31st Parliament · 1st Session
Mr SPEAKER (Rt Hon. Sir Billy Snedden) took the chair at 2. 1 5 p.m., and read prayers.
– Petitions have been lodged for presentation as follows and copies will be referred to the appropriate Ministers:
To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:
That restoration of provisions of the Social Security Act that applied prior to the 1 978-79 Budget is of vital concern to offset the rising cost of goods and services.
The reason advanced by the Government for yearly payments ‘that the lower level of inflation made twice-yearly payments inappropriate’ is not valid.
Great injury will be caused to 920,000 aged, invalid, widows and supporting parents, who rely solely on the pension or whose income, other than the pension, is $6 or less per week. Once-a-year payments strike a cruel blow to their expectation and make a mockery of a solemn election pledge.
Accordingly, your petitioners call upon their legislators to:
And your petitioners as in duty bound will ever pray. by Mr Adermann, Mr Aldred, Mr Armitage, Mr Bourchier, Mr Lionel Bowen, Mr Bradfield, Mr John Brown, Mr N. A. Brown, Mr Burns, Mr Kevin Cairns, Mr Donald Cameron, Dr Edwards, Mr Falconer, Mr Fife, Mr Fisher, Mr Fitzpatrick, Mr Gillard, Mr Howard, Mr Hunt, Mr James, Mr Jarman, Mr Peter Johnson, Mr Roger Johnston, Mr Barry Jones, Mr Charles Jones, Mr Kerin, Dr Klugman, Mr Lucock, Mr MacKenzie, Mr Les McMahon, Sir William McMahon, Mr Martin, Mr Morris, Mr Neil, Mr Ian Robinson, Mr Ruddock, Mr Scholes, Mr Shipton, Mr Short, Mr Street and Mr West.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled.
The humble petition of the undersigned citizens of Australia respectfully say we are concerned about the deteriorating standards of ABC radio and Television programs.
Your petitioners therefore humbly pray that Parliament take immediate steps to appoint an independent inquiry into the ABC which:
And your petitioners as in duty bound will ever pray. by Mr Anthony, Dr Edwards, Mr Ellicott, Mr Keating, Mr Lusher, Mr Mackellar, Mr Ruddock and Mr Street.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:
That the plan to obliterate the traditional weights and measures of this country does not have the support of the people;
That the change is causing and will continue to cause, widespread, serious and costly problems;
That the compulsory tactics being used to force the change are a violation of all democratic principles.
Your petitioners therefore pray:
That the Metric Conversion Act be repealed to ensure that the people are free to utilize whichever system they prefer and so enable the return to imperial weights and measures wherever the people so desire;
That weather reporting be as it was prior to the passing of the Metric Conversion Act;
That the Australian Government take urgent steps to cause the traditional mile units to be restored to our highways;
That the Australian Government request the State Governments to procure that the imperial and metric systems be taught together in schools.
And your petitioners as in duty bound will ever pray. by Mr N. A. Brown, Mr Burns, Mr Gillard, Mr Jacobi, Mr Roger Johnston, Mr Macphee and Mr Neil.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:
That we the undersigned, having great concern at the way in which children are now being used in the production of pornography call upon the Government to introduce immediate legislation:
Your petitioners therefore humbly pray that your honourable House will protect all children and immediately prohibit pornographic child-abuse materials, publications or films.
And your petitioners as in duty bound will ever pray, by Mr Martyr and Mr Ruddock.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of John Begelhole respectfully showeth:
That current requirements of the Commissioner of Taxation for the lodgement of Income Tax Returns by Registered Tax Agents restricts the trading of such agents to a period of 8 months in any fiscal year. The demands by the Commissioner for lodgement of Income Tax Returns before the 28 February following the tax year is an imposition and a restriction, limiting the trading from twelve to eight months.
Your petitioners therefore humbly pray that the law should be amended to permit any registered tax agent to trade for a full year and lodge Income Tax returns to the close of the respective tax year.
And your petitioners as in duty bound will ever pray, by Mr Aldred.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully sheweth:
That the provision of payments for abortion through items of the Medical Benefits Schedule is an unacceptable endorsement of abortion which has now reached the levels of a national tragedy, with at least 60,000 unborn babies being killed in 1979.
Your petitioners therefore humbly pray that the Honourable Members should:
Amend the Medical Benefits Schedule so as to preclude the payment of any benefit for abortion.
And your petitioners as in duty bound will ever pray, by Mr Baume.
Australian Work force: Retirement Conditions
To the Honourable the Speaker and Honourable Members of the House of Representatives in Parliament assembled the petition of the undersigned citizens of North Queensland, support this protest at the unjust treatment by the Federal Government of people depending on the old age pension, which is considered to be below the poverty level.
That we protest at the Federal Government’s failure to provide all sections of the Australian community with conditions of retirement more comparable to that section who now retire in comfort under superannuation and long service leave schemes.
That immediate action be taken to provide that all sections of the Australian work force be allowed to retire under a more comparable level than that which exists at present.
That we protest at the re-introduction of the means test for people over seventy years of age, especially those people who have already been assessed by the Social Security Department before being placed on a full age pension.
That we protest at the Government’s failure to honour their promise to have pensions adjusted in line with the C.P.I. cost of living adjustments, which is applied to all other sections of the community.
That the amounts allowed for earnings by single and married pensioners should be increased to a more comparable level to the high cost of living, before it affects the pensions.
That the amount allowable before a pensioner pays income tax which covers all forms of income, including the annual pension, should be increased, as the high cost of living warrants this consideration.
And your petitioners as in d uty bound will ever pray. by Dr Everingham.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled:
The humble petition of the undersigned citizens of Australia respectfully showeth.
That in view of the proposed adjustments to all pensions to be made yearly instead of half yearly, and because of the financial hardship this will entail to the elderly, invalids, widows, and, in this International year of the Child, to lone supporting parents, we the undersigned do earnestly urge the Government to reconsider this decision and adjust pensions at a minimum of1/2 yearly intervals.
And your petitioners as in duty bound will ever pray, by Mr Fisher.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:
That it is necessary for the Commonwealth Government to renew for a further term of at least 3 years the States Grants (Dwellings for Pensioners ) Act 1974-77, renewed for one year expiring on 30 June 1 978.
The demand for dwellings has not slackened as the waiting list (all States) of 12,060 single and 4,120 couples as at 30 June 1977, showeth.
Your petitioners respectfully draw the attention of the Commonwealth Government to the Report of the Committee of Inquiry into Aged Persons’ Housing 1975 under the Chairmanship of the Rev. K. Seaman (now Governor of South Australia) which recommended additional funds to State housing authorities to meet the demand for low-rental accommodation in the proportion of $4 for $1 with the proviso that the States do not reduce their existing expenditure and
That the Act include married pensioners eligible for supplementary assistance and migrants as specified by the Seaman Report and that particular consideration be paid to the special needs and requirements of the prospective tenants in the location and design of such dwellings.
Furthermore, your petitioners desire to draw the Government’s attention to the hardship of many pensioner home owners caused by the high cost of maintenance.
The Social Security Annual Report 1976-77 shows that 24.6 per cent, or 283,000 home owning pensioners, have a weekly income in excess of the pension of less than $6 per week.
Your petitioners strongly urge the Commonwealth Government to establish a fund whereby loans can be made to means tested pensioners for the purpose of effecting necessary maintenance to their homes. Such a loan to be at minimal interest rates sufficient to cover administrative costs and to be repaid by the estate upon the death of a single pensioner before probate or upon the death of the surviving spouse in the case of married pensioners or where two pensioners jointly own the dwelling.
Administration to be carried out by local government bodies.
And your petitioners as in duty bound will ever pray, by Mr Goodluck.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: that we the undersigned wish to protest in the strongest possible terms the Government’s decision to abolish the twice-yearly review of Pensions. that this decision will cause untold hardship for people on fixed incomes who will now be a full year behind rising prices.
Your petitioners therefore humbly pray that the House will request the Government to reintroduce twice yearly pension reviews in line with the Consumer Price Index. by Mr Hodges.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth objection to the Metric System and request the Government to restore the Imperial system.
And your petitioners as in duty bound will ever pray, by Mr Jarman.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:
That we believe that Australia ‘s constitution is undemocratic and should be replaced by a democratic constitution. This new constitution should be drafted at a representative directly elected people’s convention following extensive public debate, and then put to a referendum of the people.
The petitioners therefore humbly pray that the Parliament, as a matter of urgency, will help to promote such public debate and will arrange for the holding of such a people’s convention and referendum.
And your petitioners as in duty bound will ever pray. by Mr Les Johnson.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled.
The humble petition of the undersigned citizens of Australia respectfully showeth:
That we object in principle to Intensive Livestock Farming, namely the system of keeping animals in close confinement in artificial environments and feeding them entirely or partly on concentrated foods with a variety of artificial additives.
Your petitioners therefore humbly pray that:
Legislation be introduced to eliminate the existence of both the abovementioned practices, namely (1 ) the close confinement of animals in artificial environments, and (2 ) the feeding of animals entirely or partly on concentrated foods with a variety of artificial additives.
And your petitioners as in duty bound will ever pray. by Mr Les Johnson.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled.
The humble petition of electors of the State of New South Wales respectfully showeth:
That compensation benefits payable to injured Australian Government employees and Defence Forces personnel under the Compensation (Commonwealth Government Employees ) Act 1 97 1 should be increased as a matter of urgency in view of the financial plight of recipients, particularly those suffering long term incapacity and because of the significant increase in the cost of living which has occurred since compensation payments were last adjusted; and
That statutory provision should be made for the automatic adjustment of compensation benefits.
And your petitioners as in duty bound will ever pray. by Mr Les Johnson and Dr Klugman.
ACT Termination of Pregnancy Ordinance
To the Honourable the Speaker and Members of the House of Representatives.
The petition of the undersigned respectfully showeth:
That the Termination of Pregnancy Ordinance ( No. 1 6 of 1978) has the effect of prohibiting the operation of private abortion clinics in the ACT.
Your petitioners therefore humbly pray that Honourable Members should vote to:
And your petitioners as in duty bound will ever pray. by Mr Katter.
Television Stations in Isolated Areas
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Muttaburra and District of the Division of Kennedy respectfully showeth:
That we have been without a television service since the introduction of television in Australia in1956.
That we have been seeking such a service for many years without success.
And that we are one of the few areas remaining in Australia not enjoying what is now considered a normal facet of Australian life.
Your petitioners therefore humbly pray that Muttaburra town and the surrounding country areas will be included in the second phase of the remote areas television program.
And your petitioners as in duty bound will ever pray. by Mr Katter.
To the Honourable the Speaker and Members of the House of Representatives of Australia in Parliament assembled. The petition of residents and workers in the Newtown area ofSydney:
Respectfully showeth that the people of this inner city area will be considerably disadvantaged with regard to noise from aircraft and increased traffic hazards, from road transport to and from the airport, by any new runway at Mascot as proposed in the MANS Enquiry.
Your petitioners therefore pray that your Honourable House will reject any such proposals.
And your petitioners as in duty bound will ever pray. by Mr Les McMahon.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully say:
That we are concerned about the discrimination which exists against the children of those parents who are in receipt of the Supporting Parents Benefit in comparison with children of Single Parents who receive the Widows Pension. Your petitioners therefore humbly pray that Parliament take immediate steps to ensure that this year’s Budget allow for Lone Parents to be given the right to receive a pension with the same benefits as are given with the Widows Pension, and we also request that Parliament take immediate action to instigate one ( 1 ) category of Lone Parent Pension to eliminate the discrimination currently experienced.
And your petitioners as in duty bound will ever pray. by Mr Ian Robinson.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens respectfully showeth:
That we condemn the strangulation of Mental Health Services in NSW’ by the reduction of Commonwealth funding for health services in NSW.
Your petitioners most humbly pray that the House of Representatives, in Parliament assembled, will take immediate steps to enable a full program of Mental Health Services to continue and expand in New South Wales.
And your petitioners as in duty bound will ever pray. by Mr Sainsbury.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled.
This humble petition of undersigned Christian citizens of Australia respectfully showeth that:
And your petitioners as in duty bound will ever pray. by Mr Scholes.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned students of the Drouin High School in the electorate of McMillan respectfully showeth:
Your petitioners therefore humbly pray that Parliament take immediate action to express concern to the needless slaughtering of baby Atlantic Harp Seals in Newfoundland Canada and that the Ambassador of that country be so informed. by Mr Simon.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of undersigned citizens of Australia respectfully showeth:
That newly born Harp Seals are being barbarically clubbed to death annually off Newfoundland, Canada, and will become extinct by 1 983 if the present level of slaughter is continued.
Your petitioners therefore humbly pray that the government will:
And your petitioners as in duty bound will ever pray. by Mr Wilson.
– I inform the House that the Minister for Health (Mr Hunt) left Australia on 21 April to attend a meeting of Commonwealth Health Ministers and to attend the 32nd World Health Assembly. He is expected to return on 20 May. During his absence the Minister for Business and Consumer Affairs (Mr Fife) is acting as Minister for Health and will represent the Minister for Social Security (Senator Guilfoyle) in this chamber. The Minister for Immigration and Ethnic Affairs (Mr MacKellar) left Australia yesterday to represent the Treasurer at the Asian Development Bank meeting in the Philippines and to have discussions elsewhere on refugee matters. He will return on 1 1 May. During his absence the Minister for Housing and Construction (Mr Groom) is acting as Minister for Immigration and Ethnic Affairs.
– I direct a question to the Treasurer. Is it a fact that, as a result of investigations made by taxation officers following land scandals in Victoria, the taxation officers recommended that proceedings be instituted to recover the sums of approximately $770,000 and $32,000 due to the Commonwealth by way of arrears and understatement from two citizens who figured prominently in that inquiry? Does the Treasurer agree that such recommendations lend support to the allegation that disclosures to date in respect of land scandals in Victoria are merely the tip of the iceberg? Finally, is it also a fact that, in order to save any political embarrassment to the Hamer Government, action in respect of both these matters has been delayed until after the forthcoming Victorian State elections?
-I would have thought that even the honourable member for Melbourne Ports who, in one way or another, has been a member of parliaments of this nation for over 20 years would have realised one very simple fact, that is, that I do not have ministerial authority under the taxation Act, nor had any of my predecessors, to determine which individuals or companies should be prosecuted. I know nothing about the matter to which the honourable member has referred. I think it is nothing short of disgraceful that the time of the Parliament should be used to imply that some alleged prosecution has been delayed, presumably- by innuendo- by some kind of intervention by this Government.
– I take a point of order. Mr Speaker, is it in order for the Treasurer to indicate that it is disgraceful to ask a question which you, sir, quite properly upheld under the Standing Orders, particularly having regard to the fact that on 21 November 1978 the Treasurer, in answer to a question on taxation matters -
-The honourable gentleman has made his point of order.
– . . . directed in respect of a ministerial colleague -
-The honourable gentleman has made his point of order. He will resume his seat.
– . . . fully accepted responsibility for and knowledge of matters that occurred in his own Department.
-I warn the honourable member for Melbourne Ports that if he persists in speaking after I have asked him to resume his seat I will have to deal with him without further warning. There is no point of order.
– Very simply, as most honourable members in this House know, the secrecy provisions of the Income Tax Assessment Act forbid my, or indeed any other Minister’s, knowing anything about the personal affairs of individual taxpayers. Therefore, I am unable to answer questions on the affairs of individual taxpayers without the express consent of those individual taxpayers. That is precisely what the situation should be, and that is how it will remain so far as this side of the House is concerned.
So far as the suggestion in the last part of the question is concerned, that in some way something has been delayed because of the Victorian election, I reject that completely. It is an outrageous suggestion. If this is going to be ‘Victoria day’ in this House and if the Opposition cannot do any better than that question, we are not the least bit concerned.
-Is the Treasurer aware of the decision by the South Australian Government to limit individual shareholdings in Santos Ltd, the Cooper Basin gas producer, to 15 per cent and to force shareholders to divest holdings of more than 1 5 per cent? Does this early backtracking by the new South Australian Premier from his commitment to be more favourably disposed towards private enterprise -
-Order! The honourable member will ask his question, not make statements.
– . . . than his predecessor have implications for Australia’s foreign investment policy and the attractiveness of Australia for foreign investors generally?
– My attention has been drawn to the decision of the South Australian Government. I think it is a regrettable decision. I think it will add -
– I raise a point of order. I understand that the decision of the South Australian Government- that ‘regrettable decision ‘-has been supported by the Leader of the Liberal Party in the Upper House in South Australia.
-There is no point of order.
– I think the decision is regrettable. I think it is regrettable for the State of South Australia. I think it will discourage industry away from the State of South Australia. Incidentally, I notice that the decision has already drawn the public support of the New South Wales Minister for Energy, Mr Hills. I think that honourable members on this side of the House will be very interested to know the views of the Victorian Leader of the Opposition, Mr Wilkes. I wonder whether he will be interested in supporting it. This kind of commercial provincialism on the part of State governments in Australia is to be deplored. I think it distorts the operations of market forces. I think it is detrimental to overseas perceptions of Australia. I think it is something that in the long run will discourage foreign investment. If the South Australian Government is concerned about the price of natural gas in South Australia, if it is concerned about some aspects of that particular and at this stage potential development in South Australia, there are other weapons available. I do not believe that amendment of companies legislation arbitrarily reducing the shareholding of an individual company which has been properly acquired in the open market is a proper response by any government, irrespective, of its political persuasions, at a State level in Australia.
– I direct my question to the Treasurer. Does the Reserve Bank of Australia have any legal authority to instruct the Australian Wheat Board to sell commercial bills in order to reduce its Rural Credits Department overdraft? If so, what Act or regulation gives it that power? If not, why is the Board any more likely to comply with a Reserve Bank request than with the Government’s request which it rejected last week? How can the Government force the Board to comply with Government policy, unless the Minister for Primary Industry instructs it to do so?
– The situation is that there is a relationship between the Reserve Bank and the Wheat Board in the nature of a banker-customer relationship just as there is between any other bank and customer. The honourable member is theoretically correct when he says that, just as with any other bank, once an overdraft limit has been agreed between the bank and the customer it is a breach of that arrangement for the bank unilaterally to withdraw that particular facility. I am advised by my colleague- and it is certainly the intention of the Reserve Bank to make the approach- that there will be an agreement between the Reserve Bank and the Wheat Board for the overdraft facility to be reduced by the amount of $300m and that that amount of money will be put out to the non-bank public through the issue of commercial bills. In those circumstances the proposition that the honourable member’s question raises does not apply.
– I direct my question to the Minister for Foreign Affairs. I refer to reports of a dramatic increase in the number of Kampuchean- formerly Cambodian- refugees entering Thailand as a result of fighting between Vietnamese troops and forces loyal to the former Pol Pot regime, and the proposed establishment of a refugee transit centre in Indonesia. Are refugees fleeing the fighting in Kampuchea being denied refuge in Thailand? Does the Government support the proposed establishment of an island processing centre for refugees in Indonesia? Does the Government support the proposed establishment of a permanent island settlement for refugees?
-There have been a number of recent instances of Kampuchean refugees being denied entry into Thailand. In addition, some tens of thousands crossed into Thailand from Kampuchea but subsequently re-entered Kampuchea to the south of the area of fighting. It is very important, however, to bear in mind that these developments and the other media reports that have referred to this situation should be seen after all against the background of Thailand’s long and humanitarian record of granting sanctuary to Indo-Chinese refugees, and its close co-operation with the United
Nations High Commission for Refugees and other international relief agencies.
Since the communist victories in Indo-China, Thailand has borne a far greater share of the refugee burden than any other country. The number of refugees in camps supervised by the UNHCR in Thailand alone now exceeds 160,000. Many more have crossed into Thailand but have not been registered with the local authorities. The predicament faced particularly by’ Thailand and Malaysia reinforces the need for greater internationalisation of the IndoChina refugee problem.
That takes me to the second part of the honourable member’s question, the proposal in January by the Foreign Ministers of the Association of South-East Asian Nations for the establishment of a special island processing centre for Indo-Chinese refugees. Indonesia has offered a site suitable for such a centre with a capacity of 5,000 to 10,000 refugees. This is a very positive step in the direction of settlement. At the invitation of .Indonesia interested governments, including Australia, will meet in Jakarta on 15 and 16 May to agree on practical details including the funding of such an island centre. The Australian Government firmly believes that, in addition to the responsibilities of the countries of first asylum, the international community as a whole has a responsibility to work towards a solution of this problem. The Government hopes that agreement can be reached at Jakarta to establish an island centre along the lines that have been predicated, namely, a processing centre. In relation to the last part of the honourable member’s question, on a number of grounds I would certainly not favour the establishment of a permanent island settlement. On the proposition as put forward by the ASEAN Ministers, to which the Government is giving support, we will continue actively to encourage other countries to provide additional resettlement places and financial contributions to the United Nations High Commission for Refugees.
– Has the Minister for Primary Industry, in accordance with his power under section 18 ( 1) of the Wheat Industry Stabilization Act, instructed the Wheat Board to sell commercial bills in order to reduce its Reserve Bank overdrafts? If not, when will he instruct the Board to implement the Government’s decision to cut the overdraft by $300m?
– The answer to the first part of the honourable gentleman’s question is no.
The answer to the second part of the honourable gentleman ‘s question is that it does not arise.
– My question is addressed to the Minister for Trade and Resources. Following the signing of a nuclear safeguards agreement with the Republic of Korea and the Minister’s discussions this morning with Energy and Resources Minister Chang of the Republic of Korea, what are the prospects for increased Australian exports, in particular minerals, to the Republic of Korea?
– I think all members of this House would be aware of the phenomenal industrial growth of Korea and of the opportunities opening up for the sale of raw materials to that country. This morning I had discussions with the Korean Minister for Energy and Resources, Mr Chang. He was able to give me information as to how the Korean Government sees developments taking place in the Republic of Korea. I feel that the figures are so significant to Australian industry that I should inform this House of them. Korea has a nuclear program which it hopes to continue to develop as an alternative form of energy to oil for power generation. It anticipates the building of two nuclear power stations per annum and expects to have about 40 nuclear power stations by the year 2000. If Australia were to supply the uranium for that nuclear power program it would mean that 80,000 tonnes of uranium would be supplied between now and the year 2000.
The Korean Minister also spoke about Korea’s program for the production of steel. By 1986 Korea expects to be importing 1 1.2 million tonnes of coking coal and 24.5 million tonnes of iron ore. The Korean Government also expects to be importing approximately 4.8 million tonnes of steaming coal for coal-fired power stations by 1986. It hopes to import 800,000 tonnes of copper, 530,000 tonnes of manganese, 4 million tonnes of phosphate, 90,000 tonnes of asbestos and 370,000 tonnes of zinc. It also is interested in getting into joint ventures for the manufacture of aluminium in Australia to supply Korea’s needs. Quite obviously, Korea will be a very important and very significant market in the future for the supply of raw materials. I only hope that Australian industry can respond by meeting some of these requirements.
– My question is directed to the Treasurer. Is it a fact that the rate of growth in the money supply was 14 per cent or thereabouts for the March quarter of this year? What steps does the Government intend to take to remove liquidity from the monetary system to bring money supply growth into line with the Government ‘s new target, which is reported to be in the range of 9 to 10 per cent? In particular, what measures will be taken by the Government to remove the potentially volatile impact of surplus liquidity which will arise from the maturity of the unusually high levels of treasury notes held by the community as well as the Wheat Board commercial bills? Finally, will the Treasurer make a statement on the terms of the May loan before the Victorian elections next Saturday?
-The answer to the first part of the honourable member’s question is yes. The M3 figure for the 12 months to the end of March was, to be precise, 1 1.4 per cent. For publication purposes that figure was rounded down to 1 1 per cent. For the 12 months to the end of February the figure was 1 1.6 per cent and for publication purposes it was rounded up to 12 per cent. If the honourable member pauses for a moment to analyse that figure of 11.4 per cent for the 12 months to the end of March and he bears in mind that virtually none of the effects of the refinancing of $ 155m of the first wheat advance would have been reflected in that figure and he also bears in mind that there is a further $300m of refinancing of the first wheat payment to be captured in the figures for subsequent months, he will be looking at a total of $455m, which represents slightly in excess of 1 per cent of the money supply growth throughout the year. Even making allowance for the fact that perhaps not all of those commercial bills will be effectively sold to the non-bank public, there is still some considerable scope, all other things being equal, for a further reduction in the rate of growth of M3 for the balance of the 12-month period to 30 June.
The honourable gentleman spoke of a new money supply target. I have not announced and I do not propose to announce a new money supply target for the remainder of the current financial year. As I have already indicated, the outcome of M3 will be over 8 per cent. The reasons for that have been explained in some detail in answers that I have given in this House and also in the Press statement and Press conference which accompanied the announcement of the increase in the interest rate on Australian savings bonds and on semi-government interest rates. There are good, proper and anti-inflationary reasons why the money supply outcome should be above 8 per cent for the current year. Growth is greater than forecast at the time of the Budget, and it is entirely consistent with an anti-inflationary stance in monetary policy that the outcome should be above 8 per cent. So far as the terms of the main loan are concerned, they will be announced when appropriate. Just as this Government was not prepared to delay other announcements in the interest rate area on account of the Victorian election, we do not intend to accelerate unduly announcements just because there is a Victorian election.
-I draw the attention of the House to the presence of Mr Chalid Mawardi, Chairman of the Indonesian Parliamentary Committee on Foreign Affairs, Defence and Security.
Honourable members- Hear, hear!
– Is the Minister for Housing aware of certain claims being made in Victoria that the level of home ownership has dropped in that State during recent years? Could the Minister possibly provide some facts to this Parliament on the level of home ownership in Australia, and in particular in Victoria?
– I was made aware of the honourable member’s interest in this subject some time ago and I happen to have some information with me on this occasion. It is a timely question, not because of something which is about to happen in Victoria on Saturday, but because my Department only recently completed an analysis of the last census which indicates that the rate of home ownership in Victoria is 7 1 .5 per cent, and that is the highest rate of any State in the Commonwealth. It is higher than the New Zealand national rate of 70 per cent which is said to be the highest in the world. It is fair to say that an analysis of the figures that are available of various States and countries around the world shows that Victoria is the home ownership champion of the world. That is a big statement, but it is based upon fact. Victoria is the Muhammed Ali of home ownership, if you like. That is based on the authoritative information that we have available as a department.
The figures available from the census back in 1947 indicate that the home ownership rate in Victoria then was 52.7 per cent. That has now increased to 7 1.5 per cent, which indicates a very significant improvement in home ownership in Victoria since 1947. I cannot understand the comments being made by people in Victoria that the home ownership rate has been reduced in recent times. In fact it is to the contrary.
– I refer the Prime Minister to his statement made in Esperance last weekend that youth unemployment affected only 10 to 12 per cent of young people and that youth unemployment problems were largely caused by deficiencies in the education system. How does he reconcile these statements with the Bureau of Statistics unemployment figures which show that 18.7 per cent of people aged between 15 and 19 are jobless and that the annual intake of apprentices will fall by 5 per cent in the year to June 1979? Has the number of workers receiving training under the National Employment and Training scheme and the Special Youth Employment Training Program fallen dramaticallyand I stress ‘dramatically’- in recent months? Is this a direct result of Federal Government changes to the criteria for selection of employment projects? Finally I ask: When does the Government propose to introduce its long awaited youth community service scheme?
– I was referring very plainly to the percentage cf each age group who, as I understand it, have difficulty in gaining employment. Of each age group it is about 10 to 12 per cent who have difficulty in gaining employment. That is a quite different criterion from one which says 15 to 19 per cent or whatever. The figures that the honourable gentleman cites in relation to that, as I understand it, are about right. I was using a different criterion- 10 to 12 per cent of each age group. That was an answer to the point that it is a whole lost generation. It is not a whole lost generation. There is a difficulty in each age group of a certain proportion of young people who find it hard to get a job. That is one of the reasons why the employment training schemes are directed specifically to try to help them. It is one of the reasons why this Government established the experimental program for unemployed youth. I think such people have always been in difficulty in the community, but it was this Government which did something about the situation.
– You table the reports of your Department. They are a disaster.
– I have one here.
-Order! The honourable member for Robertson will cease interjecting. He has been continually interjecting today and 1 ask him to cease.
-Mr Speaker, you may not have heard them, but the honourable member for Robertson’s interjections were only part of those of the Leader of the Opposition. I was also making the point because amongst other things I was doing when I was in Albany, Esperance and Bunbury I was talking to school children. I made the point before a large number of teachers- they did not seem to object- that in a number of schools the programs have been in the past, and I think still are, designed too much to help those who are academically well qualified, or designed in part to help too much those who can go on to universities and colleges. This helps the prestige and status of the school. It gets so many distinctions and so many people with first-class honours. A properly devised school curriculum ought to be arranged in such a way that all pupils get adequate attention and a preponderance of attention should not be given to those who are academically well qualified and who will be seeking tertiary education.
I made the point that in a number of schools there was a tendency to downgrade physical work and trade training; there was a tendency to suggest that one had no real future unless one could get to a university or a college of advanced education. I think that such views are so much against the interests of Australia that not only schools but also other institutions ought to pay more attention to those who do want to work with their hands and who do want to be skilled tradesmen. There is a very real role amongst our educators and, in particular, amongst the secondary schools which I do not believe is adequately fulfilled at the present time. It is worth noting that the teachers who heard me making these points found no quarrel whatsoever with them.
– My question, which is addressed to the Minister for Industrial Relations, concerns the industrial campaign being waged by the Builders Labourers Federation in Victoria and South Australia for an over-award payment of $2 1 a week. Is the Minister aware of Press reports this morning that negotiations were about to commence between building employers and building unions, and later reports that these negotiations had broken down, with the Builders Labourers Federation imposing work bans on building sites in Victoria and South Australia? In view of what the Minister said in this House on 3 April, I ask him whether the campaign referred to is a matter of concern to the Government and, if so, what the Government can do to try to ensure that such claims are resisted by employers.
– I am aware of the reports referred to by the honourable gentleman and I am informed that they are substantially correct. There has been a campaign for wage increases clearly outside the wage indexation guidelines and directly in conflict with the policy of wage restraint. In fact, it is an attempt to extort additional payments, particularly in circumstances where the time factor is critical in completing contracts. For example, the so-called insurance which has been referred to is equivalent to a threat that unless an additional $21 a week is paid industrial action will delay the project and increase costs to the contractor. As honourable members will be aware, the Federal award in this area is a paid rates award which already contains an element to cover over-award payments. I understand that currently builders labourers are receiving substantially in excess of $200 a week. There is a current log of claims before the Conciliation and Arbitration Commission. Mr Justice Alley said, when the claims came before him, that clearly the campaign to which the honourable member referred was outside the guidelines and in breach of the paid rates award. He made a strong recommendation that all bans be lifted before the case came on for hearing. The rank and file members of the BLF are getting fed up with this sort of behaviour by their union officials, which is costing them -
Opposition members interjecting-
-I am glad to see that it is a matter of some levity in the Labor Party that builders labourers and their families are losing hundreds of dollars because of the actions of these officials, which in turn is adding millions of dollars to the cost of major projects all over Australia and therefore inhibiting employment opportunities. It surprises me that that sort of campaign has that effect on the Opposition. I am glad to say that the majority of employers have refused to concede to this sort of industrial pressure. I applaud the stand that they have taken. I emphasise, to take up the other point the honourable gentleman raised, that the Government will not hesitate to take any action in its power against employers who concede to industrial pressure, including asking the Prices Justification Tribunal to take into consideration any payments made by contractors or developers which are designed to circumvent the guidelines, in examining the pricing structure in the area involved.
– I ask a question of the Prime Minister following his answer to a question I asked a few seconds ago in which he said that the Government gave great emphasis and priority to job training programs for people, especially young people. Is it a fact that the relevant department has reported: ‘The number under the normal on-the-job provisions of NEAT at endJanuary is 26 per cent lower than at end-January 1978 when there were 8,256 persons in training under the NEAT on-the-job provisions’? Did the relevant department also advise: ‘The numbers in training under SYETP have continued to decline since reaching a peak of 39,319 at endAugust 1978. The number of SYETP trainees at end-January 1979 was 15,226’? In view of his assertions that the Government gives great priority and emphasis to such programs, how does he justify the dramatic reduction in support for these sorts of programs?
