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Wednesday, 2 October 1974
Page: 1617

Senator WALSH (Western Australia) - Firstly, I congratulate those Opposition senators who have already spoken during this Budget debate, and spoken very eloquently. In particular, I commend my fellow Western Australian, Senator Chaney, for the very fair and reasonable summary, which he delivered last week, of the Budget's general objectives. Senator Chaney has recognised that the Budget, as he puts it, represents what the Government promised the people of Australia'. He recognises that it expresses the belief that resources, at least at the margins, should be directed towards satisfying public needs rather than private wants and that it contains 'a soak the rich element with its capital gains tax and property income surcharge '. By acknowledging those realities he achieved a level of objectivity which is not often reached in this Parliament and which has been conspicuously absent from post-Budget comments, some of which have been on those very issues, by many of his colleagues.

Not everyone, perhaps not even Senator Chaney, will agree that relatively more resources should be directed from the private sector to the public sector. Some might even argue that the existence of what the American economist, Galbraith, described as public squalor in the midst of private affluence is a desirable social objective. In fact, in some conservative circles there appears to be a deeply entrenched view that all private spending is innately desirable and that all public spending is inherently wastefulunless, of course, it is directed to what is somewhat euphemistically called defence. A logical extrapolation of that point of view would be that the last few feet of non-functional metal on a modern motor vehicle is more important than the road upon which the motor vehicle moves, that the unsolicited plastic toy in the cornflakes packet and the costly package that contains it are more valuable than an adequate health service or that the half empty glass and concrete monoliths that dominate the city skyline are socially more desirable than public housing for economically or ethnically underprivileged groups.

Some people may argue that people who possess considerable wealth and/or receive high incomes should not pay higher taxes. Such people may even argue that attempts by governments to redistribute wealth or income in favour of the relatively poor are unwise or even immoral. The degree to which income should be redistributed or the relative allocation of resources between the public sector and the private sector becomes ultimately a value judgment. As such, it provides an area of quite legitimate political dispute and debate. I do not complain because Opposition members debate these issues or dispute them. I do not complain simply because they believe or say that public spending should be reduced. But I challenge them to specify the areas in which they would reduce public spending if they were the Government. The silence is eloquent. Calls to restrict public spending are popular only in the abstract. Except in terms so vague or so petty that they are meaningless, the Opposition has failed to specify one area in which it would restrict spending. On the contrary, it talks vaguely of an alleged need to increase defence spending, sometimes by as much as one per cent of gross national product or about one per cent of gross national product, which amounts to about $500m. A few months ago it promised to restore the superphosphate bounty which last year cost $68m and which benefits far more than proportionately farmers on the highest incomes.

If Mr Snedden 's much vaunted calls for leadership are to acquire any credibility outside Liberal Party cheer squads, let him specify the areas in which he would reduce spending. Is it to be spending on pensions, is it to be spending on education, is it to be spending on health or is it to be spending on grants to local and State governments?

Senator Baume - Overseas trips by the Prime Minister.

Senator WALSH - In dealing with the question of overseas trips and the chartering of transport, I can state that there is one thing of which I am sure. I can guarantee that the Deputy Leader of the Australian Country Party in the House of Representatives (Mr Sinclair) does not believe in restricting Government expenditure on the hire of private motor cars for shopping trips for his wife. But to keep the discussion on a more orderly basis, I have excluded petty areas and that is a petty area. Let Mr Snedden specify where his much vaunted tax cuts would be made and whom they would benefit, not by vague and deceptive references to middle income earners but by specific references to taxable income divisions. Until the reductions in spending and the like reductions in taxation about which the Opposition talks have been specified, the talk amounts to nothing more than a sustained exercise in political chicanery.

The Budget itself could not, by any rational judgment, be claimed to have more than a marginal influence on inflation. It is true that it assumes a continuation of inflation. In the circumstances which exist throughout the capitalist world, not to have done so would have been at the best optimistic or at the worst dishonest.

Senator Martin - It is very high, though.

Senator WALSH - It is exactly half way down the scale of the Organisation for Economic Development and Co-operation countries with which we are normally compared. We are equal twelfth on the scale of 24 countries. A high and recently accelerating rate of inflation is common to all capitalist democracies.

