IPA I REVIEVII JULY SEPTEMBER Vol No nstitute of by icecube


									IPA               REVIEVII                      JULY/SEPTEMBER 1980 Vol.34 No.3

     I   nstitute of Public Affairs 289 Flinders Lane Melbourne 3000 Tel. 63 6558

         THE BUDGET 1980/81 SOME
   The most important influence on the             One is that the rate of inflation, on the
economy is not the Budget surplus (or           Government's own admission, is likely to
deficit); nor that arcane concept M3 (or is     be higher in the current year than in the
it M4, M5, or M6?) to which magical             two preceding years, notwithstanding the
curative properties are being attributed. It    much- acclaimed domestic Budget surplus
is the movement in money incomes.               (the first for seven years) of $39 million.
   It is the movement in money incomes          The reason is very simple: in 1980/81
that governs the rate of inflation, the level   average weekly earnings are forecast to
of employment (or unemployment) —               rise 12 per cent as against 9.6 per cent last
particularly among the young — the              year and 7.75 per cent in 1978/79.
international competitiveness of our               How much significance, then, can one
industries, the level of interest rates, and    attach to the Treasurer's words in the
the confidence (or lack of it) that the         Budget Speech that, "The dominant
community feels about the economy. The          feature of those policies has been our
latter-day obsession of politicians,            relentless effort to control inflation.
economists and media commentators with          There must be no relaxation of that ef-
the Budget deficit and the money supply is      fort"? "Relentless", the efforts of the
obscuring this simple, but over-                Government may have been, but they
whelmingly important, truth.                    have met with only minimal success. The
   The Fraser Government has been               results that are now being posted on the
consistently right in its emphasis on in-       board can bring little joy to the Govern-
flation as the root of all evil; it has been    ment or to anyone else.
consistently wrong in attributing such             The truth of the matter is that the
unique importance to the Budget outcome         Government's efforts are being largely
and the supply of money. This has given         misdirected. As an instrument of overall
rise to hopes and expectations in the           economic management, the Budget (or
community which monetary and fiscal             for that matter its close relation, the
policies have no prospect of fulfilling —       supply of money) is not nearly so ef-
that is, no prospect of fulfilling while the    ficacious as modern thinking would have
present rapid increase in money incomes         us believe. Indeed, experience in Australia
is allowed to go on, virtually unchecked.       over the entire post- war period has shown
   There are several disturbing things          that the Budget has never been especially
about the 1980/81 Budget.                       effective in controlling the economy. In

IPA Review — July-September, 1980                                                          49
earlier years — in the 1950s and `60s —         The first is concerned with in-
budgetary policy was often rendered          formation. The Government should set
largely impotent by the pursuit of over-     about, systematically, to change the
ambitious growth targets for development     climate of opinion in the community
and migration. Today, it is being rendered   toward inflation. This may not be so
even more ineffective — as an instrument     difficult as it may at first appear. Not-
for controlling inflation — by an annual     withstanding the indexation of their
10 per cent (and more) increase in money     incomes, most people, it is fair to assume,
incomes when the maximum for price           deplore the continuing rapid decline in the
stability would be no more than 3 per        purchasing power of their dollars and
cent.                                        hanker after some degree of price
   If the Government is serious about        stability. Moreover, the majority have
defeating inflation (and there is no doubt   more than a lingering suspicion that wage
that it is) it should spend less time        and other rises are almost immediately
worrying about M3 and the budgetary          translated into higher prices. The
outcome and more time worrying about         Government should demonstrate in
the rate of increase in money incomes.       simple terms which can be understood by
   What can it do? It is certainly not       all, and through irrefutable fact and logic,
sufficient for the Government to wring its   precisely why prices are rising at 10 per
hands over irresponsible wage demands,       cent and more every year and what
whether by metal workers or doctors or       conditions the community must,
anyone else; or to present submissions       therefore, accept if this is to be stopped.
against full indexation to the Com-          If the Australian people after they have
monwealth Arbitration Commission; or         been told the truth, refuse to face up to
to deplore the irrationality of the          the facts of life, the Government can
Commission's judgements. No Govern-          hardly be blamed. But, first, it should not
ment in the modern world of competitive      avoid the responsibility of making the
acquisitiveness can achieve reasonable       effort. The money that the Government
stability in the economy and dispense        proposes to spend in the current year on
economic justice without a positive in-      the faintly absurd "Life Be In It"
comes policy. This is the third leg of       campaign (not a matter in any case for a
economic management and at present by        national Government) could be much
far the most important — budgetary and       better applied to a counter-inflationary
monetary policies being the other two. At    educational campaign. Community
present we are faced with the ultimate       education is one of the main weapons in
absurdity that the most potent weapon of     the armoury of democratic Governments
economic control is being wielded by a            a weapon which has been much
body which not only should have no           neglected in recent years. If Governments
pretensions to (( :onomic expertise but      wish to gain support for policies to which
which is not responsible to the people for   there is widespread resistance — based on
the state of health of the economy —         ignorance and misconception — the
indeed which, in any case, refuses to        sensible thing to do is to set about
accept such a responsibility.                changing the ideas giving rise to this
   What, then, is meant by a "positive       resistance.
incomes policy?"                                The second strand of an "incomes
   Much, we believe, can be done short of    policy" is for the Government to
the Government attempting to assume          demonstrate, by its own actions, what is
direct control of incomes and prices.        needed by refusing to countenance
There are at least three strands in the      recommended rises in pay for
make-up of such a policy.                    Parliamentarians or for senior officials