-The honourable gentleman has asked a statistical question. He can put it on the Notice Paper and direct it to the Minister directly concerned or, if the Minister wants to do so, he can answer it now.
– I direct my question to the Treasurer. In view of the substantial contribution which the Commonwealth makes to the finances of the States via its tax sharing and other arrangements, is the Treasurer satisfied that these finances are being properly managed?
– It is true, as the honourable member for Henty says, that the Federal Government has made extremely generous financial provision for all State governments throughout Australia. The tax sharing arrangements which this Government has put into place over the past three years and which give to the States a percentage of income tax revenue and flexibility within that percentage to spend the money on what they wish have, I think, contributed enormously to the financial independence of various State governments and have enabled individual State governments to make very significant revenue concessions. I do not think that the significance of that point ought to be lost on any member of this House. It has been suggested in some quarters, in the context of the Victorian election, that the handling by the Victorian Government of this increased financial flexibility from the Federal Government has been less than satisfactory. The Federal Government believes that what the Victorian Government has done over the past three years has demonstrated a prudent use of this greater financial flexibility and has illustrated the extent to which the new financial sharing arrangements give State governments capacity, independence and flexibility to make revenue concessions of their own choice according to the needs and aspirations of their own people. I think that that policy has been of great assistance and has been widely received.
-I ask the Minister for Industry and Commerce whether the Government has accepted the Crawford Study Group recommendation that:
If so, will new guidance be issued to the Industries Assistance Commission? If no decision has been taken, will the Government suspend examination of IAC recommendations until a decision has been taken? Would the Minister, in answering this question, consider the case of Hanimex Pty Ltd which has made representations to him indicating that a factory will be closed and jobs will be lost if the IAC proposal to phase out duty protection for sporting and recreation equipment is adopted? Specifically, does the Minister consider this IAC proposal part of a ‘general program of tariff reductions’?
– I will certainly look at the Hanimex case to which the honourable gentleman has drawn attention and provide him with such information as can be made available. The honourable gentleman is aware that the Crawford Study Group report is the subject of processing by a ministerial committee which has had several meetings, including one with Sir John Crawford and other members of the Study Group. I can assure the honourable gentleman that the Government regards the Crawford Study Group report as a matter of very considerable substance, but he would not expect me to be trading questions and answers on matters referred to by the Study Group until such time as the ministerial committee has completed its deliberations. I am very much aware of the particular recommendation by the Study Group relating to the question of tariff reform and the context of the reference to ‘say, 5 per cent’ quoted by the honourable gentleman. The Study Group made it perfectly clear in the balance of the report, apart from the definitive recommendations which appear in an earlier section, that that reference is in no way to be interpreted as binding on the Government in processing the normal IAC reports that come before the Government. They will continue to come before the Government. The Government will take definitive decisions upon those recommendations by the IAC on the basis of the Government’s tariff policy which, as the honourable gentleman knows, has been laid down in the White Paper.
– Can the Minister for Employment and Youth Affairs provide any information showing trends in the labour force based on more recent statistics than the March figures of the Australian Bureau of Statistics?
– I can supply the honourable member and the House with further information because the Australian Bureau of Statistics today released the civilian employee figures for February 1 979. 1 am quite sure that the honourable gentleman who asked the question will be pleased with the figures. They show that the number of civilian employees in February 1979 was estimated at 4,753,100 persons, an increase of 31,700-12,200 males and 19,500 femalesover the January 1979 figures. There are two aspects of this matter about which I am sure the House will be pleased to hear. In seasonally adjusted terms this represents an increase of 1,900. This is the eighth consecutive monthly increase in seasonally adjusted terms. The number has increased by 48, 100 since June 1978. Most of the increase in original figures occurred in the private sector. The figure is 20,000. This was due mainly to a seasonal increase of 11,300 in the manufacturing sector. At least we on this side of the House realise that, if there is to be growth in employment which will not only satisfy those who are coming on to the employment market each year but also provide work for those presently unemployed, we must have growth in the private sector. Whereas for so many years since the Whitlam era the manufacturing sector has been depressed, in recent months we have seen a significant growth in employment in the manufacturing sector.
-I refer the Prime Minister to his recent statements congratulating the Commonwealth Police on their handling of the attempted hijacking incident at Sydney Airport. Is the Prime Minister aware that the Commonwealth Police Officers Association has requested an audience with the Minister for Administrative Services eight times in the past two months? Is he aware that on each occasion the Minister has been unavailable? Is the Prime Minister also aware that a major concern of the Association is a proposal in draft legislation to set up the new Australian Police Force which, the Association claims, downgrades police officers serving in high security areas such as airports? Will the Prime Minister ensure that the Association’s views and objections are given a hearing by the Minister for Administrative Services?
– I wonder whether the honourable gentleman who asked that question is aware of the fact that I met with that Association about a fortnight ago and that we are now very, very good friends.
– I direct a question to the Minister for Primary Industry. Suggestions have been made that the guarantee given to the Australian Wheat Board by the Government, that the Board will not pay any higher interest rate on its borrowings as a result of the Government’s decision that $455m will be raised on the commercial market, is in fact a subsidy to the Australian Wheat Board. I ask the Minister: Is this correct?
– I have noticed some comments in the Press suggesting that the arrangements that the Government has undertaken with the Australian Wheat Board to meet any differential between the cost of commercial bills and Rural Credits Department advances is a subsidy. This, of course, is not true. As most people who have had an interest in the wheat industry would know, the Australian wheat crop is harvested over a period of six to eight weeks. The procedures implemented by the Australian Wheat Board enable the marketing of the crop over the course of 12 months, or longer if need be, thereby bringing significant benefits not just to the wheat industry but to everybody in the Australian community. If the crop had to be marketed in the period immediately after harvest in such a way as to provide a cash flow to growers, this would certainly mean that a significantly smaller amount of money would be available to the wheat industry and to meet Australia ‘s balance of payments than is available under the present practice. For that reason the Rural Credits Department advances have traditionally been entered into to finance the wheat industry and other rural industries to enable them to market their products over a longer period.
The second aspect of this matter is that at the moment the interest rate set under the Rural Credits Department is set by the Government and, whilst the interest rate that is to be paid on commercial bills may not be the same, in fact it will be a commercial rate of interest and the net cost to the Government will be no different. In the one instance it will be a visible cost, whereas in the other instance perhaps it would not be so visible. The third aspect is that in any event, in terms of the arrangements between the Australian wheat industry and government, there is a long-standing arrangement that this facility will be provided. It would have been totally unacceptable to the maintenance of that arrangement if the Government had not given the undertaking that it has provided in this instance.
-I refer the Minister for Employment and Youth Affairs to his Press statement of 24 January this year wherein he announced the creation of 1,000 training and work experience opportunities in the Public Service for a period of 17 weeks. I ask the Minister How many young people have now been employed under this scheme and in what work have they been trained?
– I have asked the Public Service Board to give me a report on progress in supplying those training positions to which the honourable member has referred. When I obtain that information I will let him have it also.
– I refer the Minister for Employment and Youth Affairs to his Press release of 30 April in which he announced the composition of the National Youth Advisory Group. Is the Minister aware that in that 1 2-member group all States and Territories, except the Australian Capital Territory, are represented? Can the Minister indicate to the House what particular qualities those members, in particular the five members from Victoria, have and the youth of the Australian Capital Territory do not have, other than the fact that the Chairman is a former State President of the Young Liberal Movement and a Queen’s Scout?
– I am sure that all members of this House will be pleased with the 12 men and women who have been chosen by the Government to form the first National Youth Advisory Group. The seven young men and five young women represent Australia geographically, ethnically and racially. They have been chosen because of the personal contribution which they can make to the well-being of the youth of Australia. The honourable gentleman should not feel that because the Group has no member from the Australian Capital Territory the ACT will not be given due attention in its affairs. After all, all the members are Australians regardless of the part of Australia from which they come. I have spoken to the Chairman, Mr Graham Allan, who is approaching his task with great enthusiasm and great confidence that the Group can make a real contribution to the future of Australia through the youth of Australia. I would like to feel that the honourable gentleman will give the Group every support he can.
-My question is directed to the Minister for Industrial Relations. It relates to a statement recently put out by the Minister for Employment and Youth Affairs about the Government’s very great concern about the shortage of skilled tradesmen. Does the Minister know that a large number, said to amount to thousands, of qualified fitters and turners, toolmakers and welders have left the industry because of the low rate of pay and are now taking up other employment, such as transport driving and the like? Does he not realise that the principal cause of the shortage of skilled metal workers is the fact that the wage for that skill is now regarded as being the lowest in Australia on a comparative wage basis? Will the Minister support the putting of a positive proposal to the Conciliation and Arbitration Commission for the introduction of a more realistic paid rates award than is now the case so that these people can be attracted back to the industry?
– I am aware, from my own knowledge and from statements that have been made by various people, of the shortage of tradesmen in certain skilled trades in Australia. The shortage does not extend to all skilled trades but it particularly affects the area which the honourable gentleman mentioned, that is, the metal trades. I understand that it also affects the electrical trades. I understand that relatively large numbers of skilled tradesmen are working out of trade. I think that they are doing so for a variety of reasons, not just the one mentioned by the honourable gentleman. For example, many skilled tradesmen progress to management positions. That is very desirable. Large numbers of people work outside their trade in that way. The honourable gentleman referred to relativities. As he would know, once relativities are upset in one area, distortions in other areas are almost inevitable. That is a question for the proper arbitral tribunals to decide on the merits of each case, including the arguments put before them in relation to the metal trades award.
– My question is directed to the Prime Minister. In view of the importance of Australia’s economic reputation overseas with respect to its borrowing capacity and trading strength, has the Prime Minister received recently any up-to-date reports from London, particularly the London Chamber of Commerce, as to the current assessment of Australia ‘s economic prospects?
-The reports that the Treasurer and I get from both New York and London indicate that Australia’s reputation in economic matters stands high. Indeed, it would be difficult to name any country which stands higher in terms of financial responsibility as a result of the policies of the last three years. I am glad to see that Mr Batt in speaking to the London Chamber of Commerce did nothing to detract from that reputation. Of course, if he had he would not have been believed. Mr Batt himself indicated that the mood is right for recovery in Australia and the general tenor of his remarks, having regard to the positions he holds in Australia, was certainly forward-looking and constructive.
He did indicate some hesitancy in relation to consumption expenditure, but of course he would not have been aware of the latest figures for retail sales which came out this morning and which indicate that for the three months ended March they were 3.3 per cent higher than for the three months ended December 1978. That is regarded as a very healthy lift indeed when measured against the price changes over the same period. No doubt in his other discussions overseas, on a visit which I understand is taking a couple of months, Mr Batt will be able to reinforce the argument that he has already been putting with some firmer words about retail sales and consumer confidence in Australia.
– Pursuant to section 18 of the Dried Fruits Research Act 1971, I present the annual report of the Dried Fruits Research Committee for the year ended 30 June 1978.
Mr HOWARD (BennelongTreasurer)Pursuant to section 10 of the International Monetary Agreements Act 1947, 1 present a report on the operations of this Act and on the operations, insofar as they relate to Australia, of the International Monetary Fund and of the International Bank for Reconstruction and Development, for the year ended 30 June 1978.
– For the information of honourable members I present the annual report of the Department of Foreign Affairs for the year ended 31 December 1978.
– For the information of honourable members I present a report of the twentyfirst meeting of the Australian Water Resources Council held in Canberra on 1 September 1978.
– Pursuant to section 9 of the Education Act 1 970, 1 present the annual report of the Education Research and Development Committee for the year ended 30 June 1 978, together with the text of a statement by the Minister for Education relating to the report.
– Pursuant to section 35a of the Prices Justification Act 1973, I present the Prices Justification Tribunal half-yearly report for the six months ended 3 1 December 1978.
– For the information of honourable members I present reports of the Industries Assistance Commission on:
Chokes and ballasts (developing country preferences);
C-zero cassettes (developing country preferences); and
Nuts, bolts and screws.
– For the information of honourable members I present the Parliament House Architectural Competition Document. I commend it to honourable members. Each honourable member will receive a copy of it. The document sets out the basis of the competition and contains the details as determined by the Joint Committee on the New and Permanent Parliament House.
- Mr Speaker, I claim to have been misrepresented.
-Does the honourable member wish to make a personal explanation?
– Yes. In Hansard of 6 March at pages 621 and 622 the honourable member for Shortland (Mr Morris) in a debate when I was away said of me that on 4 October last year I went to Singapore and told the Singaporeans that the airline agreement negotiations had not been before Cabinet. As is set out clearly in the Press release that I issued when I was in Singapore, I actually said that I stressed that the Government had taken no final decision on the matter but I would report Singapore’s concern to the Government. The honourable member for Shortland repeated that inaccuracy twice in the course of that debate.
– For the information of honourable members I present a review of the new arrangements in the stevedoring industry. I seek leave to make a statement relating to the review.
-In. October 1977 the Government introduced legislation to abolish the Australian Stevedoring Industry Authority and to introduce new administrative, financial and industrial arrangements in the stevedoring industry. In my second reading speech I indicated that the Government had broadly accepted the recommendations of the National Stevedoring Industry Conference chaired by Sir Richard Kirby on operational matters and by Mr N. F. Stevens on funding aspects of the industry. Their recommendations were embodied in the new arrangements I was then proposing. I also indicated at the time that the Government would review the changed administrative, financial and industrial relations arrangements after they had operated for some twelve months to determine how effective they were in practice.
Mr Speaker, it is a matter of history now that after almost two years extensive consultation with industry parties, representatives of the port authorities and user interests the new arrangements became operative on 5 December 1977. On 1 1 December 1978, 1 announced the establishment of a working party to provide the Government with an overall review of the new arrangements introduced some 12 months earlier. The working party was chaired by Mr John Wallace, President of the Maritime Services Board of New South Wales. Its membership was drawn from organisations with standing membership of the Stevedoring Industry Consultative Council and consisted of representatives from the port authorities, stevedoring employers, including representatives from Broken Hill Pty Co. Ltd, the Australian National Line, the Waterside Workers’ Federation and the Australian Shippers’ Council.
The working party was assisted in its review by specialist reports from the Federal Co-ordinating Committee on the management aspects of the new arrangements and from His Honour Mr Justice Robinson on the operation of the port conciliator service established under the new arrangements. The Stevedoring Industry Finance Committee has reported to me on the operation up to 31 December 1978 of the financial aspects of the new arrangements for which it has a statutory responsibility. The review reports concluded that, generally speaking, the new arrangements have contributed to better performance in the stevedoring industry and that they have gone a long way towards meeting those difficulties identified by Mr Justice Northrop as far back as February 1976. I have made arrangements for the review reports to be made available and I do not therefore propose to deal with the views expressed in those reports, or conclusions reached other than in a general fashion.
The new arrangements provided for detailed measures to ensure a proper distribution of the labour force between stevedoring companies, the transfer of surplus labour between companies, the provision of supplementary labour and the working of overtime in certain situations. The reports of the working party and the Federal Coordinating Committee conclude that during the 12 months under review these measures have operated to ensure the virtual elimination of locked-up idle time and the better utilisation of the labour force. The provision for the transfer of surplus labour between companies and the availability of a supplementary labour pool in the major ports have made a significant contribution to minimising port labour shortages.
Mr Speaker, one of the matters of great concern to the Government has been the high level of idle time payments incurred in maintaining redundant labour within the industry. This has been a serious problem for many years and it was one of the matters to which the National Stevedoring Industry Conference was asked to give special attention. In introducing the new arrangements in October 1977, I referred to the fact that since June 1975 some 3,000 waterside workers had left the industry. The Government is pleased to note that the industry has continued its efforts in this regard and that since the commencement of the new arrangements, the number of waterside workers has further declined from 10,142 to9,583 as at31 December 1978, a reduction of 5.5 per cent. The working party report comments that as a result of these efforts the gap between the actual number of waterside workers and the optimum labour requirements has gradually diminished over the last three or four years.
Nevertheless, the working party concluded that it is essential that the industry continue the efforts already being made to reduce the number of waterside workers, particularly at some main ports in a manner consistent with the need to ensure the most efficient use of capital and to minimise the turn-around time of vessels. The Government believes that there must be no relaxation in the efforts to continually adjust the industry’s workforce to labour demand, if full advantage is to be taken of the improved utilisation of labour. The Government will therefore continue to monitor closely the industry’s progress towards this objective.
The new arrangements sought to improve industrial relations at job and port level by means of better consultation through the federal and port co-ordinating committees and the establishment of the port conciliator service to make the existing dispute settlement procedures more effective than in the past. The Government is indebted to Mr Justice Robinson for his endeavours in the establishment of the service, the appointment of port conciliators at some 40 ports and his continued interest in the operation of the service. His report concludes that available statistical material and the opinion of people involved in the industry, point to a substantial improvement in relationships at the port level and this is also the view of the working party. Whilst the trend to less disputation at the job and port level has been encouraging, the number of manhours lost overall in the stevedoring industry throughout the period under review has increased markedly.
The Government has noted the working party’s comments in respect of this, but is concerned at the action by members of the Federation to subject exporters and importers, and indeed the entire community, to unnecessary delays, inconvenience and increased costs in their pursuit of wage or other industrial claims. It is imperative that- as indeed the working party concluded- as far as is practicable existing machinery for consultation and the resolution of disputes should continue to be used to minimise disruption in the stevedoring industry. The Government accepts the view that whereas the new arrangements under review are confined to stevedoring employers and waterside workers, industrial relations in the industry are not so confined. It notes the view expressed in the report of the working party that after due consultation with the other unions it may be desirable to extend all or part of the new arrangements to other employees. However, the Government takes the view that any initiative in this respect should come from the employers and the unions directly involved in the industry.
The Government has always recognised the need for parties not involved in the industry in a management sense to have opportunity for an effective voice in the industry’s affairs. In January 1978 it established the Stevedoring Industry Consultative Council under the chairmanship of Sir Allan Westerman, C.B.E. The concept of the Council was based on the recommendation of the National Stevedoring Industry Conference which saw a need for a consultative body on which employers, the trade union movement, the Government, port authorities and user interests should be represented and which could be open to any interest in the community which wanted to express views to the industry and those indirectly associated with the industry to do so. The Council enables those connected with the industry- in the words of the report of the Kirby Conference:
The Government regards the Consultative Council as an important part of the new arrangements designed to improve industrial relations as well as the performance of the industry in the national interest. It is pleasing to note, therefore, that although the concept of the Council was a unique and novel development within the stevedoring industry, members of the working party, which, as I indicated earlier, were drawn from organisations represented on the Consultative Council, have taken the view that the consultative machinery available through the Council has indeed been a valuable means of communication. The working party report has re-affirmed the concept of the Council as envisaged by the Kirby Conference and the Government agrees with those of its recommendations which are designed to further clarify the role of the Council and to assist the Council in the achievement of its objectives. It is essential that all parties represented on the Council use it in the constructive manner necessary for the achievement of those objectives.
Both the Stevedoring Industry Finance Committee and the working party considered the operation of the financial machinery required to fund certain employer obligations on an industry basis. Under the new arrangements, responsibility for a considerable number of employer obligations in the permanent ports previously funded by means of statutory levy based on manhours was transferred to employers. The Government maintains a positive role in relation to the statutory levies imposed on employers through the Stevedoring Industry Finance Committee. This Committee is responsible to Parliament and its first annual report covering the period to 30 June 1978 was tabled in both Houses recently. The Government has noted that employers, including BHP, are satisfied that the rates of levy fixed from time to time in respect of the funds to which they were contributing were sufficient only to fund liabilities. Adequate funding is necessary to avoid the recurrence of an industry deficit and to ensure that stevedoring costs are kept to a minimum.
Both the reports of the Finance Committee and the working party, however, have drawn the attention of the Government to problems which could affect a number of smaller ports in the future. The Government has always adopted the view that because of their importance to the hinterland they serve irrespective of the size of the regional population, special consideration must be given to the position of the smaller ports. The reports refer to the possibility of a further decline in the number of manhours being worked, particularly in the smaller non-permanent ports. If this happens it will be considerably more difficult for employers in those ports to fund- by means of industry levies- their award obligations and at the same time maintain an adequate labour force. The Government recognises the important contribution an efficient and economical service in the smaller ports can make to the areas they serve. Accordingly the Government will keep under close scrutiny the effect of its policies in this and the other areas of its responsibility in the stevedoring industry.
-by leave-The Opposition recognises the enormous importance of the stevedoring industry in Australia and notes with satisfaction the report of the Working Party. Unfortunately, I have not been able to speak to anybody who has been involved in the drawing up of the report but one must say at the outset that the report shows advances made in industrial relations in the stevedoring industry which would be welcomed by everybody in Australia. However, there are some aspects of the report on which comments should be made. Firstly, of course, the ultimate aim of the improved industrial relations which are sought by the parties to the stevedoring industry is to see, as the Minister for Industrial Relations (Mr Street) says in his statement, the better utilisation of the labour force.
It is true, of course, that since 1975 we have seen thousands of waterside workers leave the industry. They have left the industry because sufficient redundancy payments were made available to them. I think the way in which those redundancy payments have been made available in the stevedoring industry is a lesson for people in other industries who might have in mind doing the same sort of thing. A great deal of the breakdown currently occurring in industrial relations in this country with the advent of all the new technologies is being caused by the fact that we still have available to employers some very mediaeval systems by which to dismiss employees. It is something that the Waterside Workers Federation of Australia does not tolerate. The only means by which the Government and the employees connected with the stevedoring industry have been able to get the work force down to the level at which it stands today is by agreeing to see that those who have retired before their time were granted a sufficient redundancy payment. It is something for which the Waterside Workers Federation fought very hard.
The impact of the reduction in the work force goes way beyond the stevedoring industry. The economies of port areas such as my own area of Port Adelaide are affected immensely when the size of the labour force is reduced. In my own area of Port Adelaide it dropped from something like 2,000 a few years ago to 500 today. There have been instances this year of more than 500 waterside workers being required. They have been made available under the new arrangements which are now operating on the wharves. Nonetheless, I am pleased with the way in which this Working Party has gone about its work.
The Minister made some reference to the marked increase in lost man hours. In its report the Working Party went into greater detail as to why this occurred. I make some examination of pages 10 and 1 1 of that report. Under the heading ‘Industrial Relations Aspects’ the Working Party analysed this matter in the stevedoring industry. It stated in its report:
In examining overall industrial relations aspects, the Working Party has had before it figures for total manhours lost through disputes in the period. These figures indicate that in this period, i.e. the 12 months ended 30 November 1 978, a total of 562,666 manhours have been lost as a result of stoppages by waterside workers representing 5.36 per cent of manhours worked. -
The Working Party went on then to explain what had occurred. It stated:
In the period under review the major loss of manhours resulted from:
A dispute which arose from action by another union, -
In this case it was the Amalgamated Metal Workers and Shipwrights Union- related to the shipment of live sheep. Picketing of wharves was followed by the use in Western Australia of farmers instead of waterside workers to load vessels. This led to a national stoppage by waterside workers in protest against the use of non-union labour -
The number of man hours lost in this dispute was 100,042. The second instance that the Working Party lists is as follows: disputes arising from the national negotiation of new wage rates and conditions for the 1978 General Industry Agreement and awards for waterside workers referred to . . .
That reference is in a later part of the report. It states that in that case 147,826 man hours were lost. The third instance- given is of interest also because of the Minister’s reference to the extension of the conciliation system to unions other than those unions directly involved in the stevedoring industry where some disputes have arisen. The Working Party went on to refer to the following: an industry wide dispute which was a side product of a dispute of five weeks’ duration between the ETU and AMW & SU and container terminal operators in Melbourne. That dispute led to an application of stand-down procedures against waterside workers which, in turn, lead to a national stoppage in September 1978 . . .
The man hours lost as a result of this stoppage amounted to 191,824. So in spite of the Minister’s reference to the fact that there has been a marked increase in man hours lost, the Working Party gave some explanation for it. In paragraph 7 on page 1 1 of its report it stated:
It is important to point out that the three disputes referred to in paragraph 4 account for a total of some 440,000 man hours or 78 per cent of all man hours lost by dispute during the period under review. These were not the type of industrial relations problems which it could be expected would be materially assisted by the new industrial relations provisions now under review. As previously indicated, such arrangements were designed mainly for improvements at job and port level.
The Working Party does not see these as being recurring instances of industrial disputes. As such, if one leaves aside the two major disputes, apart from the general award negotiations, one could not say that there has been a marked increase in the man hours lost in the stevedoring industry. Although there has been some disputation and argument between the Waterside Workers Federation and other unions which come into contact with it in relation to work that is done in or around the stevedoring industry, the extension of the conciliation procedures as set up by Mr Justice Robinson may be of some assistance. The Minister would be aware, as the Parliament should be aware, that a number of unions have, on occasions, sat down to try to sort out whether, in fact, amalgamation may overcome these problems. One hopes that in the foreseeable future arrangements can be made between the unions which will avoid the sorts of disputes which have occurred in the past and which have lead to a great deal of disorder in industrial relations. These disputes are of no great benefit to the employees involved in them and they should be overcome by negotiation between the unions. Perhaps this direct availability of a conciliator for the ports throughout Australia could also be extended to those unions which are involved in such work.
It is, as has been reported by Mr Justice Robinson, too early to say how successful this system will be. We probably will have to wait a little longer to grasp the impact and effect of the conciliation system now being used throughout the stevedoring industry. In the material that is contained in the report of the working party there is a strong indicator that this is the sort of system that may work not only in this industry, where we have worked for so long to improve the industrial relations, but in other industries as well. I think that the report is well worth reading by all honourable members.
– by leave- I wish to inform the House of the appointment by the Governor-General of the Distribution Commissioners responsible for the preparation of proposals for the redistribution of the State of Western Australia into Electoral Divisions. Following the determination of the Chief Australian Electoral Officer, Western Australia is now entitled to 1 1 seats in the House of Representatives. The Commissioners for the Distribution will be Mr B. S. Nicholls, the Australian Electoral Officer for Western Australia, Chairman, Mr J. .F. Morgan, the Surveyor-General for Western Australia; and Mr F. W. Statham, Regional Director, Department of Housing and Construction, Western Australia. The appointments were notified in the Commonwealth of Australia Gazette on 24 April 1979.
Advertisements will shortly appear in the Commonwealth of Australia Gazette inviting suggestions in writing relating to the redistribution. These suggestions must be lodged with the Commissioners within 30 days of the date of the advertisement. Copies of the suggestions which are lodged with the Commissioners will be made available for perusal at the end of this period. The public may make comments in writing about the suggestions that have been lodged with the Commissioners during a further 14 days.
-by leave-The Opposition welcomes the move by the Government to hold this redistribution which will result in increasing the representation of Western Australia in this House from 10 to 1 1 seats. However, I want to say that the Opposition will be keeping the conduct of this redistribution under very close scrutiny because we have very firmly fixed in our minds the recent Queensland redistribution and the redistribution in Western Australia in 1977. In the first instance one has to recall that the redistribution in Western Australia in 1977 produced a result which left the Australian Labor Party winning only one seat out of ten- that is 10 per cent of the seatseven though we got 39 per cent of the vote on a two-party preferred basis. It seems that on that basis we were entitled to expect at least three seats out of ten, maybe four seats out of ten. This demonstrates that the distribution undertaken in 1977 did not reflect accurately in the number of seats won the appropriate support which the parties had in Western Australia. On that ground particularly we will be insisting that this redistribution reflects a much fairer basis of support for the political parties.
I might say in passing that it was intriguing to note that the boundaries of the electorate of Perth were almost identical with the suggestions which were made by the incumbent member for Perth, Mr McLean. The suggestions which he made to the Redistribution Commission in 1977 were totally incorporated in the proposals of the Commissioners. The report was accepted by the Government, of course, and it resulted in his electorate being almost that for which he asked. That enabled him to win with an increased majority.
The point is that the personnel of these Redistribution Commissions is extremely important. If we look back we find that two of the people who are going to conduct this redistribution were involved in the conduct of the 1977 redistribution. They are Mr B. S. Nicholls and Mr J. F. Morgan. Therefore the personality of the third member of the Commission is extremely important. What do we find? We find that the third member appointed on this occasion is the Western Australian head of the department which the current Minister for Administrative Services (Mr McLeay) administered only recently. He is the head in Western Australia of the Department of Housing and Construction.
If we look at the Queensland situation we see that the third person appointed to the Commission to conduct that redistribution was the suggested appointee of the honourable member for Mcpherson, Mr Eric Robinson. We know that he was the Divisional Returning Officer for the electorate of McPherson. We know of the trouble that the Government got into in that case. It seems to me and to the Opposition that the Government should have distanced itself, as far as possible, from the personalities involved in this redistribution in Western Australia. We find that one of the members of the Redistribution Commission is the regional head of the department administered by the Minister for Administrative Services, which, of course, is a statutory requirement. We find that another member is the regional head of a department that he administered until a few months ago. We must have some regard for the personal contact which this Minister has had with at least two members of the Commission.
There is another aspect to consider. We would have thought that Mr Nicholls was, to some extent, a tainted appointee. After all, it was Mr Nicholls who was the first person to propose that the name of the electorate in Queensland be changed under circumstances which led to the appointment of a royal commission to determine the way in which that name was actually changed. Although Senator Withers was held responsible for the change of name in the Queensland redistribution, we know from the evidence produced at the Royal Commission conducted by Mr Justice McGregor that it was Mr Nicholls who telephoned Mr Coleman and suggested that the name be changed in order to prevent embarrassment for the government. We say that Mr Nicholls may have acted with some impropriety in that matter yet the Government has appointed him to chair the redistribution in Western Australia on this occasion.
The third member of the Commission, over whose appointment the Government has the greatest discretion, worked directly for the Minister until a few months ago. In saying that I do not want to cast any aspersions about Mr Statham. What I am saying is that if this Government wants to be seen to appoint commissioners fairly and to appoint people who appear to have no interest in the matter, then it ought to have gone to much greater lengths to distance itself personally from the appointments.
It seems to have been an instance of gross insensitivity on the part of the Government to make these appointments. As we have the appalling situation which occurred in Queensland fresh in our minds, resulting as it did in the dismissal of the then Minister for Administrative Services, Senator Withers, it seems that the current Minister for Administrative Services should have dealt with the matter much more tactfully. I say to the Minister that we will be looking very carefully at proposals which come forward from this Redistribution Commission. We believe that the imbalance has to be redressed. The position which now exists, where the Labor Party, with nearly 39 per cent of the vote on a two-party preferred basis, has only 10 per cent of the seats, indicates a substantial measure of inequity in terms of the present boundaries. We think that the boundaries ought to be drawn at least to ensure that the representation of the Labor Partyindeed, that of any of the major parties in the State of Western Australia- is accurately represented in this House. I can say, therefore, that as far as the Opposition is concerned we will be looking especially carefully at the conduct of this redistribution and the commissioners to ensure that the result is much fairer than the result on the last occasion.
-by leave-I had not intended to speak on this matter but I had the misfortune to be listening to the broadcast in my office when the shameful political speech was made by the honourable member for Fremantle (Mr Dawkins). He started off by saying that as a result of the last electoral distribution Western Australia was left with just one member of the House of Representatives from the Australian Labor Party. I agree that this is a lamentable performance, but I think that instead of looking at the redistribution as the cause of that situation the honourable member ought to be looking at the candidates and the kind of policies Labor put to the Western Australian people. He might then find out the reason why the Labor candidates were slaughtered.
