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Wednesday, 5 December 1973
Page: 4295

Mr ENDERBY (Australian Capital Territory) (Minister for Secondary Industry and Minister for Supply) - One is torn twixt wanting perhaps to thank the Leader of the Australian Country Party (Mr Anthony) for introducing this subject - it is an important subject; there undoubtedly is a widespread shortage of goods in the Australian economy at the moment, and no one would deny that - and the urge to follow his example and be political. I will try to resist the urge, but I will yield to it for a moment. We heard at the outset of the speech of the Leader of the Country Party a reference to his real motive in raising this matter of public importance today and we heard him return to it at the end of his speech, namely, a plea to the people of Australia to vote No on the referendum on prices control. Unfortunately for the Leader of the Country Party, the polls as I understand them are strangely against him on that point. The reports that I saw yesterday showed that something like 70 per cent of Australians who were polled in the recent Gallup polls indicated that they will vote Yes on the prices control measure. However, I am not in a betting mood at the moment.

I return to the central theme of this matter of public importance, namely, the widespread shortage of goods. It is true that there is such a shortage. Why has this occurred? It is because the people are in full employment. Why? Because there is money in the country and because the economy is booming as it has probably rarely boomed before. Let me quote some figures from the last 'Treasury Information Bulletin No. 72' of October 1973. Under the heading 'Secondary Industries' at page 16 there Ls a table which shows that industrial production in virtually all sectors of manufacturing for the recent September quarter was well above the levels of a year ago. This is in the context of the proposition that there is a widespread shortage of goods. Honourable members might think that is a contradiction, but the shortage is real, nevertheless. We are told by 'Treasury Information

Bulletin' No. 72 that production is well above the level of a year ago when the previous Government was in power. Of the 31 items shown, 29 recorded increases, 15 by more than 20 per cent in this year of a Labor Government. Production has been at an all time record level. After 12 months of a Labor Government the Australian economy is producing more than it has ever produced before. There were particularly large increases in the production of tinplate, plastics, synthetic resins, most consumer durables and electric motors. This is from the Treasury Bulletin, an authentic, objective-

Mr Graham - Why are plastics in such short supply?

Mr ENDERBY - I will come back to that. Why are there shortages? Let us return to the proposition. We know there are shortages. Previous governments followed policies which allowed the economy to run down. I can be accused of being political in saying that, but it is a fact. We have heard and we should remind ourselves of the word 'stagflation'. Do honourable members remember stagflation? Stagflation was the word associated with the Liberal-Country Party administration in its declining years when inflation ran away but the economy died. Stagflation was the word applied to members of the Opposition in those last 3 or 4 years of their administration when inflation took over but no production took place. That was also the period when money poured into this country from overseas to buy up this country on the cheap. This happened because the Parties opposite had not faced up to the proposition that the Australian dollar was hopelessly undervalued and that the country was over protected through the general tariff.

I remind honourable members of the issue that arose and was fought out in the Cabinet of the Liberal-Country Party Government in 1971, I think it was, in reference to revaluation. The Liberal Party, recognising the seriousness of the situation in which it found itself, wanted desperately to revalue. That Party knew that revaluation had to take place. It was widely reported and never denied that the present Leader of the Opposition (Mr Snedden), who was then the Treasurer, was urging that revaluation take place. He was not allowed to bring it about because of the rump on which the Liberal Party rested for its support to form a government - the rump being the Country Party - would not let the then Treasurer revalue. The debate or argument went on in this Parliament House behind closed doors for a full week, but the Country Party refused to allow the Liberal Party to revalue the Australian dollar. So, money poured into Australia to buy up the place on the cheap. Foreign takeovers occurred, there was land speculation and so on, and the money poured in. The percentage increase in money in that year rose to about 26 per cent. What is inflation if it is not too many dollars chasing too few goods?

The former Government followed policies that produced stagflation and almost a failure to increase the productive capacity of the country for about 20 years. It followed policies which encouraged inflation and money to pour in to buy Australia on the cheap. An inflationary time bomb was set to go off early this year, and it did go off this year. It was starting to go off last year. This has been confirmed by every publicist who writes on the subject in Australia, whether it is Dr Porter or anyone else including newspapers for the International Monetary Fund. They have all said that gross economic mismanagement by the Liberal-Country Party, particularly over the last 4 or 5 years, produced this time bomb. What did we do? We saw what was happening and we took the monetary policies that are well known. We reduced tariffs by 25 per cent to encourage imports.

Today we are talking about a shortage of goods. No imports were coming in last year. Money was pouring in to buy up the few Australian goods which were being produced while the Government at that time followed policies encouraging people to sell their goods overseas and not in Australia. The Labor Government reduced tariffs by 25 per cent. Members of the present Opposition would not have had the courage to do so. The Labor Party did it. The Labor Party was said to be the high protection party, but it had the courage to reduce tariffs because it recognised the seriousness of the situation which had been bequeathed or devised to it - depending on whether it is regarded as personal property or real property. The Opposition parties left us with this mess so we took 25 per cent off the tariff. We revalued virtually 3 times. Dr Porter estimated that without the Labor Government's economic measures the monetary supply would have grown by 48 per cent in this country this year giving a level of inflation of 20 per cent.