50                                                       IPA Review — July-September, 1980
    coming under its authority. (The Thatcher       year. Capital expenditures of the States
•   Government in Britain is doing just that.)      and Local Governments are also expected
    It is inconsistent, indeed hypocritical, for    to increase following a fall of 2.5 per cent
    the Government to take a strong line            in 1979/80.
    against indexed pay increases and yet              The big expansion in claims on
    accept those increases for itself.              resources arising from the turn-about in
    Leadership, after all, is largely a matter of   capital expenditures will certainly in-
    example.                                        troduce an additional strong inflationary
        The third strand is for the Government,     bias into the economy. Statement 2 of the
    through appropriate tax measures, to            Budget Papers comments, "Sharply
    improve or at least maintain the real value     increased investment demand is... likely
    of take- home pay. This is a much better        to lead to increased difficulties in ob-
    way of doing it than through the self-          taining skilled labour and materials as
    perpetuating process of indexation which        well as finance". It also states, "The
    (unless there is a marked change of heart       much faster estimated increase in
    by the Arbitration Commission) is likely        company tax payments — 32.1 per cent —
    to continue to guarantee the indefinite         in 1980/81, together with the increase
    continuation of inflation at an annual rate     requirement to finance business capital
    of 10 per cent or more. At the very least,      expenditures             perhaps have im-
    such an approach could be expected to           plications for corporate pricing policies".
    encourage greater restraint on the part of          The precise extent of the strains which
    the unions and other sections of the            this striking change in the investment
    community than is at present evident. It        picture will impart to the economy, both
    may also not be too much to hope that the       in the demand for funds and, thus, in-
    Commission itself will be less disposed to      terest rates, and in wage rates for skilled
    grant inflationary wage rises under             labour, will only emerge during the year
    conditions where after-tax incomes have         but, taken in conjunction with other
    increased.                                      factors making for inflation, certainly
        What is certain is that unless the          give cause for disquiet. It was, let it be
    Government changes the focal point of its       remembered, the over-concentration of
    attack on inflation from the fiscal and         the nation's resources on Investment (a
    monetary fronts to the incomes front,           synonym for Development) which was a
    then it has no hope of succeeding in the        persistent, underlying cause of the in-
    undertaking it gave when it came to             flation of the 1950s and '60s.
    power, and which it has re-affirmed, with           A third, and to believers in the market
    persistent but now unconvincing                 economy, the most disturbing feature of
    regularity, ever since.                         the Budget, is that it puts us back on the
        One aspect of the Budget (and the           track toward bigger and bigger Govern-
    picture of the economy which emerges            ment. Expenditure is to increase by 13.7
    from it) that seems to have gone virtually      per cent in money terms (9.1 per cent last
    unnoticed is the dramatic turn-around in        year) and just on 3 per cent in real terms
    the investment picture. Gross fixed             (virtually no increase last year). On the
    capital expenditure by the Com-                 revenue side, total Budget receipts will
    monwealth is estimated to increase by 24         form a higher proportion of the G.D.P.
    per cent, representing a real growth of 11      — 26.7. per cent — than in any previous
    per cent as against a fall of 3 per cent in     year. To be fair, it has to be said that the
     1979/80. The Budget forecasts also             big but wholly justified jump in ex-
    assume a real growth in business fixed           penditure on Defence — 7 per cent in real
    investment of over 10 per cent compared          terms — has not helped the Government
    with a fall of 5.25 per cent in the previous     in its professed aim of reducing the claims
    IPA Review — July-September, 1980                                                         51
of the public sector on resources. It           public sector swollen beyond belief", and
should also be said that under a Labor          which encouraged hopes that the
Government, judging not only by its past        "bureaucratic monstrosity" was at long
record but by pre- election intentions,         last about to have its wings clipped.
those claims would be very much larger.         Indeed,the 1980/81 Budget, by contrast
   Nevertheless, there are disquieting signs    with its predecessors, now allows for
that the Government is weakening in its         some growth in public service staffing. (A
attitudes both toward the appropriate size      superb example of the remote unrealism
of Government in a liberal, free enterprise     of the bureaucratic mind was provided in
economy and toward inflation. For it is         the changes to the Pharmaceutical
not only budget deficits which are in-          Benefits scheme which, to the acute
flationary but also the absolute                embarassment of the Minister for Health,
magnitude of Government spending, even          had to be dropped 48 hours after they
when balanced by receipts. One would           were introduced.)
have thought that the huge bonanza in              The Budget Speech seems to disregard
revenues as a consequence of the oil levy      entirely the all- important dimension of
would have led the Government to eagerly       political and psychological leadership.
grasp the opportunity of achieving its _       The community is not being given a clear
long- professed aim of making really big       sense of purpose or direction. Is it because
reductions in personal taxation, thus          the Government itself has (only tem-
leaving the private person much greater,       porarily, we hope) lost its own?
and government bureaucrats con-                    Rome, it is true, was not built in a day;
sequently much less, discretion over how       but one must now have doubts whether it
his or her earnings are to be spent — a        will ever be built at all: whether we are not
central principle, surely, of the liberal      caught up in a kind of inexorable
faith. Moreover, there is no better way to     progression toward bigger and more
assist and encourage small business en-        powerful Government, bigger and more
terprises, a key sector of the economy.        powerful Bureaucracy, with the in-
   Before the 1980/81 Budget, one would        dividual eventually "less than a thing of
have been justified in believing that the      naught".
Fraser Government had a firm and clear            A postscript! The people who are being
philosophical commitment to smaller            most cruelly penalised by this process, by
government, lower interest rates, selective    high taxes and high inflation, are,
Welfare, the unique value of the self-         ironically enough, the very people who
reliant individual (with appropriate           most exemplify those liberal principles for
rewards for work and enterprise) and the       which the Government professes to stand.
fullest possible freedom of choice. But        These are the hundreds of thousands in
there is little sign of philosophical          retirement, endeavouring to live on their
principle in the structure of this Budget,     own savings (of which they are being
or, indeed, of philosophy in the dull,         progressively robbed by inflation) and not
uninspired wording of the Budget Speech.       on the State: the people who, in their own
One searches in vain for ringing, clarion-     lives, have exhibited the liberal virtues of
call phrases of the kind which attracted       hard work, thrift, responsibility, en-
attention in the early Budget Speeches of      terprise, independence, and self- reliance.
the Government, phrases such as "a             It is a disturbing thought!