What really concerns me is the suggestion that I carried some kind of influence with the distribution commissioners in Western Australia. I would have thought that the honourable member for Fremantle’ would have done his homework before he started making those kinds of very serious allegations in this chamber. I certainly did make a submission, as did many others in Western Australia. The final result was vastly different from the proposals that I put to the commissioners. I am pleased to say it was much better than what I submitted. It is a shameful state of affairs when this gentleman can get up in this chamber and cast aspersions of the kind that he has. He cast aspersions on the integrity of leading public servants in Western Australia. Their records show that they conduct themselves in a fair and proper manner in discharging their duties. I think it does the honourable member no credit at all to speak today in the way he has spoken. I am not surprised but I am very disappointed.
Mr LIONEL BOWEN (KingsfordSmith) by leave- Redistribution is a most serious matter. There was a Royal Commission relating to a recent redistribution. As a result a Minister of the Government was removed from office. Let us make it very clear that there was clear and substantial evidence of impropriety. We on this side of the House still feel that the central figure involved was made the scapegoat for somebody else. In my own electorate boundaries were altered, not because of any submission by myself but because of a member of the Government making a submission. I agreed with the original proposal but it was subsequently changed because a member of the Government asked that my electorate be altered, and it was so altered. That is how unfair the situation has always been. The honourable member for
Fremantle (Mr Dawkins) is perfectly right in talking about Mr Nicholls in the terms-he did. He has a duty to perform. The Royal Commission evidence- as stated iri the Parliament- shows that Mr Coleman, who was the commissioner in Queensland, had received a telephone call from his Western Australian counterpart, Mr Bobbie Nicholls. He telephoned from Perth to say:
Frank, I don ‘t think much of your name of Gold Coast.
He said words to the effect: ‘Frank, I am sure you had better make it Fadden, Fadden, Fadden’. Why would a person from Western Australia be so interested to ring somebody in Queensland to suggest the very thing that ultimately caused this Royal Commission? He did it well before Senator Withers did it, as was reported in this House on 24 August 1978. I remind the House that Mr Nicholls is based in Senator Withers ‘s home State and, as an officer of the Australian Electoral Office, at that time would have been directly responsible to the senator as Minister for Administrative Services. I also remind the House that it was only three weeks later- I ask honourable senators to bear that in mind- that Senator Withers made exactly the same sort of representation to Mr Pearson, as a result of which Senator Withers lost his position in the Ministry. My colleague, the honourable member for Fremantle, is fully entitled to raise the propriety of the issue here. It is important that we get this issue before the public and alert the Minister for Administrative Services (Mr McLeay) who has a public responsibility and a duty -
– It is important that he get his facts right.
-The facts were perfectly right. They were supported by the Royal Commission. Evidence was given by Mr Coleman of the notes he made. It is important to ask Mr Nicholls in what circumstances was he entitled to make representations in respect of a change of name in Queensland. Was he not tainted- that was the word used- and was he not found to be guilty of impropriety by innuendo when his own Minister was sacked from the Cabinet? That is the issue. In fairness to Mr Nicholls he was carrying out ministerial instructions. If the instructions were improper his conduct in carrying them out as a public servant amounts to impropriety. The evidence on the record has not been rebutted. On that basis my colleague is perfectly entitled to say that on the face of it this is not going to be an altogether fair distribution if this sort of conduct continues.
MrMcLEAY (Boothby- Minister for Administrative Services)- by leave- I think it is unfortunate that this atmosphere has. been allowed to creep in to what I suppose we have to call a debate. When redistributions and electoral matters are discussed, always some people will say they are unfairly treated or disadvantaged by the particular redistribution. I deplore the attack on people whom I regard as outstanding Commonwealth public servants. I do not think anyone has any right to attack them here or anywhere else. The chairman of the Distribution Commission is almost’ always automatically the. chief electoral officer for the State. The gentleman under attack was the chairman in the last redistribution in Western Australia. So far as I am aware that is the situation in all the other States. The second person is the Surveyor-General. Individuals are not actually selected but positions. These two gentlemen just happen to hold those positions. The third appointment in the Western Australian redistribution, is that of Mr Statham who is the Regional Director of the Department of Housing and Construction, which was formerly the Department of Construction. I previously held the Construction portfolio.
I personally resent the innuendo- I think it is more than an innuendo- of the honourable member for Fremantle (Mr Dawkins) who introduced this element into the debate. It may interest him to know that I have not spoken to Mr Statham for a year or so. I do not remember how long it has been.
– Who recommended him?
– It is not a question of who recommended him; it is the quality of the man. I do not think any honourable members have a right to attack this eminent public servant. J only wish that the honourable member for Hughes (Mr Les Johnson) were in the chamber. Mr Statham was a regional director for the Department of Construction when the Australian Labor Party was in government. He would be well known to that honourable member, to many of the Ministers on this side of the House and previous. Ministers from the other side. There would be no one better qualified to hold that position in the. whole of the. Western Australia Public Service. We had to get somebody else because the previous person who held that position in the previous redistribution was not available. I suspect one of the reasons was the personal attack that he anticipated might occur. I reject any suggestion that we do not have completely impartial, first-class public servants to do this job. I trust that when the maps are finally published honourable members opposite will at least be reasonable in their criticism. If it is of any interest to members on both sides of the House I will table the analyses of the last redistribution proposals which were the subject of this discussion this afternoon and which are an attachment of the McGregor Royal Commission report. I think the analyses, both the statistics and the political comment thereupon, will refute the innuendoes put forward by the honourable member for Fremantle.
-Mr Speaker has received a letter from the honourable member for Blaxland (Mr Keating) proposing that a definite matter of public importance be submitted to the House for discussion, namely:’
The threat to the national interest by State parochialism and division between the Deputy Prime Minister and the Prime Minister over mineral export policy.
I call upon those members who approve of the proposed discussion to rise in their places.
More than the number of members required by the Standing Orders having risen in their places-
-Australia is the poorer for the continued squabbling within the Government, the coalition parties and the Federal branch of the Liberal Party of Australia over the question of mineral export guidelines. It has damaged Australia ‘s trading posture, its position in the world and its position in the eyes of major countries which trade with us. The squabbling is due directly to the mismanagement of the Minister for Trade and Resources and Deputy Prime Minister (Mr Anthony) and the disloyalty of the Prime Minister (Mr Malcolm Fraser) to that Minister. It is more in sorrow than in anger that I look at the Minister today. When I became a member of this chamber 10 years ago he showed promise as the boy wonder of the National Country Party of Australia and of the coalition parties, but now I see him as a Minister who cannot cope with his portfolio and who cannot win in Cabinet. He takes every opportunity to go overseas to avoid facing his responsibilities. He went overseas the day after he dropped the guidelines policy for mineral exports so that the fracas that followed would occur in his absence.
Let us look at the history of this guidelines policy. This Minister made many attacks upon the export control policy of the Labor Party when it was in office. He said that it was a socialist policy invented by the Minister for Minerals and Energy, Mr Connor. We now see two policies. The present Government kept the export control policy and superimposed on it a guidelines policy. So we have two policies currently operating. What is the force of either? The export control policy gives the Minister the right to veto contracts after they have been negotiated. The guidelines policy is a policy which permits intervention in the negotiation period and before a fait accompli is reached. It is this policy which the Minister introduced. It takes the Connor policy further in terms of government intervention. It not only adopts the whole spirit of the Labor policy but also goes further to intervention in the market place.
Why were the guidelines established if the National Country Party and the Liberal Party were opposed to creeping socialism, as they called it in the Connor years? They were established because the Minister for Trade and Resources bungled the iron ore negotiations in 1978. He knew that the Nippon Steel Co. and other Japanese steel companies would climb right into the Australian coal producers during the coal negotiations in the latter part of 1 978. So the Minister injected the mineral guidelines policy to try to save face. He put it in a heavyhanded way; he imposed it in a threatening and overt way; and he did so in a buyer’s market. He sought to impress the Australian Government’s pricing policies on the course of mineral pricing in the middle of a buyer’s market. Why? The answer simply is that the Government had let Japanese trade relationship deteriorate, so much so that there was virtually no trust between the Japanese steel mills and Australian producers.
The Government and everyone in Australia knew that world steel production was turning down in the world depression and that Japanese steel interests were having difficulties taking commodities from Australia. Instead of looking at this situation and sewing up a compromise the Government allowed the whole system to deteriorate. These threatening guidelines were then introduced by the Government to try to get out of that situation. No doubt a cartel is operating in Japan. It would be foolish to suggest otherwise. I accept- in fact I tried to force the idea down the Minister’s neck when we were in governmentthat the Japanese steel companies operate not in a process of fair competition but on a basis of competition between sellers and no competition between the buyers. Therefore a free market does not operate. Even with the guidelines, the Minister still bungled the coal negotiations. He is just one great big bungler. He just carries on making mistakes.
Let us look at the situation concerning Kembla Coal and Coke Pty Ltd, which was a company that was allowed to escape from the guidelines. It negotiated a contract at $1.50 per tonne under the guidelines price for 8 million tonnes over two years. That meant that the company lost $24m in revenue in that period. On the basis of company tax, the Commonwealth lost $ 12m of revenue. The rest of the coal companies in Australia suffered a similar cutback. So the national interest was not protected. Even with the guidelines policy, the Minister could not stand his ground in the face of pressure from the Japanese steel mills. The Japanese steel mills even threatened not to send ships to the South Coast to pick up the tonnage. Yet this Minister is supposed to be protecting the national interest.
I will say this for the Minister He put on the guidelines at the request of many companies in the iron ore area and those companies have since laid doggo when attacks have been made upon him. I know that to be the case. I was told that by the companies themselves. But those companies will not now say publicly that they made such a request for fear of reprisals from the Japanese steel mills for so doing. Of course, they are not game to come out and do so with that lunatic Western Australian Premier or that old criminal, the Queensland Premier, breathing down their necks. The result is that those companies now will say nothing. They are letting the Minister for Trade and Resources take the heat from the Prime Minister. The Prime Minister, in a characteristic display of disloyalty, ambushed his deputy amid the hysteria of the meeting in Perth of the Federal Council of the Liberal Party. He held a Cabinet meeting in Perth at which he, together with other senior Ministers, dumped the Deputy Prime Minister and deleted iron ore from the guidelines policy. But, to add insult to injury, the inevitable insult was that when a proposal was put to that Federal Council the Prime Minister voted with other people in the assembly to say that the guidelines policy was unacceptable and impracticable and should be withdrawn. That is an example of the kind of loyalty which is displayed by the unprincipled man who is the Prime Minister of Australia to a person who is a senior Minister in his Cabinet and his deputy in the coalition. The Prime Minister voted for a proposition which stated that his deputy’s policy was unacceptable and impractical and should be withdrawn. We know that the Deputy Prime Minister discussed this policy with the Prime Minister, even if he did not discuss it with
Cabinet in the first place, and that subsequent discussions were held. After launching the guidelines policy the Deputy Prime Minister took a trip to China. During that trip the Minister for Special Trade Representations (Mr Garland) sent a letter to the companies saying that the guidelines policy was only a draft policy. That was another display of disloyalty by the Prime Minister to his deputy. We can add the name of Anthony to the list of Lynch, Withers, Robinson and other senior Cabinet Ministers who have been knifed by the Prime Minister in a display of disloyalty and let down. It is no doubt a rogue’s gallery but at least they deserved the loyalty of the man who is the Prime Minister.
We have seen a complete split in the Government parties, a complete split between the coalition partners of the National Country Party and the Liberal Party, we have seen continuing attacks by the Prime Minister upon the National Country Party and we have seen the splitting of the resources portfolio with the energy section being given to the honourable member for Bass (Mr Newman), who became the Minister for National Development. The influence in the coalition of the National Country Party is being depressed and not a line has been written about it in the Press. At one time we saw some sensible and decent investigative reporting of these matters in weekly columns by members of the Press Gallery. Now we see nothing. This goes on and on. There have been massive splits in the Government and they have not seen the light of the day.
The ultimate insult that the Prime Minister could pay to his deputy was to say that he should dance to the tune of the Premier of Western Australia, Sir Charles Court. That Premier presided over the most disastrous commercial year in Western Australia’s iron ore history. I refer to 1978. There were cuts in prices and cuts in tonnage. The Premier persists with the idea that there should be a free enterprise policy and that there should be no government intervention despite the fact that the iron ore companies he is supposed to look after are being driven to the wall. He wants to deny to the Australian national government, whether Labor or Liberal, the prerogative of price negotiation on resources. Sir Charles Court wants to abrogate the Commonwealth’s constitutional powers in the interests of what he calls free enterprise in respect of trade. He wants similarly to abrogate the Commonwealth’s constitutional powers over off-shore waters. He took Labor legislation covering offshore waters- the Seas and Submerged Lands Act- to the High Court. His case was ceremoniously thrown out of the High Court. What he could not do in the courts he wants to do through shabby Liberal Party backroom politics, and the Prime Minister wears it. The Government is still mucking around with compromises over off-shore legislation so that the Premier can manage the tenement areas offshore of Western Australia.
Let me make it clear that the Opposition, when in government, will repeal the State Petroleum (Submerged Lands) Act and declare a mining code to complement the Seas and Submerged Lands Act. We will manage the off-shore areas. Sir Charles Court can just eat his little heart out on the way through. If the Deputy Prime Minister and the Prime Minister stood their ground and put the Premier in his place they would be so much the better, and so would the national interest. Instead of that we have this crude cargo cult mentality displayed by Sir Charles Court where he must deliver the cargo to Western Australians. The cargo is another iron ore mine. Honourable members will remember his attacks upon Mr Connor as Minister in 1973-74 because there were no more iron ore mines. Six years later there is still not one more mine. Why? Because there has been no demand.
The same reason was given in 1 973-74 but in those days it was said to be all Mr Connor’s fault. Now there are no iron ore mines and the cargo has still not been delivered. Of course, it would not occur to Sir Charles Court to set up a manufacturing industry in Perth to try to employ people. He wants only large extractive industries. He does not worry about the employment base of his State. There was a time when we could have said in terms of the earlier development of the Pilbara, the rational development of a few large productive, economic mines in Western Australia, that Sir Charles Court played a useful role; but he has degenerated to the point where he is a national menace. The national Government should put him in his place. That means that the Prime Minister should withstand the pressures of the Liberal Party and abide by his Cabinet’s solidarity with his own deputy.
However, we see a constant squabbling which is viewed by other people around Australia. Apparently Sir Charles Court believes that foreign companies operating in Australia and companies owned by foreign governments operating in the resource area of Australia should have power over prices that is denied to the Australian national Government, and that the Australian national Government should be denied powers which are given to the corporate creatures of foreign governments. This is in the so-called policy of free enterprise. Even so, we have watched the Deputy Prime Minister wriggle and twist for a week under the pressure. Finally the capitulation came on Sunday night in his statement from which I will read. He said:
There will be discussions with the States which will’ explore all aspects of the matter fully and without prejudice in the interests of ensuring a genuine consideration of the bases of existing policies.
Why would he negotiate with the States after what they have done to him? He continued:
If examination shows that policies need modification or change they will be changed.
In other words- ‘If you want the policy you can have it, I will not stand my ground any longer’. He probably believes that with the Connor policy still in place he can fall back on that to veto contracts without the guideline policy. Again the rot sets in during negotiations and he knows it. He should stick to the guideline policy as the right policy for Australia and not sell it down the drain. On the same night the Prime Minister sent a’ telltale telex to Sir Charles Court which said:
The further use of Commonwealth powers will be finally decided only after those discussions have taken place.
No doubt he has pressured his deputy, the Leader of the Country Party, into releasing his statement. They have already taken iron ore out of the guideline policy. The Deputy Prime Minister makes a big thing out of exempting antimony and tin and other commodities which are traded on the London metal exchange, but they do not matter in terms of this debate. It is the big bulk commodities which. we sell virtually by private treaty with Japan that matter. This policy is built around Japan. It deals only with the major traders of bulk materials. In that respect the Deputy Prime Minister has failed to. stand his ground. He has let down the interests of Australia and the interests of his own party within the coalition. He has done a damnable thing for this country.
We on this side of the House believe that the export control policy and the guideline policy are correct. If administered sensibly and flexibly and not dogmatically in a climate of conducive relationships with Japan they can be very effective policies, and ones which should remain in this country. But what we have seen in the last couple of days is nothing short of a sell-out by the coalition parties, by the Deputy Prime Minister and his Department to the Liberal Party, to Sir Charles Court, to the parochial interests, of Australia and to the States, who believe only in getting new projects started at the risk of all existing projects on the basis that the squabble should be patched up in the Liberal Party and bows made to the notional slogan of free enterprise when no such free enterprise association exists. Shame upon the Deputy Prime Minister for being part of such a shabby compromise. He should stand his ground, put Sir Charles Court in his place and make the Prime Minister honour the concept of Cabinet solidarity.
– The honourable member for Blaxland (Mr Keating) is obviously having a lot of fun today with the motion that he has brought before the House. He has weighed in very heavily with party politics ih trying to capitalise on the circumstances of the last few weeks. It would have been effective but his argument has not remained consistent throughout; nor has it been in line with some of the statements he has made over the past few weeks. He along with other people has tried to make a lot out of the part taken by the Prime Minister (Mr Malcolm Fraser) in the debate in the Liberal Party’s Federal Council in Perth on the weekend before last. It has been suggested that there was something of particular significance in what the Prime Minister said or did not say. I and my colleagues fully understand the tremendously difficult situation that the Prime Minister was in during that meeting. All honourable members in positions of leadership encounter situations in which they must tread a very difficult path between conflicting views. I am not terribly concerned about what the Prime “Minister did or did not say. We fully understand the difficulties he faced on. that particular occasion.
I have been around this place quite long enough to be able to look after myself. What does matter is that we understand between us and I can assure the Labor Party that if it-is hoping to see a division between us it is going to be very disappointed. I remind the House of what the Prime Minister said a few weeks ago to this House. He said:
I give an absolute commitment to this House that the Government will pursue policies designed to maximise the benefits for Australia from the export of its raw materials and resources.
This is precisely .my attitude. The Prime Minister and I and the Government as a whole are determined to work to devise arrangements in cooperation with the States ‘.and industry that will serve Australia ‘s interests.
In some respects the reporting of this matter by the media has been appalling. There has~been a complete failure on the part of some journalists to understand the difference between export controls as such and the procedural guidelines introduced last October. This lack of understanding has led a number of people to make assertions and reach conclusions which are very wide of the mark. I distinguish between news reporting and the editorial comment which some newspapers have made.
I have seen editorial comment which has been based on a clear understanding of the fundamental issues involved. The result of that understanding has been that sound conclusions have been drawn in most cases. Generally the view has been taken that the Australian Government has a responsibility to ensure that Australia’s interests are protected in the sale of our major mineral resources. What the Government is keen to do in consultation with the States and in continuing co-operation with industry is to establish the most effective and appropriate methods of fulfilling that responsibility. Let us look more closely at the philosophy and the rationale behind export controls for any commodity, not just minerals. The Commonwealth Government has constitutional authority to exercise control over exports. The Commonwealth must have the ability to exercise control over exports to meet the responsibility to protect the national interest. That is a paramount requirement of the Commonwealth Government and I hope that it is unquestioned.
The Commonwealth and the States have important interests, important roles and important responsibilities in all commodities but particularly in the mining and resource areas. While those things relate to different aspects of the industry and to different aspects of the national interest it is vital that all governments work in cooperation to see that the national interest is protected. The Commonwealth cannot abrogate its particular responsibilities to anyone else.
-Order! The honourable member for Blaxland (Mr Keating) has made his speech and it was received in quietness. I ask him to return the same courtesy to the Deputy Prime Minister.
-When I speak of the national interest, what do I mean? I do not mean, as many people seem to think, that I see national interest simply in terms of the price of a tonne of iron ore or coal. Certainly we must make sure that our resources are not sold off too cheaply. AH Australians have an interest in seeing that resources are sold at prices which adequately reflect their worth. There is no doubt that situations can arise in which resources can be sold at less than their real value, and in those situations, there must be a capacity for the national interest to be protected.
Another aspect of national interest lies in the need to ensure that we can play our part in making international commodity agreements or national marketing schemes work properly. We need export controls to enable that to happen. We must be able to protect the Australian environment, and in some cases we need controls to do that. Again, for strategic reasons, for defence reasons, we need to exercise control over some exports. Similarly, we need to ensure adequate supplies of materials for domestic requirements or to guarantee adequate supplies of basic raw material for existing refineries or smelters. For all these reasons, the Australian Government must be able to exercise control over exports. What is under discussion and what we will be discussing further with the States is what is required in the mineral area to ensure that the national interest is protected in relation to commercial considerations.
We now come to the question of the guidelines that I introduced in October last year. It has been most unfortunate that there has been so much misunderstanding about these guidelines and especially about the way in which they differ from export controls, as such. To many people, the terms ‘export controls ‘ and ‘guidelines ‘ mean exactly the same thing. Of course they do not mean the same thing. Export controls have existed for many years and for the reasons that I have just mentioned. The October guidelines simply said, in essence, that companies, instead of seeking export approval after negotiating a contract, should consult with the Government and obtain approval of the terms and conditions to be aimed at before starting negotiations. Why was it necessary to do this? As I have said on many occasions, and as the Prime Minister has said, the guidelines were introduced at a time of particular difficulty. In my statement to the House on 24 October last year, I said:
That is the background against which I introduced the guidelines in October. They were designed to strengthen the negotiating position of Australian mineral exporters in a situation of particular difficulty. They were designed, and this is most important, to bring about a degree of co-ordination amongst our exporters so that in these particular circumstances they could better respond to the co-ordinated buying methods of their customers. The guidelines were designed in these circumstances to better protect Australia’s interests and to produce a more effective operation of export controls in the national interest. In the iron ore negotiations carried out under the guidelines, very satisfactory results were achieved. The negotiations were completed smoothly, with real goodwill and in record time. The annual negotiations for iron ore and coal were concluded quickly under these arrangements and on the whole, the outcome could be thought of as satisfactory, particularly when the very difficult world situation is taken into account.
I say again that the guidelines were introduced to meet a particular situation. I have also said on a number of occasions that if the market situation were to change, if pressures on our exporters were to ease, then there would be no need to have the guidelines operating. Certainly I have never believed that the guidelines should operate if there is no need for them and I have made that clear on many occasions. In fact, I do not give a tinker’s cuss whether we have a particular set of guidelines so long as we have a system that works and that properly and effectively protects Australia’s interests. If there is a better system, then let us have it. If there is a better way of protecting the national interest, then let us do it that way. The whole purpose of the discussions that we will be holding with the States is to work out the best way of protecting Australia’s interests.
I can assure the Labor Party that whatever the outcome of the present consideration of this matter, this Government will not tolerate the kind of approach that was taken by the Australian Labor Party when it was in office. Under Labor the national interest was betrayed. Mineral development in this country was completely sabotaged. As soon as I took over the portfolio of trade and resources after the 1975 general election, I acted to get rid of the heavy-handed, autocratic doctrinaire system that had operated under Labor. That was a system which saw direct government involvement, with matters reaching the stage where, on one occasion, the Labor Minister for Minerals and Energy actually went to Tokyo and conducted the negotiations himself. Under Labor, the normal treatment when commercially negotiated contracts were presented to the Government for approval was that the Australian exporters were told: ‘Go back and do better’. There was no consultation or guidance, other than this directive. At that time, nearly every shipment of minerals leaving this country had to have individual approval. The approval virtually had to come from the Minister’s office. This led to terrible delays, to confusion, to frustration and to absolute annoyance on the part of the Australian mining industry. I put a stop to all that. I then removed export controls from a large number of minerals where there was obviously no need for such controls.
– You have done wonders. You have killed them.
-Order! The honourable member for Blaxland will cease interjecting.
– Last year, I proposed that export controls should be taken off a lot more minerals and mineral products. I could see no reason for their remaining under control and rather than have the Commonwealth make a unilateral decision, I arranged that we consult the industry and the State governments to see whether they had any objections to the controls being removed. As a result of those consultations I am now in the process of removing export controls from a significant number of commodities.
– All traded on the London Metal Exchange.
-Order! I warn the honourable member for Blaxland.
– Discussions are continuing about other commodities and I hope to be able to remove controls from them too, in the near future. The Prime Minister in Perth last Monday week stated:
It is important that Commonwealth and State powers in the minerals area be used in concert to maximise the benefits from new initiatives and existing activity in major resource developments.
He also said:
There is no challenge either to the Commonwealth’s constitutional authority in export controls, or that they should be exercised in certain circumstances, for there can be important national interests at stake.
What evidence is there in these statements of a difference of opinion between the Prime Minister and myself? We are both dedicated to serving the interests of Australia. We both recognise the tremendous importance to Australia of the mining industry and we are both determined to see that the policies that recognise the industry’s role, its needs, the contribution that it is making and will make to this nation’s well being are followed.
This Government has done more to help the Australian mining industry than any other government and I take great pride in that. I take great pride in the expressions of goodwill and appreciation that I have received from the mining industry as a result of my efforts to see that policies appropriate to the industry’s needs and to Australia’s needs are followed. I am pleased with the reaction from the Japanese steel mills. Only three weeks ago they told me how satisfactory they felt the negotiations had been this year. They wanted me to know that. The whole of my efforts in politics are devoted to doing all I can to seeing that Australia’s agricultural and mining industries, which are great primary industries, are recognised properly; that their importance is recognised and that the Government’s policies reflect that importance. In this matter of protecting Australia’s interests in the sale of our great mineral resources, I assure the House that the Commonwealth, in consultation with State governments and in cooperation with the mining industry, will do all it can to see that the national interests are protected.
-Order! The Minister’s time has expired.
-There can be no argument with the proposition that we need desperately to ensure fair world prices for our mineral and energy exports. The Federal Government should act in the national interest and not as a tool of multinational mining companies or the Japanese steel mills. It should not be steamrolled by State parochialism or by political australopithecines such as the Premiers of Western Australia and Queensland. In the past two weeks we have witnessed the most amazing disunity and confusion within the Governmnent coalition. It has culminated in the Prime Minister (Mr Malcolm Fraser) publicly stabbing his own deputy. We are yet again forced to condemn the coalition for reneging on its promises. In 1975 the coalition policy statement said:
The Coalition would ensure that all mineral exports were monitored and surveillance would be exercised so that domestic requirements were met and there was a proper return to distributors and the nation. Export controls would be maintained over vital areas.
Now, to placate State colleagues, the Prime Minister has forced the Liberal Party to agree that the minerals export control guidelines announced last October by the Deputy Prime Minister (Mr Anthony) were contrary to Liberal philosophy, unacceptable, impractical and should be withdrawn. There is much talk about the need for a bipartisan approach to energy policy. There is no hope of bipartisan approach while the Government causes its Deputy Prime Minister to state: ‘The position is many companies have only their own interests at heart, rather than the national interest’. Everyone is bewildered by the Cabinet circus on export guidelines. The Deputy Prime Minister has just said that there was no split between him and his colleagues. Australians have dumbfoundedly watched the coalition spectacle of the last few weeks. It has been an arena in which clowns and prima donnas have participated to savage this country’s natural resources.
Two weeks ago the Deputy Prime Minister presented a Cabinet paper arguing that controls should operate in their present form. At the Liberal Party Conference in Perth, the Western Australian Premier moved in and said that there should be a minimum of government interference in the normal commercial dealings of companies. He said that export guidelines should be withdrawn. Amazingly the Prime Minister supported him. After much playing with words, the Liberal Party Conference produced a resolution which appeared to exclude iron ore from the present policy and which referred to Commonwealth-State discussions, no doubt aimed at eventually burying the Deputy Prime Minister. However, in Sydney last Friday the Deputy Prime Minister made a comeback. He said that controls would remain on iron ore, coal, bauxite, alumina, gas and uranium and that he would not sit back and allow the country to be raped and Australia turned into the biggest quarry in the world. Yet today he said that there was no split between him and his colleagues.
To complete the charade, yesterday Australia ‘s chief clown, the Queensland Premier, stepped into the arena. He said that the Anthony controls were a flow-on from the Connor days. That is true. But he said that perhaps he could talk to the Commonwealth if there were a shortage of some kind of mineral. Fancy the Premier of Queensland speaking in such a vague, stupid way. When asked why he was quieter than Court on the matter he said:
I had an assurance from the Prime Minister long ago. I know what will happen.
Finally came the capitulation of the Deputy Prime Minister to all this pressure. Perhaps he is to be pitied rather than blamed, given the extent to which he has been undermined by his own Cabinet and his colleagues. Nevertheless, we must blame him. He is the responsible Minister. The buck stops with him. He has capitulated to the Prime Minister, the larger mining companies and the parochialism of Queensland and Western Australia. Yesterday the editorial in the Australian, a premier national newspaper, said that overseas buyers must think the nation is being run by fools. It stated:
The Federal Government is utterly confused . . . The public is confused too.
It is no wonder!
– So are you.
-I am not confused but the honourable member’s Cabinet is confused on this matter. The economy is in very poor shape. We cannot afford to sell Australia’s resources on the cheap. The Budget deficit will blow out enormously. Inflation and interest rates are on the rise. We face a total deficit in the current account of over $3 billion this financial year. Already the Government has borrowed over $4 billion in the last 3 years to. partially compensate. Australia must get a fair return for its vital exports of raw materials.
Let me turn to some specific exports such as iron ore. Last year Amax Exploration (Australia) Incorporated and the Mount Newman Mining Co. Pty Ltd accepted price cuts of US two cents per ferric unit. The Deputy Prime Minister said that this was not fair and reasonable at the time. Out of the blue he announced his new guidelines. The recent negotiations with the Japanese for iron ore were less than successful. Brazil got the better of the Australian producers with a 9.5 per cent increase. Hamersley Iron Pty Ltd averaged an increase of 7.9 per cent. The Mount Newman increase was 6.8 per cent. The Western Australian iron ore producers, aided by the Premier, are still not acting together. We heed stricter, not looser, supervision in iron ore negotiations. There is already an excess capacity of 16 million tonnes per annum in the Western Australian iron ore industry. Diversification of - sales should mean more sales but we should carefully monitor Court’s development and free market mania lest existing producers are disadvantaged in a CourtJapanese axis of free marketing.
Coal export negotiations can best be described as resembling a mad hatter’s tea party, despite the so called parameters. Predictably the Utah Development Company exploited the new system to achieve an acceptable average of $44.60 a tonne in its last contract, but when the New South Wales negotiations started the 1 1 major producers soon were at each others throats. The Deputy Prime Minister’s lower guideline was $47 a tonne. One South Coast company negotiated $45.50, $ 1.50 lower than the guideline and $3.80 lower than the old price. At that stage the Minister should have conferred with all the other companies rather than allow an advantage to one errant company. In the end the breach was made and all companies accepted less than the Minister’s guidelines. As the shadow Minister said, over two years the loss will be $24m on 16 million tonnes of New South Wales underground coal. Two companies alone on the South Coast will lose $4.5m a year so that one of them, Conzinc Riotinto of Australia Ltd, can gain an extra tonnage of 400,000.
Given the attitude of Liberal State governments and the Federal Liberals, New South Wales underground mines will have long term disadvantages in competing with the Queensland open cut mines for coking coal markets. Queensland has surface coal and efficient rail transport sytsems. It is also closer to Japan. The Australian coal industry needs rationalised policies, embracing exploration, development of new mines, surveillance of export pricing and tonnage to ensure not only the best return for exports but also to provide for our own long term needs. I am astounded by predictions that New South Wales might export 1 13 million tonnes of coal by the year 2000, including 50 million tonnes of coking coal. If we export at this rate, in 20 or 25 years there will be serious shortages of coking coal in strategic areas, such as the Port Kembla steel making centre. If Australia goes into coal liquefaction technology huge reserves of cheap coal will be required. To produce 50 per cent of Australian oil requirements by liquefaction, we would need to boost coal production by 60 per cent. That is equivalent to about 8 huge open cut mines the size of the biggest Utah mine in Queensland. If the Queensland Premier has his way, just when Australia needs cheap open cut coal, extraction costs will rocket as we produce from deeper coal seams. The guidelines on iron ore, coal, bauxite, aluminium and gas must continue. But the guidelines are too much for the Prime Minister and the small minded Liberal State Premiers.
-Order! The honourable member’s time has expired.
