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Thursday, 22 November 1973
Page: 3701

Mr LYNCH (Flinders) - I think that what the honourable member for Moreton (Mr Killen) has been saying in this House today in regard to the Minister for Labour (Mr Clyde Cameron) is that, really. the Minister is suffering a tremendous strain. This fact will be apparent to all honourable gentlemen on both sides of the House who have listened to this debate and who obviously understand that the Minister for Labour came into the House with a very brief prepared script of about 2 or 3 pages when he knew full well that this debate had been foreshadowed over a long period. For him to come in here protesting vainly that he had not had any notice that the matter was to come before the House really does not stand easily with the facts. The Minister knows full well that the use of statistics in the selective manner in which he has used them simply distorts the whole purpose, point and reason why he sought to make comment on this matter in the first place. I can well understand why the Minister is suffering and labouring under so great a strain. After all, he is a Minister who has presided over a major period of increase in industrial dislocation and turmoil. This is well understood by honourable members from, I hope, both sides of this House. He has been labouring greatly in terms of his own legislation.

In regard to the overall question of the trends in labour's share of the national product in post-war Australia, I do not seek this opportunity today to address myself to that question in depth. In fact, an adequate canvass of the real issues concerned in what is a very basic question of economics in this country does not enable a proper judgment to be drawn . because the facts cannot be drawn out in the period which is available for the matter to be debated in this House. But this much can be said: On 16 October, the Minister for Labour came before this House and alleged that labour's share of the national product had declined in the post-war period. In the course of his argument he sought to put the matter beyond debate by stating:

The choice of different bases to the statistical series does not affect the nature of the results of the study.

This is a statement by a Minister whose reputation for statistical analysis was made on the basis of an employment crisis as predicted by him at the beginning of 1973. The record shows this extrapolition of employment statistics led him to conclude that unemployment levels in January of this year would reach 200,000. 1 believe that he stands indicted on the total absurdity of the claim.

Mr Killen - He should apologise.

Mr LYNCH - Of course he should apologise. He stands indicted on the total absurdity of the statistical judgments- and forecasts he made at. that time and the absurdity- of the propositions which he has sought to argue in this House.

The Minister's assertion that the choices of different bases to the statistical series does not affect the conclusion which can be drawn from an analysis is, of course, simply untrue. The choice of the base year is vital. An examination of the empirical evidence reveals a significant decline in labour's share of the net national product during the period 1948-49-

Mr Clyde Cameron (HINDMARSH, SOUTH AUSTRALIA) - What does empirical mean?

Mr LYNCH - I will be happy to lend to the honourable gentleman a book on economics so that he can study the base terms. He might find that reading more profitable than the reading to which he referred this morning. An examination of the empirical evidence reveals a significant decline in labour's share of the net national product during the period 1948- 49 to 1953-54 and particularly during the period 1951-52 to 1953-54. This in fact points to the reason why the Australian Labor Party, including the Minister for Labour and Mr Hawke, choose to begin any analysis in the year 1948-49 rather than in 1953-54, which is the year chosen in most responsible economic analyses. Mr Hawke is well known to the Minister for Labour as a past master of his and a continuing master at present of many of his policies. I was amused by the recollection that the Minister allowed Mr Hawke to leave the country before he released to this country news of the inquiry into industrial relations, a fact which is not without significance but on which I will not bore the House because the Minister knows it to be a fact of life.

It is clear that a responsible economic analysis will confirm that it is preferable to select 1953-54 as the starting point. I hope that the Minister for Labour will not cavill at this point. During his exposition to the House he relied very heavily on Mr John Tilling's work. I think it is appropriate to quote from Labour Market Studies No. 4' produced by the Department of Labour, a document which I have in the House. I am not even sure whether the Minister has seen the total document. Perhaps his Department has not drawn his attention to it, or perhaps he is prepared to ignore the totality of what is in the document because, certainly, the whole tenor of this document does "not accurately reflect what the Minister has been saying in this House. The Minister no doubt would be aware that Mr Tilling is a co-author of the document. Chapter 1 contains- the following conclusion:

Thus, the early post-war period can be viewed as an economically unstable and abnormal period in which labour's share was abnormally inflated and only returned to more normal leyels in 19S3-S4. Because of these abnormalities in' the early post-war period, which held labour's share at an inflated level, it was decided to commence the analysis at 1933-54.

This is the same Mr John Tilling upon whom this Minister has relied so heavily in drawing selectively from the information which is available to him. The Minister would be aware of the factors which led the researchers in his Department to select a statistical period quite contrary to that chosen by his colleague Mr Hawke, which no doubt commends itself to the Minister who shares the same sense of bias about these matters.

What are the factors which really come into this issue? They are, firstly, the dismantling of wartime price and wage controls during the period on which the Minister hangs his hat; secondly, the low level of productivity growth due to low levels of private fixed capital investment during the war; and, thirdly, the repressed demand for consumer and capital goods arising from wartime restrictions which resulted in considerable demand pressures combined with a tightening labour market. The general effect of these factors resulted in increases in earnings far ahead of gains in productivity and prices. After 1948-49 the labour share remained at an inflated level. Once again, there were a number of basic reasons for this. Firstly, this was a period of unprecedented wage inflation. Competition for scarce labour forced wages up to very high levels. Secondly, competition from imports from 1948 to 1952 restrained profit margins and maintained labour's share. Imports increased by over 50 per cent during this period.

In short, economic conditions conducive to the restoration of traditional profit margins emerged only in 1953-54. It should also be observed - and this should not be lost on the Minister - that the abolition of automatic cost of living adjustments to wage rates by the Conciliation and Arbitration Commission in 1953 also eased the inflated share held by labour. I seek leave of the House to incorporate in Hansard Table 2.1 contained in the document 'Labour Market Studies No. 4'.

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