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Tuesday, 28 August 1973
Page: 471

Mr HURFORD (Adelaide) -The Leader of the Opposition (Mr Snedden) has made a farce of this debate tonight. He has resorted to witless attacks on personalities rather than relying on arguments. The effect was such that he had to send the Deputy Leader of the Opposition (Mr Lynch) to the Country Party benches to keep the Country Party members quiet. I am afraid to say too much more in case that situation changes. J reject the Opposition amendment as a shallow and cynical exercise in political juggling. I support the Budget, albeit with some reservations - we are not sheep on this side of the House - and I am proud to be the first to congratulate the Treasurer (Mr Crean) on a difficult job well done. Over 100 years ago a great English public figure Walter Bagehot, an economist and journalist, quoted a financier of those days as saying: 'If you want to raise a certain cheer in the House of Commons make a general panegyric on the economy. If you want to invite a sure defeat propose a particular saving'. How, oh how, the Leader of the Opposition attempted to follow the shallow thoughts of that financier tonight. For economies' substitute 'cut Government expenditure'. That is one of the few messages we have received in this laborious evening so far. Credibility is the key word. The speech lacked credibility. There was plenty of talk about economies but not much - in fact none - about where the savings were to come. Certainly it might raise a certain cheer among the unthinking - the sheep- on his own side of the House; but, just as Walter Bagehot would not go along with the financier, so the vast majority of the Australian people today who generally think about these things too deeply will not go along with the Leader of the Opposition.

They throw at members of the Liberal and Country Party Opposition in this Parliament the questions which I direct to them now. Where do honourable members opposite want government expenditure cut? In their amendment they call it expansionary public sector spending'. Do they want the pensioners to receive less? Heaven knows, the Labor Party Government, although it has improved their lot a little by increasing the pension by $3 a week each in 10 months, would have loved to have done more. Would the Liberal and Country Party members have liked to practise their economy by cutting government expenditure on the pensioners? What about education? To use a favourite word of the Leader of the Opposition, is that not where the main thrust' - that is the in word at the moment - of this Budget has come? Perhaps honourable members opposite would like the government schools and the more deprived private schools to continue to be starved of funds. Has the report of the Karmel Committee - an independent committee with representation from all sides of education - no merit? Is that where the Liberals' savings would be? We were not told in the speech from the Leader of the Opposition tonight. They just talk about economy.

In fact, I seem to remember their being a little inconsistent over the last few weeks on the subject of education. Of course this inconsistency is not unusual, Mr Speaker. You and I know that. But let me mention it in further detail. There has been a lot of Liberal and Country Party talk about spending another $5m or $6m a year on category A schools which already have an index of up to 270 as opposed to an average of 100 for government schools and as little as 40 for some poorer private schools. I might mention that the Government Party has not yet made a final decision on this matter. It is still collecting more facts. I do not mind admitting at this point of time that 1 would like to see the Karmel Committee report accepted in total. In other words, I would like to see a phasing out period for per capita grants given to category A schools, time for adjustments to be made by schools to their financial arrangements so that they do not have to increase fees and thus penalise the less wealthy parents of children going to those schools, time for adjustments by some parents and children where fees may have to be increased, and time for adjustments by the Karmel Committee where it may have made understandable mistakes in making its assessments because it had to do such a mammoth task in such a short space of time. I am able to advocate this because I am not a proponent of cutting government expenditure. Not so my Liberal and Country Party opponents; they believe in economy, in cutting government expenditure. In these circumstances how could they advocate spending more money on category A schools?

Do they want to delete expenditure on the cities? Is that one of the areas where the cuts should be made? Is there nothing that should be done for the- quality of life in some of those overcrowded and cultureless suburbs of, say, Sydney and Melbourne? Should we not take notice of the cries of outrage, for instance, by the Ford Motor Company workers at Broadmeadows at the quality of their lives? Of course we should. Not only do 1 welcome the Australian Government's appropriation for the new South Australian city of Monarto and for public transport in all cities - of course, I ,am interested mainly in my own city of Adelaide - to take some of the pressures off the cities; I also welcome the initiatives in the western sectors of Sydney and Melbourne, the sewerage proposals and the plans for Albury-Wodonga and the systems cities on the outskirts of the big metropolitan cities of Sydney and Melbourne to ease the even greater pressures on those great cities, to say nothing of what is planned to be done for Perth, Brisbane and other places in our country. These expenditures are long overdue. There are far too many Australians not leading lives of sufficiently high standard because of the oversight, the lack of imagination and the laziness of the previous Liberal and Country Party Government that previously we had to withstand.