– It is very disturbing to hear a debate such as today’s, not because of the content of the Opposition speakers’ statements but more for the manner in which they were presented. It seems to me that the totalitarian dictatorial approach that the Opposition generally favours in these matters is now being reinforced by a speaking style which depends so much on personal abuse rather than on fact. The standard of debate in this House is being seriously jeopardised. It is extraordinary that in debating such a matter, one which is regarded by the Opposition as being a matter of public importance, we hear such edifying terms as ‘clowns’ and ‘prima donnas’. They came from the honourable member for Cunningham (Mr West). I suppose this is in the tradition of the former honourable member for Cunningham who referred to our exporters as ‘mugs ‘ and ‘hillbillys’. Those who sit opposite form a highly sophisticated group. They have gone from calling people ‘mugs’ and ‘hill-billys’ to ‘clowns’ and ‘prima donnas’.
We had the gentleman who presents himself here as the alternative Minister for Trade and Resources and who would be involved in dealing with State Premiers in, one would hope, a friendly and reasonable way, referring to one of them as a criminal and another as a lunatic. Is this the way we would get friendly co-operation between the States under- a terrible thought- a Labor Federal government? This is a repetition of the exact style of dictatorial assault on the independence of States that was such an offensive part of the Labor Government- a style which was described as ‘Connerism’- the former export controls. This style is probably the most awful thing revealed in today’s debate. It is a style of hatred, of division and of contempt for people who have a proper role to play in developing this nation.
I want to stress that today’s debate does not relate to whether or not there should be export controls because they have been there for some time. This whole discussion- the discussion to which Opposition speakers, when they were not undertaking personal abuse, referred to in passing- relates to whether or not there should be export control guideines. In other words, it is a discussion on the timing of when the Government should take a decision about export contracts in these key areas. Obviously under the old Connor system there was scope- which was exercised, I might say- for direct governmental intervention to the extent that the then Minister went and personally abused the Japanese rather than doing it indirectly. That of course was a great way to succeed in the long run if one wanted to get the Japanese so off-side. The Japanese are now continuing to try to penalise the South Coast coal mines in my electorate because they consider that they were partly responsible for, or somehow involved in, the Connor dictatorial approach to trading with them.
The present draft guidelines are there to prevent a’ situation in which governments could be blackmailed, and blackmailed very simply. When there is a market downturn, as there has been in the coal industry, there could be a situation in which, when approval for export comes after the event, as occurred under the old system, after a contract had been negotiated a coal mine could come to the Government and say: ‘We wish to have this price approved ‘. The Government could say: ‘No, it is too low’. As a result the coal mine could sack all of its employees and say that it was the Government’s fault. The whole purpose of these guidelines is to establish first the rules within which the whole of the industry operates so that- and this is the essential pointthere is not a dictatorial insistence by any autocratic Minister about what the price should be. It is in fact a concept of negotiation in which all that the Federal Government is doing is backing a private cartel. That is what it is all about. There is a buying cartel in other countries. There has to be, I believe- and the Government certainly maintains this position, as it has ever since it was elected- some protection on the part of the Government of the competitive mining and processing firms which are endeavouring to sell into this cartel dominated market. The only discussion is the way to succeed; the way to do that best.
This Government’s policies are only supportive of private industry, not dictatorial to it. That is the essential difference between the Labor Party’s policy and ours. I can understand State Premiers looking at these guidelines and saying: This might be quite acceptable while there is a government which is responsible and adopts the approach that this Government adopts and simply seeks to back the industry in this area; but if it were replaced with a Labor government there is no doubt that there is a risk that under these guidelines an authoritarian dictatorial Labor government could make things difficult for the States’. That is why I believe that the Government was absolutely correct and was acting in a proper manner by insisting that these guidelines would be draft guidelines and would be available for discussion with the States and with industry. The whole concept is to be supportive of industry, not antagonistic or dictatorial towards industry. Under this Government it is not a question of the Government fixing prices. It is a matter of the Government and industry consulting together to establish reasonable prices.
We all know that many of the foreign dominated corporations involved in the Aus: tralian mineral industry cannot be involved in private cartels for legal reasons. The only way they can be involved in getting together to combine against a united buyer is under the aegis or the protection of a governmental structure. It is recognisable that there are problems on both sides; that State Premiers are desperately worried about the manner in which these guidelines could be used if ever a Labor government were to get back into office and maintained the sort of mailed fist that existed under the previous government when Mr Connor was the Minister. I am concerned that there could well be a mailed fist here today. We have seen that mailed fist, not under a velvet glove but under a natty gent’s velvet jacket.
I stress that these guidelines are, as the Minister for Trade and Resources (Mr Anthony) said, not necessarily to be exercised permanently. The whole purpose of these guidelines is simply to ensure that at a time of difficulty the Australian industry will not, as the Minister said, get raped. Let me examine the extent to which the alleged concern of many sections of industry and the alleged confusion exists. I accept that the honourable member for Cunningham can be very easily confused. We should recognise that there is no confusion in the mind of, for example, Mr Robert Marcus, the Vice President of Alumax. Last November he was reported as saying that he would not invest in Australia while the guidelines operated. A couple of weeks ago he announced that he is about to put in a $5 00m smelter in Australia. Why did this happen? I can only suggest that perhaps it is because people are starting to understand what it is all about, instead of getting as emotional as he did at the time and instead of getting perhaps as vicious as members of the Opposition did today. This Alumax decision is on top of the major expansion announced for this industry, and bear in mind that alumina comes under the export guidelines.
Just look at the expansion in this industry which allegedly is in confusion. There is the $500m Alumax smelter proposed for New South Wales. There is the $350m Alcoa of Australia Ltd smelter in Victoria. There is the $200m Alcoa refinery at Wagerup. There is the $540m Comalco Ltd smelter at Gladstone. There is also the Alcan of Australia Ltd smelter extension at Kurri Kurri. In other words, the best part of $2,000m is being spent on expansion in one industry. The mining industry as a whole expects a rise of 32 per cent in its investment in this year. All governments involved- State governments as well as the Federal Government- have the best interests of this nation at heart. None would accept the dictatorial bullying both of overseas customers and Australian producers which characterised the Connor era.
The present discussion is on which is the best way of ensuring the proper exercise of market forces so that all Australian producers get as good a return as the market allows, recognising the cartel buying arrangements in most export situations. Of course there are many problems involved in getting a system that does not give a Federal government dictatorial powers such as were used under the Connor regime while at the same time protecting the best interests of the Australian people. There are many different views about the best way to achieve this objective. That is why the Government has been involved in such widespread discussions on the draft guidelines.
-Order! The honourable member’s time has expired. The discussion is concluded.
-I claim to have been misrepresented. I wish to make a very brief personal explanation. It relates to the debate which occurred following the statement made by the Minister for Administrative Services (Mr McLeay) on the forthcoming electoral distribution in Western Australia. The honourable member for Perth (Mr McLean) alleged that I had misrepresented him and that I had not correctly stated the basis of his submission to the distribution commissioners. His proposals were that the subdivision of Menora should be included in Perth and that the subdivision of Lockridge should be taken out of Perth. Amongst other things, the recommendations of the redistribution commissioners included just those proposals. I seek leave to have incorporated in
Hansardthe submission of the honourable member for Perth, together with the proposals of the commissioners as they related to the Division of Perth. I have checked with the honourable member for Perth and he has no objection to their being incorporated in Hansard.
The documents read as follows-
Parliament of Australia House of Representatives Parliament House Canberra, A.C.T. 2600 Telephone 72 1211 24th May, 1977
The Chairman, Distribution Commission, Australian Electoral Office, 5 th Floor, Wapet House, 1 2 St. George ‘s Terrace, Perth, W.A. 6000
I wish to make a brief submission regarding the possible redistribution of boundaries between Federal electorates in Western Australia.
I represent the electorate of Perth in the Federal Parliament, and although I have views on many aspects of the way in which the boundaries of the seat of Perth are drawn, I wish to confine my remarks primarily to two obvious anomalies.
The first and most serious anomaly relates to the exclusion of the Menora sub-division from the seat of Perth. This subdivision, which until 1 974 was part of the Perth seat, is now a part of the Stirling electorate.
Historically, this sub-division has always belonged to the electorate of Perth, and, geographically, the absence of the Menora sub-division creates a very irregular incision into the western boundary of the seat. I have found that this disrupts the community of interest which exists in the suburb of Mr Lawley, and creates a certain amount of confusion in the minds of many residents of this area. As a resident of Mr Lawley all my life, I am well aware of these problems and would be prepared to elaborate on this matter before the Commission if necessary.
Suffice it to say at this juncture that the suburb of Mr Lawley is both socially and economically homogeneous. Mr Lawley, which has historically contained all the Menora subdivision, is located totally within the State electorate of Mr Lawley. It is totally located within the local government ward of Lawley in the City of Stirling, which is a major local government authority embracing a significant part of the Perth electorate. But the suburb is split between two Federal electorates; with the dividing line being Learoyd Street, which is certainly not a major thoroughfare.
There is another confusing aspect of the way in which the absence of Menora creates a wedge into the Perth seat. Walcott Street, a major road, has a different electorate on each side of it for much of its length, and is located within one electorate (Perth), for some distance.
Because of the way in which the absence of the Menora sub-division distorts the shape of the Perth seat in this area, and disrupts the substantial community of interest which exists in Mr Lawley, I believe there is a very obvious case to be made for the return of this sub-division to the electorate of Perth, which historically, has always included Menora.
The other major anomaly relates to the Lockridge subdivision, which, until 1974 was not part of the Perth seat. I cannot understand why a capital city seat should contain a sub-division such as Lockridge, which covers a very large area, and which is mainly zoned ‘rural’, and in other parts, deferred urban’.
The sub-division, because it is large, sparsely populated, and mainly rural, provides me with certain representation difficulties. My representation activities are centred around the need to cater for a densely populated, suburban, residential population. In addition, the problems of suburban dwellers are vastly different from those of people living in rural areas, and this creates representation difficulties for a Member representing a seat which is mainly of a suburban nature.
That part of the Lockridge sub-division which is residential can be catered for quite adequately. But the large part of the sub-division which is of a rural nature, and which has nothing at all in common with the rest of the Perth seat, does not, and cannot, receive adequate representation from me.
The Lockridge sub-division also embraces part of the Swan Valley, a rural area largely devoted to vineyards, and other rural activities, and in which there is a substantial community of interest’. I believe it is not in the best interests of this region for it to be dissected by two Federal electorates, one basically rural, and one basically suburban. The representation duties and activities of inner suburban areas, and rural areas, are just not compatible.
Quite clearly, the residents of this area do not identify with the seat of Perth because this is the one area of my electorate from which I have received no constituency communication.
For these reasons, I believe the Lockridge sub-division should be removed from the Perth seat.
These two suggestions- the re-inclusion of Menora, and the exclusion of Lockridge- would simply return the seat of Perth to the boundaries it occupied prior to 1974.
I would be pleased to provide you with any additional information, should you require it.
Yours faithfully, ross McLean Member for Perth
-I thank the House. In addition, the Minister said that I had attacked Mr Statham. I did not attack Mr Statham. What I did say was that it seemed to me that the Government, given the experience in
Queensland and the experience of the last distribution in Western Australia, had a particular obligation to ensure that the commissioners were well and truly at arm’s length from the Minister responsible for the redistribution. I just raised the question of whether that could be said in the case of the appointment of Mr Statham.
– by leave- On 29 November 1 978 1 announced in a Press statement a number of Government measures designed to encourage the wider use of liquefied petroleum gas in Australia. One of these measures was a decision to remove naturally occurring LPG from the application of the Prices Justification Act. The.effect of this decision was to bring the price of naturally occurring LPG into line with the price found justified by the Prices Justification Tribunal for exrefinery LPG. Thus the price anomalies which previously prevailed were removed.
To offset the additional profits that the Bass Strait producers thus stood to realise from the higher prices on the domestic market the excise on all excisable LPG production was adjusted upward from $12.60 to $13 per kilolitre. I indicated at the dme that the movement in the domestic price of naturally occurring LPG would be kept under review. Since that time the Prices Justification Tribunal has found justified further increases in the price for ex-refinery LPG totalling $27 per tonne. The latest increase became effective on 30 April and the producers have advised their customers that they are adjusting the price of naturally occurring LPG accordingly.
These further increases in the price of naturally occurring LPG would thus lead to additional profits by the Bass Strait producers and the Government has therefore decided to offset this by a further increase in the excise on all excisable LPG of $1.00 per kilolitre which will increase the rate from $ 1 3 to $ 1 4 per kilolitre. This decision is to take effect from tomorrow and my colleague the Minister for Business and Consumer Affairs (Mr Fife) will table the necessary excise tariff proposal in this regard.
The Melbourne price- for both ex-refinery and naturally occurring LPG will now be about $ 1 10 per tonne. Thus the domestic1 price is now approximately the same as the free on board export price and this should have a significant bearing on the further development of the sales of LPG on the domestic market. This, as honourable members will know, is an important aspect of the Government’s energy policy, especially in regard to the conservaton of our increasingly scarce liquid fuel resources. I present the following paper:
Increase in Excise on Naturally Occurring Liquefied Petroleum Gas- Ministerial Statement, 2 May 1979.
Motion (by Mr Fife) proposed:
That the House take note of the paper.
-The Opposition welcomes the statement by the Minister for National Development (Mr Newman) as a further indication of the Minister’s keeping Parliament informed upon the movements in the prices of synthetic and naturally occurring liquid petroleum gas. As the House would realise, most of Australia’s liquid petroleum gas is supplied by LPG produced as a by-product of catalytic cracking at refineries throughout Australia. There has been a loose arrangement between the oil companies and the Bass Strait producers that Bass Strait production should be an area of last resort in the event of a shortfall in the supplies of synthetically produced LPG in Australia.
It has been the policy of the Opposition to increase the usage of LPG in the Australian motor vehicle fleet but a number of factors have operated against such a policy. One factor was that in the case of naturally occurring LPG selling at a price of approximately $A1 10 a tonne, there was a far more significant area of potential earnings for the Bass Strait producers by exporting LPG than by selling LPG domestically in Australia. The increase of $27 per tonne in the price of ex-refinery LPG as a result of the investigation by the Prices Justification Tribunal, will bring the price of ex-refinery and naturally occurring LPG to approximately the same figure of $.1 10 per tonne. This should start to create the mood for the development of a domestic market for naturally occurring LPG in Australia.
It would be senseless endeavouring to have naturally occurring LPG sold ahead of refinery LPG. The consequence of such a policy would be the flaring again of gas at refineries. The Government did overcome this problem by freeing the price of naturally occurring LPG through applications to the PJT. The consequence of the policy outlined in the statement today is to remove any benefit that the Bass Strait producers might receive in the market place for selling naturally occurring LPG domestically by increasing the excise. However, over time, it should be in Australia’s national interest to see that’ the amount of LPG sold is well above refinery production, thus cutting into the massive quantities of LPG sold for export.
Fifty per cent of the remaining recoverable reserves in Bass Strait of LPG, in terms of British thermal unit content, will be sold for export. Whilst I do not cavil at that policy in terms of the supply of liquid fuels in Australia I want to see Australia’s domestic supplies of LPG used in our motor vehicle fleets. To that extent, I hope that over time the movements in this price will create a more conducive climate for the absorption of naturally occurring LPG into the Australian energy picture, through the Australian motor vehicle fleet in particular. On that basis the Opposition welcomes the statement.
Debate (on motion by Mr Hodges) adjourned.
– I move:
Excise Tariff Proposals No. 4 (1979) which I have just tabled implement the Government’s decision announced by the Minister for National Development (Mr Newman) on naturally occurring liquefied petroleum gas. Excise duty on naturally occurring LPG is increased from $13 per kilolitre to $14 per kilolitre- a rise of $1 per kilolitre. The new duties will operate on and from tomorrow, 3 May 1979. I commend the Proposals.
Debate (on motion by Mr Willis) adjourned.
Debate resumed from 5 April, on motion by Mr Eric Robinson:
That the Bill be now read a second time.
- Mr Deputy Speaker, may I have the indulgence of the House to raise a point of procedure on this legislation. Before the debate is resumed on this Bill I would like to suggest that it may suit the convenience of the House to have a general debate covering this Bill and the Appropriation Bill (No. 4) 1978-79 as they are associated measures. Separate questions will, of course, be put on each of the Bills at the conclusion of the debate. I suggest therefore, Mr Deputy Speaker, that you permit the subject matter of both Bills to be discussed in this debate.
-Is it the wish of the House to have a general debate covering both Bills? There being no objection, I will allow that course to be followed.
-The Bills now before the House are Appropriation Bills which supplement Appropriation Bill (No. 1) 1978-79 and Appropriation Bill (No. 2) 1978-79, which formed the Budget propositions that were debated in the first half of this financial year. The Bills now before the House largely provide for additional appropriations for wage increases, but there are significant variations to the expenditureonBudgetallocationswhichIwould like to draw to the attention of the House. I refer firstly to Appropriation Bill (No. 3). Under the appropriations for the Department of Administrative Services one can see that the allocation for visits abroad of Ministers has been increased by $300,000 or 37.5 per cent after a substantial increase on the previous year’s allocation in the original Appropriation Bills. The appropriations for the Attorney-General ‘s Department provide for an increase in the allocation for the Australian Security Intelligence Organisation of just under $900,000 or 7. 1 per cent. Altogether, there has been an increase of 35 per cent on the 1977-78 allocation for ASIO. In the appropriations for the Department of Defence one can see an item covering special purpose aircraft and associated initial equipment and stores. I understand that that relates to the purchase of VIP aircraft for which an allocation of $ 10.2 m has been made. Honourable members will recall that this is just the first step in the proposal to spend some $40m on the purchase of VIP aircraft. Under the appropriations for the Department of the Prime Minister and Cabinet there is an item covering the conveyance of the Governor-General, Ministers of state and others. This again relates to the operating costs of VIP aircraft. The allocation has gone up by $422,000 or 26.4 per cent.
I refer now to Appropriation Bill (No. 4). Under the appropriations for the Department of Aboriginal Affairs one finds that the National Aboriginal Conference has had its allocation cut by $323,000 or 64 per cent, which seems an extraordinary reduction. The appropriations for the Attorney-General’s Department show a reduction in legal aid payments to the States of $3.5m or 50 per cent. With regard to the appropriations for the Department of Employment and Youth Affairs, the amount allocated to the Commonwealth Rebate for Apprentice FullTime Training scheme has been reduced by $3.6m or 9.5 per cent. In the appropriations for the Department of Social Security there is provision for a reduction in grants to homeless persons organisations of $1.9m or 48.7 per cent. Grants to handicapped persons organisations have been cut by $4.5m or 8.6 per cent. The allocation for home care services has been reduced by $2m or 1 9.6 per cent.
It seems that in those allocations which I have just mentioned there is a certain establishment of priorities which is not unfamiliar to us in regard to the expenditure priorities established by this Government in previous Appropriation Bills. Indeed, it is clear from these Bills that the Government’s approach to the economy and to the Australian society is totally unchanged. I therefore move:
That all words after ‘That’ be omitted with a view to substituting the following words:
Whilst not opposing the provisions of the Bill, the House-
condemns the Government’s failure to adopt an economic strategy designed to reduce unemployment:
deplores its failure to fulfil its promises to reduce inflation and interest rates, and notes with alarm that both are now increasing;
rejects the Government’s determination to place the blame for its economic failures on wage earners, trade unions and the Conciliation and Arbitration Commission, and
expresses its disgust at the Government’s perverted and wasteful expenditure priorities as exemplified by its allocation of substantial funds in this Bill to indulge the travelling comfort of the Ministry whilst increasing the deprivation of the under-privileged ‘.
I wish to devote most of my time in this debate to the economy. Doubtless, honourable members opposite will think that the amendment I have just moved is rather unfair in that it is very critical of the Government’s handling of the economy. Some of them may feel that they have something to boast about because of some indication of economic recovery. Certainly not the least of the honourable members opposite who would think that there is something to boast about in respect of the economy is the Prime Minister (Mr Malcolm Fraser), who has been loudly proclaiming that economic recovery is with us and that it is all due to his policies. I shall quote a short paragraph from his speech to the meeting of the Federal Council of the Liberal Party of Australia in Perth on 22 April. He said:
Confidence is much stronger than it has been for a very long time. This revival is not due to luck, not caused by accident. This recovery has come because we have taken the necessary decisions.
In my submission that statement is sheer nonsense. There are some signs of improvement in production, employment and exports, but they are not due to this Government’s policies. In our view the improvements are due to the economic stimulus of a big rise in rural incomes, which is in turn due to increased rural production and better prices on world markets. Farm incomes have been calculated by the Bureau of Agricultural Economics to go up by 90 per cent in real terms this financial year, which is a colossal and extraordinary increase. The figure for the December quarter of 1978 for gross farm product will be up by 52 per cent on the figure for the previous December quarter.
The main reason for the extraordinary increase in the figure for the gross farm product and the increase in farm income is the enormous increase in the value of the wheat crop. According to BAE forecasts, the gross value of wheat production will rise from $940m in 1977-78 to $2,030m in 1978-79. The wheat crop itself will be a record 18.3 million tonnes, which will be 3.5 million tonnes above the previous record. This, of course, is due to higher yields because of favourable growing conditions. Also important to the rural revival is the gross value of cattle and calves slaughtered this year. According to the BAE ‘s forecast it will be double last year’s figure. This in turn is due to an increase in the average price of cattle of some 1 10 per cent compared with last year, which in turn is due to increased export demand. In fact, actual slaughterings will fall somewhat, but this will help to raise the price. Overall, cattle producers will be doing far better.
The rural boom has nothing to do with the Government’s policies, unless the Prime Minister is now taking credit for the weather, which would not be too surprising. Insofar as there has been a recovery that recovery shows the correctness of the Opposition’s approach which is that if there is a stimulus to the economy by way of increased demand we can start to get an increase in production and we can start to get an increase in employment opportunities. In this case that increase in demand has come about not through any government policy but through an increase in demand stemming from the much increased incomes of the rural sector. Increases in the gross farm product mean increases in the gross nonfarm product as that income is spent and increased demand permeates the whole Australian economy. The recovery is due, in our view, to the facts that I have mentioned but we must also put that improvement in perspective. The economy is still very recessed. The index of economic activity up to February 1979 of the Australia and New Zealand Banking Group Ltd still shows that the economy is way below its trend level and is very much in recession. The Australian and New Zealand index to factory production shows that the index has now returned to the levels of 1974, the levels of five years ago. It has certainly gone up in the last few months but it is now at the level that it reached five months previously.
In regard to employment we see that in seasonally adjusted terms it has increased in the last six months but it is still very low. The total number of the employed wage and salary earners in January 1979 is only 0.4 per cent above the number for the previous year. The number of employed wage and salary earners in private employment in January 1979 is only 2,000 above the number in January 1978 and 48,000 below the number in January 1977. There is still a tremendous way to go in respect of employment. Indeed, if we look at the total number of persons employed- not just wage and salary earners but all persons in the work force- we find that in January 1 979 the number was 9,000 less than in February 1976, soon after this Government took office. Clearly there is a tremendous amount of leeway to make up on the employment front and it is reflected in the unemployment figures.
The number registered for the unemployment benefit for March was 38,000 or 9 per cent above the level of March 1978, with the total unemployed still near 450,000. We must bear in mind that a survey conducted by the Bureau of Statistics has shown that the number of non-recorded unemployed is in the order of 200,000.
I remind the House of a survey taken in May 1977 which showed that there were 2 10,000 persons who were not in the work force but who wanted a job. They had just given up hope of getting a job and had, therefore, retired from the work force and were not being counted amongst the unemployed. Clearly the economy is still in a state of acute recession. There is a need for a prolonged period of strong recovery before we can pull out of that recession. It is not likely that that will happen. In our view it is not likely because recovery will be choked off by various factors; firstly, by a very contractionary Budget which appears certain for the year 1979-80; secondly, by rising interest rates and tighter credit; thirdly, by rising inflation; and fourthly, by the incompatibility of the wages policy of this Government with economic recovery.
Let me refer to the factors which, in our view, are certain to prevent the recurrence of anything like full economic recovery. In regard to the 1978-79 Budget I am sure honourable members of the House are aware that the deficit is likely to blow out once again. The House will recall that last year it blew out by 50 per cent, by $1.1 billion, and this year it will blow out by something less than that. It would appear to be $300m or $400m. The Minister for Finance (Mr Eric Robinson) has admitted that Government expenditure will be $150m above the budgeted level and the Treasurer (Mr Howard) has admitted that the deficit could be $3.1 billion to $3.2 billion. In case any honourable member is not prepared to take my word I quote from the Australian Financial Review of 24 April:
Mr Howard said it was extremely difficult to estimate the currentdeficit,butitcouldbe$3,100millionto$3,200 million.
Clearly we have the Budget deficit blowing out by up to $400m since the budgeted deficit of $2.8 billion. If that happens I ask the House to take note of what that means in terms of Budget deficits accumulated by the Fraser Government compared to those accumulated by the Whitlam Government. In the three years of the Whitlam Government the three Budgets brought down by that Government produced Budget deficits amounting to $6.4 billion. We were attacked and berated for such supposedly irresponsible financing. In the three years of the Fraser Government, if the Treasurer is right and the Budget deficit this year is in the order of $3.2 billion, then there will be a total accumulation of Budget deficits of $9.3 billion in those three Budgets. It is almost 50 per cent above the accumulated Budget deficits of the Whitlam Government. So much for the attacks which were made on the Labor Government by the Opposition for the supposedly highly irresponsible financing through increased Budget deficits.
Why has the Budget deficit blown out this year? Firstly, because of the false assessment of unemployment benefits. It appears that they are in the order of $1 10m to $ 120m understated, because the unemployment level is higher than the Government expected, and because of the clear understatement of unemployment benefits in the Budget estimates. The second reason is the changes in the Budget provisions. There were various changes. The means test on family allowances of the so-called newsboy tax was abandoned. The proposal to tax various benefits for the handicapped was abandoned. Both of these items were described by the Treasurer as areas of judgment. There was also a change in the taxation arrangements for lump sum payments, which resulted in a loss of revenue and changes to the plan requiring employers of subcontractors to deduct pay-as-you-earn tax before making payments. All of these mean increased expenditure or reduced revenue. As I have mentioned, that means an increased Budget deficit.
This sets the scene for the next financial year when there will be a much bigger deficit problem facing the Government. Following the Government’s failure to reduce the deficit in those three years it is now putting itself in the position where, if it sticks to its promise, it is going to have a massive deficit problem in 1979-80. It will be starting from a Budget deficit in the previous year of $3.2 billion, and on top of that it has committed itself to a loss of at least a billion dollars net in revenue. Those items come from the abolition of the coal export levy and death and gift duties, and reduced incidence of the crude oil levy, all of which will cost around $230m.
The Government is committed to the introduction of full trading stock valuation over a threeyear period from 1 976. There is a firm commitment by the then Treasurer to introduce only 50 per cent so far. The other 50 per cent must be introduced if the Government abides by that promise. That will cost $400m. Tax indexation to be fully introduced from 1 July 1979, to which the Government is committed by the previous Treasurer in the 1 977 Budget Speech and by the Prime Minister in the 1977 election, will also cost in the order of $400m. The income tax surcharge, which the Government assured the Australian people would be for only one year, is due to end at the end of this financial year. The nonrenewable cost to revenue is $5 70m. This all adds up to a total revenue loss of $1.6 billion, against which such items as increased income tax from farmers can be offset and a reduction in the cost of the investment allowance of some $200m.
There is still a billion dollars net which the Government has to find in order not to break its promise. What is most likely to happen is that there will be a combination of the measures I have detailed. The Treasurer in boasting about the Government’s performances seems to have stopped talking about the stock valuation adjustment, even the 50 per cent, because it is such a sensitive matter for him. It seems likely that there will be no addition of the other 50 per cent. In fact it has been mentioned in the Press that the Government is contemplating dropping the 50 per cent that it has already introduced,, which would be a very substantial cutback on the promise made. We will have a combination of the breaches of promise and of contractionary policies involving Draconian expenditure cuts. If we have Draconian expenditure cuts and if we have substantially increased taxes, there is no doubt that we are going to exacerbate recessionary factors and chop off the chances of economic recovery in the next financial year.
Supplementing that there is, as I have mentioned, rising inflation. The Government’s Budget forecast of reduced inflation is clearly not on. The Budget forecast inflation of 5 per cent by the end of this financial year. It is certain to be well above that. I do not think that anyone on the Government side will argue with a proposition from the Opposition that it will be at least 8 per cent at the end of this financial year. Inflation has been around 8 per cent for the last five quarters on a 12-month basis. Although the March quarter figure could be taken as suggesting that inflation might be on a downward trend, I do not think that there is any economist in the country who would really believe that. For various reasons the March quarter figure of 1.7 per cent was not a realistic guide to the underlying inflation rate. Firstly, it was unrealistic because the petrol prices were surveyed in mid-January instead of mid-February and missed the increase at the end of January, and also because the effective end of discounting through most of the country, particularly in Melbourne, where it has been very important. Another factor is the Brisbane beer prices where the end of that strike meant the end of imported beer and the consumption of cheaper local products, the result being that the Brisbane price index was unusually low. The March quarter anyway is a seasonally low figure because of falls in the prices of fruit and vegetables.
We cannot take the March quarter figure of 1.7 per cent as against the December quarter figure of 2.3 per cent as suggesting any reduction in the rate of inflation. In fact, in our view, inflation is certain to pick up in the near future because of the continuing impact of petrol prices. As well as those missed in the March quarter further increases will be recorded in the index such as the increases on 1 1 April, 30 April and others. This Government’s crude oil policy of matching Australian crude oil production prices to those on world markets will feed the continuing increase of world crude oil prices into the Australian economy. If I might digress slightly, I point out that quite clearly this simply is not fighting inflation first, as this Government continually maintains is its policy. We cannot fight inflation first if we adopt a policy which imports fully into Australia, in a way which is totally unnecessary, the full impact of a major world inflationary factor and that is the increasing crude oil prices. It is absolutely unnecessary to do that. The policy of moving progressively towards world parity for Australian produced crude oil was a sensible one which we supported, but we totally oppose this mad policy of going immediately to import parity as was provided in the last Budget, thereby introducing a major inflationary factor. It is a complete digression from this Government’s supposed policy of fighting inflation first. We also have the increased prices of various commodities and metals and, most recently of all, sugar. We have had dramatic increases in the cost of materials used by manufacturers. It has increased by up to 25 per cent in the last 12 months. This increase has yet to show up in the consumer price index. A lot of inflationary factors are building up which are certain to increase the rate of inflation rather than to allow any reduction in inflation in the near future. Insofar as the Government takes contractionary action to prevent that recurrence of inflation, we are certain to have the economic recovery- or whatever chance there is of economic recoverychoked off by those policies.
There is this important subject of rising interest rates. There are clear indications that interest rates generally are on the increase. That will also tend to choke off economic recovery. The House will recall that at the last election the Prime Minister made a thoroughly irresponsible promise to reduce interest rates by 2 per cent in 12 months. He maintained that this was a promise which could and would be achieved. Of course, it has not been achieved and it will not be achieved in 12 months, 24 months or 36 months, the way things are going. What the Prime Minister did achieve was a reduction in overdraft and mortgage rates of 1 per cent. That has to be admitted. The bond rate fell by 1.7 per cent up to November 1978, but that was as far as it went. The reduction was achieved because financial institutions were encouraged to buy bonds in large quantities because of the apparent certainty of substantial capital gains. Herein, of course, lies part of the irresponsibility. The financial institutions were apparently guaranteed large capital gains. Surely this was a fairly immoral thing for a Prime Minister to do. That is what he was doing in giving them what they took to be a guarantee. They believed his promises that a 2 per cent reduction in interest rates would occur and therefore there would be large capital gains to be had by people who bought* bonds with interest rates of 10/2 per cent if they sold them when interest rates were generally more like 8’/4 per cent. They expected that that would be the case in 12 months’ time. With apparently declining inflation it seemed that these interest rate deductions were sustainable and so for a while the Government was able to persuade the financial institutions to buy up big on government bonds.