52                                                         IPA Review — July-September, 1980
                                    by B. A. Santamaria

  Australia is one of the small group of         What is its significance?
nations which is confronted not with one            As far as I understand the Federal
but two sets of problems of quite different      Opposition's position in relation to
orders of magnitude.                             Afghanistan, it appears to be this. The
   She is caught up in the general crisis of     Soviet invasion of Afghanistan deserved
the Western World. In the event of an            to be condemned, as does the invasion of
historic catastrophe for the West, we go         any country. But Afghanistan is 13-
too. Abstractions may be dreamed up by           15,000 kilometres from Australia; the
some who have, for instance, envisaged a         invasion is not a strategic hazard to this
future for Australia as a life-raft for "the     country; hence Mr. Fraser is "stunting,"
human flotsam of a nuclear holocaust".           with a khaki election in mind.
They are what the humorist, Stephen                 Furthermore, the Federal Opposition
Leacock, called "Moonbeams from the              has claimed that the Soviet's invasion of
Larger Lunacy."                                  Afghanistan, while morally unacceptable,
   There are few small nations, however,         is essentially defensive in intention; and
which do not, at the same time, need to          that expert opinion in the Department of
concern themselves with a second set of          Foreign Affairs actually backs their view
problems: purely regional threats to their       rather than the Government's.
national security. These can explode to             I believe — although naturally I cannot
their ultimate undoing, quite apart from         prove — that it does. But is it right?
the central international issues, as a result       If you wish to look at Afghanistan as a
even of the policies pursued by Great            single isolated incident, you can make an
Powers, quite conceivably even by their          arguable case for the view that the Soviet
own allies. However one judges the               intervened so as not to lose the control it
regime of the Shah in Iran, it is difficult to   had established over the past five years, in
avoid the conclusion that a major factor         which a mere 5,000 Soviet advisers and
in the overthrow was the total confusion         combat troops maintained pro-Soviet
in the policies of the American President        governments in power. That apparently is
who, only six months previously, had             the "expert" view of at least one section
publicly testified to the primacy which          of the Australian Department of Foreign
U.S. placed on the alliance with Iran in         Affairs.
the preservation of its own interests in the        But if you regard the invasion of
Middle East.                                     Afghanistan as part of a process, I suggest
   Perhaps one should examine each of            that a totally different conclusion follows.
these situations in turn.                        That process began immediately after
   The general defence of the Western            Khrushchev's humiliation by President
world which has taken on a new urgency           Kennedy over Cuba in October, 1962. By
with the Soviet invasion of Afghanistan.         the end of the year historic decisions had

IPA Review — July-September, 1980                                                         53
been taken by the Soviet Politburo and        of the Gulf; of Angola and Mozambique
the Soviet General Staff. The decisions       in southern Africa, the Soviet sending its
began with a rapid build-up of Soviet         heavy transports, heavy artillery, planes,
nuclear and naval power, clearly aiming       rockets to supply the Cubans and East
at supremacy with the first, and probably     Germans to do the job for them.
with the second.                                 I would submit that in this situation, to
   In nuclear power the U.S.S.R. today        treat the invasion of Afghanistan as a
equals the United States; for certain         single incident rather than as part of a
specific operations, for instance a strike    process, does not appear to accord with
against the nuclear installations of Europe   common sense.
or China, it has surpassed the U.S.A.,           What makes the occupation of
unless the latter is prepared for a total     Afghanistan important in 1979 is that it is
nuclear conflict including the destruction    not a single incident but that it is part of a
of its own cities.                            process. It is bad reasoning, leading to
   As far as naval power is concerned,        invalid strategic and political conclusions,
1966 witnessed the first entry of Soviet      to look at each incident in isolation, as in
ships into the Eastern Mediterranean,         the thirties it proved bad reasoning so to
which previously could have been called       regard the Nazi occupation of the
"Mare Nostrum", thus neutralizing the         Rhineland, Austria and the Sudetenland.
U.S. Sixth Fleet's capacity for operations      The more correct judgement appears to
in the Middle East, in circumstances short    be that of Dr. Kissinger's former
of general war, a capability which the        Counsellor on U.S. European and East-
U.S. had possessed in the fifties, when it    West relations, Helmut Sonnenfeldt. It is
landed intervention forces in the             all the more significant in that Son-
Lebanon.                                      nenfeldt, like Kissinger when they were
   1969 witnessed the first entry of Soviet   both in office appeared to take a more
ships into the Indain Ocean, the              accomodating view of Soviet ambitions.
Department of Foreign Affairs pusuading                "There are several particular
the unfortunate Mr. Freeth to say that              consequences of the Soviet action in
this was not an event to cause alarm, a             Afghanistan" wrote Sonnenfeldt.
prophecy which ten years later looks                "First, it clearly represents a new
rather threadbare.                                  Soviet position in Southwest Asia.
   1975 saw the defeat of the Americans in          Though perhaps never to be
Vietnam, which would have been im-                  pacified, Afghanistan is a country
possible if the Soviet Union had not                with a road network (constructed
armed 19 North Vietnamese divisions.                partly by the United States and
One major consequence is that the Soviet            partly by the Soviet Union) and
Navy is increasingly using the great naval          important airfields that make it not
base at Cam Ranh Bay, its air power the             simply a remote place, nor indeed
airfields at Da Nang, while a Vietnamese            even a buffer, but potentially a base
Communist army of 20 divisions has                  from which military operations can
occupied Cambodia, threatening                      be conducted in adjacent areas.
Thailand, Malaysia and Singapore.                   Second, this Soviet position, unlike
   This was followed by the Soviet oc-              its postions in Czechoslovakia and
cupation of Ethiopia on the south bank of           Hungary, occurs in a region that is
the Red Sea, close to Saudi Arabia; of              itself militarily weak and plagued by
Aden at its mouth, and close to the mouth           political turbulence. Third, this

