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Wednesday, 16 May 1973
Page: 2233

Mr HAYDEN (Oxley) (Minister for Social Security) - May 1 say with respect that the contribution of the honourable member for Berowra (Mr Edwards) was a little disappointing. He is, after al], the best qualified person, at least on paper, m this House to discuss this subject. He restricted himself unnecessarily in a very conventional way so usual for other members of the Opposition. One would have expected that he would have been above that but he restricted himself almost exclusively to an attack on wages and to a defence of the present system of doing nothing. I do not believe that in his own heart he accepts that this is the answer to the problem of inflation in Australia. I expect that he is in the Party he is in because he subscribes to a belief in the fundamental principles of free enterprise. Therefore I would nave hoped that he would have discussed in some detail and given us some extensive analysis of ways in which we might, in fact, achieve a free enterprise economy, a truly competitive free enterprise economy in which resources might be used efficiently and in which, accordingly, the featherbedding which is so apparent in the Australian economy and which in general allows the injection of all sorts of inflationary pressures from a myriad of sources might be eliminated eventually. But the honourable member dealt with none of these matters. It was - unfortunately for him - a predictable speech from a member of the Opposition, but one would have hoped not from him.

The need for some kind of prices justification mechanism in Australia has been very clear for quite a few years; whereas for many years we have had mechanisms for the justification of wages and, to a lesser extent, salaries, there has been no comparable approach to the rewards of capital. It has too often been assumed that investors are delicate hothouse plants, who would wilt away at the slightest hint of the cold winds of competition or criticism. It is ironic that the same people who, on the other side of the House, now are so concerned about the delicate plant of private enterprise are the very same who, when it comes to ideological argument, are so assertive of the virility and superior strength of private enterprise.

They have taken the attitude that wage earners have had no choice but to accept the determinations of wage justification processes or starve. Wage earners have had no option but to accept these processes, in the name cf the sanctity of profits as the engine of capitalist investment and economic growth. We, by contrast, are able to see that the possible disincentive effects of profit regulation are much on a par with those of wage regulation. If a price justification mechanism is likely to deter and harm the operations of investors - profit earners, that is - why should not a wage justification mechanism have an equally harmful effect on the amount of effort which wage earners are willing to exert?

The fact that this possibility has been recognised in the past is not unconnected with the willingness of conservative governments to introduce coercive measures directed against wage earners to force people to work for wages lower than they themselves would be prepared to accept and felt were justified in similar conditions whether by way of measures of fiscal policy designed to create unemployment, or by corrective measures against the recipients of unemployment benefits. Such governments of the past have been only too happy to sacrifice economic growth, and waste economic resources through unemployment, in order to enforce their own concepts of justification of wages. However it is not enough and it is not this Government's intention to penalise the whole community in the name of wage or price justification. Rather, we have taken the approach of adopting the least authoritarian and coercive approach to the problem of prices in the present period of world-wide inflation that is compatible with a proper concern for the interests of the community.

By setting up what is deliberately named a Prices Justification Tribunal, as what may be either an interim or a long-term approach, the Government is hoping to encourage the sellers of goods and services to adopt the same kind of social responsibility which has for years been accepted on the whole by the wage earners under the arbitration system. We do not expect our proposed tribunal to be exempt from criticism, any more than the arbitration system has been, but we rely on the essential reasonableness of Australians which has supported what the great Mr Justice Higgins called 'a new province for law and order' to support the effective operation of the Tribunal.

The primary function of the Tribunal as proposed in the legislation before the House is investigative. That is to say, we do not propose that, initially at least, any powers to determine prices should be assumed by the Tribunal or by the Government. It is important to note in this respect that the Bill invests the Tribunal with the power to initiate its own inquiries. Whenever a major company as defined in the Bill notifies its prices to the Tribunal as required, the Tribunal will, in the light of any public complaint or, as it gathers experience, in the light of its own judgment, be able to set about investigating these prices. Also, the Government will be able to refer any charges it feels need to be investigated either because it feels that a company is taking advantage of a monopolistic dominance of the market, or of excessive tariff protection, or as a result of restrictive trade practices, or for any other special reasons. It is obvious therefore, that, to some extent the function of the Prices Justification Tribunal will overlap those of such bodies as the Tariff Board, and later the Protection Commission, and the Trade Practices Tribunal. This overlap is intentional. The legislation provides that the Prices Tribunal will have, normally, to report within 3 months on any particular prices matter. This is a much shorter time perspective than that within which the other 2 bodies have to work, and we expect that the Tribunal will both benefit from and take account of the more profound analysis of these bodies. Like the Tariff Board, the Tribunal will be concerned with the analysis of the performance and efficiency of firms and industries, and like the Tariff Board it will have need of its own research staff to facilitate its work and guarantee its independence.