As I have mentioned there is current evidence of rising interest rates. We have had the February conversion loan after the December quarter 2.3 per cent price rise. That rate went up by 0.2 per cent. Then market yields began to rise as the market became concerned that the interest rate structure generally was not sustainable. Recently we had bonds being sold on the market at the rate of 10 per cent or more with the Reserve Bank of Australia trying to establish a rate around 9.7 per cent when compared with ihe official bond rate of 9 per cent. We then had the Treasurer (Mr Howard) coming in with a temporary, or a long-delayed package, which involved savings bond rates going up 0.5 per cent, semi-government authority rates going up 0.7 per cent, and following that, inevitably, subsequent pressure from building societies, particularly in New South Wales and the Australian Capital Territory, to increase interest rates by up to 1 1 ½ per cent. Interest rates are rising and the Prime Minister’s promise is patently not going to be kept- not in 12 months or in any other period- because of the Government’s failure to reduce inflation as promised. The reduced interest rate structure simply was not sustainable.
The rapid increase in the rate of growth of the money supply was also a factor involved here. The money market assumed that a rate of growth in the money supply, well above the Government’s target rate, would lead to an acceleration of inflation and, therefore, this increased concern that the interest rate structure simply was not sustainable. I remind the House that the target rate for the growth of the money supply was 6 per cent to 8 per cent as set out in the Budget, but the annual rate of M3 has been about Vh per cent in recent months, with Ml rising at an even faster rate. Quite clearly there was concern on the part of those who were involved in the money markets that the Government had perhaps lost control. At least the money supply rate of growth was far ahead of what it had budgeted for. They saw this as being another inflationary factor. This was exacerbated by the Government’s reluctance to take action on the money supply. This created uncertainty in the money market with consequent bidding up of interest rates. Some people claim that up to a half a per cent rise in market interest rates was due to this uncertainty in the market through the Government’s failure to act and establish a new level of interest rates.
The Government clearly failed to recognise early enough the potential impact on the money supply of the wheat bonanza. Having increased the first advance payment last November, the Government then found that it had a massive wheat crop to finance. The Government was very slow to come up with the idea of commercial bills as a way of offsetting the money supply expansionary effect of funding that first advance through the Rural Credits Department of the Reserve Bank. The Treasurer’s failure to state whether Government policy in regard to money supply had changed or whether he had simply lost control also added to uncertainty and higher interest rates. The reason for the Government’s paralysis in this area for this period of nonaction, in which market interest rates were going up all the time and making it more difficult and more inevitable that there would be substantial increases in interest rates, was that the Government did not want to take any action to raise interest rates, presumably for two reasons. Firstly, because it was tremendously embarrassing given the Prime Minister’s promise and, secondly, because of an election in Victoria where the Liberal Government is clearly under enormous challenge. Anything which might look like making the electoral prospects of that Government less attractive was clearly something which it was concerned to stop the Federal Government doing. So there were those sorts of pressures apparently accounting for a period of absolute paralysis by the Government with the consequent unease and bidding up of interest rates, and the inevitable establishment, eventually, of an interest rate structure which was higher than it needed to be.
The reason interest rates are likely to rise across the board even further is that inflation is tracking up. If it goes well above the 8 per cent level it is inevitable that we will have higher increases in interest rates. There is continued uncertainty because of the Treasurer’s failure to set either a new money supply target or new official bond rates. The Treasurer has admitted that the Budget target for the money supply no longer applies, but he will not establish a new money supply target because .he says he might not achieve it. That does not help to create certainty in the economy. Not having money supply target and official bond rates established still leaves this area of substantial uncertainty and creates the greater likelihood of increases in interest rates. The Treasurer’s announcement on 22 April increasing the Australian savings bond rates and the semi-government rates simply ignored the official bond rate. He said that this was because we must wait for a new loan before we make such an announcement. It is much more likely, as I have mentioned already, that the Victorian election was a factor in that because an increase in the official bond rate by 0.7 per cent or one per cent would have meant a lot of alarm about general increases in interest rates. The market reaction to the Government’s failure to deliver on the interest rate promise and so not provide large capital gains as promised, is also a factor in the likely trend to higher increases in interest rates. Having been promised capital gains which did not eventuate, the market will take a lot more inducement in the future.
Also, an enormous deficit financing problem will face the Government in the next financial year because we have a tremendous amount of short term money at the present time. The Government has financed this year’s deficit largely through Treasury notes, which is short term finance. Some $2.1 billion of short term finance has been circulated compared with $600m last year. So effectively next year the Government will have to finance this year’s deficit and next year’s deficit as well. This will create great pressure on the Government to sell government bonds. If it is to get the market to take them it will have to increase interest rates. Because of these factors it is highly unlikely that economic recovery will occur.
Mr DEPUTY SPEAKER (Mr Jarman)Order! The honourable member’s time has expired. Is the amendment seconded?
– I second the amendment and reserve my right to speak later.
-I am again puzzled by the attitude of the Opposition on matters concerned with the economy. I am puzzled because it is difficult to define the attitude of the Opposition. It is difficult to know whether at any time in the future the Opposition is likely to put forward positive alternatives to the policies that its members choose to criticise. It is difficult also to know whether Opposition members are really interested in high or low inflation rates, in high or low deficits or in setting money supply targets or allowing them to run. It is difficult to know whether they have an interest in a wages policy. The Labor Party has now been in opposition for three years and it has yet to answer all these things. Members of the Opposition are very good at criticising, in a destructive sense, the firm resolve of the Government to bring this country back onto a sensible path. That is what is happening right now.
It is difficult to know why the Opposition is so keen always to ask for higher amounts of expenditure while at the same time asking for lower deficits. It has even become fashionable in recent months for the Opposition to ask for lower taxation. Of course, that is a ludicrous proposition to come from a socialist party, If members of the Opposition stand for one thing- they probably should state openly what they consider to be the best alternative to the political system- it is higher taxation rates and higher amounts of government spending. That is the choice that the people have to make when they vote at elections in this country.
I propose to talk about one or two points of the amendment later. Before doing so I address myself very briefly to the Appropriation Bills before us. The results on the expenditure side this year appear so far to be as pleasing as one could hope. There has been a great deal of talk especially from the Leader of the Opposition (Mr Hayden) both at Question Time and at public forums in recent months about his fears that our expenditure targets would be exceeded by a large amount of money. If he was worried about that, he was not half as worried about it as I was. I am pleased to see that the amount of the extra expenditure- some $290m is provided for in these two Bills- is in the order of the amount of extra expenditure that we have seen provided in the past few years and certainly since this Government came to power when responsibility was reintroduced into the expenditure side of government. When one takes into account the saving of some $107m which was announced at the same time as these Bills were introduced we are left with a net increase in expenditure- I know this applies only to the expenditure side of the Budget- of $ 1 83m. This leaves us with a total increase over and above the predicted Budget outlays of only some two-thirds of one per cent. I believe that that is most commendable. Despite the fact that it has created a lot of difficulties in the minds of many pressure groups in our society, I think those people should realise that it has been a responsible expenditure regime of the past 12 months which has shown results. This contrasts, as I said, with the tremendous blowing out of expenditure that was becoming evident in the 1975-76 Budget which was brought down by the present Leader of the Opposition. One could quite legitimately ask at this time whether the Appropriation Bills (No. 1 ) and (No. 2) of 1975 were really misappropriation Bills. They certainly would have led to a great misappropriation of Australian taxpayers’ funds if they had been allowed to have effect for the full year.
I want to talk this evening about a matter which is probably more important than the present Budget. I refer to the whole problem that we seem to be facing in relation to budgetary thinking in this country. It seems to me that we are at a cross roads situation where we very rapidly need to re-think our whole budgetary ideas. The recent unavoidable slight increases in interest rates have very firmly brought home to the people involved in the money market the massive influence that the Budget in this country has on so many matters which indirectly relate to our whole free enterprise system. At present the Government is a major operator in the money market. Traditionally, apart from its dealings in loan funds, when the deficit was zero or slightly plus or minus, the Government was not a major operator. It certainly was not a major operator in the sense that it is now. But since it has become a major operator the cumulative results of massive deficits in the past four or five years have brought some quite terrifying prospects to this country. We are facing the prospect of having some 10 per cent of our total Budget outlay- it is provided after all by the current work efforts of the producers in our society- being interest on our deficits. In other words, we are facing the prospect of the interest being paid on the cumulative deficits being some 10 per cent of the Budget. It has not reached that stage yet, but that is what we are facing. We are facing an ever increasing problem of the cumulative deficit crowding out productive investment. As the honourable member for Gellibrand (Mr Willis) has just noted, a lot of short term money becomes due for renewal in the next 12 months. In order to continue with the programs for which money has already been raised, we are faced with another problem of raising more money which will even more crowd out productive investment. After all in our capitalist society- it is a system which has proved quite conclusively when one looks around the world that it is the best system for all people- it is tremendously important to keep money within the system so that the producers and the service industries, the productive people, can have that money for investment so that the welfare of our people can always be on the increase.
At the moment we are habitually taking large slabs of money in order to finance the deficit away from productive enterprises. As I said, those enterprises after all ensure the welfare not only of the people in the work force but also of the underprivileged and of all those other people who are referred to in the amendment moved by the honourable member for Gellibrand. At the present time the problems of the deficit flowing through to the problems in the money supply are creating great uncertainty. The money market depends a great deal on a degree of certainty not only internally but also in relation to those people who might be thinking about increasing production through investment from overseas. One question- and this is a corollary to this discussion- whether the funds that needed to be raised and created the increase in interest rates should not have been raised a lot earlier in this financial year. In order to decrease the uncertainty in the money market that must arise when interest rates move one way or the other, perhaps the Government should make it fairly clear early in the year how much money will be raised. Perhaps by doing that, especially in the present context of having interest rates set more by market forces, the funds could be obtained and the Government could proceed from there without having to raise too much more money in the remainder of the year. Thus any money that came forward could be invested in productive enterprises without any fear that interest rates might go up. It is attractive not to do so.
It appears that all governments in Australia have suffered in recent years by confusing politics with good management. I gently chide the present Government for being too human in this way. Politics- unfortunately all members of parliament realise this- creates situations where pressure groups, some wealthy and some poor, some big and some small -
– Not too many poor.
– There are plenty of poor pressure groups. I answer that interjection because there is a constant problem in the pensioner and handicapped children’s areas. These people form pressure groups too and they have legitimate claims on the wealth of this country also. I reiterate that there are a lot of pressure groups which come to the Government. It will always appear that in terms of votes it is more efficient to spend an extra $ 1 m. The votes gained by that expenditure will always appear to be more than those lost by taxing people an extra $ 1 m. This philosophy has appeared in all sorts of governments in recent years. Considering the work of pressure groups, I suppose that this is one thing for which politicians could be forgiven. In the light of the results of the elections held in 1975 and 1977 I wonder whether the Australian people want ever-increasing handouts or socalled middle class welfare? Do people want to transfer payments from the rich to the rich, from the middle income earners to the middle income earners? Or should we not be looking more to a sensible welfare policy that looks after disadvantaged people or, as referred to in the amendment, the underprivileged; so that we tax the rich to look after those people but not to look after themselves? I will quote from an article in the magazine Fortune dated 23 October 1978:
In Keynesian perspective, such transfers may be all to the good since they put a floor under purchasing power as well as caring for human needs. But in a capital-hungry economy, when transfers are made from savers to spenders on a vast scale, they will destroy the raw stuff of investment and capital formation. The transfers can also undermine the capitalist incentive system, in which those who work hard, are supposed to be rewarded.
I endorse exactly what that article says. The political weathervanes tell us otherwise.’ The Australian people appeared to know what they wanted when in 1975 and 1977 they voted for a government that they knew would be tougher on expenditure and would, by its philosophy, have a lower tax aim. If we talk about means testing all pensions, perhaps we could adjust the means test to bring more people into the net. If at the same time we were to say that taxes would be reduced to that extent, or- and this is even more difficult- point out that the deficit to that extent would be reduced, thus allowing more money into the productive investment areas, I suggest that Australians would be sensible enough to know what we were talking about.
Now is the time to say that we must halt expenditure rises. We are always left with the furphy of whether employment can be increased by pump driving. That proposition was alluded to in the speech of the honourable member for Gellibrand who represents a socialist party which sees that old Keynesian ploy as being a good idea in the present context. However it is not working now. It could be argued that we are pump driving now. If there is a deficit of $3,000m, what else are we doing but pump priming, and on a massive scale, but it is not working. We have seen that it does not work in the federal sphere and we have seen that it is not working in the State sphere. One or two years ago the Government in my State of New South Wales introduced schemes whereby people worked on roads. It did a lot of road work. It provided funds for all sorts of things in the same way as the old Regional Employment Development scheme was operated. I have noticed that the New South Wales Government is not introducing these schemes now. It found that the schemes did not get more people into the work force: If it had any brains it would know that Australians get into work when people invest money, provide productive capacity and create jobs in the private sector. That is our way to salvation. It has been the way to the salvation in recent years of countries such as Germany, Japan and, more topically, Korea. Many subjects can be discussed during debate on an Appropriation Bill. Thankfully, such scope is provided. I reiterate that it is time, for the good of the people of Australia, that we halt expenditure rises.
I turn briefly to the amendment introduced by the honourable member for Gellibrand. I want to add to something he mentioned. He talked about the rural boom having nothing to do with Government policies. I remind him that if inflation had carried on in the way that the Labor Party seemed to be fostering it at the time it went out of business farmers would have had increases in the order of 30 per cent over and above cost increases they have had already. If that had occurred the taxation that we are gathering from the farmers and the additional investment that farmers will have in fencing materials, tractors, fertilisers, new cars and new fridges would not be occurring this year. By taking certain decisions, unpopular ones at times, we have managed to bring down inflation. The rural boom does have something to do with the very firm resolve of this government to promote overseas sales. Whether honourable members agree or not, the rural boom also has something to do with the November 1 976 devaluation.
There are two points in the amendment that I do not like at all. If one is talking about economic strategies designed to reduce unemployment, I would say that our economic strategy, to the extent that it has not reduced unemployment enough, needs to be criticised to the extent that we have followed Labor’s ideas. Within the Government there is fairly strong knowledge about that fact. 1 also criticise that part of the amendment in which the honourable member for Gellibrand referred to our ‘increasing the deprivation of the under-privileged’. I repeat: The under-privileged of this country, the people who need to receive some money from the relatively well-off, depend on productivity and on other people having the go in them, the incentive, to go out and make that money. That is how we look after underprivileged people. We need fewer governments. Governments are not good at artificially tampering with the system. Given that governments have social and international obligations, they are here for oiling the system, not for clogging it up.
– I am glad to second the amendment moved by the honourable member for Gellibrand (Mr Willis), which properly emphasises the question of unemployment. I deplore the fact that these Appropriation Bills do so little to use the resources of government to examine and analyse the deepseated structural factors which are shaping our economy. I believe that we are at a turning point in world economic history and that the actions we take now can determine whether the potential for increased wealth and increased output in this economy will narrow the gap between rich and poor or widen it.
The Industrial Revolution was an enormous force which transformed the economy of Europe and North America- and Australia too- over a long period. Most economic historians would say that it began in Britain in about 1780 and ran throughout Europe until 1914, when World War I marked the beginning of a new era. Ten generations back- 200 years ago- we can be certain that the great majority of our forebears, no matter from where they came, were farmers. The figure was perhaps as high as 70 per cent in Britain and even higher in Europe. Some were in the services- tinkers, tailors, soldiers, sailors- and others manufactured things, either in cottage industries or in factories. If a politician had stood up in the House of Commons 200 years ago and had said that in a few decades agriculture would cease to be the dominant employment sector he would have been laughed at, and yet it happened.
In Britain from about 1800, in Belgium from 1815 and in France from about 1830, and so on throughout Europe, and then the United States of America, manufacturing overtook services as a large employment sector. For some decades in Europe and the United States around the beginning of the 20th century manufacturing, with directly related services such as transport and retailing, was the largest employment sector. In Australia, manufacturing was never the largest sector in a conventional 3-sector analysis. Services displaced agriculture here as the largest employer in about 1910. Services generally, a large employer since the 1 9th century, expanded rapidly after World War II to become by far the largest sector in sophisticated economies.
In the present era employment in agriculture and manufacturing has stabilised oris still falling in many advanced countries. The normal phenomenon, of course, is that output is up but employment is down. The United States, for example, has never had fewer farmers. The proportion of the work force in agriculture in the United States is now about 3 per cent, but that does not mean that it is necessary to send people in the US food parcels; their output is enormous.
Successively in advanced economies the dominant employment sector has been first agriculture. The next dominant sector has been manufacturing, and then services. In Australia at the moment services, depending on how one defines them, account for between 60 per cent to 70 per cent of the total work force. The problem is: If services starts to decline as an employment sector, what do we do for an encore? Where do we go if services contracts as an overall employer?
Before I answer my own rhetorical question, I want to draw the attention of the House to an extremely important essay by Sir Ieuan Maddock, CB., O.B.E., D.Sc, F.R.S., who was the chief scientist of the Department of Industry and who is now the Secretary of the British Association for the Advancement of Science, which appeared in the New Scientist on 23 November 1978. 1 shall quote briefly what Sir Ieuan said and then I shall seek leave to incorporate two short sections of the article in Hansard. Sir Ieuan Maddock, in his essay entitled ‘The Future of Work’ wrote: lt has become conventional to regard ‘work’ as not only the means of producing the goods and the services we need but particularly as the means by which individuals acquire the purchasing power necessary to obtain some proportion of these goods and services. Most economic analyses show a loop diagram relating output to the various inputs, (capital, labour, utilities, raw materials) on the one hand and the recycling of income through purchases, investments, accumulation, et cetera on the other. Low unemployment, high productivity, high use of capital equipment, are invoked as formulae for economic advance (or recovery).
Yet there are examples in history which show that there is no fundamental relationship between the working capacity of individuals and their ability to purchase. The very high civilisations of the Egyptians, Greeks and Romans prospered without ‘working’ being associated with ‘purchasing’- the slaves did the work, the masters did the purchasing and consuming. Indeed it has been argued that the advance of cultures of all kinds coincide with a large leisured class, free from the burden of working to survive and therefore able to pay more attention to more abstract or aesthetic things. However real this relationship might be there can be little doubt that in the 19th and 20th century work has been linked with purchasing power and affluence, and unemployment equated to misery and deprivation. So strong has become these links in people’s minds, the provision of employment has become a greater priority than increasing the total availability of goods and services, lt is regarded better to continue inefficient and uncompetitive enterprises in being, because they provide purchasing power, albeit a small one rather than to improve efficiency, and the ability to compete in home and foreign markets.
As technology has advanced, it has become progressively more difficult to maintain this stance. Modern capital facilities (electricity, gas, oil, chemicals, man-made fibres, food processing, telephone, et cetera ) are able to supply most of the goods or services needed without great use of labour. Reverting to the example of the early civilisations and the use of slaves, the modern slave is the machine (some regard it as the reverse) and man could progressively be the master.
The tempo of technological development becomes ever more rapid and the range of potential ‘technological slaves’ becomes progressively wider. This paper discusses some of the powerful influences which can now be seen to be operating, and speculates on the future pattern of work in the UK.
Mr Deputy Speaker, I seek leave to incorporate in Hansard two sections of this paper, one of which is entitled ‘The Mighty Chip’-‘Chip’ of course is not spelt with a double ‘p’- and the other is entitled ‘Learning and Forgetting Curves’.
The documents read as follows-
The Mighty Chip
There is one technology, although implicit in what has been written above, must nevertheless be singled out for special comment. When the historians of the 21st and later centuries look back at this one, they will probably label it as the ‘Technological Century’. But when cataloguing the technological discontinuities which would justify such a title, their first choice will not be the internal combustion engine, jet aircraft, nuclear power or plastics- it will be semiconductors. Whereas all the other technologies have advanced dramatically they have only given more impetus to things that man was already able to do with the use of machines- travel, shape materials, provide horse-power, construct buildings, etc. etc. The impact of the microelectronics revolution manifests itself in very different ways, i.e.
By its ability to extend or even displace man’s capacity for thinking, his intuition or his judgment.
By its pervasiveness; there is virtually no field in manufacturing, the utilities, the service industries or commerce that can fail to be influenced by this advance- very likely in a profound manner.
Replacing many devices which have traditionally been the territory of precision mechanical (or electromechanical) devices by purely electronic systemsitself a very substantial revolution. Cash registers, wrist watches, telephone exchanges, etc., have already gone this way, many more will follow.
The speed of advance. Never has a powerful technology advanced so rapidly in such a short time. The performance of a single chip measured in terms of the number of gates it can contain has increased ten thousandfold in a period of 1 5 years. The speed of obsolescence of not only the chips themselves but of all the ways they can be applied is so great that there has hardly been time to get adapted to one regime before another emerges.
Reduction of Cost. Not only has the performance increased, but even more remarkable has been the reduction of cost. In a period when inflation and escalating costs are the norm, the price of each unit of performance has reduced one hundred thousandfold since the early 1960s.
Reliability. Already the reliability of the semiconductor devices far exceed that of any engineering device to date and it continues to improve.
Flexibility. Because micro-processors are programmable their performance can be changed quickly and cheaply- as distinct from all earlier engineering products.
This collection of qualities add up to the advent of the most remarkable new technology ever to confront mankind.
Consequencesto the Developed Nations
The six influences catalogued above must profoundly affect the industrial structure, performance and attitude of the developed countries. These are not just marginal effects, to be absorbed in a few per cent change in the economic indicators- they are deep and widespread and collectively signal a fundamental and irreversible change in the way the industrialised societies will live. Already the foothills of these changes are in sight. The massive switch of the world ‘s cash resources from the long established stronghold of the industrialised nations into the Oil States, the persistent signs of increasing structural unemployment, the complete displacement of long cherished technologies by new ones, which call for either very much fewer people or very different people or both. The rapid emergence of formidable new world competition, the growing clamour for a more equitable share of the planet’s resources, the urgent quest for international partners in the high technologies and growing public involvement in major decisions are all significant pointers to the accumulating and growing pressures on the future pattern of work. To try to predict the precise outcome and its timing by extrapolating from examples in the past is both hazardous and irresponsible. Changes of such magnitude and speed have never been experienced before, and plans and strategic studies, no matter how diligently pursued are likely to lead to the wrong results.
What can be identified however is the need for flexibility, adaptability and a widespread realisation that profound change is inevitable. Rather than try to guess the specific changes that will occur or to identify new opportunities, it is more important to recognize the factors that can impede or can stimulate the changes which are necessary and to attend to these.
There are clearly four areas of concern
1 ) Changes in job opportunities, both in numbers and in character. No longer is it realistic to regard a person in a ‘job for life’. Its content, location or very existence will change in time scales measured in decades rather than lifetimes. Whilst new job opportunities will certainly emerge and these may be large and rewarding, it would be rash to suppose that the rate of new job creation will be a complete match to the rate of job extinction, that there would be a natural compatability (in terms of skills, temperament or location) between the new jobs and the old ones, nor indeed that the new opportunities would exist in the same country as the ones that are being lost. The past two decades have seen the migration of many major industries from long established centres in Europe into new ones in other parts of the world. Nor should this migration be regarded as belonging exclusively to the manufacturing industries. Many of the service industries are vulnerable and already shipping, tourism and some aspects of banking and insurance have moved. The developed nations of the world will have to accept and adapt to these changes and be prepared to accept their impact on their society.
) Polarisation of the Work Force. There is the real likelihood that the workforce will become polarised into a relatively small technological elite, able to move with and enjoy the advancing technologies and to adapt to the changing circumstances and a much larger proportion of work people whose skills have become outmoded and who lack the education or the mental attitudes to adopt to change. A widely based initial education, greater use of further education and retraining and an acknowledgement by society that anyone who has served well for as long as they are able to do, deserve to be well treated in later years, are all matters that will have to be appreciated. If they are not, then unmanageable social stresses are certain to arise and the consequences are likely to be catastrophic.
De-Industrialisation. There is the likelihood that whole industries will be rapidly extinguished because of a combination of the influences described above. This has happened before leaving ‘ghost towns’ where the older people cling on, the younger ones migrate to new areas. The textile industries, shipbuilding, farming have seen such changes but the pace was slow enough to allow individuals to adapt.
The problem of the future is the speed of change, where flourishing and competitive industries can be liquidated within a few years. Motor cycles in Britain, watch-making in Switzerland and France, photographic goods in Germany are but a few recent examples. The tempo of national planning and re-distribution of industries is likely to prove too slow to adapt to the rapid changes and a more responsive system will be needed.
De-Humanisation. Alreadymany of the manufacturing processes contain very little job interest, leading to lack of commitment and poor morale within the work force. This trend will increase and accelerate as the developed nations seek to increase their competitiveness against the low labour costs of the emerging countries by ever greater amount of automation. This is likely to fuel a social problem which is already difficult to resolve.
These factors in combination pose greater problems in the education, training, selection and management of the future work force in the developed nations and it is doubtful whether past and existing practices will be adequate.
Learning and Forgetting Curves
Most Engineers and Technologists are familiar with Learning Curves’- the graphical analogy of the process by which skills progressively build up and more efficient methods are introduced. Probably without realising it every amateur cook, part-time gardner or do-it-yourself houseowner has experience of the same process- the climb up the Learning Curve. The more advanced and complex the technology the longer and more painful is the climb and if the technology is advancing rapidly, then as each slope is ascended a new and steeper slope comes in sight so that the climb has to continue.
The reality of the Learning Curve has long been acknowledged in the planning and the execution of very complex projects. Many attempts have been made to quantify it. It is known for example, that as the aggregated production of a particular motor car or radio set progresses, the efficiency of manufacture improves and hence the unit costs continue to drop. But if the models are changed frequently or if there are sudden switches in production methods, it becomes necessary to climb new Learning Curves and so efficiency is lost.
But what of the Forgetting Curves- the ability to shed old outmoded techniques and attitudes, to surrender treasured traditions or to change employment in order to be competitive in a new field. This has received very little study, yet can be identified as a prime cause of difficulties in a large number of industrial failures. It is not the inability to note and to learn about the new techniques that lead to failure but the unwillingness to abandon long established methods and product lines. It was not the former giants of the electronics industry in the U.S.A. that seized the new opportunities in semi-conductors, but small and initially little known companies. The giants of the photographic industry failed to respond to the opportunity of ‘instant photography’ whilst the household names of office machinery failed to react quickly enough to the new techniques of dry copying.
In more recent times even the comparatively young giants in the computer industry have been slow to react to the new opportunities arising in mini-computers and now micro-processors.
Forgetting Curves are much more slower than learning curves and companies or indeed countries that have the most to forget’ are the ones at greatest risk in a rapidly advancing and changing situation. Here the advantage is clearly in .favour of the late developing nations which enjoy not only the rapidly increasing mobility of technology but also the absence of old technological habits to forget.
Alas governments of whatever political persuasion are frequently guilty of prolonging the forgetting curves. When there are clear signs that an industry or company is in hazard they will rush in and protect it. Rather than note that a radical change in the size and character of the industry is essential and encourage this change, they will postpone and ultimately increase the agony of readjustment. Instead of facing the fact that the disease might be terminal and therefore seek new birth and growth elsewhere, the profitable dynamic and expanding industries are taxed in order to provide the funds to sustain those that are in final decline.
How is it possible to establish the balance between the undoubted advantage of prolonged learning curves on the one hand and the damaging effects of forgetting curves on the other. On the one hand one is concerned with the familiar, the confident and quite frequently the affectionate, and there are human, geographical and even cultural factors which will influence the decision maker. On the other hand there is the unknown, the uncertainty of a new technology, a different market place, a new amalgam of human skills and a different tempo. It is very unlikely that the transition from the one to the other can be done by deliberate ‘planning’. Giant organisations whether they are governments, multinational corporations, nationalised industries or very large companies, are unlikely to have the agility to shorten the forgetting curves. The flexibility and adaptability required comes most readily from the creation and growth of new companies, composed of resources- human and inanimatematched to the new opportunity and unencumbered by the habits and traditions of large parent organisations. In the presence of a great number of such new enterprises, hungry for labour, the decline of a major company or industry would be less alarming or even a blessing. A situation where the new triumphs over the old by natural extinction is to be preferred to the deliberate policies of fossilisation which have been pursued by governments over many years.
The ability of new companies to emerge, to expand and to adventure is substantially determined by the economic and social climate. Creating a new enterprise is immensely hard work and there is a high likelihood of failure. To encourage such enterprises they must be easy to start, success must be well rewarded, and failure should not be regarded as a social disgrace. None of these ingredients exist in Britain at this time. Capital is difficult to raise and is very costly, employment of labour is hazardous, success is meagrely rewarded whilst failure and bankruptcy is treated as a scandal.
Not only are these social and economic factors of great significance, the very structure of industry can be a powerful disincentive to innovation. As companies and organisations (be they private or publicly owned) become larger, they become more introvert, they cross trade within themselves, defining requirements very specifically to their own needs, and become ever less prepared to look beyond their own perimeters for goods, services or even utilities. This inhibits the ability of the entrepreneur to enter the field with a new idea. Here the habits of the European companies and organisations differ from that of the U.S.A. In America, subcontracting is an acknowledged way of life. A high percentage of the very successful small and medium sized companies in the U.S.A. thrive because they established themselves as specialised sub-contractors to a number of competing larger companies. In this way it is possible to have within the one country both giant companies that can afford the very large costs of designing, producing and marketing large complexes whilst still permitting the emergence. of a constant flow of new dynamic companies. Alas in Europe and particularly in Britain this attitude is less evident. All too often a high measure of vertical integration exists making it difficult to break into an established field with innovative ideas. Industries such as computers, semi-conductors, instrumentation, telecommunication, electrical equipment, software etc., have been inhibited by the fact that so much is already contained within the maw of the giant organisations in both private and public sectors.
To adapt to the rapidly changing hazards and opportunities of the future a move to a far less rigid and inhibited structure is urgent. Sub-contracting and ‘hiving off’ should be the aim rather than the deliberate creation of giant monoliths. Here the trend of the past two decades have been in the wrong direction.
-I thank the House. With regard to service employment- I have made the point before and I will state it againbroadly speaking, employment in services falls into two approximately equal categories. One category provides tangible services, namely, things that a person can wear or drive or put in a suitcase or carry around or put on the back of a truck. The other category provides what are essentially intangible services- often described as information services, that is the collection and dissemination of data in the broad sense. That category includes office workers, public servants, teachers, people in research and development and so on, although of course many such services may produce tangible effects.
We have to recognise that Post-Industrial Australia is essentially an information-based society in which at present more people are engaged in collecting, processing, and disseminating data than are employed in manufacturing and construction. The figures are self evident. As to whether this should or should not be the case will no doubt be argued when others participate in the debate, but so far as numbers are concerned there is no question that more people work in the information sector of the economy than in manufacturing and construction. The celebrated ‘law’ formulated by C. Northcote Parkinson, that ‘work expands so as to fill the time available for its completion’, recognises a profound truth- that service employment is inherently capable of mopping up far more workers than manufacturing because the services provided, for example by nurses, teachers or office workers, are consumed or used up each day and then have to be provided again the next day. A manufactured consumer durable, however, is a capital asset which has an extended life. Information services so far tend to be largely personal in nature and, therefore, labour intensive.
But it is clear that with the new technology it will be very easy to reduce the number of people employed in this area where the cost of labour is, of course, enormous and where the gap between costs of labor and technology is likely to be very great.
Let me illustrate this point. The installation of an Olivetti TES 40 1 word-processor may result in the displacement of five office workers who may absorb up to 200 hours- that is, five by 40 hours- per week of labour time. The TES 401 has a capital cost of about $6,600; Understandably, the Olivetti company was reluctant to reveal the labour lime involved in making each unit. In any case, it would be difficult to calculate as workers would also be involved in building, operating and maintaining the machines which construct the TES 401. However, it seems very likely that the time absorption in manufacturing each TES 401 would involve far fewer than 200 hours. So even if each TES 40 1 lasted for only one week there would be some employment loss. However, since the machine is a consumer durable which might be expected to operate for some years, there seems to be little justification for the hope, often expressed, that the five displaced office workers will be cheerfully absorbed in making the machines which displace them. Perhaps one might be absorbed in manufacturing and servicing, but what happens to the other four?