54                                                        IPA Review — July-September, 1980
         event has occurred in a region of the    the Indian Ocean, and the bottling up of
         world that is crucial to the economic    the oil supplies of the Persian Gulf.
         health and well-being of the world           I am not predicting that the Soviet will
         at large, particularly of the Western,   do all or any of these things. I am simply
         industrialized world, because of         saying that they now have the capability
         both its oil resources and water-        to do so, if they consolidate their position
         ways. Fourth, the Soviet position in     in Afghanistan, and if they so desire.
         Afghanistan is clearly related to its      (iii) The question of essential intention
         attempt to surround China with           remains in short, with whom are we
         positions or countries closely           dealing?
         associated with the Soviet Union —           The Soviet leaders are human beings, as
         a reaction to its anxiety about an       we are. They are not Martians or
         encirclement stemming from the           creatures from outer space. According to
         possible alliance between China,         their own lights, they are not monsters of
         Japan, Western Europe, and the           iniquity but men accustomed to the use of
         United States." *                        power. They are flesh and blood, the
    How far will they go? Well, the future        products of their heredity, their en-
is unpredictable, but all contingency             vironment, and particularly of their life-
planning ought to be based on the premise         long education.
of the worst reasonably foreseeable                   In the case of the Soviet leadership,
contingency. This demands a study of (i)          there are two basic elements in their
their capabilities (ii) their interests and       character. They are Russians in the
(iii) their essential intentions.                 tradition established by Peter the Great.
    (i) Their capabilities have been broadly      But they have had a life-long education
described. All that needs to be added is          based on Marxist-Leninist ideology.
the strategic effect of their military                That combination lies at the heart of
dispositions in Afghanistan, if they are          the matter.
able to consolidate their hold.                       By that I do not mean that each
   (ii) It appears that the Soviet has located     morning Brezhnev and his associates, on
its armour — and possibly both short-              rising, read a passage from Marx's "Das
range nuclear missiles and gas — in such a         Kapital" or any of Lenin's works, any
way it can develop opportunities in four           more than most believing Christians
directions, if only it can consolidate its         indulge in a daily reading of the New
positions once campaigning weather                 Testament. Nevertheless, the "Holy
begins:                                            Books" of Marxism impregnate the
        in the vicinity of Jalalbad, which is      minds of the Soviet leadership, just as
close to the Khyber Pass, so that it can           their Russian origin powerfully influences
threaten Pakistan.                                 their psychological make-up, in ways
        in the vicinity of Herat, from which it    brilliantly described by Tibor Szamuely in
can threaten Iran: Iran would also be              "The Russian Tradition."
attacked from the north from Soviet                    If one accepts this view of their
Azerbaijan.                                        mentality and inner motivations, it is
        in the vicinity of Kandahar, from          logical to accept that Soviet leadership
which it can attack Baluchistan through            ultimately aspires to a world in which
which it can seek its warm water port on           Soviet power will be dominant;
• Afghanistan: Hard Choices for the U.S.
                                                       That when, at the 25th Congress of the
   Helmut Sonnenfeldt — "Worldview" June, 1980     C.P.S.U. of 1975, Brezhnev stated openly

IPA Review — July-September, 1980                                                          55
  that detente did not mean the end of the          right of kings was M Christianity; and
  world-wide struggle between Communism             therefore their imperialism, too, has to be
  and Western democracy, he meant what              ideological or else it commands no
  he said;                                          legitimacy.
     That when, in Prague in 1973,                     This is why the men in the Kremlin can
 Brezhnev said that "a decisive shift in the        lose no territory once acquired, why they
 balance of forces would occur in 1985,             cannot abandon friends and allies, no
 and place the U.S.S.R. in a position to            matter how objectively burdensome they
 impose its will wherever necessary" * he           may have become to them . . . or admit
 meant what he said;                                alternative interpretations of the true
    That much more scientifically than              faith.
 Western democratic States — much more
                                                       That is also why it is an insupportable
 scientifically, in particular, than the            American hope that the Kremlin may be
 U.S.A. — its leadership constantly                 pressured or humoured into a type of
 measures the "balance of forces" to                comprehensive detente which would
 ensure that it uses the best weapon
                                                    guarantee Soviet moderation in Africa
 whether, at a particular moment, it is             and Asia as part of a SALT settlement, or
 political, economic, military, ideological
                                                    any settlement. No Soviet leader can do
 — to fill the vacuum created by the
                                                    that without abdicating his title to
 weaknesses of the West;
                                                    leadership and jeopardising the
    That its essential advantage over               justification of Soviet rule.
 Western societies lies in the iron
 totalitarian controls — dictatorship,                Ideology in the Soviet Union is both
labour camps, psychiatric wards — which             dead — and very much alive! Dead at the
enable the Politburo to dominate every              level of faith, alive as an indispensable
potentially dissident element in the Soviet         rationale of policy."
Union, whether the managerial                          Is there then a danger of great in-
bureaucracy, the workers or the in-                 ternational conflict? Yes, there is, but one
telligentsia. These pressure groups do              should understand precisely why and
exist in the Soviet Union, as they do in            how.
Australia. But whereas in Australia they               If I may refer to the analogy of 1939, it
dominate governments, in the Soviet                 is to refer to the immediate cause of the
Union it is quite different.                        Second World War as it was gauged by
    Nobody knows the Soviet leaders better          one of its few great historians, the British
than Tito's wartime Second-in-command,              military strategist Captain Basil Liddell
Djilas. His words are worth recording:              Hart.
    "The importance of ideology for the                The central cause of the outbreak of the
Soviet leadership — any Soviet leadership           Second World War, wrote Liddell Hart,
— is seldom understood in the West. For             was not "Hitler's aggressiveness, but the
an American or an Englishman 'im-                   encouragement he had long received from
perialism' and 'expansionism' have to do            the complaisant attitude of the Western
with financial investment, technology,              Powers, coupled with their sudden turn
raw materials and the like.                         about in the spring of 1939. That reversal
   Not so for the Soviet leaders. Their rule        was so abrubt and unexpected as to make
as anchored in ideology, as the divine              war inevitable."
                                                       In other words, according to Liddell
 * Denis Warner, Brisbane "Courier Mail", 24.1.80   Hart, the West was, at least, as much to

