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Wednesday, 29 August 1973
Page: 511

Mr SNEDDEN (BRUCE, VICTORIA) - I address a question without notice to the Treasurer. Last night I stated a specific proposal for inflation control in Australia which included a national incomes-prices policy. On 10 April1973 the Prime Minister said 'there is good reason to believe 'a prices and incomes policy can be effective' in the short-term as one means of fighting inflation. On 5 May 1973 he further conceded that he considered restraints on prices and 'the orderly determination of personal incomes' as ingredients required to control inflation. Because of the failure of the Government's ad hoc and ineffective price policies will the Minister now indicate what action is to be taken to implement a national policy to control inflation?

Mr CREAN (MELBOURNE PORTS, VICTORIA) (Treasurer) - .The right honourable gentleman might have thought that last night he delivered a counter to inflation. I believe it was no such thing. I have indicated on many occasions, both in this House and outside it, that I believe that ultimately all Western democracies will have to come down to the acceptance of something that is rather broadly described as an 'incomes policy'. 1 have said further that in my view the minimum condition of getting such a policy in a workable form is that there should be trustful co-operation between employer and employee groups with the Government holding the ring, not taking one side or the other as did the previous Government, and that the minimum condition of being able to begin such talks between employer and employee groups is that the trade union movement should believe that something systematic is being done about prices just as it believes that there is systematic regulation of wages. It is for those reasons that we took the steps we did - and there was no great assistance from the other side of the House about it. We took steps to set up the Prices Justification Tribunal, we appointed a committee from both sides of the House, and we sought, at the Premiers Conference in May the co-operation of the States because there will be no grappling with inflation until first there is comprehension as to what the magnitudes and perspectives of the problem are.

Mr McMahon - What about the Government as an employer appearing before arbitration tribunals?

Mr CREAN - I am suggesting that at least employees have to go to arbitration but price makers do not, and what you want is reconciliation between price makers on the one hand and price takers on the other hand, and there are far more price takers than there are price makers. The Leader of the Opposition said last night that he called for a wages-prices freeze. Does he believe that it is constitu tionally possible to do it in the first instance? What would be the basis for deciding what the prices were on the day that he sought to get the freeze? I would submit, as was rightly said here last night, that it was a pale echo of phase 3 of the United States policy. The United States could not have done what it did, nor could the United Kingdom, unless more preliminary steps were taken. In the United States before phase 2 or phase 3 was introduced there was in existence the Economic Stabilisation Act. There is no such proviso here.

One of the difficulties in this country is that nothing was done about price justification or price regulating over the years, and to suggest that merely by saying you will create certain sorts of mechanisms they immediately become working mechanisms is, to my mind, economic nonsense. I thought last night that the approach of the right honourble gentleman, with all respect - and I said this this morning - was almost supreme blasphemy. He condemned the policy that his Government had lived on for the last 10 years. Half the increase necessary in Budget outgoing this year is simply to pay for the same sorts of services at today's prices. You can haggle if you like as to how much of the inflation is yours and how much is mine. It is a collective inheritance. I simply point out, as my colleague the honourable member for Adelaide did last night, that the first 2 years after your Government came into office when the Labor Government went out in 1949 were the 2 years of highest price inflation on record.

I do not attempt in any way to underestimate the seriousness of this problem, but I think that we get nowhere by cheap arithmetical exercises, at one moment using percentages and at the next moment using the aggregate of millions. I was surprised last night by the attitude of the Country Party. After all, look at the document that you ought to begin with if you make any fundamental analysis of the economy of Australia - the White Paper on National Income and Expenditure 1972-73. Look at where the greatest increases in incomes were this year. They were at the country level. You got twice as much last year for selling slightly less wool than you got in the previous year.

I say this about the Country Party, as part of the Opposition: Last night there was a lot of theoretical argument - sneering if you like - about the principles of socialism. Country

Party members in particular squeal like stuck pigs when some of the socialist benefits they receive are taken away. Let .us be sensible about this. It is a problem which is not peculiar to Australia. Part of the reason for inflation in Australia, as has been pointed out in several speeches made by honourable members, is that it is imported. A large part however, as is reflected in the consumer price index, has nothing whatever to do with wages but a lot to do with higher food prices. I am not arguing that a wage earner is entitled to a fair return for his labour but a farmer is not entitled to a fair price for his product. Members of the Country Party should not be condemnatory of a higher level of inflation now because its section of the community, in its opinion justly, is getting higher incomes now than previously. What is wanted here is a collective approach, not a series of guerrilla sniping efforts. In May this year my Leader took the step of convening a meeting of the States about this matter. So far we have had plenty of words but very little action. I hope that at least we can accept what the Leader of the Opposition said last night, namely that we can expect the cooperation of Liberal State governments in future.

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