The Leader of the Country Party (Mr Anthony) talks about courage. Has there ever been courage such as has been displayed by this Labor Government in its first year of office? It has had the courage to make monetary policies of this kind, to make tariff reductions of 25 per cent and to revalue the Australian dollar 3 times. At the same time it has been carrying out the policies that it was elected to carry out. It has been increasing public expenditure on education, housing and social welfare. Has there ever been economic management to match that? We have held inflation down to 12 per cent or so when it would have reached 20 per cent if the Opposition Parties had remained in power.

Mr Edwards - Oh!

Mr ENDERBY - That is what Dr Porter says. Does the honourable member deny what Dr Porter said? Would the honourable member for Berowra, in all honesty - I do not know whether he is to follow me in this debate - suggest that if the Liberal-Country Party had remained in power and had inherited this mess, a horror budget such as this country had never ever seen would not have been introduced? It would have been introduced. The Opposition Parties would have tightened up money to such an extent that no one would have had a dollar in his pocket and unemployment would have been created.

I will recall to honourable members the measures of the previous Government. I refer to the Budget of 1971. The previous Government thought that the economy was going into a boom stage so it put on the stops, full brakes, and put people out of work. That is all the previous Government knew. Mr Gorton even turned off the fountain in Lake Burley Griffin to indicate how he was going to cure inflation and the boom conditions in Australia. Of course he was completely wrong. The economy was not rising at the time; it was going down. The brakes applied by the then Government brought things to a screaming halt, so much so that in 1972 it had to pour fuel on the fire - kerosene or petrol, whatever we want to call it - to such an extent that although the then Treasurer said he went to the limits of responsibility in that 1972 Budget, every publicist since who has written on the subject has said that he went way beyond the limits of responsibility. It was a most overexpansionary Budget. Of course we know the reasons for that Budget. The previous Government was trying to float itself through an election. That was pretty clear.

I suppose politicians can understand the need or the fear of a government that has run out of steam and run out of ideas after 23 years. The previous Government tried to save its power structure at any cost. It said, more or less: 'Who cares about tomorrow. If we lose, the Labor Party people inherit the mess. If we get back in, well, people have short memories and something will come 'up somehow'. The previous Government came down with the 1971 Budget, which was completely misjudged and in gross error, and inflated the problem into the situation which we inherited in December of last year and which carried through into January February and succeeding months of this year.

For one short moment I thought the Leader of the Country Party was going to place some emphasis on the fact that there is a gross shortage of commodities throughout the entire world. People on the Government side recognise that the world has become a very small place. The growth of communications and the growth of multi-national corporations means that decisions can be taken in New York one minute and implemented in Zurich the next; in Berlin one day and Paris the day after; in Sydney-

Mr Katter - East Berlin?

Mr ENDERBY - The right side of Berlin, if my friend is so sensitive. Decisions can be taken in Sydney one day and Tokyo the day after. So, the upturns and downturns in the trade cycle are far shorter and everything seems to point to this being a developing trend. The recovery which took place in the Australian economy between 1971 and 1972, when nearly 2 per cent of people were unemployed, has been effected in a much shorter period than might have happened 20 years ago. But, we on this side at least take account of these things, whereas the previous Government left us completely defenceless economically because it did not revalue the Australian dollar and did not think of the tariff instrument of economic management in any real sense. We had to revalue the Australian dollar and cut tariffs.

The question is: What can be done about the situation? The Australian Government is determined to increase production. It has had magnificent success already. I read out the figures, and they bear repeating. Of the 31 items shown in the last Treasury bulletin, 29 recorded increases, with 15 recording increases of more than 20 per cent. Production is up to an all time high. But, because of the excessive amount of liquidity caused by the inflow of foreign capital which the previous Government encouraged through its refusal to do anything about the position, we inherited the situation.

There are other aspects, of course, on which I should touch in the very short time left to me. Whatever the instruments of economic management available to the Australian Government might be - and there are some - there are many others. This Labor Government seeks to have the power to exercise them in this ever-changing, rapidly-changing world. We seek to give Australia proper restrictive trade practices legislation. Where does the opposition to that legislation come from? It comes from the Liberal Party and the Country Party. We seek to give the Australian Government power over prices and power over incomes and to let the people have a choice on whether we should have these powers. Where does the opposition come from? It comes from the Liberal Party and the Country Party. Yet members of those parties here say that there is a widespread shortage of goods, notwithstanding that more are available now than ever before; but the demand - demand brought about by gross economic mismanagement - measured in money, of course, far exceeds the supply.

There are some people who talk about a conspiracy of manufacturers and suppliers to withhold goods from the market. I repect that theory. But there is a first cousin to it that perhaps bears some comment. It is this: There are manufacturers who take the view that, seeing the Government's policy to bring about new restrictive trade practices legislation may not be thwarted in this Parliament by the Liberal and Country Parties, it is better to push up prices now by withholding supplies so that if some form of price control is introduced it will be easier to justify a price increase in the long run. That is a first cousin to it that is not without merit at all-

Mr SPEAKER -Order! The Minister's time has expired.

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