As I mentioned earlier, C. Northcote Parkinson’s famous law is the precise reason why some types of service employment, particularly of the intangible or information processing type, have been a major absorber of labour time. The principle of ‘economies of scale’ has, in practice, much less relevance in service employment than in manufacturing. Why should Parkinson replace Adam Smith in manufacturing now? If a telephonist is replaced by an automatic switchboard we cannot assume that she will secure work making telephones. If a classroom teacher is replaced by a television set can we assume that the ex-teacher will be employed building sets or making programs? In much service employment the ratio between employer and employee may be very low. It may be 111 or even less, as in the case of members of parliament or Ministers. A chauffeur might drive a single passenger in the same car for 48 weeks in the year. If he lost his job as a chauffeur- that is, as a worker in the service sector- and worked in motor manufacturing in Australia he would produce the equivalent of one car every 5.3 weeks. Of course, in the large Japanese motor industry each employee produces the equivalent of two cars per week. I echo the words of the distinguished member of this House who, on 24 August 1978, in the Budget debate said: .
We must face the fact that too many people are chasing too few jobs. Generally speaking, the more able, more articulate and more affluent two-income families are catching them. The unemployment we are now looking at is quantitatively and qualitatively different from the unemployment we have experienced in the past. Because of this it is also important that the ABS produce regular monthly statistics as to the effect of unemployment on families and households. The experience of other industrialised countries points to unemployment being a permanent feature of the economic landscape. The problem of the 1980s is going to be sharing the workaround.
That speaker also said that a survey which had been carried out by the Commonwealth Parliamentary Library suggested that the actual unemployment figure was about 12.5 per cent of the potential work force and that in May 1978. there were 856,000 people who would have liked a job. I agree with those words. I could not have put it better myself.
– It is a. Labor fallacy.
-I am grateful for the interjection by the honourable member for Moore. The speech was made by Mr Ian Wilson, the Liberal member for Sturt. I believe he was right. I also direct the attention of the House to a recent book entitled Unemployment by Keith Windschuttle, published by Penguin Books Ltd. He -argues, I think very plausibly, that if one examines the various categories of people who would, like to work but who for various reasons, having regard to the nature of the labour force, are reluctant to compete with other people who are obviously unemployed and perhaps unemployable, one will find that we have a large concealed unemployed and under-employed figure. This argument, fascinating though it is, might be best pursued after dinner.
Sitting suspended from 6 to 8 p.m.
-As I was saying, before the suspension of the sitting, Keith Windschuttle in his book Unemployment points out that in many ways the figures that we have to indicate full-time unemployment gravely understate the real figures. There are six categories of people to be considered in determining unemployment levels. The first comprises those who are registered with the CES as unemployed and are eligible for benefits or assistance. The second category is those who are unemployed but who are not eligible for CES benefits or assistance, perhaps because they have a working spouse or are excluded by the means test. The third category is those who are unemployed but who are excluded by health or other incapacity from receiving CES assistance. They may want to work but no appropriate jobs are available. Of course they may be receiving social security payments or they may be too old, too young or the wrong sex for any job that is available.
The fourth category consists of the underemployed; those who are in part-time work but who would like to be in full-time work, particularly women. Statistically they are regarded by the CES as employed even if they work for, say, only one day a week though they may prefer to work for five days a week. The fifth category is discouraged job seekers; those who wish to work but who feel pessimistic about their chances of getting a job and have stopped looking actively. This is particularly common where a spouse is working. The sixth category is those who are temporarily placed in jobs and then drop off the lists. It is the unrecognised dilemma of those who accept a tiny and short-lived bird in the hand only to miss out on a long-term and possibly more appropriate job.
The conclusion that Keith Windschuttle arrives at is that the total level of unemployment plus underemployment, plus disguised or concealed unemployment is really more of the order of 18 per cent of the potential work force. The honourable member for Sturt in his Budget speech gave a figure of 12.5 per cent, which we might see as a low figure. If we examine both figures we might perhaps equitably split the difference and say that 1 5 per cent is a more realistic figure of the degree of not just unemployment but also underemployment and disguised unemployment. I seek leave to incorporate in Hansard that section of Keith Windschuttle ‘s book entitled ‘Underemployment and Hidden Unemployment’.
The section read as follows-
UNDEREMPLOYMENT AND HIDDEN UNEMPLOYMENT
The previous section was not meant to argue that employers have taken kindly to wage gains made by women workers in the period since 1972. On the contrary, they have sought to keep down labour costs wherever possible. One of the main ways they have attempted to do this has been through part-time employment. A great deal of the growth in employment in the recession has been in part-time work. Between May 1972 and May 1977 only 30 per cent of the growth in jobs was in full-time work. Some 70 per cent was in part-time work. The savings employers gain through parttime work are greater if women part-timers are employed. Part-time work is seen as an ideal opportunity for many married women whose commitment to home and children makes it difficult for them to work full-time. In 1977 63 per cent of the female workforce was married and 40 per cent of these were working part-time. They averaged fourteen hours a week on casual rates and were ineligible for the holiday and sick leave benefits of full-time work. For many women, parttime work amounts to involuntary unemployment or underemployment. Those on part-time work are counted officially as employed yet more than 30 000 of them say they work part-time only because of the shortage of jobs. Because part-time work suits married women and because almost all young women are looking for full-time work, it seems likely that in that small number of industries where married women have replaced young women in jobs, the acceptance by married women of part-time work has been a significant factor.
In addition to underemployment through part-time work, the phenomenon of hidden unemployment is also characteristic of women. The hidden unemployed are those not measured by either Commonwealth Employment Service or Australian Bureau of Statistics surveys of the unemployed. The CES figures are the most unreliable for women. They refer only to people registered with the CES for full-time employment. Part-time job seekers are not counted. Women living with men who have jobs are ineligible for unemployment benefits. This acts to discourage women from registering with the agency. Further, because many women’s jobs are handled by private agencies, particularly in office work, cleaning, and entertainment and recreation jobs, women tend not to register. Finally, most women are simply not in the habit of registering with the CES for employment. In March 1976, for instance, despite a collapse of employment in the manufacturing industry, only 327 women, compared to 34 987 men, registered for unskilled manual jobs. A survey of women’s work for the Royal Commission on Human Relationships found that in Melbourne in 1975-6, only 1 per cent of a sample of working women found jobs through the CES. Most used personal connections, advertisements or direct applications.
The ABS survey does not suffer from as many limitations as the CES but is still a far from accurate guide to the state of female unemployment. ABS defines as unemployed: people actively looking for full-time or part-time work in the past four weeks, people who were available for work in the survey week, people waiting to start a new job, and those stood down temporarily. The group who are missed out of such a definition are discouraged workers, that is, people who are unemployed and want work but who are neither looking nor ready for work because they believe no jobs are available. Women are highly likely to be such discouraged workers, particularly those with children. Because they believe no jobs are available they do not try to make child-care arrangements and so are not ‘available’ to work under the ABS definition. However, other surveys have indicated that the number of discouraged women workers is very large indeed. A Morgan Gallup Poll conducted in 1973 found 32 per cent of women interviewed would go out to work if there was a convenient child-care centre available. Surveys by the New South Wales and Commonwealth governments found that in six New South Wales regional centres an average of 24 per cent of women contacted who were not registered as unemployed would have sought work were it available. This data indicates that between one-quarter and one-third of women regarded as housewives and thus outside the workforce should be counted as among the hidden unemployed.
This is, of course, a huge number. Taking the mean of the two above figures of 28 per cent and applying it to the number of women listed by ABS as not in the labour force at February 1978, there were 829,304 women who could be regarded as among the hidden unemployed. This lifts the total number of the unemployed at that time to 1,306,304 or 18 per cent of the labour force. Is this a meaningful figure or simply a play with statistics to paint a black picture? Most discussion of the proportion of married women who work takes the ABS figure of 41 per cent as its guide. The assumption is that the remaining 59 per cent are full-time housewives who remain relatively permanently outside the labour market. The assumed pattern is that most women work until they are about 24 years old, leave work to bear children and then, at about 35 years old, a smaller proportion re-enter the workforce and stay until they retire. This assumption, however, is not borne out by closer investigation. In a sample of Melbourne married women with children under 12, Jan Harper and Diane Worrell found that the most common pattern of work experience was that of intermittent employment- moving in and out of the workforce at intervals. There was no long gap between child-bearing and work re-entry. Harper and Worrell found that about 70 per cent of their married women had worked at some time when they had a pre-school child and more than 40 per cent worked at some time when they had a baby less than twelve months old. This sort of picture makes the ABS figure of 4 1 per cent of married women in the workforce rather misleading. It is true at any one time but does not portray the range of women’s experience. Now, what this evidence indicates is that we ought to take seriously those housewives who say they want to work. We should regard them not as being ‘out of the labour force,- but as unemployed, intermittent workers.
This argument ought to lead us to regard the concept of full employment’ with some scepticism. It means low rates of unemployment among adult males and the young and single. It is a definition that neutralises the impact of hidden unemployment among women. Lacking a social definition of their status as ‘unemployed’, women at home who want jobs do not regard themselves as truly unemployed. The inability of the capitalist economy to provide jobs for all who want them goes largely unrecognised. As Kaye Hargreaves has observed: ‘The political implications of a dole queue containing half the adult female population would be explosive. ‘ While the definition of the status of these women thus contributes to social stability it has other consequences as well. It diminishes the possibility that married women will act the way the ‘reserve army’ thesis suggests. The existence of large numbers of hidden unemployed does not mean there are a great many desperate women willing to undercut the pay rates of their sisters. Hidden unemployment probably accounts for part of the gap that exists between male and female pay rates but it is not a strong force, or women’s wages could not have increased as they did between 1972 and 1975. The lack of the appropriate definition also eases some of the psychological burden that unemployment imposes on those with close ties to the labour force and which manifests itself, as shown in Chapter Six, in higher suicide and mental hospital admission rates. It also has some intriguing consequences for government benefits policy which are discussed in the next section.
-I thank the House. It seems to me that the greatest contribution to work redistribution in a Post-Industrial or PostService era- I am starting to think that the term Post-Service era is perhaps even more appropriate than Post-Industrial- might be to accept a 35-year working lifetime as the norm- that of course is not the ‘Life. Be in it’ Norm- rather than the 50-year model which is still regarded as typical for working class males, although not for women or the tertiary educated. Eligibility for maximum retirement benefit, for example, under a national superannuation scheme- whenever we get that; and it has been promised one way or the other since 1 939 when the then Mr Robert Menzies resigned from Cabinet- could begin after 35 years work, or less if medical or other special circumstances were involved.
Since those who choose to remain working after 35 years would benefit financially from continuing to receive wages for a longer period, this could lead to a proportional reduction of retirement benefits where a choice was made to work for 40, 50 or even in exceptional cases 60 years. It should be pointed out that this incentive to retire early has been incorporated- quite rightly- in the Australian parliamentary superannuation scheme. We might say that what is sauce for the goose ought to be sauce for the gander; it ought to bc applicable outside this place, not just to us. The same principle is implied in the Commonwealth Employees (Redeployment and Retirement) Bill which this House will be debating at some time in the future where in effect a 35-year option or less is offered to the Commonwealth public servants who will be able to elect to retire at 55 years, if they choose. I remind you, Mr Deputy Speaker, as you would well remember, that 55 years is the mandatory retirement age in Japan for those who are the privates and non-commissioned officers in the Japanese industrial army.
Choosing options for a 35-year working life should encourage people to consider the value of time in their own lives. The conventional wisdom asserts that work equals income equals the power to make choices and that free time equals impotence. Often the reverse may be true and it may be that free time equals power to make choices whereas work equals response to economic necessity equals performing tasks set by somebody else. The 35-year option may help people to conclude that it is better to make active choices on their own behalf rather than passively to accept decisions made by someone else for them. The question of life after death has always occupied human thought. Basic changes in human working patterns may stimulate interest in the possibility of life before death as well.
The basic 50-year to 35-year reduction would not occur immediately but could and should be phased in pari passu to coincide with the reduced demand for labour which may accompany the increased use of labour displacing technology. This would enable technology to realise the hope, promised but never fulfilled by the Industrial Revolution, to liberate man from boring and life-denying labour. For those who find it pyschologically necessary to continue working even past 35 years, even at tasks which most of us regard as boring drudgery, the option must be kept open.
Order! The honourable member’s time has expired.
– I support the Appropriation Bills now before the House, not because I necessarily agree with all of the components of the additional expenditure sought in these Bills but basically because I support the need for the kind of restraint referred to by the Minister for Finance (Mr Eric Robinson) when he introduced these Bills. In his second reading speech the Minister said:
Notwithstanding the additional appropriations now sought, current expectations are that total outlays Tor 1978-79, including those financed from special appropriations, will exceed the Budget estimate by only a relatively small margin. This reflects the Government’s continued adherence to its policies of restraint in public sector spending.
That is a strategy which I have endorsed since I have been a member of parliament. My concern is rather whether or not the Government has the courage to give effect to its rhetoric. Certainly the rates of increase in budgetary outlays have been reduced substantially over the past three years and the Budget deficit has been held. But overall, notwithstanding the direct tax reforms of the Government and the expenditure restraint, the fact remains that the ratio of total public sector outlays as a percentage of gross domestic product- for all levels of government both for Budget and non-Budget sub-sectors- has not changed dramatically or favourably since the large upswing in 1974-75. In fact, there has been a marginal increase. Although the rate of increase may have slowed, this is not sufficient progress for a government concerned with lowering the overall tax burden, lowering interest rates and encouraging private sector expansion. What these Bills do not tell us, of course, is the extent to which the Budget estimates of revenue and expenditure are being held.
For the current financial year, from the March figures released several weeks ago, it is obvious that because of outlay overruns and revenue shortfalls this year’s deficit will exceed $3 billion. So there will be a substantial overshoot from the Budget estimate of $2.8 billion. If this is the case I submit that it constitutes a very serious threat to economic recovery in Australia. As the public debate is now beginning to realise, a continuation of sizable deficits each year creates an intolerable financing burden for monetary policy which can result only in higher interest rates and higher unemployment. As the Treasury Secretary recently said, there is both a flow and a stock dimension to the deficit financing problem and governments can come to grips with this only if the deficit is reduced.
An even more serious threat is the possibility of a fiscal blowout next financial year unless the Government exercises real fiscal restraint in the coming Budget. If this occurs, the very substantial economic progress made by the Government over the past three and a half years will go out the window. There have been gains and even the Leader of the Opposition (Mr Hayden) is acknowledging that an economic recovery is under way. Inflation has been steadily reduced. Nonfarm production statistics continue to strengthen. Private capital expenditure has strengthened considerably. Retail sales have strengthened. Civilian wage and salary earner employmentseasonally adjusted- has risen steadily throughout the present fiscal year. Forward indicators of private dwelling activity have strengthened. Company profitability and surveys of business opinion indicate that the private sector now believes that the recession has passed and the narrowing of the inflation gap between Australia and the major trading nations of the world has seen a strengthening of Australia’s balance of trade. Even the Australian Financial Review, which is a great friend of the Minister for Defence (Mr Killen), was prompted recently to state:
The Australian economy on current indications at last appears to have passed the trough of the recession and to be entering a period of increasing activity and rising business and consumer confidence.
However, what bothers me, is that having made these gains, the Government may not have the courage to properly control the recovery. Monetary policy, which has been required to carry a heavy burden arising from an endless series of large deficits, is not something which governments can pretend totally to control in the absence of fiscal restraint. The Government cannot at the one time treat the quantity and the price of money as totally independent variables. If the deficit is to be financed in a non-inflationary manner then obviously any money supply blowout will require substantial marketing of Government securities. A failure to do this will inevitably lead to consumer price index increases. In my view the Government placed its total economic strategy at risk over the past 6 months by failing to supply the non-banking private sector with competitive Government securities.
It is quite unrealistic to adhere to interest rate targets which are incompatible with money supply targets. In my view, the Government, if it is to follow a low interest, low tax and low inflation policy, simply has to follow a tough fiscal policy. If the Government does that it will provide the scope for private sector expansion and the possibility of providing jobs for the unemployed. The only way to solve the present problems of the Australian economy is to remove the fundamental imbalances in the economy. Some of these such as inflation, international competitiveness, private sector expansion and profitability, can be achieved only by controlling the growth of the public sector and the size of the public sector deficit. We have seen clearly in recent years that massive government expenditure and massive deficits only increase inflation rates, interest rates and unemployment.
The other major imbalance, the wage-price relationship, is largely outside the control of fiscal policy. But even here I think the Government could expect a more moderate wages policy from the Australian Conciliation and Arbitration Commission if it were seen to be proceeding consistently along a firm fiscal and monetary path.T submit that the Government should continue its present wages policy. I refer to the experience in the Organisation for Economic Co-operation and Development countries. The secretary of that organisation has stated:
Where effective stabilisation policies have been pursued, it has proved possible to hold down production costs in relation to prices and thus pave the way for the necessary improvement in the rate of return on capital. This has generally meant that at some point wages have risen less fast than prices.
I mention that because it is necessary for the Australian Government to follow this same line now as it has done in the past. The growth of real wages in relation to productivity in Australia over the past five years has been a major cause of unemployment in recent times. It is about time that the Australian Labor Party, the Conciliation and Arbitration Commission and the trade union movement recognised this and started to think of their responsibility to the unemployed as well as to the employed. However, a number of commentators have suggested that this wages policy of the Government should now be abandoned. I think that the honourable member for Gellibrand ( Mr Willis) has also suggested this.
The commentators follow this line of argument. They state that although Australia has experienced a period of weak economic activity, labour productivity has increased. They seem to ignore that the gap between real wages and productivity can be closed either by reducing real wages or, in the absence of that, by induced productivity growth as a result of labour shedding, that is, replacing labour with capital. If the Opposition wants to close the overhang by further reductions in employment, that is, induced productivity growth, then it should continue to argue for full wage indexation. I prefer to argue on behalf of the unemployed by securing a better employment performance as a means of closing the gap-
I suggest, therefore, that it would be preferable to reduce real wages rather than to keep them at their distorted level and to wait for induced productivity growth to close that gap. It is this latter method of reducing the gap- the low rather than high employment method- which has produced the labour productivity growth which is used as further justification for wage increases. I reject that approach and suggest that the Government continue its present responsible wages policy in the interests of those people who are presently unemployed. I reject the proposition that unemployment will be solved by anything other than proper demand, management policies.
In answer to some of the comments made previously by the honourable member for Lalor (Mr Barry Jones), I say that it is fallacious in my view to talk about job sharing schemes, early retirement schemes, shorter working weeks and to adopt a Luddite view towards technology as a means of increasing employment because this presupposes that there is a fixed amount of work to be done in any economy; that the relationship between scarcity of goods and total wants is, in aggregate, easily satisfied; and if anything happens to enable that work and those wants to be met by fewer people or to increase the labour force, then the result is inevitably more unemployment. The only way to reduce unemployment is to remove distortions in factor returns and to follow fiscal and monetary policies which will encourage job creation on a self-sustaining basis through an expanding private sector.
– Would you care to give an example?
– I will give you an example a little bit later. At the moment the risk is very great that the progress towards this goal which has been substantial in the past three years may be totally lost if the next Budget is not a responsible one. In my view this Budget is the most important one for the present Government. It will determine the future of the economy and the future of the unemployed. Unless there is a very substantial reduction in the deficit for 1979-80, Australia will again go down the road of high inflation, high interest rates, high taxation, low levels of economic activity and higher unemployment. Given the commitments already entered into by this Government and their implications for increased expenditure and loss of revenue, as far as I can ascertain the Government has a very difficult task regarding the formulation of the next Budget. Its options are very limited but quite clearly there will have to be very substantial expenditure cuts.
Public expenditure restraint to date has been exercised in an ad hoc way. It has not always been just or equitable and it has tended to be concentrated largely in capital works areas where the employment effects have been most damaging. I do not think it is possible to ignore the transfer areas of government expenditure any longer. I agree with the Minister for Social Security (Senator Guilfoyle) when she says that there is a limit to what the economic resources of this country can provide. In two areas- health and welfare- the cost to this nation approaches $ 1 1 billion. In other words, about 85 per cent of all personal income tax collected in Australia is spent on health and welfare. If one adds the education bill and the defence bill to that tally one finds very little scope for budgetary flexibility in other areas.
I was one of the members who did not support the concept of annual indexation of pensions. I still hold that view and will continue to hold that view. I call on the Government to restore six monthly indexation. But I do not see that as being necessarily in conflict with my belief that transfer payments should be subject to very close examination when expenditure cuts are being considered. I have always held the view that such cuts should be just and equitable and should not apply to those who are in real need of assistance. On the contrary, I suggest that it is precisely because so many benefits are paid universally, irrespective of need, that expenditure cuts to date have inevitably been unequally and inequitably imposed.
Until such time as taxpayers funds are paid only to those in need it will not be possible to reduce substantially the tax burden in Australia. It will not be possible to initiate welfare initiatives such as family allowances to a satisfactory level and it will not be possible to index such benefits regularly in order to preserve the real value of those benefits. For that reason, even though pensions in Australia have risen by more than 37 per cent since this Government came to office and are now at their highest level ever in relation to average weekly earnings, any reduction in their real value will substantially disadvantage those pensioners who rely totally on the pension for their income. This anomalous situation occurs when selectivity based on need is ignored as the basis of disbursing welfare funds. When payments are universally reduced or adversely amended in some other way, the burden will always fall unequally and unjustly. So we have a situation where I consider it quite necessary, if we are to preserve equity and indulge in responsible budgetary management at the same time, for welfare payment to be more closely associated with a needs basis than is presently the case.
While advocating a tight but equitable aproach to budgetary matters, it is difficult to ignore one item in Appropriation Bill (No. 3). It is an item which inevitably, I suppose, has been the subject of some political debate both inside and outside this chamber. I refer to the appropriation of $ 10.2m for the purchase of two Boeing 707 aircraft for special transport purposes. It is difficult to make a judgment on this matter. As a private member I am not familiar with the security report which was an important element in the decision to purchase these aircraft. Also, unlike other honourable members in this Parliament, I believe that Prime Ministers should travel, and travel often, particularly when the international political environment is as fluid and uncertain as it is now. I also think that the Prime Minister should be given maximum security.
It is my view that in normal economic times, on the information available to me, that such a purchase would be justified. I am not convinced, however, that at a time when austerity is being preached in budgetary matters, such a purchase is warranted. I cannot see the consistency in that action with the bringing forward of policies such as the annual indexation of pensions as a means of curtailing public expenditure. I raise that matter simply to stress that while expenditure reductions are necessary it is essential that they be carried out in a consistent and an equitable manner.
It is my view that the Government should continue its present policy of fiscal restraint as mentioned by the Minister for Finance (Mr Eric Robinson) when introducing those two Appropriation Bills. The recent economic history of Australia supports that approach and so does every respectable body of national and international economic opinion. The amendment moved by the honourable member for Gellibrand (Mr Willis) should be rejected out of hand. Paragraph (a) of the amendment condemns the Government’s failure in the area of employment. I draw the honourable member’s attention to the fact that in one year, between 1 974 and 1 975, unemployment went up by 207 per cent. Between 1972 and December 1975 it rose by 140 per cent. These figures are the result of the policies which the Labor Party pursued in government. While this present Government has been in office unemployment has increased at a rate of approximately 1 1 per cent per annum. I also refer to a report put out by the honourable member for Macarthur (Mr Baume). It shows that there are 152,700 more people at work in Australia now than was the case when the Labor Government lost office in 1975. 1 therefore reject that part of the amendment moved by the honourable member for Gellibrand.
I refer also to the second point of his amendment which refers to inflation and interest rates. From an examination of consumer price index movements, March quarter on March quarter, we can see that between 1973 and 1975 the CPI rose from 5.7 per cent to a peak of 17.6 per cent. Under this Goverment those annual CPI increases, March quarter on March quarter, have been halved. The honourable member for Gellibrand, in his amendment, then referred to interest rates. Again, following the policies which the Labor Government pursued in 1972 to 1975 and policies which the Labor Opposition now say are still appropriate, interest rates went up by 64 per cent. They went up from 5.5 per centthese are the yields on 5-year non-rebatable bonds- to 9.03 per cent in 1975. That interest rate level has been held to the March quarter of this year. In those cases, therefore, I reject that part of the amendment.
Paragraph (c) of the amendment refers to the Government’s wages policy. I simply say that the points I mentioned during the body of my speech justifies the kind of wages policy that this Goverment has pursued. It has had the endorsement of the Reserve Bank of Australia, the Organisation for Economic Co-operation and Development and the Bank for International Settlements. Also, the President of the Australian Council for Trade Unions has agreed that any submissions which are made by the trade union movement should now show some concern for those who are unemployed.
Finally, in relation to paragraph (d) of the amendment, I mention that pensions have increased by approximately 37 per cent. I have already suggested that they are now at a record level in relation to average weekly earnings. I also point out that the Government’s efforts to reduce the inflation rate and to expand national production are always in the best interests of the low income earners. Professor Henderson, in his report on the Commonwealth Commission of Inquiry into Poverty in Australia, mentioned quite clearly that the pension groups, the low income disadvantaged groups on fixed incomes, were the ones who were the most disadvantaged by high inflation rates. So in all those areas referred to in the amendment moved by the honourable member for Gellibrand, the policies which are being pursued by this Goverment and which are opposed by the Opposition have produced far better results than the policies espoused by the Labor Opposition and pursued by it when in government. For those reasons I am very pleased to support the two Appropriation Bills now before the House, and I reject the amendment moved by the honourable member for Gellibrand.
– The two Appropriation Bills now being debated are merely the latest official confession that the Fraser Government’s economic management is an undisguisable shambles. Interest rates, money supply, inflation and unemployment are all going in the direction opposite to that which the Fraser Government asserted they would and should go. There is no doubt that the assertion as to where they should go was correct. The assertion as to where they would go was dead wrong. It was wrong because of the serious inherent deficiencies in the general thrust of the application of economic management by the Fraser Government. The Fraser Government economic management has lost any pretence of co-ordination. It is misfiring. It is out of control.
The most recent, dramatic and worrying aspect of this concerns money supply. Today, the Treasurer (Mr Howard), during Question Time, produced what can be described only as a flimsy alibi in defence of the runaway condition of money supply. It was totally unconvincing. Money supply is an important indicator as to the state of the economy and the direction it is taking. Put in its crudest and most simplified, perhaps even misleading, sense nonetheless to give an indication of what we are talking about- if the volume of money increases much more rapidly than the volume of productivity in the economy, there is highly likely to be an outbreak of inflation. That is what has occurred.
Let us look at what has been happening with money supply. For the year it has accelerated by 1 1.8 per cent on a seasonally adjusted basis. For the most recent quarter annualised it has increased by 14 per cent. What that means very simply is that not only is money supply running well ahead of the 6 per cent to 8 per cent target the Government stipulated as necessary to reach its objectives, but more than that, on the latest quarterly figures annualised, there is a rapid acceleration over the rate of increase applicable earlier in the year. What must be borne in mind is that although the Government has taken some- I believe they have not been adequatecorrective monetary measures with adjustments in interest rates, the fact is that there is a lag of several months beyond 6 months before that sort of measure starts to be fully effective. What the Government has done recently will not start to bite in in terms of beneficial effect for some time yet. When we look at the acceleration in money supply for the latest quarter annualised at 14 per cent, we can rest assured- we can do so with no sense of security- that the rate will accelerate further.
The undeniable fact is that the increase in money supply has more than accommodated higher inflation; it has fuelled it. Inflation is now running at the rate of 8.2 per cent on an annual basis, according to the figures for the latest quarter, as against the 5 per cent which was promised. My calculations suggest strongly that inflation for the year ended June 1979 will be of the order of 9 per cent. This figure is a long way removed from the optimistic promises of the Prime Minister (Mr Malcolm Fraser) that inflation would be wound back to 5 per cent on an annual basis by June this year.
There is another aspect of this outbreak of inflation which is disturbing. The Government is asserting that there is evidence of economic growth, of economic recovery. There is no doubt that economic growth is evident within the economy- I would say that there is roughly five per cent economic growth- and it is associated with a fresh and disturbingly large outbreak of inflation. All that that means is that the economic growth has been fuelled by and proceeds in an environment of unhealthy, forced hot-house growth. In those circumstances it cannot be sustained. The implications of such a situation are simply that the Government has to cut back severely in a number of areas and that it will cut back on that sort of economic growth. I will go into that matter in a few minutes.
If money supply was on a healthy target according to the Government’s planning it would fall well below the 10 to 1 1 per cent rate for this fiscal year which the Treasurer is obviously thinking about. Let us look at the relevant statistics: The 5 per cent growth and the 5 per cent cost of living increase that was supposed to be associated with that level of growth, not the 8.2 per cent, going up to 9 per cent, for the fiscal year that will occur. The Government said that 5 per cent was necessary and that we should expect it. After all, we paid a high cost for it- an increase of some 30,000 in unemployment in past months. In spite of that, inflation continues to climb. The 5 per cent growth and the 5 per cent cost of living increase represents a total of about 10 per cent. On the sort of parameters the Government has been setting itself, the adjustment in the money supply to accommodate that is not 10 per cent to 1 1 per cent; it is no more than a maximum of eight per cent. The implication of that is obvious. Money supply is running in excess of some $ 1,200m, or, in relative terms, about twice the rate that the Government would believe proper on the basis of the planning that it outlined in the Budget and which it has been upholding continuously for some months. It obviously is not doing so now.
All this means that the Government’s record in economic management now becomes a catalogue of error, failure and dishonoured promises. The deficit is blowing out by about $500m. Money supply is in a chaotic condition. Interest rates are surging upwards, and they have not yet reached their ceiling. Inflation is taking off. Unemployment continues unabated. Taxes will continue to climb. Overlaying this there will be an even more determined effort on the part of the Government to further reduce real wages. The year 1979 will be one of cold comfort for Australia and there will be little chance of a thaw in 1980. The inevitable consequences of the present economic shambles is that 1979-1980 will be a period of tough fiscal and monetary policies.
If we look at the Appropriation Bills which we are discussing we find that they disclose that the deficit will have blown out by some $500m by June, the end of this fiscal year. That means that the deficit will be in excess of some $3,000m. A thoroughly legitimate question to ask is this: How is that deficit going to be funded? On the basis of all of the evidence so far the printing press operators have been working at penalty rates to print the money. Government bonds were to be sold by the Prime Minister, setting an artificial interest rate as though he were operating as the Miser Jones of the money markets. That approach may bring quick sales for used Lancias or help in flogging land in Victoria- two areas in which I understand senior members of the Ministry have some specialist experience but it will not work in the money markets. Government bonds were offering too little to the market when the rest of the market was offering so much better. Accordingly, the bonds were not being sold and the deficit was not being properly funded.
Fraser ‘s economic quackery has a high price. We have already seen a part of the result, an interest rate hike; and it is hard to see how building societies will be insulated from that. Accordingly, the average home mortgage will increase in cost by something like $20 a month and perhaps more. It depends upon whether the Government can contain interest rates at about the present level. I do not believe that it can. I do not believe that the interest rate climb has stopped. I believe that it will go more nearly to 10.5 per cent, and conceivably more nearly towards 1 1 per cent. The effects on business are going to be gravely dislocated. Interest payments from gross profits of companies have gone from 1 0 per cent to over 1 6 per cent. Accordingly business has already suffered a severe squeeze because of the interest bill it has to meet for borrowed money. On this basis the squeeze will worsen, the cash flow of companies will become more difficult to obtain and the level of activity will be set back further.