In a series of books stretching as far back as 1952, of which 'The Affluent Society ' is probably the best known, the American economist, Galbraith, both forecast this phenomenon and provided a convincing analysis of its underlying political and economic causes. His basic premise was that price competition has virtually disappeared from most sectors of the economy and has certainly disappeared from what he calls the economic heartland. The private entrepreneur or the private corporation is not, as poltical dinosaurs and free enterprise myth makers would have us believe, an aggressive, fiercely price competitive human or corporate dynamo. Prices are determined not by competitive market forces but by cost mark-ups or, probably less commonly, by collusive agreement. Demand is not spontaneous, but is largely synthesised by a continuous and expensive campaign, the object of which is the manipulation of consumer preferences and the creation of human wants, as distinct from human needs.

Senator Martin - The beef producer- how does he fit into that?

Senator WALSH -I will deal with the beef producer later. The sheer size, the resources and the limited number of firms in the secondary, and to some extent even in the primary and tertiary, sectors have provided for each of those firms a considerable degree of original monopoly power, and in response to this monopoly power organised labour has developed countervailing power. The Bourbons of capitalist society, of course, still believe that the former can be tolerated but the latter cannot. Progressively, both the sellers of labour and the sellers of commodities become price setters rather than price takers. So on both sides of the market pressure on prices is upward.

According to more or less conventional economic theory, a business recession accompanied by high levels of unemployment will deflate price pressures on both sides. In a political democracy that so-called solution is not viable. Even if it were, the cost in terms of human suffering probably outweighs the gain. Recessions, as the cynics have noted, are usually championed most vigorously by senior public servants on de facto lifetime appointments and politicians holding blue ribbon seats. Given the constraints of a political democracy, inflation, according to Galbraith 's diagnosis, is unlikely to disappear until an intellectual revolution has developed into a common consensus, until a new conventional wisdom more attuned to the realities it seeks to interpret has replaced the old. Unfortunately, there is little sign that such an intellectual revolution has become a common consensus. Acceptance of the simplistic notion that inflation is a product of the Whitlam Government demands the exclusion of evidence from the rest of the world. It ignores the destabilisation of all capitalist economies which flowed from the declining strength of the American dollar, which was a direct consequence of the reckless distribution of $60 billion worth of paper currency throughout the world, chiefly to finance the United States' immoral adventures in IndoChina, which I understand were warmly applauded by virtually every member of the present Opposition in this Parliament.

Acceptance of this notion demands also a blackout on history for the year prior to 2 December 1972. Many factors have contributed to and have compounded price increases in 1973-74, but the genesis of what ultimately occurred took place in December 1 97 1 . After 3 days of internal wrangling the then Liberal Party-Country Party Government made the most selfish, irresponsible and sectionally motivated economic decision an Australian government has ever made, with the possible exception of a similar decision made by a similar government in 1950. In December 1971 the McMahon Government caved in to political blackmail from an unrepresentative minority party which was concerned with the protection of its eroding electoral base and the interests of its financial backers, who had been foolish enough to write long term contracts in United States dollars in the late 1 960s. In December 1 97 1 the then Liberal Party-Country Party Government settled for a de facto devaluation of the Australian dollar. In the ensuing year $ 1900m of foreign capital poured into the country. In the last quarter of 1972 the money supply grew at an annual rate of 37 per cent.