Attention to cities reminds me of the great problems of housing and the price of land. With such a wide canvas as this one in a Budget debate I am forced to be brief and somewhat cryptic on specific measures. What a tragedy it is for our nation that we have such a negative approach from the Liberal and Country Party State governments of New South Wales, Victoria and, of course, Queensland. In the vicinity of 93,000 Australians are on the waiting list for housing commission or housing trust homes throughout this nation. The new Australian Labor Government has moved with great speed and energy to draw up a new housing agreement. Increased funds have been made available in this Budget for this splendid purpose. But all of this has been done in spite of Liberal and Country Party State governments and in the face of hostility from them. We learn from the media today that we are to be forced to overcome similar difficulties in relation to our plans for limiting the spiralling cost of land which causes such hardship in so many quarters. The Australian Labor Government, as announced in the Budget Speech, will provide $60m assistance to the States by way of repayable loans, and $30m is promised by way of grants for the establishment of land commissions designed to provide Australian families with land at fair prices. Yet the first sign from States with Liberal and Country Party governments is that this assistance is being spurned, and a reactionary non-Labor Legislative Council majority in at least one other State - Western Australia - is threatening to block the necessary State legislation to set up the commission there. We must defeat these troglodytes in the interests of more reasonable land prices for average Australians.

Here I must sound a warning note: Our government must put tremendous effort into making more building resources available. If we make more money available than there are building materials and building workers available, there will be only one result - higher prices for buildings and higher building costs. Today's news of the disturbingly high increase in June in the wholesale price index for materials used in building other than house building is exercising the efforts of our energetic Minister for Housing (Mr Les Johnson). The Parliamentary Joint Committee on Prices, of which I am Chairman, has given itself the job, amongst many others, of looking into the prices of building materials. We shall proceed with that task just as quickly as we can.

This brings me to the subject of inflation - another of the main thrusts, to use again that in word of the Leader of the Opposition in his effort tonight. The Budget is not only a social document - so far I have dwelt on social issues - but also an economic document. I concede that. I am sure that no one in this House disagrees with the proposition that inflation is a problem; in fact, our main problem. The Treasurer himself said so in his Budget Speech. What deserves such cynicism is the attitude of honourable members opposite to this subject. They do not know the answers. Twenty-three years of their administration proved this. Yet they want the Australian Labor Government to revert to their own outworn, unsuccessful measures creating unemployment - we had this only 2 years ago - which led to a shocking waste of resources at that time. Now they talk about a prices and incomes policy, which previously they roundly condemned in this chamber. They are doing their best to sabotage the new initiatives and polices being undertaken by this new Government.

Let me be more specific about inflation. Firstly, let me point out that Sir Robert Menzies - Mr Menzies as he then was - won government in 1949 when inflation was running at 8.4 per cent. He promised to put value back' into the pound. We all remember that. Following the first budget of his Treasurer, Arthur Fadden, the annual rate of inflation rose to 13.6 per cent. After the next Budget the rate of inflation rose to 22.5 per cent a year. Ups and downs of this sort were the pattern of 23 years of Liberal and Country Party government. Secondly, let me say something about the present rate of inflation or, rather, let me quote from the leading article in the Australian Financial Review' last Thursday on the subject of the Leader of the Opposition and inflation. The article anticipated the sort of nonsense that we heard from him on this subject tonight. The article stated:

With political dexterity but questionable economics Mr Snedden has been saying that he left the country with an inflation rate of only 4.8 per cent whereas now it is running at 13.2 per cent.

Mr Snedden'sfigures are obtained by multiplying the December quarter increase in the consumer price index by four and presenting it as an annual figure.

For a number of reasons, not the least of which was the conscious budget policy in August of not touching items in the CPI, the December quarter figure was artifically, low.

While the CPI was not cooked it was certainly given a cosmetic touch-up.

Anybody with a knowledge of economics could see this.

By the same token the 13.2 per cent increase now being quoted by Mr Snedden (obtained by multiplying the June quarter by four and presenting the result as an annual figure) was inflated by factors which were certainly well beyond the immediate control of the Labor Government.

Meat prices rose during the June quarter by 11 per cent.

The Leader of the Opposition would multiply that by four and say that meat prices rose by 44 per cent.

Mr Reynolds - Did he say he wanted to bring meat prices down?

Mr HURFORD - He did not say it in his speech on the Budget tonight because he does not know how to do it. The article continued:

Winter clothing rose by 11.1 per cent during the June quarter. Home ownership costs rose by 3.3 per cent.

These were the big ticket items of the CPI increase.

The article went on to state:

Just as the inflationary situation confronted by the Menzies-Fadden Government in 1950-51-52 had its roots in events beyond the control of the Government, so too the present situation is one that is a little more complex than Mr Snedden would have us believe. 1 need do no more than' present the point of view of that newspaper. I will leave Sneddenomics - I think that is what they called it - to their deserved fate.