56                                                              IPA Review — July-September, 1980
blame as Hitler. Its crime was its lack of           That, however, is the Soviet Union's
consistency.                                      decision. That decision won't be greatly
    It is this lack of consistency which          influenced by President Carter's threats.
underlies the world's present danger.                American threats will have no
    For the last decade the political-            credibility until the U.S. has a land base in
academic establishment which has                  north-eastern Africa, close to the Red
controlled U.S. foreign policy — far more         Sea, and therefore to Saudi Arabia and its
decisively than the so-called military-           oil-fields, on which to locate what in-
industrial complex — has behaved exactly          tervention forces the United States has
as its European opposite numbers did in           today and those it is now pledged to create
the early thirties. They have both                in the next four years. There is no real
passively and actively condoned the               alternative to Egypt.
Soviet rearmament program, with                      Next, the U.S. needs some local suc-
Western bankers financing, Western                cesses to prove to potential allies that if
farmers exporting grain, and Western              you link your fate with the U.S., you will
corporations exporting high-grade                 not be sold down the river. That means
technology, to the Soviet Union. This             encouraging Egypt to rid Libya of
policy has yielded effective military             Gaddafi. It means working with Egypt,
superiority to the Soviet which it will           the Sudan, Somalia, and the Eritrean
retain at least for the next five years, even     rebels to rid Ethiopia of Mengistu — if
if the Americans should, as they promise,         these governments can be interested.
embark on an accelerated rearmament                  Finally, to make it politically possible
program tomorrow.                                  for friends like the Jordanian king and the
    Now — to the cheers of the very                Saudis openly to side with the West, Israel
Congress which scuttled South Vietnam ,            must be persuaded to permit the creation
and condoned the activities of Cubans,             of a genuinely autonomous Arab entity
East Germans and Russians in Africa —              on Palestinian soil. Israel's fears are
 the American President threatens war if           understandable: but the alternative is
 the oil supplies of the Middle East are           much worse for Israel itself.
 interfered with by the Soviet Union.                If, time permitting, these things can be
    I am not saying that it is not time to call    done, the West would be, once again, in
 "Halt." It is. I am saying that America's         business.
 inconsistency is counter-productive. It             What is not "on," however, is that the
 frightens both the Europeans and                  U.S. should assist China to develop its
 Japanese; it weakens rather than                  nuclear arsenal with Western technology.
 strengthens existing alliances; and, as           About China the Soviet are paranoid.
 after 1938, it could contribute to the            Recently, Brezhnev warned the President
 unutterable catastrophe of war.                   of the French national Assembly,
    So, what is the danger? What is "on"?          Chaban-Delmas, that the West should not
 What is not "on"?                                 make the mistake of building up China as
    The risk lies in the highly uncertain          a nuclear balance to Russia. "Believe
  factor of "lead-time"; that the Soviet           me", said Brezhnev, "after the
 leaders, after they have consolidated their       destruction of the Chinese nuclear sites by
  postion in Afghanistan — which will take         our missiles, there won't be much time for
 six months — may decide to act soon               the Americans to choose between the
 when the United States is at its weakest,         defence of their Chinese allies, and
  with NATO riven by uncertainty.                  peaceful co-existence with us." He was

 IPA Review — July-September, 1980                                                           57
 neither joking nor bluffing.                           Oceania, stretching from Papua
    These world-wide considerations above               New Guinea through the Solomons,
 provide an acceptable framework for a                  New Hebrides and Fiji, down to
system of Australian defence preparation.               New Zealand in the south. That
 I would give strong support to the Prime              would provide a necessary link with
Minister's analysis of the significance of             U.S. power in the Philippines and,
the invasion of Afghanistan. There is,                 through the island chain including
however, little or no relationship between             the Carolines and the Marianas,
the resultant perils, and the new defence              back to Hawaii.
measures he announced. These were, in               (3)Australia should establish the
substance, already announced in the                    closest economic, political and
Defence White Paper of 1976, and                       military relationships with the
nothing has been done about them.                      ASEAN nations, particularly In-
   What is indispensable, I suggest, is a              donesia.
clearly-stated and seriously pursued               This would involve more than the
strategic concept to test the seriousness of     development of adequate air and naval
the defence policies of any Australian           power. Within the framework of such a
government.                                      de facto alliance, it involves the main-
   The Government's strategic concept            tenance of land forces necessary to assist
must naturally be consistent with,               an ally whose territory may be attacked by
although it should not be dependent on,          hostile power, e.g. Vietnam.
the world-wide American defence                    This force should also include
posture: that is, if there is such a thing as    specialised units — whatever they are
an effectively world-wide American               called - similar to the intervention forces
Strategy, of which I am frankly doubtful.        which the French have used effectively,
   The Australian concept should, I              on several occasions, in Africa: to help a
suggest, cover a ten-year period and aim         legitimate government, friendly to
to equip Australia to face up to many           Australia, which requests emergency help
decades of heavy and increasing                 against the threat of a foreign-assisted
responsibility in three major areas of          coup d'etat, not impossible once heavy
potential engagement.                           Russian transports are based on Viet-
    (1)Australia should accept respon-          namese airfields.
       sibility for developing and main-           Australia's own defence industries
       taining naval and air superiority in     should be re-established to provide the
       the eastern Indian Ocean: a triangle     greater part of Australia's own defence
       whose base would stretch from            equipment, and of a substantial
       Cockburn Sound to North-West             proportion of the defence equipment of
      Australia, with Cocos Island as its       the ASEAN States, since the supply of
      apex. This would provide a link with      U.S. equipment cannot be relied on in an
      U.S., French and South African            emergency.
      naval and air power operating from           Australia's failure to develop her
      Diego Garcia to the Persian Gulf          defence industries over the past decade
      and south to the Cape.                    has meant that ASEAN States have
   (2)Australia should accept a similar         looked primarily to the U.S. for their
      defence responsibility accompanied        immediate supplies.
      by close political, economic and aid         On the still uncertain assumption that
      relationships — with the nations of       the U.S. is capable of providing effective