I suggested that interest rates would go up even further than the level they have reached already. Let me give some justification for that statement. The domestic deficit will be of the order of about $2,000m this year. Only about one-fifth of that has been covered by the sale of bonds to the non-bank private sector. The rest, to the extent that it has been covered by the sale of Government paper, has been covered by short term Treasury notes. That means very simply that liquidity has held for only a few months; it has to be rolled over regularly in the course of a year. Accordingly, these borrowings of the Government will be rolled over early in the new fiscal year, after June. According to the Finance Department the deficit next year looks like being of the order of $4,000m. That implies a domestic deficit of about $2,500m which will have to be funded next year with borrowings on the money market from the non-bank private sector, at the same time that short-term Treasury notes of a very large order, are being rolled over. So, effectively, for 1979-80 we are talking of two deficits being funded at the same time.
One does not have to be terribly intuitive about the implications of economic policy in that sort of circumstance to understand immediately that interest rates will not drop below their present level and that it is inevitable that there will be upward pressure upon them in the course of 1979-80. The inflation upsurge which we have seen is clear evidence of the incompetence of the Government and is very largely a product arising from two factors- undesirable and unwise cost increases in the last Budget for important consumer commodities, like petrol, and the fact that the money supply has got out of control, as I have already explained, and is not only accommodating but is fuelling the fresh outbreak of inflation.
Let us look at that one point, Budget cost increases. Let us look at the happy conspiracy between the Government and the major oil companies in this country. As a result of the introduction of so-called import parity pricing for petroleum, the price of motor spirit has gone up enormously in this country. Import parity was achieved in the 1978-79 Budget in one fell swoop, not over several years as was promised. The movement had nothing at all to do with a wish to establishpart of a nationalenergypolicy. It was solely and exclusively related to the fact that the Government desperately needed additional revenue. The Government’s revenue from levies on the sale of petrol went from a little over $400m in the last fiscal year to over $ 1,200m this year. In order to keep the domestic petroleum producers quiet, the producers are picking up more than $300m in additional profits that would otherwise have not been available if there had not been this movement towards import parity pricing. That is bad enough but, to add insult to injury, in next year’s Budget, on top of that $300m will be added another $100m which will come from revenue otherwise available to the Government. That will add to their profits. The upshot of all this is the aggravation of inflation.
The inflation upsurge is unambiguous. There was a 1.7 per cent increase in the March quarter this year as against 1.3 per cent for the same quarter of last year. There was an 8.2 per cent increase for the year to March, exactly the same as for the last year. The significance is that there was not a stand-steady position over the 12-month period. There was some evidence of a continued marginal but important windback in the level of inflation in that intervening period. It has been lost and inflation is on the upward climb again.
Let me come back to the money supply targets. They are now a mirage. They are empty and meaningless and the Government is in a desperate situation. Let me talk about the implications of the Government trying to get the money supply back into control and to reach the target of 6 per cent for this calendar year, that is, to December 1979. That is roughly the target it set itself for the fiscal year to June; a target it cannot conceivably achieve. To achieve that target would mean that money supplied for the remaining nine months of this calendar year would have to increase by no more than 2.6 per cent; that is, one-third of the rate for the nine months to
March of this year. It is incredible. It is unachievable in any sensible term at all. Let me raise with honourable members of the House some of the technical difficulties of trying to achieve that sort of target; trying to achieve by December 1979 a money supply increase of 6 per cent. This was the target supposed to be achieved this year. This was essential, according to the Government, for inflation to come down to the 5 per cent level it had postulated.
In the 12 months to June 1978, inflation had increased by less than 8 per cent and money supply had increased by about 8.3 per cent. At the time when those targets were set in the last Budget. A 6 per cent to 8 per cent increase in money supply was associated with real growth of a little over 4 per cent- that is not much different from what is actually being achieved this yearand inflation of about 5 per cent. When this fiscal year finishes and when the next one is commencing- that is the basis for setting the framework for the next Budget’s parametersinflation will be of the order of 9 per cent and the money supply will be somewhere between 10 and 1 2 per cent. So the Government will be starting from a higher base than it commenced from at the beginning of this current fiscal year. The Government missed its targets this fiscal year, and it will not conceivably reach them by the end of this calendar year. There must be the greatest amount of doubt imaginable that the Government could possibly achieve these targets by the end of 1979-1980. That is the sort of shambles that the Australian economy has got into under the Fraser Government’s economic administration. The undeniable fact is that the Fraser Government is about to squander the opportunity for economic recovery, not for the first time but for the second. It did it in 1976, it is about to do it again. Not even that tame cat of conservative journalism, the florid pensioner of the Packer family, David McNicoll, could seek to excuse this fiasco without at least blushing.
Let us look at the outlook. What it means in the course of this year is that we are going to see a clamp on liquidity in 1 979 as the Government struggles to get runaway money supply back under control. It means interest rates will go to about 10.5 per cent a year and probably closer to 1 1 per cent. It will mean a yearly rate of inflation of about 9 per cent by June of this year rather than the 5 per cent promised. It could certainly reach double digit figures by the end of this calendar year. It will mean unemployment of the order of 550,000 at the January 1980 seasonal peak. Of course it will mean further spending cuts. Already the States have been advised of this. For instance, under the joint cost sharing arrangements with the Commonwealth for hospital services the Victorian Government has been advised to expect a cut of $40m. The cut in New South Wales will be $63m and in Queensland, $34m. So not only will provision for the comfort and the needs of the community be cut back, but also essential services will be seriously undermined.
There is no inspiration and no reassurance from the leading lights of the Government. At best they are dim and if they are switched on they are going out. We have offensive homilies from the Prime Minister who blames schoolteachers for unemployment and asserts that they should be training young people for apprenticeships. In 1976, 16,000 young people were unable to get apprenticeships. There will be a shortfall of tradesmen in excess of 10,000 this year. In Victoria the ratio of applicants for apprenticeships to vacancies is 57 to one. And the Prime Minister had the gall to say that the educational system is to blame for this!
Liberal Party Ministers are able to keep their jobs in the Ministry, sell land, deliver moralising injunctions against the casualties of Government economic incompetence and assail the level of unemployment benefits, as did the Minister for Industry and Commerce (Mr Lynch) last weekthe lord of Stumpy Gully who finds no embarrassment at all at making $67,000 capital gain through rigging the land market and then giving lectures to people on unemployment benefits. He said that unemployment benefits are too high. A man with a wife and four children is $9.20 a week below the austere poverty level line. A single person is $2.25 a week below it; a lone parent with one child is $4.50 below it; and a lone parent with three children is $ 14.60 a week below that very austere, that very mean and thoroughly deprived line of poverty. The lord of Stumpy Gully, the Minister for Industry and Commerce, had the gall after collecting a cool $67,000 from land speculation, to lecture the poor, the deprived, the unemployed and the casualties of Government economic policy. This Prime Minister deserves to be cashiered not just from the Government but from the Parliament. The Government has no confidence within the community. It destroyed any semblance of credibility it might have had by its abject failure in economic management, by the shambles it has created, by the inordinate level of suffering it has unnecessarily imposed on the community.
– Appropriation Bill (No. 3) 1978-79 and Appropriation Bill (No. 4) 1978-79 are part of the machinery of government. They seek to allocate the sum of $289.56m for the carrying out of essential Government services and commitments. It is appropriate to remind the House that this sum of money is required to be provided only by virtue of the fact that there has been a saving of $ 1 07. 1 m on the allocation provided in Appropriation Bill (No. 1) and Appropriation Bill (No. 2). This saving has been achieved by a rigid exercise of a disciplined approach to Government spending and good husbandry in making sure that the Government and the people of Australia have received value for each dollar expended. This good husbandry is the nuts and bolts of the finance machine of the Fraser-Anthony coalition, and is only part of economic management.
At the outset I want to say that I support fully the thrust of these two Bills and I dissociate myself completely from the amendment moved by the Opposition. It is a dispiriting piece of paper. Its character was backed up by the lack of credibility shown by the Leader of the Opposition (Mr Hayden) in his speech. I think it is important to remind the House and the Australian people that his Government, in which he was Treasurer in the later stages, presided over the greatest rate of inflation in Australia, the greatest increase of unemployment and the greatest lack of confidence that has ever been known since we became a Commonwealth in 1901. 1 think it ill becomes him to recite in platitudes a meaningless repetition of words which have no application whatsoever. It is appropriate to remind him that persons in glass houses should not throw stones. We ought to look at the totality of the situation with particular reference to the recent increase of 1 .7 per cent in the consumer price index.
I was amazed to find that all the scribes in Australia, the great prophets in the media, were predicting that this increase would be considerably in excess of 2 per cent. How wrong they were. They failed to be fair. They failed to acknowledge that in the present coalition Government we have financial managers of the highest order. It is appropriate to compare that increase with the recent increases in corresponding countries which have the same standard of living as ours. In the United Kingdom the increase was 2.3 per cent; in the United States 2. 1 per cent; and in West Germany- which has the strongest currency in the world- 1.7 per cent, which was exactly the same rate of increase in the CPI as occurred in our own country. It is also worthy of pointing out that last year private investment in Australia increased by 24 per cent. Mining was well out in front with a 56 per cent increase, and a firm expectation of an additional increase of 32 per cent in 1979.
Members of the National Country Party recall that under the Labor Administration exploration for oil in this country was nil. It is anticipated that in the next year between 85 and 143 exploration wells will be drilled. Because of the confidence that has been created and the economic environment and climate we now have seven out of the ten deep sea oil drilling rigs in the world operating off ihe Australian coast Quite obviously this confidence has been shared by the manufacturing sector which showed an increase last year of 2 1 per cent. We have had positive adknowledgment of continuation of that confidence by such firms as ICI Australia Ltd, which has invested $500m in a petrochemical plant, and General Motors-Holden’s Ltd, which will take on the rest of the world by the infusion of $200m into the car manufacturing business.
The Opposition talks also about there being a lack of funds for housing. How wrong again it is. In February of this year $577m was made available to provide housing for Australian people. This represented an increase of $110m on the amount made available in February of the previous year and of $2 1 m on the amount for the previous month of January 1979. The Leader of the Opposition, in criticising the Fraser-Anthony Government, failed to get down to the grass roots situation of the Australian economy. He talked about unemployment. None of us is pleased with the unemployment situation in Australia, but if one sorts the wheat from the chaff one will find that the total for employment in Australia is up 86,600 on the figure for May 1 978. In excess of 6 million people are employed in Australia, which is the greatest number of people who have ever worked in Australia.
– Record employment.
– I am in debt to the honourable member for Calare for signifying that Australia has record employment. Over 6 million people are employed. They are all playing their part to make Australia one of the great trading countries of the world. They are alive to their responsibilities and are not adopting a negative approach of self-destructive criticism.
I want to comment on one or two of the specific points raised in the Appropriation Bills. I pay particular attention to the increased sum being made available for the Community Youth
Support Scheme. I am delighted to note the increase of $3. 3m. This indicates that the scheme, which was the brainchild of this Government, has gained credibility in the eyes of the Australian people and is playing a meaningful role in bringing hope and confidence to people who otherwise would be forgotten. It is good to see that the community has become involved. It is good to see the increase in the number of schemes in Queensland in the last 12 months. They have gone up from 33 to 38. A total of 1,803 young people are involved compared with 1,400 as of July of last year. In February of this year 470 left the scheme in Queensland. Of that 470, 260 were able to be placed in full-time permanent employment. Two excellent schemes operate in my own area of the Darling Downs. One operates in Toowoomba and the other in Warwick. Sixty people participate each day in the scheme in Toowoomba. Eight people left it last month and seven of them were placed in fulltime employment. In Warwick 17 people left it and 9 of them were given the opportunity to be fruitful members of the Australian society by being placed in employment. More importantly, in many instances mothers and fathers write to the people responsible for the administration of the schemes stating that their children have extra confidence and have been able to relate better with other members of their family and with society, by virtue of the fact that they have been able to establish inter-personal relationships through the confidence which has been given to them by people indicating that they are concerned about them and interested in them. We are grateful to those young people who take jobs as teachers aides and tuck-shop aides. I believe that it is appropriate in a debate such as this to urge the people to co-operate more with the various schemes. I think it is wrong in this modern era for people of my generation to tend to criticise the youth of today. I appeal to these people to be very generous in their attitude to the youths of today. The youths of today live in an inquiring era. They live in the era of technology. Unless the older generation is alive to the aims and aspirations of the youth of today it may well be that we will fail them. The youth of today is equal to the youth of yesteryear. The young people of Australia need our co-operation, not our criticism. We must not fail them. We must give them the greatest gifts that we can give them, that is, our time and interest.
I note in one of the Appropriation Bills that a sum of money has been made available for natural disaster relief. At one time there was in this Parliament enthusiasm for security of living.
Memory dims that enthusiasm because quite obviously it has waned. Unfortunately when we have disasters such as that which occurred in Darwin, the enthusiasm waxes and everyone is determined to introduce a system of national insurance to guard against such disasters. Then, the fires of enthusiasm are extinguished. This ought not to be. We have debated and discussed a system of insurance for natural disasters. I hope that the Treasurer (Mr Howard) will soon bring into this Parliament his policy information paper on natural disasters which he indicated on 19 January he would be tabling in the Parliament.
Natural disaster relief is a responsibility for all of us. It is good to see that the States have assumed greater responsibility following the doubling of the base in the last Budget and the re-arrangement of the ratio of the amounts to be met by the Commonwealth and the States. The States now have to meet 25 per cent of the amounts above the base. The States should be part and parcel of this arrangement. At most times they are very jealous of their sovereign rights. It is only appropriate that they make a meaningful contribution to the area of funding for natural disasters relief. Propaganda will not put a roof on a house or return a ton of silt from where it came- be it sand from the seashore or fertile farming land- but money will. The insurance industry surely has to design policies which meet emergencies and exigencies without an intricate system of technical jargon. The Australian people are always open to a natural disaster, be it fire, flood or the droughts which occur with monotonous regularity in the Australian rural industry.
I want to draw the attention of the Parliament to the natural disaster insurance system that operates in countries which compete with us for overseas trade. I refer to Canada and the United States. In the United States farmers are assured of their income without putting in any contribution whatsoever. It is a government responsibility to ensure that the country has a viable rural sector. A similar situation exists in Canada, which has two schemes. One is the livestock and beef agricultural stabilisation scheme, which guarantees a farmer a return on average income for the previous five years without any contribution whatsoever by him. The other scheme is the Western Canadian grain stabilisation scheme, which is funded on a dollar for dollar basis by the farming community. All this indicates that our overseas competitors are safeguarded by a sympathetic government against the problems of natural disasters.
I make a special appeal to the Cabinet, when framing the Budget, to make sure that the Australian farming community is allowed to compete on equal terms with farmers from other countries. The amount of input by government to the. Canadian and American systems is four times the amount of input by the Australian government on a per farmer basis. The total amount put in by the American Government to ensure that the farming communities have the same high standard of living as the rest of the community and to make sure that the input is sufficient to enable its 2.7 million farmers to be viable competitors on the world market is $6, 130m. The 230,000 farmers in Canada receive a government input of $493m. The Australian farmers, numbering 170,000, get an input of only $85m. So roughly four times greater government help is given to the American and Canadian farmers as compared with the Australian farmers. That basis is worked out by using a combination of the farmers, a proportion of gross agriculture output, the value of assistance per farm and the proportion of gross domestic product provided by the farmers of that particular country. In particular I refer to the help that is given in the fuel situation. It is important in Australia that assistance be given in the area of fuel for farmers because in the grain industry we export approximately 80 per cent of our total produce at prices largely influenced by the sheer volume of production and by the policies of the American and Canadian governments.
Within this framework it is important to remind Australian’s that in Italy petrol to farmers costs 14.9c per litre, and distillate 13c per litre; in France, which is a country on a high bracket similar to Australia’s, petrol costs 25c per litre and distillate 1 7c per litre; in Britain petrol costs 21.3c per litre and distillate 14.2c; in Canada, one of our great competitors, petrol is sold to the farmers at 10c per litre and distillate at 8.8c per litre; in the United States of America petrol costs 13c per litre and distillate 8.8c; whilst in Australia the average price in the grain producing areas is 23.5c per litre for petrol and 17c for distillate. The comparison for petrol costs is Canada 10c, United States of America 13c, Australia 23.5c. Distillate in Canada costs 9.9c per litre. In the United States of America it costs 8.8c per litre and in Australia it is 1 7c per litre.
– Twice as much.
– As the honourable member for Dawson says, it is twice as much. Therefore it is difficult to isolate the Australian farming community from the assistance that is given by other countries to their farmers. Why should we be different? Why are we different? I make a special appeal to the Cabinet in the pre-Budget discussions to become fully cognisant of the situation as it pertains in other countries because in a final analysis it is necessary for the Australian farmer to compete in the world-wide stadium of tough commodity marketing with countries which get as government input four times the amount that the Australian farmer receives. Of course, we cannot expect any assistance whatsoever from the Australian Labor Party. We find that its spokesman for agriculture in another place is saying that there is no way in the world that there is any justification for putting Australian farmers on a competitive basis with overseas competitors. In effect, it is going to wield the axe on the Australian farming community. There has to be a sensible fuel policy. City people of course can save on fuel. Farmers too can save on fuel. With the application of pre-emergent herbicides such as ‘Stampede’, farming costs can be saved. But there is a vast reservoir of petrol being used by city people who travel one in a car to work.
There must be a sensible policy. No one wants to deny fuel to city people for general purposes of leisure, but by the same token if there is to be rationing of fuel in Australia it is absolutely essential that preference be given to fuel for primary production. Any rationing of fuel is the responsibility of the State governments. I make an appeal to the State governments to be aware of the situation and to have legislation on the books, as I understand one State has, for the purpose of allocating petrol to productive industries and to industries necessary for our survival.
It is interesting to note that the total fuel bill in Australia for primary production of $300m last year was at a cost per Australian farmer of $1,750 more per annum than the price paid by his competitor in America. These are significant points. We do realise that the world is becoming short of fuel, but we must make sure that the real wealth of Australia is safeguarded against unfair competition in overseas markets. I also remind Australians that the Australian Labor Party’s policy is not for reduced taxation; it is for increased taxation. I repeat the words of Labor’s shadow Treasurer who spoke in Brisbane at a seminar earlier this year. He said:
We are going to have to get out and defend the public sector and encourage people to support it, not because it represents something they will not have to pay for- but rather because it is worth paying taxes to have it. Such a policy can and should be made more palatable by proposals to pay for at least part of the increase in public expenditure by redistributive taxes such as a resource rent tax and taxes on private capital such as a tax on wealth capital transfers.
Mr DEPUTY SPEAKER (Mr Armitage)Order! The honourable member’s time has expired.
-The honourable member for Darling Downs (Mr McVeigh), who preceded me in this debate, spent some time talking on the issue of natural disasters. This is a matter of great significance to rural people and others around Australia. From what I heard of the honourable member’s speech one could fairly construe that he is a member of a government that is a national disaster; that is especially the case in respect of rural people and especially the case in respect of the matter that he has raised. While he was speaking I looked through some papers and found that the allocations for natural disasters were as follows: In 1974-75 $113m; in 1975-76 $58m; in 1976-77 $27m; and in 1977-78 $53m. This is a great drop from the provisions made under the Labor Budget in 1974-75. In 1978-79 $ 12.6m was allocated to meet the outstanding commitments in respect of past natural disasters- drought and things of that kind that had already occurred. No allowance was. made in the 1978-79 Budget estimates- none at all for payments in respect of natural disasters which may occur in 1 978-79.
The funding of assistance in respect of natural disasters also changed. The honourable member for Darling Downs made brief reference to this matter. In the past a base figure was paid by the States but this was set back in 1 97 1 and the Commonwealth met all expenditure over this amount regardless of what it reached. From 1978-79 the States’ base contributions have been doubled and expenditure in excess of those base amounts will in future be funded on a $3 Commonwealth to $ 1 State basis. The situation that has emerged from this thimble and pea trick which has been perpetrated is that the States under the federalism scheme are virtually devoid of any surplus money and cannot really amass the base amounts upon which they can expect to attract a subsidy. This is another retrograde step. The people in remote parts of Australia are the ones that are going to suffer most and I do not wonder at the normally complacent member from Darling Downs being almost violent in his contention that there should be an overhaul of this procedure.
This afternoon we heard one rebellious Government member after another expressing indignation at the deteriorating situation in Australia generally. Tonight a member who is usually a sycophant, who has never raised his voice in criticism before, is raising it in such a trenchant way. There is the question of natural disasters but there is also the matter of the broken promise about the natural disasters insurance scheme. Does the honourable member for Darling Downs remember the promise made in March 1976 by the Prime Minister (Mr Malcolm Fraser) in an unambiguous and unequivocal way that a natural disasters insurance scheme would be introduced for those people whose property and the like was not insurable under the ordinary insurance schemes. Once again, this is a matter of great importance to the country people and certainly to the people in my electorate.
Many unfortunate people have become the victims of yet another broken promise on the part of this Government. As an example I refer to people in the Illawarra part of New South Wales and the southern part of my electorate, around Corrimal and Bulli and around north and south Wollongong. Almost 40 houses have been seriously affected- some of them have been completely written off- because of land subsidence and land slippage. Yet their properties were approved by the local authorities at the development stage. This Government undertook to introduce a natural disasters insurance scheme. It even went so far as to set up working parties and interdepartmental committees. A stack of paper work on this matter simply flowed when the general election was being held. But as soon as the election was over, we discovered that nothing further would be done about the matter. So that, in itself, is another great disaster.
We are debating the Appropriation Bills, which are of very great moment. Appropriation Bill (No. 3) allocates an amount of $223m-odd while Appropriation Bill (No. 4) allocates some $66m-odd. It is really remarkable to see the depths to which this Government will stoop to engage in this most ruthless pin-pricking of deprived people in this country. Let me illustrate the priorities of the Government in respect of some half a dozen of the significant appropriation items affected. First of all, an extra $300,000- an increase of 37 per cent- has been allocated to the Department of Administrative Services in respect of visits abroad by Ministers, their personal staffs and others. My party does not generally make a big complaint about this sort of thing because we recognise that in a modern world where trade and commerce is the order of the day, it is important for people to go overseas. But this Government, this Prime Minister and this Treasurer (Mr Howard) steadfastly contend that there have to be and there ought to be across-the-board cuts and curtailments. But when it comes to their own movements around the world and their inclination to travel, there are no cuts in allocation; in fact there are substantial increases. Even today several Ministers sought pairs through the Government Whip’s office to enable them to go away on matters which did not come under their ministerial obligations. One Minister was going to look at sport and recreation and things of that kind around the world. No specific meeting was mentioned. If anything looked like a junket, a holiday, then that did. Of course on that basis, the request for a pair could not be granted. I mention that matter because I believe this whole thing is out of perspective.
Furthermore, the allocation for the Austraiian Security Intelligence Organisation has been increased by $898,000 or 7.1 per cent. One wonders whether such an increase is necessary at a time of curtailment and cuts. This Parliament has always been very distinctive. In terms of the parliaments of the world, it has been a free Parliament. There has been an ebb and flow of the citizenry around here in a most uninhibited way. But too many of our Ministers are going overseas and are starting to emulate the standards- or rather lack of standards- that are evident in other parts of the world. So we are going to have more police boxes, more security provisions all around the place and more ASIO agents, although heavens knows what they will be for. Maybe we need some tightening up of procedures to enable us to seek out the drug offenders. But obviously the unstated purposes for which these amounts have been increased are not of a desirable nature. The appropriation for the Department of Defence has been increased by $ 10.2m. I think that some of the expenditure under this heading is for aircraft to be used to transport the Prime Minister. There has been an increase in the allocation for the Department of the Prime Minister and Cabinet amounting to $422,000, or 26.4 per cent, for the conveyance of the Governor-General, Ministers and others, by VIP aircraft. Such extravagances, at a time when all these restrictions are taking place, just invite criticism.
The people in my electorate were alarmed, as were the people of Sydney generally, when the Monday afternoon papers hit the streets and we saw the forcast that widows ‘ pensions were to be eliminated. The Sun newspaper of 30 April contained an article headed: ‘70,000 Pensions Face Axe ‘. It stated in part:
The Federal Government is considering scrapping nearly 70,000 widows’ pensions to help finance a proposed loneparent pension.
The proposal, contained in a special ‘task force’ report, will be given to State Ministers of Social Security tomorrow.
The article went on to contend that there would be a new scheme which involved the abolition of pensions for Class B and Class C widows. Nobody knows whether that is true. To my knowledge, no statement of clarification has been made. But one thing is certain, and that is such an action would be very much in keeping with things that have happened already under this Government. I ask honourable members to recall some of the complaints made during the debate on the last Budget. For instance, that Budget provided that pensions would be adjusted only once a year on a cost of living basis, thereby depriving pensioners of some $60m as a result of that change of policy. There was a provision in the Budget to subject those over 70 years of age to a means test. Maternity leave provisions were also abolished in the Budget. Family allowances which had previously been paid for students receiving the Tertiary Education Assistance Scheme allowance were abolished. The unemployment benefit rate being paid to young unemployed people in this country, the single unemployed, was frozen. That is not a contention; that is not a hypothetical situation. That is a fact of life. It has happened, as have the other things I have mentioned. The Budget provided that there was to be no increase in sickness benefit paid to people under 1 8 years of age, except in exceptional circumstances. Social security payments for children living overseas are no longer paid. Such a provision affects the well-being of migrant families in particular. The family allowance was to be taxed but of course, because of great pressure, the Fraser Government was forced to reverse its policy on that particular matter.
Let me mention some of the curtailments which are taking place. Next we have the Department of Aboriginal Affairs. It is a matter of very great distress to the Aboriginal community and especially to those who are involved in Aboriginal organisations, that the amount allocated for the National Aboriginal Conference has been reduced by $323,000 or 64 per cent. As a former Minister for Aboriginal Affairs, I know what this Conference means to the Aboriginal people. The Labor Government initiated this process at the request of the Aboriginal people. They wanted to have a democratic participation in deciding their own affairs. They wanted their effectiveness in this regard to increase steadfastly as their capacity to handle their own affairs increased. By now, they have had a great deal of practice in handling their own affairs. They have been supported and had their hopes built up to a considerable degree, only to find that the funds have been cut. I have little doubt that this will reduce the number of their meetings, the frequency of their travel around Australia and the extent to which expert advice will be available to them.
I also see that the allocation for legal aid has been reduced. A saving of $3. 5m has been made. That is a reduction of 50 per cent. A great deal can be said about legal aid. I have taken the trouble to make some notes on it. I probably will not be able to say very much on the subject in view of the time available to me. In 1975 the caretaker Prime Minister as he was at the time, Mr Fraser, promised that legal aid would be retained. This promise, of course, was in response to Gallup polls which showed that over 80 per cent of Australians supported the concept of legal aid and thought that the Legal Aid Office was doing a good job. There have been all sorts of up and down movements in the allocations for legal aid. The main effect of these has been deleterious in that people are now subjected to a most stringent means test. They almost have to be paupers to qualify under the present system. It is the exclusions rather than the inclusions that concern me about this matter. The Commonwealth has stated that it will reduce the legal aid allocation to the extent that I have already outlined.
There is a cut in the allocation to employment and youth affairs of 9.5 per cent. If ever there was an area that has been totally shemozzled by this Government it is the area of youth training and the attempts to reduce youth unemployment. Some 5.5 per cent of all youth between 16 and 19 years of age are receiving some form of government subsidised youth employment or job training. But the sad thing is that information oh the success or failure of these schemes is not readily available to the public. The Special Youth Employment Training Program is a case in point. A review of this $80m scheme was prepared by the Department of Employment and Youth Affairs and handed to the Government in February this year. It indicates that the scheme does not provide adequate training, give useful work experience or enhance the ability of the participants to compete in the labour market. If this report is correct the scheme is either a fraud or a gesture to pacify those millions of Australians who are out of work.
In the limited time available to me I draw attention in a statistical way to some of the very serious and adverse trends that are occurring in Australia at present. I refer in particular to the unemployment situation. Every Labor speaker should say something about it. The Fraser Government, since taking office, has increased unemployment by 50,000 people a year. The latest figures show that 6.4 per cent of the full time labour force is seeking full time work.
I refer to inflation, again in cryptic statistical terms. This Government has put its reputation on the line in relation to inflation. In the last 12 months the rate of inflation has been running at 8.2 per cent. It has continued at high levels and has now begun to rise. Sacrifices have had to be made by so many people, such as public servants, who have been denied wage increases and the staff complements they require, and pensioners who have been denied their indexation adjustments. These people and those in many other sections of the community must feel that the situation is serious when, after the Government has said that the sacrifices they were called on to make were justified because inflation would be brought down, we have now established that that is not the case.
We know that there has been a masquerade in recent times. We were told through the media as a result of the public relations work of the Government that there would be a 2.5 per cent increase in the consumer price index for the March quarter. It turned out to be only 1.7 per cent. Most of us knew that it would be only 1 .7 per cent. The Government was dressing up the figure because it knew that there would be a great crisis in interest rates. It wanted to let people down as lightly as it could. In any case, even the figure of 1.7 per cent for the March quarter was not terribly impressive, as the figure for the same quarter in the previous year was as low as 1.3 percent.
The Government’s policies are bringing disaster to Australia. Bankruptcies are at their highest level. Interest rates have surged to 9.25 per cent. Soon there will be consequential increases in interest rates for home buyers around Australia. The Government is sustaining itself by selling off the farm. The only way in which it can prevail is by bringing in overseas investment and multinational capital at an unrelenting rate. The longterm sequel to this policy is that dividends will be repatriated overseas in massive amounts and the Australian people will bear the brunt of this Government’s unfortunate policies.
Mr DEPUTY SPEAKER (Mr Armitage)Order! The honourable member’s time has expired.
-In speaking to these Appropriation Bills I intend to discuss how the Australian economy came to its present position in the hope that that may give the Parliament some guidance on how we should proceed from here. I will use the minimum of polemic at the risk of disappointing the honourable member for Hughes (Mr Les Johnson). I will endeavour to bear in mind his admonition about ‘ruthless pinpricking’. During the 1950s and 1960s unemployment was low. It was between one per cent and 2 per cent. The inflation rate was low. It was less than 5 per cent, in spite of the years of the Korean War. Economic growth was, however, poor. Real growth in gross domestic product per head between 1950 and 1955 was a mere 3 per cent. Between 1955 and 1969 it was a mere 2.7 per cent. Between 1969 and 1976 it was a mere 1.8 per cent per annum. During those years we managed our economy in macro terms very well. The Budget was tightly controlled. Deficits were, for practical purposes, non-existent. The money supply was therefore easy to manage and it was well managed. However, over those years we did not manage the economy in the micro sense nearly as well. During that time two things developed: Firstly, a very strong trade union bargaining power that lives with us to this day and, secondly, the growth of a badly structured industry behind high tariff and quota walls.
– And it is still with us today.
– It is still with us today. By the late 1960s there were already signs that these two weaknesses were catching up with us. The unions’ capacity to demand higher wages was imposing an upward pressure on prices. Governments were faced with the stark choice of either accommodating that pressure with an increased money supply, hence causing inflation, or limiting growth in the money supply and allowing wage demands to be reflected in unemployment.
Other countries such as Japan and the Federal Republic of Germany showed that there was another way of meeting the public’s demand for increased goods and services- a higher standard of living. They were able to achieve rapid economic growth. That possibility was not available to Australia because of our trade barriers and our unions. It was already becoming evident that more and more inflation was required in order to induce an improvement in employment. For the purist the Phillip’s curve was becoming steeper.
– What does the ‘Phillip’s curve ‘ mean?
– The honourable member can look it up. In 1972 the Whitlam Government came into power. Economic management changed at that time. Wage demands were encouraged and wages rose much faster than they had risen previously. That resulted in unemployment. The honourable member for Hindmarsh might like to refer to that as the Clyde Cameron syndrome. The money supply was expanded, the result of which was inflation. That might be referred to as the Jim Cairns syndrome. The public sector spending expanded rapidly, too rapidly, and this for a time placed excessive pressure on resources. It also resulted in a steep rise in taxes, the deficit and hence interest rates. The change was far too rapid and so disruptive that for quite an extended period real interest rates were actually negative.