Not only did that Government make a mistake, not only did it refuse to correct it when the evidence became clear that it had made a mistake, but at the time it took the decision it knew, or at least the majority Liberal Party knew, that it was a mistake. The then Treasurer, Mr Snedden, who was an accessory, however unwilling, to that decision, is now the Leader of the Opposition in the House of Representatives who talks glibly of leadership. Leadership indeed! The Labor Government was accused in this chamber last week of dividing the nation. Virtually all political activity is divisive to some extent, but do the people who involved Australia in the war in Indo-China expect to be taken seriously when they pontificate about divisions in society? The Country Party, that sectionally based group, which for as long as I can remember has spewed out anti-urban venom, which nurtures and feeds upon farmers' distrust of city residents, civil servants and city business, has the audacity to accuse the Whitlam Government of turning city people against country people or against farmers who, in the Country Party lexicon appear to be synonymous. Since the end of 1972 the Country Party in general and its leader in particular have conducted a continuous campaign of vilification against the Whitlam Government, a campaign which preyed upon the fear and ignorance of large sections of the rural community, a campaign supported by misinterpretation, distortion, deception and irresponsible inflammatory rhetoric. Some examples of the last: From the Farmers Weekly' of 21 December 1972: The Leader of the Country Party launched an attack upon the appointment of Senator Wriedt as Minister for Primary Industry, later Minister for Agriculture, who has subsequently been described by the president of the major farmers' organisation of Victoria as the best Minister for Primary Industry Australia has ever had. From the 'Farmers Weekly' of 19 April 1974: Story: The Government has country people in its gunsights. Author: Anthony. From the 'Farmers Weekly' of 23 August 1973, commenting on the Budget: Vicious attack upon rural industry. It really puts the boot into rural industry. Anthony. From the ' West Australian ' of 1 September 1973 a report of Mr Anthony's speech at a meeting of the New South Wales Country Party Council, in which he 'predicted that a tax of up to 12c a lb would be applied initially to meat exports.' He went on to say it would then be increased because an export tax would not reduce domestic prices.

I wonder whether the Leader of the Country Party still believes that domestic prices are not set by export prices. That is the answer to the honourable senator's question about the beef industry. Both the claims by Mr Anthony were false. The climax of his long campaign of vilification and fabrication I personally witnessed in Forrest Place, Perth, on 25 March 1974. Incited by Country Party propaganda, obligingly amplified by the rural media, and fortified by Swan Lager, a few dozen political thugs staged an exhibition of violence without precedent in the city of Perth. A Prime Minister was physically assaulted by people who had been told so often and for so long that they were being victimised that they believed it. In electoral terms the demonstration was almost certainly counterproductive, which probably explains why the Country Party is now trying to dissociate itself from the violence which it originally incited.

I challenge those members of the Western Australian Government who may choose to disagree with my interpretation of the events in Forrest Place to authorise the royal commission that they were asked to hold or even to release the police report which I understand they have suppressed. The Labor Party was exhorted in this chamber last week to deal with facts. Here are some facts relevant to whether farmers were being victimised. In the financial year just ended net farm income in Australia reached an all-time record high of almost $3 billion. It was almost $3,000m in the financial year just ended.

Senator Young - What was the reason for it?

Senator WALSH - It was more than treble-

Senator Young - Since you know so much, give us the reasons for it.

Senator WALSH - I do not have the time and have never claimed that the election of the Whitlam Government was responsible for it. The point I am making is that net farm income reached an all-time record high and I do not believe that people who have record high incomes are being victimised by any government. Apparently Senator Young disagrees. By any realistic definition--

Senator Young - Go and ask the farmers.

Senator WALSH - Do you not want the facts? By any realistic definition of what constitutes a farm, average net farm income in Australia last year was around $15,000, which is more than double average weekly earnings. Sixty-five per cent of Australians have incomes below average weekly earnings. Now who is being victimised? In Western Australia, the State where this demonstration of violence, this exhibition of thuggery, took place, it was considerably higher. Average net farm income there was probably as high as $25,000. These were the people who were persuaded that they were being victimised. Honourable senators opposite asked for the facts and now they have them. I might add that the Green Paper has estimated that the average net worth of Australian farmers is in the vicinity of $100,000 compared with $12,000 for nonfarming Australians. So much for victimisation.

