution of the total resources that the economy is capable of generating. Insofar as the majority of those who take a share take a share as wage earners, the greatest single problem in the economy is the relationship of wages and prices, or the social equation. It seems to me that this is the problem that we have failed to grapple with in the economy in recent years. To expect that miracles are going to happen overnight to solve this great problem is flying in the face of reality. No Western economy has satisfactorily solved the problem of full employment and inflation.

I am humble enough to accept that I do not have a simple, single solution to that great problem. But I believe that we will not achieve social cohesion and social cooperation unless it is acknowledged that something has to be done about prices. In our own groping way we are beginning to do that. We have great difficulties in our path. 1 said the other day that it is not much of a defence afterwards to say that when you saw a lion in your path you did not recognise what it was, particularly when you might be finishing up inside it. There are great problems that beset us. We have to acknowledge what they are and we have to begin to grapple with them. That is why I plead with the Opposition to appreciate that we are serious about endeavouring to do something about prices. I hope that we receive co-operation and not sheer politicking in the Opposition's approach.

Question resolved in the affirmative.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.

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