The Labor Party, to its credit, did attempt to improve the structure of industry. The 25 per cent tariff cut in the long run will improve the structure of Australian industry. However, since that time some of the good has been undone by the imposition of quotas to protect some of the most highly protected industries and some of the most non-competitive industries. While the effective rate of protection of 35 per cent in 1971-72 was brought down in 1974 by the 25 per cent tariff cut to 27 per cent, and is still at about that level, the range in protection is greater than it was at that time. Therefore, the damage that it does to the Australian economy by protection is somewhat greater than it would have been at the time we took office.
The legacy that the Fraser Government inherited in 1975 was one of high unemployment, high wages for those in work- and those wages were indexed- a high level of Government expenditure and a political commitment to such expenditure. It is much more difficult in political terms for governments to remove benefits once granted than it is not to grant them in the first place. With that high level of Government expenditure were the attendant problems of high taxes and a high deficit. We of the Fraser Government inherited a changed set of community expectations, some beneficial, some otherwise. We inherited the expectation that wages would continue to rise with inflation and growth. But we also inherited a preparedness to accept tough measures. Probably the greatest single mistake we made was not to take those tough measures very quickly when we came to office. We inherited the expectation that the mess would be cleared up too rapidly. But we also inherited a wholesome fear of inflation and a trade-off between employment and inflation that was negative. In fact, if one increased inflation one would have frightened the devil out of the employers so that they actually would have employed fewer, not more.
Economic growth offered us the only real opportunity to reduce unemployment. Economic growth of course has other virtues. It also gives us the capacity to defend ourselves better and to educate ourselves better. In fact it widens the choices that are available to the Australian people in any field. There is in theory another way by which unemployment could be quickly overcome, and that is by substantially reduced real wages. Anything that will reduce real wages will reduce unemployment. However, substantially reduced real wages are unfortunately within the realm of pure fantasy. We are not capable of achieving that, and that is a sad thing for those who are out of work. The problem was, and still is, how to achieve sustained real growth. Business needed, and still needs, a stable environment in which to plan. Above all else it needs a currency which retains its value. It needs a reduction in inflation. We did not have access to the Keynesian trade-off of growth by demand expansion. Inflation stimulates only when that inflation is unexpected .The business community had learned to expect rates of inflation and could not be fooled by inflation that was induced by government action. It knew that inflation would be general. It would have been no incentive for it to increase its activity. So the Keynesian trade-off was not available to us. In fact, as I have said before, if anything the effect was the reverse- more inflation merely frightened people.
First of all, we have to get inflation down. Inflation has been controlled by the firm control of the money supply. It could not be brought down too fast because too many people were committed at that stage to borrowings at high interest rates. A very rapid reduction in the rate of inflation by a very tight monetary contraction would have resulted in business failures, particularly of those businesses that were committed to borrowings entered into earlier and in different times. We had firmly but steadily to bring inflation down. Apart from a short aberration recently, that is what we have done. The other stimuli that normally are available to a government were not available to us. These are lower tax and lower interest. They were both barred by a bloated public sector. In this area our rhetoric was fine but our performance weak. The total public sector deficit has continued to grow. This total is the deficit of the Commonwealth, the States and the local and semi-government authorities. In 1968-69 it was $7 18m. In 1977-78 it was $5,433m and for 1978-79 it is predicted to be $5, 604m. The public sector deficit continued to grow and that is why we still have high interest rates. We have no way of tackling it bar tackling public sector expenditure itself. The total public sector share of gross domestic product remained high. In fact, it still continues to grow, although marginally. In 1971-72 it was 32.7 per cent. It grew under Labor to 38.7 per cent and is now 39.5 per cent.
We did not face the task of getting public sector expenditure down. There is only one way that public sector expenditure can be got down and that is to tackle the big items. It is of no use fiddling around with the little ones. It is necessary to tackle the big ones. It is possible to tackle the big items of health, education and welfare in a way that will not do anything to disadvantage the needy but in fact will improve their position- by placing means tests on benefits paid to those who are not needy. There is no way that the needs of the poor in our community will be satisfied while we are prepared, to use an expression that has already been used today, to transfer funds from the rich to the rich. We have to be prepared to make large cuts in those transfer payments to people who are not needy. Unless we are prepared to do this we will continue to have a bloated public sector and we will continue to have the resultant high interest rates and high taxes.
We also have to bite the bullet in the area of trade union monopoly power. This is not completely within our control and it will be most difficult. We face a real risk that as the economy continues to grow, all the economic gains will be creamed off to those who are in jobs and leave nothing to create more jobs. I have here a quote from Dr Samuelson- hardly a right wing economist- that I would like to read to the House.
– He is hardly a left wing one either.
– No, he is not a left wing economist. He is an economist who is widely respected in all circles as one who is able to take a broad view of economic arguments. He said:
What distinguishes the 1970s from the 1960s is the lack of confidence in a stable, secure future. Fearing more rapid inflation- and possibly a recessionary reaction- business executives require a quick payoff from investments, or otherwise don’t make them. Lower investment means lower growth and lower capacity to grow.
The widely accepted standard of keeping wages abreast with inflation does more than sustain inflation. It also compels governments to run their economies cautiously for fear of accelerating inflation through shortages of labour or goods. The ethic springs from the best of intentions and is profoundly conservative: it attempts to maintain the status quo for the vast majority. But it may have the worst of consequences. It exiles a significant minority from the benefits of prosperity though they are placated by welfare. And, more ominously, it may gradually corrode the basis of prosperity itself
– Who said that?
– Samuelson. There is a need also to lift the burden of uncompetitive high cost industry. The economy is now growing. For some years we have said that we will do something about those tariffs as soon as the economy is moving. The economy is now moving and now is the time to tackle the tariff problem. That has been admitted by the Government in its White Paper and by every economics writer of any note that I have read in this country. Now is the time to tackle it. Reshuffling the burdens might help some industry but it will always be at the expense of others. Export Now programs, export incentives schemes, bounties, tariffs, preferential government purchasing and concessional lending arrangements are all paid for by others in the community. All are attempts to reshuffle the pack in the vain hope that somehow the weak cards will go away. Worse than that, we somehow seem to rub the spots off the strong cards. Tolstoy said:
I sit on a man ‘s back, choking him and making him carry me, and yet assure myself and others that I am sorry for him and wish to ease his lot by all possible means- except by getting off his back.
Industry desperately needs, above all else, for government to get off its back. In the apocalypse of St John there were four horsemen- famine, pestilence and so on. But if the veil were to be lifted so that Australian businessmen, Australian unemployed and young Australians generally might see the determinents of their destiny they might tremble before but three horsemenexcessive public sector expenditure, excessive wages and excessive import restraint.
– I think that the previous speaker has indicated the growing concern that is being experienced on the government side of the House with respect to the ability of this Government to manage the economy. It does not take a very good memory to recall the certainty with which the Prime Minister (Mr Malcolm Fraser) and his senior men spoke when in Opposition in 1975. There was no question that it would be not three years or four years before the economy would be back on the right track, but a matter of months. They thought that unemployment would be reduced, inflation would be restrained, public sector expenditure would be reined in and all the problems that the Australian economy faced would be resolved. I think members of the government side are beginning to recognise that the problems that
Labor faced in 1973-74 were not simply problems of a domestic economy but were problems of the whole capitalist world.
In that period all countries within the Organisation for Economic Co-operation and Development faced similar problems including rising inflation, rapidly rising unemployment, managing public sector spending, deficits and so on. It is good that members such as the honourable member for Moore (Mr Hyde) are beginning to recognise that perhaps in certain respects one has to think again and to look at what the Government is actually doing. One has to look at the Government’s performance and to look for alternative strategies. I do not suggest for one moment that I would want to throw my support behind any of the strategies that he has mentioned.
For example, the honourable member for Moore talked about the need for the Government to concentrate its welfare spending in relation to the very poor. That is a fine sentiment. No doubt there are people on both sides of the House who would agree with that sentiment. But the reality is that the Fraser Government introduced the much vaunted family allowance which is costed in the Budget at something of the order of $ 1,000m a year. That family allowance was introduced with a promise that it would not be means tested. It is one of the promises upon which the Fraser Government no doubt believes itself to have been elected. Yet now people such as the honourable member for Moore suggest that that kind of strategy needs to be changed. That is incredibly inconsistent. I think it indicates that there are growing contradictions between various members on the government side of the House about the Government’s economic priorities, about the direction that it is taking. Fears are beginning to emerge that this Government is running into a situation which very soon will prove to be electorally disastrous. The Government is reaching a situation in which all the promises it made so firmly 15 months ago and two years prior to that, are going very rapidly down the drain. The Government is looking more and more out of control.
In relation to the Bills before us- as the previous speaker from this side of the House suggested- we can see something of the priorities of this Government. We can see the areas upon which the Government is chopping back. They are critical areas in terms of welfare priorities. 1 refer to legal aid, employment programs such as the Commonwealth Rebate for Apprentice FullTime Training, a 50 per cent cut in the homeless persons program and cutbacks in money for handicapped persons programs. There are cutbacks in funds for home care services. On the other side of the ledger we see the Government expanding funding for Ministers to go on overseas trips and for the purchase of VIP aircraft. In a peripheral way that perhaps indicates the priorities of this Government. They are priorities which have been written into several Budgets and will certainly be written into this year’s Budget. Ultimately they are priorities upon which the electorate will make a judgment. Tonight I want to refer particularly to housing policy. In its last Budget the Government made a substantial cut to the funds available to the States for the construction of housing. The cut was of the order of 2 1 per cent. In money terms it was a cut from $390m to $330m. In addition, the Government scrapped the housing allowance voucher experiment which it had made much of for something like two years previously and spent a great deal of money on. It was to be introduced within Victoria. The Government chopped back on funds for the home savings grants scheme, resulting in the deferment of payment to thousands of people eligible to receive the grant within this financial year. These people were told that they would not be able to receive the grant within this financial year because of Budget cuts.
The Minister for Housing and Construction (Mr Groom) answered a question today at Question Time which was obviously a Dorothy Dixer. The purpose of the question was to give the Minister an opportunity to say how well the Government was doing, particularly in relation to the State of Victoria. The Minister said that what one could say about Victoria was that it had the highest rate of home ownership of any State in Australia, and perhaps in the world. Using a sporting analogy, as members of the Government increasingly seem to be doing, he described Victoria as the Mohammed Ali of housing, the world champion in terms of its performance on housing, particularly in relation to home ownership rates. Interestingly enough this claim is one about which the Premier of Victoria, Mr Hamer, has also made great play. He said recently that eight out of every 10 Victorian families live in homes of their own. There is no evidence to support this assertion. Both the Housing Industry Association and the Australian Bureau of Statistics state that the census figures, based on the most accurate data available, indicate that 69.5 per cent of the private dwellings in Victoria are owned or being purchased- not 7 1 per cent and certainly not eight out of every 10, but 69.5 per cent.
One needs to look at that as that percentage relates to houses owned or being purchased. If one makes a distinction in terms of who actually owns the homes and what is the rate of home ownership one finds that Queensland in fact has the highest rate of home ownership in Australia at 34.5 per cent. Victoria had a home ownership rate of 32.6 per cent in 1976 and New South Wales was very close behind with a figure of 32.4 per cent. So Victoria is actually behind Queensland in terms of dwellings owned. The combined figure for dwellings owned and being purchased in Victoria in 1 976 was 69.5 per cent. Tasmania, with a figure of 68.4 per cent, and South Australia with a figure of 67.7 per cent, followed close behind. So Victoria in fact is in a comparable position to Tasmania and South Australia if one thinks in terms of people who actually own their own homes or are purchasing their own homes.
Of course, behind these home ownership figures are rather more serious realities that have to be faced. For a very long time it was assumed in Australia that most people and perhaps ultimately the whole of the population would be able to reach a home ownership position. One of the points that the Minister made today in answer to the question was that home ownership was in fact increasing in Australia, particulary in Victoria. He took the figure for Victoria in 1 947 of 52.7 per cent home ownership and he said that it had gone up to more than 70 per cent. If one looks at more recent figures- say at the 1966 census figures- rather than going that far back one can get some sense of the more recent trends. The Minister was quite clear about that. He said:
I cannot understand the comments being made by people in Victoria that home ownership has been reduced in recent times.
In 1966, 73.1 per cent of the households in Victoria owned their own homes whereas in 1976 69.6 per cent of them either owned or were in the process of purchasing their own homes. If one looks at the Australian figures for 1 966 one will see that 70.8 per cent of Australians either owned or were in the process of buying their own homes whereas in 1976, 66.6 per cent of the people were in that situation. What is the reason for that? It is not a situation in which progress has been achieved in that goal; rather we are seeing a real decline occurring, especially in Victoria. In the first place one has to say that housing and land costs have been rising at a much faster rate than average incomes. Between 1971 and 1977, land costs in Melbourne increased by 230 per centfrom approximately $4,600 in 1 97 1 to $ 1 5,200 in 1977. House costs in Melbourne increased by 116 per cent between 1971 and 1977- from $10,200 to $22,000.
– I raise a point of order. If the honourable member is making such comparisons he should make them on a year by year basis. If he stated the figures for 1973, 1974 and 1975 we would know how high these figures rose under the Labor Government.
There is no substance in the point of order.
– I am quoting census figures. Combined house and land costs increased between 1971 and 1977 by an average of 151 per cent. The average interest payable on loan payments for the same period- from 1971 to 1977 - increased by approximately 300 per cent. The average weekly earnings in Victoria between 1971 and 1977 increased by 120 per cent. More than half the workforce earns less than the average weekly earnings. By 1977-78 the total for house and land costs in Melbourne was higher than that for Adelaide and Sydney. In Melbourne in 1977-78 the house and land costs totalled $40,200. In Sydney the total cost was $39,200 and in Adelaide it was $34,600. In 1977-78 Adelaide’s house and land costs were 14 per cent lower than those in Melbourne. In Melbourne in 1977-78 the average cost of a block of land was $16,000 and the average cost of a house was $24,200, making a total cost for the house and land package of $40,200. The source for these figures is in the report of the Committee of Inquiry into Housing Costs.
If one looks behind the meaning of that to people and looks at, for example, the deposit gap one will find that the deposit requirements in Melbourne were higher than they were in all other capital cities of Australia. To buy a house in Melbourne in 1976-77 a deposit of $15,300 was needed. It was estimated that it would take 12.6 years for a single income family and approximately two to three years for a dual income family to save enough for the deposit. In Sydney the deposit gap was less at $14,500 and in Adelaide it was only $9,600, compared with $1 5,300 for Melbourne. The deposit required to buy a house and land in Melbourne is 5 per cent higher than it is in Sydney and 37 per cent higher than it is in Adelaide. Melbourne has the highest deposit gap requirement in Australia. The source for those figures is volume I of the report of the Committee of Inquiry into Housing Costs. The deposit gap has increased beyond the means of the average family on less than average weekly earnings.
– What about the situation in 1973, 1974 and 1975?
Order! The honourable member for Bendigo will cease interjecting.
– The increase in the size of the loan required to buy a house and land package has pushed many potential home buyers out of the market. The reason behind that, as the honourable member for Bendigo is well aware, is that the land speculation which occurred in the period between the 1971 census and the 1976 census was not in fact countered in Victoria by the operations of a land commission funded by the Federal Government, as was the case in South Australia. Most of that time was spent with the Victorian Government fighting the Federal Government and refusing to implement a measure which would have meant a difference of thousands of dollars in terms of the deposit gap for the average home buyer in Victoria.
If one looks at another statistic- the one for mortgage repayments- one will find that more Victorians pay higher monthly mortgage repayments than Tasmanians, South Australians and Queenslanders. In Tasmania, 60.3 per cent of the mortgage repayments are less than $100 a month. In South Australia it is 59.7 per cent and in Queensland it is 48.9 per cent. In Victoria only 46.3 per cent pay less than $ 100 a month in mortgage repayments. This Government has made a tremendous amount of play over the last two years about interest rates. Interest rates, as we all know, have recently been increasing. Despite public calls for a reduction in interest rates, the Premier of Victoria, in tow with the Prime Minister (Mr Malcolm Fraser), supported the increase in government interest rates. Because Victorian home purchasers pay higher weekly mortgage repayments, they will be most directly and adversely affected by increasing interest rates.
If one looks at other costs associated with housing one finds, for example, that Victoria has higher stamp duty costs for housing than any other State in Australia. One also finds that conveyancing and mortgage preparation costs are extremely high in Victoria and, in some cases, higher than those in most other States.
I think that the whole picture that I have been trying to present in terms of the statistics indicates that what the Minister had to say today was, to say the least, extraordinarily misleading. He was seeking to help the Victorian Government, and in doing so in a rather ham-fisted way he had to distort the figures. He was not really able to present a factual case to the House. The facts that I have presented indicate that it is becoming increasingly more difficult for Australians to reach a home ownership situation. It is much more difficult for the average family to achieve that goal in the State of Victoria than it is in most other States. The reason for that is a combination of the policies of the Commonwealth Government and the ineptitude of the State Government, as well as its corruption in terms of its involvement in housing and land deals which have been well dealt with.
– I raise a point of order. I am sorry, but it is absolutely necessary. A charge of corruption was never proved. The commission that held an inquiry said that there was no corruption from the Government’s point of view. The honourable member should be called on to retract that statement.
-! was listening to what the honourable member said.
– He said there was corruption by the Government.
-No. My understanding is that he did not say that the Government was corrupt. I believe that there is no substance in the point of order.
– Finally I will very briefly refer to the situation of people renting public housing in Victoria or purchasing housing from the Government. In terms of the recent agreement, and in terms of this Budget, the Commonwealth Government has moved to the situation where in terms of rents paid in housing commission dwellings, those rents would be based on a market figure. Rather than the rents being related to the costs of the acquisition of the housing stock, rents would be based on what was vaguely termed market rents. 1 believe that there is considerable and mounting evidence of hardship being caused by the introduction of market rents in the State of Victoria, resulting in a recent increase of $6 per week for people living in housing commission accommodation. The introduction of escalating interest rates for people purchasing housing commission accommodation is as serious and is causing mounting concern within housing estates in Victoria where people are involved in the purchase of homes from the Housing Commission.
Honourable members will remember that the basis on which people are purchasing homes from the Housing Commission has now changed. People now have to pay an additional Vi per cent per year in interest rates until their interest rate reaches the Commonwealth bond rate. The Government is now moving towards increasing the bond rate. That means that people in public housing who are purchasing homes from the Commission are going to be paying a great deal of money. It has been estimated by the Westmeadows Progress Association, formed on a Housing Commission estate in Victoria, that the purchase of a $35,000 house on a 45-year loan is going to cost the purchaser in the order of $135,000. So that the overall cost of a Housing Commission dwelling -
-Order! The honourable gentleman’s time has expired.
– I rise to take part in this debate to support the Appropriation Bills that are before the House. I want to raise a matter which I believe is of great significance if we are to get our national priorities right in the determination of future budgetary policy. There has been too much glib talk about what has been described as the escalation of allocations to the social welfare budget. We have to be concerned in proportionate terms about the quantum of that allocation. We should be honest when we examine the way that the judgment is made in regard to the increase. I have been interested to observe the way in which a large number of countries in the Organisation for Economic Cooperation and Development have tended in recent years to move in a similar direction in their social welfare policies.
Members will recall that there was a time in this country when allowances were made to taxpayers who had dependent children. Those taxpayers were granted a concessional allowance. As a result of this process the Commissioner of Taxation allowed a taxpayer to deduct from his taxable income the approved concession in any one year. Under a progressive rates scale those people on higher incomes received a higher cash benefit than those on lower taxable incomes, and those without any taxable income received no benefit at all. Under the previous Government there was a change. The concessions were abolished and a tax rebate was allowed. All taxpayers had their tax calculated and if they had dependent children, a dependent spouse or student child, they were able to claim the rebate applicable in that year as a deduction of their tax liability.
When the present Government came into office one of its early and significant social initiatives was to introduce the family allowance. It abolished the tax rebate so far as dependent children were concerned and made an explicit cash payment to the parent- normally the motherwho had the care and control of the child. This was a significant social reform. Some Treasury officials and economists pretend that it cost the revenue $ 1,000m or more, but it did not because the tax collections went up by the amount which would previously have been granted as allowances to taxpayers. It is true that it cost something because part of the social reform was to pay benefits to those in need who were not taxpayers. Are we to believe that the honourable member for Moore (Mr Hyde) and the honourable member for Perth (Mr McLean) would suggest that taxpayers with dependent children should receive no concession in respect of their dependent children? Having listened to them in tonight’s debate one would believe that they are advocating that there is a level of income at which parents of families supporting dependent children should be on their own. That is contrary to the principles of equity so far as taxpayers and those who are needy are concerned.
I would invite those two members- as I would invite members of the bureaucracy and particularly in the Department of the Treasury- to study what is happening in other countries, to look at OECD papers, and to examine how other countries are dealing with this problem. Macroeconomists love to say that public expenditures represent a particular percentage of gross domestic product. They love to say that the tax gatherer takes in a certain percentage of GDP. At the stroke of a pen, by an economists ‘s accounting gimmick, one could reduce the percentage of tax collections and public expenditure and present these figures in a way that may appear to be more acceptable to the honourable member for Moore and the honourable member for Perth, yet not change in any way the financial position of any household in this country.
We have to be very careful when we transfer hidden or disguised social welfare payments that are delivered through a reduction of tax liability that would have been payable but for the concession to a particular category of person. When we transfer that across to an explicit payment we have to be careful to ensure that the public identify and realise that families caring for children are being recognised as having needs over and above those households who have no dependent children. The OECD is beginning to examine this situation.
It has become quite clear that it is very difficult to compare the position of one country with another in terms of percentages of public expenditure as against the gross domestic product when one country pays social welfare benefits not only to the needy in the sense that they are poor, but to the needy in the sense that they have dependent children whatever their level of income. They pay those benefits by way of cash in one country but in another the concession to the taxpayer is provided through a tax deduction whether it be in the form of a rebate or concession. The Organisation for Economic Cooperation and Development is finding that it is terribly difficult to compare the position of one country this year with its situation last year because countries are changing the proportions of their social welfare packages which they deliver by way of explicit payment as compared with those that they provide through a tax rebate or tax concession. Because there is not an adequate realisation that one can achieve the same social welfare goals through these alternative means, we sometimes find that governments through their income tax system pursue policies which are contradictory to those that are pursued through their social welfare system. I suspect that one of the grave problems that confronts many families in Australia is that that very paradox exists in Australia today where, through the social welfare system, we are seeking to do one thing and we are undermining the attainment of the goals we are trying to achieve by the sort of tax system that we are operating.
When we look at taxation, I think it is important that we recognise that the general principle applied in the case of personal income taxation is that taxpayers should pay tax according to their taxable capacity. What then becomes relevant is the appropriateness of differentiating between taxpayers having different sized families at any one given level of income. The issue is not one as to how taxpayers at different levels of income should be treated, but rather how taxpayers at the same level of income are dealt with by the system. The defenders of the taxable capacity approach might accept the need for cash transfers for parents below the subsistence level because one argument for setting a tax threshold is that no one who needs the whole of his income for a basic subsistence should pay any of that income by way of personal income tax. Therefore, I presume that when the honourable member for Perth said tonight that he agreed with welfare payments being made to people who were poor, who were in need, then he takes a very narrow definition of need. He forgets that the large proportion of Australian families are paying income tax. Yet they are in need too when we compare their situation with a single man, a single woman or a married couple with no dependent children.
The question that we must face is whether we will subject a family with dependent children to the same tax burden to which we subject a family with no dependent children or a single taxpayer. If we are not going to subject them to the same tax burden, the question we must ask ourselves is: Are we really going to hide the benefit that we confer on them by giving them a tax rebate or tax concession? Is it not better to expose the whole social welfare program so far as children are concerned by paying cash benefits. Do we not also achieve other advantages for families? I would invite all those honourable members who are suggesting that means tests should be put on the family allowance or that the family allowances should be withdrawn at certain income levels, to ask any woman in a single income household whether she believes the cash benefit should be replaced by a tax rebate. I am sure that those women recognise that this Government’s transfer of the cash from their husbands’ wallets into their purses was one of the significant reforms introduced by this Government.
One of the difficulties that we face is the manner in which our friends in the Department of the Treasury present the accounts. I was interested to read that in Britain where they were in the process of introducing explicit cash payments for children in place of a tax rebate concession system, they were doing it over a period of years in contrast to what we did here in this country where we did it in one year. In Britain, in the Government’s Budget papers, they have the commonsense and the foresight to present the figures in the alternative. They are netting down the tax paid by the family by the amount of the cash benefit that is paid to that family by way of family allowance. I think that we should do this in this country. If we are to present a truly representative Budget- representative of the full extent and nature of public expenditure- then it is necessary for us to recognise that many taxpaying individuals and many taxpaying families receive cash benefits from the Government.
It is important for the sort of reason I have just outlined that those cash benefits be paid. We can see the total cost, we can make sure that the benefit is paid in respect of every child in the country and, at the same time, we should make sure that we do not inflate the public expenditure by wrong-headed accounting procedures. We are adopting and continuing to adopt wrongheaded accounting procedures when we treat as part of public expenditure a cash benefit to a family that, in net terms, is paying more to the Government than it is getting back. As families, they would rather the Government pay a cash benefit for the reasons I have mentioned. I will just touch now on the whole question of whether we concentrate on needs. Those who define needs narrowly and who concentrate only on those whom they say are poor, ignore the needs of families on higher incomes when comparing them with single people. I would like to mention a quotation made by a woman called Barbara Rodgers at the National Children’s Bureau Annual Conference held in Great Britain in 1976. She stated:
We should increase the horizontal as well as the vertical redistribution of income in favour of families, and not concern ourselves only with family poverty.
I would like to quote from another article that appeared in Australia which was written and prepared by Ian Manning of the Urban Research Unit at the Australian National University. He said that some people, however, not only object to the introduction of social dividends- one could say that he is talking about universal payments, and the family allowance is a universal payment for children- but consider that there should be no such payments at all at higher levels of income for such children. He stated:
It is as though horizontal equity is a luxury for the poor; that the government should regard a poor man’s dependent wife and children as its responsibility, but a rich man’s as his indulgence.
I believe that it is the responsibility of government to recognise the role performed by families, to recognise that over the life cycle of a family its income will rise and its income will fall in its purchasing power per head. It is absolutely essential that we preserve the horizontal equity where it exists. Where horizontal equity does not exist it is absolutely essential that we make a real effort to achieve it, while at the same time we do all we can for those who are in real need and those who are below the subsistence level. We will be able to do so only if we review the way in which we present our national accounts and the way in which we assess the tax rebates that are conferred.
One could argue that the standard rate of tax, which represents about a third of every dollar earned, should be charged from the first dollar upwards. Maybe it is right that the basic rebate should be paid as a cash payment, as was the case under the previous government. Those macro economists who say that public expenditure is too high would then find that we were spending another $3,000m and more by paying to taxpayers- this is assuming that tax is imposed on the first dollar and upwards- an amount which represented the subsistence level.
A similar situation applies to the age pension. Many age pensioners today are receiving a pension in cash terms but are paying back a proportion of it- in some instances it is more than the pension they receive- in income tax. Yet we innate public expenditure by saying that we are paying these people a pension. Another way in which to reduce public expenditure so that it is a smaller percentage of gross domestic product would be to let these people net out these payments in their income tax returns and pay the net difference on the basis that we recognise that, because of age, those people are entitled to the social security benefits which they are now receiving. One could do the same with the sole parent rebate, namely, pay it in cash terms. We could do the same in the case of the spouse allowance. But we do not. In those cases we keep public expenditure down. Other economists try to pretend, when they talk about this situation, that it is revenue forgone, as though the Government has the prior right to an individual’s income.
The point I want to make is that we have a confused debate about the quantum of resources being spent on welfare. Either we should gross it all up and recognise that everyone is entitled to every benefit- if the whole lot is withdrawn it should be seen as a tax being imposed- or, alternatively, we should net the payments out in such a way that the public expenditure represents, in the case of individuals or households, only the net amounts paid by way of tax.
Order! The honourable member’s time has expired.
Debate (on motion by Dr Klugman) adjourned.
House adjourned at 10.24 p.m.
The following answers to questions upon notice were circulated:
asked the Minister for Industrial Relations, upon notice, on 20 February 1979:
– The answers to the honourable member’s question are as follows:
It has not been possible to obtain, from the records now held in the office of the Industrial Registrar, the number of applications made under section 47 of the Conciliation and Arbitration Act in some States and Territories during the earlier years. The following information, which is given in tabular form, is the best that can now be made available by the Industrial Registrar.
The figures in the tables are those of ‘applications’, rather than ‘persons’ as asked by the honourable member, but I am advised that each person would almost certainly make only one application in a year. In the case of the applications made under section 47 of the Act the records do not indicate whether an application is a ‘ first ‘ application or a renewal.
asked the Minister representing the Minister for Education, upon notice, on 27 February, 1979:
– The Minister for Education has provided the following answer to the honourable member’s question:
Funds for non-government schools in the electorate of Murray have been made available under programs administered by the Schools Commission. Payments for the years 1 975- 1 977 are set out in the reports which were tabled in the Senate on the dates listed below-
Report- States Grants (Schools) Act 1 972- Financial Assistance granted to each State in 1974-75- 19 May 1976
Report-States Grants (Schools) Act 1972- Financial Assistance granted to each State in 1975-76-2 November 1977
Report- States Grants (Schools) Act 1972- Financial Assistance granted to each State in 1 976-77-23 February 1978
Report- States Grants (Schools) Act 1973- Financial Assistance granted to each State in 1975-30 November 1976
Report- States Grants (Schools) Act 1973- Financial Assistance granted to each State in 1 976- 25 August 1 977
Report- States Grants (Schools) Act 1976- Financial Assistance granted to each State- 23 February 1978
Report- States Grants (Schools Assistance) Act 1976-24 November 1978.
Information in respect of 1 978 is not covered in the above reports. In relation to non-government schools it is set out in the schedule below.
The following funds were allocated to government schools in Victoria through Schools Commission programs in 1 978:
Grants- Government Schools 1978
Innovations program- Electorate of Murray Cohuna, Cohuna Consolidated School, $2,898 Echuca, Echuca East Primary School, $3,060.
asked the Minister representing the Minister for Education, upon notice, on 28 February 1979:
What has been disclosed by the monitoring of orientation courses for teachers at Aboriginal schools as referred to in the Minister’s reply to Question No. 1756 of 24 November 1978 (Hansard, page 3511).
– The Minister for Education has provided the following reply to the honourable member’s question:
The monitoring of the effectiveness of arrangements for orientation courses for teachers going to Aboriginal schools in the Northern Territory for the first time indicates that such courses are extremely valuable. European teachers going into an Aboriginal community for the first time are made aware of the cultural gap between their lifestyle and that of the community and are better prepared to do their job without offending the community’s wishes and attitudes. The courses have become an integral part of the training process for teachers going to Aboriginal schools.
The follow-up course at the end of the first term was a voluntary course. In the opinion of the Director of Education in the Northern Territory the follow-up course will enhance the effectiveness of the training to such an extent that the course will be made compulsory from this year. Teachers involved will have experienced common problems and will be able to share experiences and pass on advice.
asked the Minister for Industrial Relations, upon notice, on 28 February 1979:
– The answer to the honourable member’s question is as follows:
The information required by the honourable member is recorded in the answer, provided by the Minister for Health, to question number 3302 which is recorded in the Hansard dated 28 March 1979.
asked the Minister for Industrial Relations, upon notice, on 28 February 1979:
– The answer to the honourable member’s question is as follows:
The information required by the honourable member is recorded in the answer provided by the Minister for Health to question number 3303, which is recorded in the Hansard dated 28 March 1979.
Cite as: Australia, House of Representatives, Debates, 2 May 1979, viewed 22 October 2017, <http://historichansard.net/hofreps/1979/19790502_reps_31_hor114/>.