58                                                         IPA Review — July-September, 1980
leadership to the non-Communist world,                raising taxes, in other words, into
this pattern of military power in the                 current consumption. That is what
South-West Pacific would complement                   we are now doing — consuming
"free world" power on the American                    what should be treated as a
continent, Europe, the Middle East and                depletion allowance.
North-East Asia.                                  (2)You can treat all or part of it as a
   This program is geared fundamentally               depletion allowance, and use that to
to the defence of Australia's own region,             establish a coal-to-oil industry, as
but fits in with the world-wide respon-               South Africa has done with its
sibilities of the Western alliance.                   SASOL plants.
   As to the costs, they do not create a           (3)You can use all or part of it on
specifically economic problem. They do                defence, without raising new taxes.
underline the real question — which is            In other words, there is now at least one
that of political will. I leave aside any      way, making it clear that our problems
discussion as to whether Federal and State     are not economic but political, that if we
Budgets should be re-shaped so as to allot     ultimately lose Australia, we have no one
to defence some of the proportion of           to blame but ourselves.
G.D.P. which goes to what may generally           If Australian governments, of whatever
be called social welfare. As far as I am       political complexion, proceed in these
concerned, this is not a closed question:      ways, in the brutal world which this
let us, nevertheless, treat it as closed.      decade is likely to provide, this continent
   The Federal Government is now raising       has a fighting chance. If, however,
approximately $3 billion annually from         national leaders bravely call the people to
 the crude oil levy, It is reasonable to       the barricades, but their deeds do not
 believe that this will rise to $4 billion     match their words, we may have reason to
 annually, perhaps higher.                     recall the words of Pitt the Younger when
   What do you do with it? Essentially,        he received the news of Napoleon's
 your choices are three:                       victory at the Battle of Austerlitz: "You
    (1)You can feed it into the Budget for     can roll up the map of Europe. It will not
        more social welfare without directly   be needed again in a very long time."

 IPA Review — July-September, 1980                                                       59

    Australians are constantly being told       most lightly taxed people in the Western
  that they are among the most lightly taxed    world. In fact, they are not.
 people in the Western world. Indeed, this         The notion that Australia is "lightly
 myth is repeated, almost ad nauseum, by        taxed" derives from an absurdly sim-
 many economists and by supposedly              plistic comparison with other countries of
 intelligent media commentators who             total tax revenues as a percentage of
 should know better. The inference one is       Gross Domestic Product. Using this basis,
 intended to draw is that there is con-         Australia, in 1976, ranked 17th among 23
 siderable scope for tax increases in           O.E.C.D. member nations; that is, the
 Australia without detracting from in-          ratio of total tax collections to G.D.P.
 centives and without damage to the             was less than that of all but six countries.
 national economy — since other high               These are the percentages for the 23
 standard of living countries are carrying a    countries. (They are taken from a paper
 substantially greater burden of tax.           given by Professor R.L. Matthews to the
    Most Australians, it is fair to say, feel   Summer School of the Australian In-
 that their taxes are much too high. At         stitute of Political Science last January.)     •
 quite modest levels of income, personal                            Total Tax    Ranking in
 income tax takes a painfully large cut out                       Revenue as %     Order
 of the pay packet — almost a quarter.                             ofG.D.P.
Moreover, any increase in income, gained        Australia             30.0            17
                                                Austria               38.9             9
as a consequence either of good work or
                                                Belgium               41.9             7
promotion or even just from inflation,          Canada                32.9            14
may attract taxation at absurdly high           Denmark               44.7             5
rates. Retired people, living on their own      Finland               42.2             6
savings (and not on the Government)             France                39.5             8
already being robbed by the thief of            Germany               36.7           12
inflation, are confounded and angered by        Greece                27.9           19
the savage impact of taxes especially           Ireland               36.8           10
provisional tax, on their near-fixed in-        Italy                 35.8           13
                                                Japan                 20.9           22
comes. Those fortunate enough to be in
                                                Luxembourg            50.5             2
the high income brackets can hardly be          Netherlands           46.2             4
expected to take kindly to the subtraction      New Zealand           31.8           15
by the tax authorities of over 60 per cent      Norway                46.2             3
of any additional earnings. It is hardly        Portugal              26.5           20
surprising, human nature being what it is,      Spain                 20.3           23
that large numbers of these people are          Sweden                50.9             1
tempted to resort to ingenious, though          Switzerland           31.6           16
utterly reprehensible, devices to avoid         Turkey                24.9           21
                                                United Kingdom        36.7           11
paying their fair share of taxes.
                                                United States         29.3           18
    With this background in mind, it must
come as a shock to most Australians to be         There are a number of reasons why
told repeatedly that they are among the         these figures give a false picture of

