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Thursday, 30 August 1973
Page: 708

Mr KEATING (Blaxland) - Unlike the speech of the honourable member for Maranoa (Mr Corbett) who preceded me, my speech will not be read. His was a typical Country Party whingeing speech ranging from telephones to hayseeds. All that members of the Country Party are sad about is the fact that they cannot get their grubby little hands in the public till. I say to them: 'It is all over boys and you will have to wait a few more years'. A Budget debate should be a serious debate. The only serious contribution I heard from members opposite was from the former Prime Minister, the right honourable member for Lowe (Mr McMahon). He had a well prepared speech; nevertheless it was fallacious and a lot of the basic arguments contained therein were totally wrong.

The atmosphere in which this Government took office was one in which 110,000 persons were unemployed. In August 1972 unemployment stood at 2.10 per cent; it now stands at 1.3 per cent. At present 70,000 people are out of work. This is the lowest figure we have had for years, .yet when Labor took office 110,000 were unemployed. Job vacancies are now at a record high. If honourable members study the 'situations vacant' columns of the Sydney Morning Herald' and similar newspapers they will see that they are filled. The Government expects non-farm production to increase in the economy about 7 per cent this year. Factories are running at full speed and employment is as high as it can get, yet it is unusual to note that on the stock exchange stocks are today at a low. All I can say to people who have any intention of buying growth stocks like Western Mining Corporation and Broken Hill Pty Co. Ltd is that it will be a fairly good year ahead and they should buy quickly because the shares are bound to rise.

Mr Calder - Why is it that you are the only Labor member in the House?

Mr Bourchier - That is not unusual; it is because of the Budget.

Mr KEATING - Mr Speaker, how about some protection from these characters?

Mr SPEAKER -Order! The previous speaker was heard in complete silence. I ask honourable members to extend the same courtesy to the honourable member for Blaxland. If they do not do so I will have to take action.

Mr KEATING - The Government is very conscious of the issue of prices and inflation and the Budget is framed in such a way as not to aggravate that situation. At page 6 of Statement No. 1 - 'Summary of the 1973-74 Budget' - appears the following statement:

There was a rapid growth in the volume of money which expanded by 26 per cent in the 12 months to June 1973, although there was a marked slowing in that growth in the second half of the year-

That was when we took office - when tighter restrictions on capital inflow were brought into operation and the Reserve Bank raised the Statutory Reserve Deposit ratio of the major trading banks.

They were measures the Government took to take some of the money out of the economy. What it did has to be viewed in the context of the two previous years. In 1971-72 the then McMahon Government introduced a Budget which was to take so much demand from the economy as to create a pool of 130,000 unemployed. Last year, 1972-73, the then Government was so panic stricken about such a massive pool of unemployment with an election 3 months off that it injected an enormous amount of money into the economy at the time of the last Budget. It was that injection of money which has given Australia its inflation level of 13 per cent today. The Government is conscious of this situation. It has introduced measures to do something about it and to restrict capital inflow. The Government revalued the dollar by 7.5 per cent in December of last year. It left the Australian dollar static when the United States dollar depreciated by 10 per cent in January of this year. So there was a disparity of 17.5 per cent between the 2 currencies which assisted imports to meet demand on domestic productive capacity. In other words there were more imports to meet local demands and this tended to keep the price of goods down. It caused a flight of $600m out of Australia. This money was hanging around the market and bidding up the price of all commodities. It stopped the wholesale buying of our shares at rock bottom prices on the stock exchange which was allowing foreign companies to take over companies cheaply. Despite this currency re-alighment Australia recorded a major trading surplus to 30 June this year. So exports were not affected.

The next measure of the Government's was a tariff cut in line with its concern over inflation and prices. Before the cut, imports were expected to increase this year by about 20 per cent. With the cut we will assist expansion in imports and again ease inflationary pressures. I have already referred to the money flight of $600m from Australia since the realignment of the currency. The Government raised statutory reserve deposits with the Reserve Bank to mop up any excess liquidity left about the trading banks and which was tending to bid up prices for goods and services. The Government restricted capital inflow by requiring that 25 per cent of all deposits coming into Australia had to be lodged interest free with the Reserve Bank. That action promptly took foreign money out of the economy, but we were still suffering from the Liberal's last Budget excesses.

The Government introduced the Prices Justification Tribunal, which now getting under way, to do something about the actual price of products although, as is known, the Australian Constitution binds this Parliament fairly substantially with respect to what it can do directly about price control. By contrast with the last Budget, the present Budget is framed not to add to the massive inflationary pressures already existing in the economy. It is designed to limit demand. In his speech last week the Treasurer (Mr Crean) said: . . given the need to avoid adding in mt pres.sures on resources, it is necessary that the increase in outlays budgeted for be more than covered by increased receipts.

In other words, we collected more than we spent. The Treasurer continued:

In 1972-73-

That is, last year under Mr Snedden - outlays increased about twice as fast as receipts.

In other words, there was more money running around the economy. He continued:

The very different economic circumstances now prevailing dictate a much more circumspect approach.

That illustrates the Treasurer's view of the present Budget, that it will allow the country to carry on as it is but is an attempt to ease back on inflationary pressures by not putting too much Federal money into the economy. The total outlays for this year will be $12, 168m, but our receipts will be $1 1,481m. That compares more than favourably with last year's deficit of $2 15m. A deficit means that the Commonwealth has spent more than it has collected. Last year $2 15m. This year it will be only $162m which was spent by way of deficit. If we read further from the Treasury document we find the following very enlightening comments: . . this estimated overall deficit in 1973-74 represents a small decrease of $22m compared with the previous year, whereas the deficit in 1972-73 represented an increase of $576m compared with the previous year.

That backs up what I have said. The previous Government was so panic stricken about its electoral prospects that it poured that much money into the economy. Yet tonight we had the right honourable member for Lowe (Mr McMahon) in the House telling us how we were introducing an inflationary Budget. The next item referred to in the document states: the domestic deficit in 1973-74 is estimated at around $162m, a decrease of 853m compared with 1972-73;

That happens to be our Budget -

The domestic deficit in that year, however, represented a turn around (i.e. a swing from surplus to deficit) of $620 compared with 1971-72.

So, this Government is reducing the deficit by $53m whereas last year the previous Government increased it by $620m. Yet honourable members opposite say that inflation has occurred since 2 December. The only reason that we have inflation in our economy is that the previous Government thought it could buy votes with a big Budget last year and it has left us with the problems of trying to correct it. I seek leave of the House to incorporate in Hansard the table on page 2 of the Summary of the 1973-74 Budget.

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