It cannot be emphasised too much that it is the Government's desire that the very creditable standard of performance set by the Tariff Board in recent years - and by the Trade Practices Commission and Tribunal, despite the fact that they have hitherto been hampered by the pusillanimous legislation of the previous Government - should be emulated by the Tribunal. If this hope is to be realised, the Tribunal must be given the facilities for conducting its own inquiries, as does the Tariff Board, independently of departmental briefs. It is also worth pointing out that the work of the Tribunal will be greatly facilitated, and indeed dependent upon, the availability of adequate data. Much of this will, of course, come from the study of the accounts of individual firms and the study of the reports of bodies like the Tariff Board. But it will have to depend also upon the data supplied from the general statistical work of the Bureau of Census and Statistics. In this context, it is clear that there is a much greater urgency than was the case under the previous Government to improve and extend the data basis available.

The analysis of the effects of an increase in the price of an important basic or intermediate commodity, whether it be the product of an individual monopoly or of a multi-firm industry dominated by one or a few major companies, as is generally the case in Australia, is not possible without the use of input-output tables which describe the inter-relations of the various industrial sectors. A steel price rise, to take the example suggested by Mr Justice Moore's investigation, will have repercussions throughout the economy. It will affect the prices of ships and shoes and sealing wax. It is only possible to begin to trace through these effects by using input-output tables. The Bureau of Census and Statistics recently has published the final version of its input-output table for the Australian economy in 1962-63. This is a very praiseworthy piece of work, and typical of the high quality of the Bureau's own output. Nevetheless, it is too far out of date for it to be of great reliability for the purposes of the Prices Justification Tribunal, and there is a very strong case, indeed an overwhelming case, for greater priority to be given to the production of a more up to date input-output table for the Australian economy. This would of course, require an expansion of the resources of the Bureau, and particularly of the section of the Bureau involved. This, I am convinced, is an essential prerequisite for the success of the Prices Tribunal.

Similarly, the Bureau should be given the resources and encouraged to redouble its efforts to bring about a much greater degree of uniformity and consistency of statistical data, whether collected by itself or by particular departments, so as to ensure the comparability and general usefulness of departmental work on particular sectors or aspects of the economy. When the Tribunal becomes operational, it is clear that many organisations and individuals will from time to time wish to give evidence before it. The Bill lays down that parties having a substantial interest in a particular inquiry will be able to make submissions and give public and confidential evidenve to the Tribunal. It is clear that, along with the companies being investigated, their major customers, and the employees of both supplying and purchasing companies, the public as a whole has a substantial interest in prices. So I would hope that at every inquiry conducted by the Tribunal the public will be represented as an important intervening party.

One way of doing this, of course, would be by the Australian Government intervening as it does in the Arbitration Commission hearing of the national wage case. The most recent decision of the Arbitration Commission demonstrated that such intervention can be judicious and to the public advantage. However, past experience has shown also that too often such a form of intervention can be abused, and used to support one side against another to suit the politics of the Government. Instead I would like to see the consumer organisations appearing on behalf of the public interest in prices. The concept of the public interest is an awkward one in many respects. It may be that occasionally the public interest, the interest of the community and the nation, might be served by a price increase, whether consumers like it or not. But consumers, as consumers, have a very real interest in opposing price rises, or lowering certain prices. Accordingly, I would like to see what we could perhaps call a bureau of consumer affairs established. The function of such a body could be to provide research back-up to existing consumer organisations, or occasionally stand in for them, in the presentation of a consumer's case to the Prices Tribunal.

Such a burean need not be confined in its scope to prices. There is a very real consumer interest involved in most references which go before the Tariff Board, a notable current example being that of the colour television reference where the Board very properly commissioned its own survey of consumer purchasing intentions. In this case, most unusually, consumer interests have been taken into account, both by way of this survey ad by way of direct representations by consumer interests. I put the proposition squarely that such a development is highly desirable, and will and should be encouraged by this Government.

Much will depend upon the personnel selected for the Tribunal, both as members and staff, and upon the initial subjects it and the Government choose for it to investigate. My own personal desire would be to see an early inquiry into the prices of important pharmaceutical products. A good place to start would be the price of valium, a very widely and sometimes too readily prescribed tranquilliser. The Tribunal would have available to it the recent report of the British Monopolies Commission, which concluded that this drug is grossly overpriced in Britain. It would also be aware that the current price in Australia is high even by British comparisons. It would be able to follow the current investigations of the Swiss firm holding the patents, Hoffman-La Roche, which are being conducted in a number of European countries. It could also consider the reports of the British Monopolies Commission in the past, particularly that into Glaxo Laboratories, which indicate that the standard justification for high prices by the big drug companies in terms of research effort is simply not valid.

I do not believe that this measure alone is the answer to any inflationary tendencies in the economy. Many other measures must be applied. These are being developed and will be applied, and in some cases are being already applied. But it is an important immediate measure and is valuable especially as a bridge to long term measures for achieving a more efficient use of resources through a more competitive economy, something which I would go along with and which ought to be dear to the heart of all honourable members opposite who proclaim the virtues of free enterprise and a competitive economy.

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