60                                                          IPA Review — July-September, 1980
comparative tax burdens.
                                                                  Personal      Income Tax
    For one thing they take no account of                       Income Tax      (incl. profit
how the tax revenues are raised. For                           as percentage taxes) as percent
another, they take no account of how the                         of G.D.P.       of total tax
taxes are spent.                                                   13.4            56.6
    As far as the raising of revenues is      Austria               8.4            24.9
concerned, the crucial distinction is         Belgium              13.1            38.3
between direct taxes on income and in-        Canada               11.2            46.7
                                              Denmark              24.2            57.6
direct taxes which result in higher prices.                                        53.7
                                              Finland              20.8
By far the most painful taxes are those       France                4.9            18.4
which directly reduce the income of the       Germany              11.1            34.8
taxpayer. Indeed, indirect taxes, after       Greece                2.5            17.5
                                              Ireland               9.5            30.2
their initial impact, become accepted as a                                         22.7
                                              Italy                 5.9
daily part of life and are, for the most      Japan                 5.1            41.2
part, not "felt" as taxes at all. They        Luxembourg           12.7            42.4
certainly do not affect enterprise or the     Netherlands          12.4            34.0
                                              New Zealand          17.2            67.3
incentives of the ordinary person. The                                             40.8
                                              Norway               16.9
 "burden" of taxes is regarded by most of     Portugal              2.8            20.2
us as what we are compelled to hand over      Spain                 3.3            23.8
to the tax authorities out of our hard-won    Sweden               21.9            46.6
                                              Switzerland          11.6            44.6
earnings or out of moneys received from
                                              Turkey                7.3            36.8
 the investment of our savings.               United Kingdom       14.0            42.8
    Taking income tax as the criterion of     United States         9.7            43.3
 "burden" the picture becomes entirely
 different. Far from being the "most             There is a lesson for Australia in this
 lightly taxed" country, Australia becomes    comparison. From the important stand-
 one of the most heavily taxed. As a          point of incentives to enterprise and
 proportion of G.D.P., personal income        efficiency, it is clearly desirable for
 taxes are higher in Australia than in all    Governments to move away from direct
 countries with the exception of New          taxes to indirect taxes as a means of
 Zealand, the United Kingdom and the          raising revenues. This, indeed was
 four Scandinavian countries. Total in-       recognised in the Asprey Report on
 come taxes, including taxes on business      Taxation.
 profits, make up a greater proportion of        One reason why Governments have
 total tax revenues than any other country    shied away from it stems from the in-
 except New Zealand and Denmark. By           dexation mechanism. It is feared that
 this measure, Australia from being 17th      increased prices resulting from indirect
 on the tax graduation of the O.E.C.D.        taxes might be translated into higher
 countries becomes 3rd. (Only in three        incomes through the community, thus
 countries, New Zealand, Canada and           inflaming an already threatening in-
 Luxembourg, do company taxes form a          flationary situation. Another reason
 higher proportion of G.D.P. than in          derives from the conventional supposition
 Australia.)                                  that indirect taxes are regressive,
    The following figures (for 1976) give     penalising the lower incomes, and are
  the picture for 23 O.E.C.D. countries.      more inequitable than direct taxes. In his
                                              paper to the Political Science Summer
                                              School, Professor Matthews attacked this

IPA Review - July-September, 1980                                                           61
assumption. He said that progressive                         If Australia were to follow the
income tax "has been thoroughly                          European example, our taxes would
discredited as a policy instrument for                   necessarily rise at least to European levels.
achieving the redistribution of wealth...                In that case the individual would be
Personal income tax has become largely a                 deprived of voluntary choice as he would
tax on wage and salary earners as other                  no longer have the financial means to
income groups, at both the upper and                     contribute to private schemes. It is in-
lower ends of the income scale, have been                dicative, for instance, that whereas in
able to take steps to avoid or evade tax".              Australia the total value of life insurance
         * * * * *                                       policies amounts to some 102 per cent of
    There are other reasons why the ratio                National Income, in many European
 of tax revenues to G.D.P. does not                     countries the comparative figure is under
 provide an acceptable measure of the                    50 per cent.
comparative tax load. In comparing the                     A further reason for the higher level of
 "burden" of taxes in different countries               taxes in the European countries is that
much will depend on the purposes to                     education is virtually nationalised
which taxes are applied — that is, the                  whereas in Australia private schools and
ways in which the moneys raised are                     institutions comprise a sizeable part of the
spent.                                                  educational structure. It is unlikely that
    Here there are very big and significant             many Australians would want to change
differences between Australia and the                   this situation, particularly as it is
countries, for instance, of the European                becoming more and more widely
Economic Community. In these coun-                      recognised that the private schools are the
tries, Government has assumed virtually                 pace-setters in the standards of education
total responsibility for social security,               provided. Those who support taxes of
whereas in Australia much is still left to              European dimensions appear to forget
the discretion and choice of the individual             about important considerations of this
person. The European peoples, as is to be               kind. Perhaps, if they thought more
expected, are naturally called upon to pay              deeply, they might change their views.
heavily in taxes for the benefits they                     The difference between the European
receive. Indeed there are specific social               methods and our own (with consequent
security contributions amounting, for                   differences in tax revenues) is based on
example, in France to some 15 per cent of               widely divergent political philosophies,
G.D.P. and in Germany to 12.5 per cent.*                involving a totally different view of the
  In Australia greater weight is placed on              role of the State. Those who implicitly
self-reliance and self-help and the in-                 argue for taxation on the European scale
dividual is expected, so far as possible, to            seldom, if ever, bother to explain that this
make provision for his own retirement                   would necessarily deprive the individual
and for the protection of himself and his               Australian of the freedom and personal
family by contributing to private                       choice which he or she enjoys under our
superannuation and health funds and                     present arrangements. The wide
through life insurance policies.                        disparities in taxes as a proportion of
* Social Security contributions in most countries       G.D.P. between Australia and such
are funded by levies on employers and employees of      countries as France, Germany, Sweden
which the larger part is paid by employers.The levies   and Denmark reflect a deep-rooted
on employers most probably are recouped in prices       difference in viewpoint about the ap-
and this might be regarded as an indirect tax.          propriate spheres of private and public