I think someone asked what was happening a couple of years before. Amidst all this talk of a rural revolution or attempts to incite a rural revolution it is interesting to look back a few years to when net farm income averaged about $3,500. That was in 1970-71, I think. At that time Mr Anthony was telling the wheat growers that he would not sell his soul for trade by desisting from insulting the Chinese, the previous Government had worked its way out of its major wheat market, and Mr Anthony called off the professional lobbyist that the Australian Wheat Board was employing in the United States because, as Mr Anthony told a meeting of the executive of the Farmers' Union of Western Australia, he was starting to embarrass the Americans. Of course, in those days- that is, 1970- we did not do anything to embarrass the Americans. I seem to recall in 1969 the former Leader of the Australian Country Party stating that rural industry was facing its darkest hour since the great depression. I noticed that the current Deputy Leader of the Country Party (Mr Sinclair) repeated that the other day. Where was the rural revolution then? The distinction between a real economic crisis which existed in respect of agriculture in 1970-71 and a fantasy economic crisis which exists today and between the reactions to the two can be explained by the fact that current so-called attempts to incite a rural revolution are politically motivated. It is true that average net farm incomes this year appear likely to be much lower. Possibly they may fall to an average as low as $8,000 but that is still above the average weekly earnings.

Senator Marriott - Of a typist.

Senator WALSH - Only 35 per cent of Australians exceed average weekly earnings. Senator Marriott must have a well paid typist. Certainly there are poor farmers. Certainly there are poor people in country towns. The Henderson report showed that the incidence of poverty in country towns was nearly twice as high as it was in capital cities. That is the way it was under Country Party rule. The rural town poor received no assistance from superphosphate bounties, dairy bounties or farmer taxation dodges and the small farmer received very little assistance. The weakening of their competitive position vis-a-vis the larger farmers possibly exacerbated their problems. So far as I am aware, neither the Country Party as a group, the Liberal Party nor any major farmer organisation has ever campaigned for income assistance for either the rural town poor or the small low-income farmer. Perhaps they do not realise that input or output subsidies and taxation concessions are regressive. Perhaps they callously regard the rural poor as expendable human propaganda which can be used to rationalise the regressive distribution of largesse to the rural aristocracy. The real inequalities in the distribution of income and wealth in this country do not exist between the urban sector and the rural sector. The real inequalities are within the urban sector and within the rural sector.

This Budget expresses the fundamental belief of the Australian Labor Party that gross inequalities in the distribution of wealth and income are immoral. Quite apart from their propensity to filter the evidence and distort the facts, the opponents of this Government and the opponents of its agricultural policies in particular suffer from a congenital inability to comprehend the basic logic of the free enterprise system they espouse and the crucial role of market prices in allocating productive resources. Sir Charles Court, who is probably best known as the exgoverning director of Cherita Investments but who is also the Premier of Western Australia, at least until the more rational and progressive members of the Liberal Party, some of whom sit across the aisle in this chamber, can engineer his removal, made the astounding claim last month that the Australian Wool Corporation would sell more wool to the trade if the Government set the reserve price higher. He was at the time accompanied by his new-found ally, the Premier of Queensland, who has, I understand, recently embraced the economic doctrines of the League of Rights.

Sir Charlesevidently possesses not only a remarkable ignorance of the process of price formation but also is ignorant of recent wool marketing history. In July the corporation did try to hold a 300c floor price. The trade bought less than 30 per cent of the wool offered when the reserve price was 300c. Since then the reserve price has dropped to 250c and the trade has bought about 50 per cent- and 50 per cent is more than 30 per cent. Having denied the existence of a rational world, Sir Charles then asserted that the world needs more wool growers and greater production. If anybody wants the reference for this, it was reported in the 'Western Australian Farmer and Grazier' on 12 September. The Australian Government is currently buying about 40 per cent of the wool clip. In what sense the world needs more wool growers or greater production Sir Charles Court did not explain. Sir Charles is, of course, a growth man, a simplistic growth man, and it was he who boasted loudest and longest during the 1960s of the 'million acres a year' being opened for agriculture in Western Australia. He was the architect of a policy of reckless agricultural expansion.

In 1969 his Government introduced legislation to restrict wheat production on land which only one year earlier it boasted of having developed. In 1969 thousands of sheep were fed to pigs, not because there was no demand for mutton but because there was a shortage of abattoirs to slaughter the sheep. The Government was warned as early as 1966 of the impending abattoir crisis in the Towns and Austin report. It did nothing to forestall the crisis. Indeed it exacerbated it by continuing the 'million acres a year' policy. Sir Charles, of course, does not believe in economic planning or indeed any rational planning.

The DEPUTY PRESIDENT (Senator Webster) Order! The honourable senator's time has expired.

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