Thirdly, on the subject of inflation, I want to talk about the fact that a vast proportion of our inflation is imported from abroad. Anybody reading the daily Hansard reports of the evidence being collected by the Parliamentary Joint Committee on Prices cannot fail to be struck by this. High beef prices are almost entirely due to the demand for that product abroad, particularly in the United States of America and Japan. High lamb prices are due to shortages of stock in this country at a time when world wool prices have recovered. Winter clothing prices reflect the surge in wool prices. The price of cotton and cotton fabric have escalated, not due to anything that has happened in this country but due to the serious world shortage of cotton. Even with salmon we have a world shortage until, it is estimated, 1975. It is the world shortage of salmon which has been to such a large extent responsible for the increased price that Australian housewives have to pay for this product in our supermarkets. I could go on and give one example after another of where prices within our country are affected by prices on the world market and have nothing to do with what ls going on in this country whatsoever. Yet, in spite of this incontravertible fact we have the Opposition members so often putting all the blame on wages and salaries, putting their faith on an incomes policy - a new faith since they became comfortable in Opposition. We heard it again tonight. They called it a wages freeze. Where has such a policy succeeded? lt has certainly not succeeded in the United States. It merely builds up pressures. The lid of the pressure cooker gets blown off eventually in industrial upset. The rate of inflation over a reasonable period is as great in those countries attempting to impose prices and incomes policies as in those such as ours which have not done so. I could quote from the Reserve Bank's 1972-73 report to justify everything that I have said about these external prices and how a prices and incomes policy - a wage freeze as we have heard from the Leader of the Opposition tonight - would be futile.

Next, let me make it quite clear that the Australian Labor Government realises that there is not one cure for inflation - it must be attacked on many fronts, and that is what the Government has been doing. Of course, revaluation of our currency has helped greatly and has caused very little dislocation in spite of the howls from the Opposition when it was brought in. It should have been undertaken a year earlier. We would not be suffering the inflation troubles today to the same extent if the McMahon Government, put in a straitjacket by the Australian Country Party, had not muffed the chance and badly let down this country. Of course, the direct controls on capital inflow have helped. Our financial institutions had funds flowing out of their ears. Of course the Government's monetary policy has been in the right direction. I am referring to the calling up of the statutory reserve deposits. I would like to see more of this. In addition we have had the courageous decision relating to the 25 per cent across the board cut in tariffs. At least we have some public structures acting as watchdogs in the private sector, seeking to ensure that important decisions being made in the private sector are being made in the community interest. I am, of course, referring to the Prices Justification Tribunal and the Parliamentary Joint Committee on Prices. Let us ensure that we have got competition and efficiency and reasonable rates of return on invested funds in the private sector, not exorbitant rates. All of these are new initiatives. All represent a multipronged attack on inflation.

Lastly I refer to the so called inflationary effect of this Budget made so much of by the Leader of the Opposition. Dr Peter Sheehan of the University of Melbourne Institute of Applied Economic and Social Research is one of the few economists in recent times specifically to analyse the impact of budgets on the overall level of economic activity in Australia. Few others have done it. Despite the obviously complex nature of the Budget influence on the economy, Sheehan has argued that the ratio of the Budget deficit to total Budget receipts is a satisfactory indicator of the Budget impact. The average ratio of the Budget deficit to receipts during the period 1959-60 to 1971-72 was 6.5 per cent. Dr Sheehan suggests that in order to maintain the economy on a full employment growth path without excessive inflation a satisfactory Budget would incur a deficit of about 5 per cent to 7 per cent 6f receipts. What do we find in our Budget? The estimated deficit to receipts ratio for the 1973-74 Budget is 6 per cent. On the basis of Sheehan's criteria the impact of the 1973-74 Budget on the level of economic activity is likely to be neutral, that is, neither expansionary nor contractionary. In an address to the Canberra Branch of the Economic Society of Australia and New Zealand only last week which I heard myself, concerning this Budget, Dr Sheehan suggested that rather than being neutral the overall impact may even be contractionary. I would rather accept Dr Sheehan's analysis than that of the Leader of the Opposition.

Let me say that I do regret the indirect taxes, particularly the increase in petrol prices, because of their effect on the Consumer Price Index and inflation. I wish some alternative could have been found for them. I wish perhaps that this had been the year of some capital gains tax or wealth tax. But I know what sort of pressures the Treasurer has been under and I accept that he chose the best of all the alternatives available to him at that time. This, for me, is but one blemish, and I refer here to the effect of indirect taxes on the Consumer Price Index. I reject the Opposition's amendment. In the interests of the vast majority of Australians I have pleasure in once again congratulating the Treasurer on a difficult job well done. I support the Budget wholeheartedly.

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