62                                                                  IPA Review — July-September, 1980
    responsibility. The cost of providing         areas. In the three years 1974 to 1976,
    protection against economic misfortune        whereas in Australia public investment
    or old age, or for health and education,      expenditure amounted to 13.7 per cent of
    has to be borne under all systems. In         total public sector spending, in France
    Europe, the "cost" is paid for almost         and Germany it comprised only 8.9 per
    wholly in taxes (including specific social    cent, Sweden 8.5, Holland 7.4, Canada
    security contributions). In Australia,        9.1 and the U.S.A. 6.0. The fact that the
    taxes are less because the individual meets   benefits of much of the capital ex-
    a substantial part of the cost in a private   penditure currently being undertaken will
    capacity.                                     only be reaped in the fairly distant future
                                                  places a much heavier load on taxpayers
      Those who imply that there is sub-          in the present.
    stantial scope for increasing taxation in        When assessing the "burden" of
    Australia would thus have to prove a case     taxation, taxes used to finance social
    that the government-dominated systems         security or to pay for educational and
    of the European countries are superior, in    health services must clearly be considered
    all respects to the methods we have           of a very different order from taxes used
    followed in Australia. Many Australians       for funding public projects. In the first
    with their strong traditions of in-           instance, the taxes represent no more than
•   dividualism and dislike of paternalism        a transfer of income between different
    might take a lot of convincing.               sections of the community. Some gain,
       There is a further highly important        others lose. But with public works ex-
    consideration which has a bearing on the      penditure there are no immediate
    relative tax "burdens" of Australia and       benefits: the whole community is called
    European countries Australia, unlike          upon to reduce present consumption for
    Europe, is a young, developing country,       the sake of the future.
    rich in resources, and with its population       The "tax argument" is just another
    spread far and wide over a massive            example, and a classic one, of the danger
    continent. This has meant that a much          of reaching conclusions — particularly
    greater proportion of tax revenue is           making international comparisons —
    devoted to funding huge public works           based on broad aggregates, without
    projects and the public infra-structure        regard to the meaning of the aggregates
    required as a basis for the development of     and to the differing circumstances which
    remote and climatically inhospitable           account for them.

    IPA Review — July-September, 1980                                                      63
                       DISCRIMINATION -
                      TURNING THE TABLES
                                by Lauchlan Chipman

Foundation Professor of Philosophy, University of Wollongong and Visiting Professor,
                 Department of Jurisprudence, University of Sydney

     Is racial, ethnic or sexual                     Affirmative programmes seek to
  discrimination ever justified? The answer,       accelerate progress along the path, by
  according to some influential thinkers and       such schemes as the provision of
  a growing number of political activists is a     scholarships and bursaries to minority
  qualified yes. If a policy of active            members, and the raising of
  discrimination in favour of a class whose       consciousness and self-respect, so as to
  members were previously victims of              encourage the pursuit of traditionally
  unjust discrimination is likely to correct      male or majority occupations, education
 an imbalance in their representation in          levels, and social roles.
  position of power, prestige, and social            To many radical critics however, such
 responsibility then, it is argued, the           schemes are too modest in ambition and
 deliberate introduction of an equal and          too slow in result to really meet the im-
 opposite bias into the relevant system of        mediate needs of those whom they are
 selection may be justified so long as the        intended to benefit. Thus they propose
 imbalance exists.                                the introduction of a period of reverse
    A common element in many pieces of            discrimination in such fields as
 existing or proposed anti-discrimination        educational and public service ap-
 legislation is an exception clause per-         pointments, and the senior managerial
 mitting limited 'reverse' discrimination,       levels of the corporate sector.
 as it is commonly called, provided that it          Never is it seriously suggested that
 is corrective in intent.                        underqualified women or minority
    Reverse discrimination is one form,          members be appointed to these posts.
indeed the most extreme form, of af-             Rather, it is said that those of such ap-
 firmative action. Those who advocate            plicants who are adequately qualified
programmes of affirmative action point           should in some way receive a bonus for
out, quite correctly, that merely by             their status. The bonus might be the
making discrimination against women              minimal one of requiring that, should two
and racial or ethnic minorities in em-           qualified applicants otherwise be of equal
ployment, education, and access to               merit and one of them be a women or
housing, goods and services, illegal and         member of a racial or ethnic minority,
punishable, one does little to positively        then the latter should be preferred. Or it
advance their position. Unlocking the            might be the more substantial one of
front door is of little benefit to someone       requiring an active search amongst the
who cannot make it along the path from           qualified applicants for the best of the
the street.                                      women or minority candidates, and giving

64                                                          IPA Review — July-September, 1980
such a person, if one is identified, ab-       other evils which might persist without it?
solute preference, this policy to be           To my mind no adequate justification has
continued until a socially representative      ever been given. It cannot be justified as
composition of the staffing is achieved.       compensation for past wrongs, for it is no
   It is precisely this form of                compensation to those women, or
discrimination which is causing increasing     minority members, wrongly denied jobs
anxiety among many contemporary                or access to goods and services in the past,
philosophers of law. Some make the             that others of the same sex or grouping
economic criticism that such an                are given privileged access to them now or
overriding policy of preferential hiring       in the future. While it is certainly im-
must mean a systematic increase in             portant in their formation of role models
inefficiency, as it will often mean passing    that young people see more women and
over the best qualified applicant and          minority members in positions of high
appointing someone of lower probable           public responsibility, it is surely better
competence. But this is not the nub of the     that they see them winning them on merit,
issue, for many would accept that a            and not merit supplemented by con-
relatively short period of reduced ef-         siderations of status.
ficiency, if such did eventuate and were it       Indeed one inevitable consequence of
the only cost, would not be too high a         reverse discrimination is that all women
price to pay for the improved society          and minority members who hold high
which is expected to result.                   office are placed under a cloud for it is
   Rather, the issue is whether two wrongs     said, or silently assumed, by others that
can, after all, add up to a right, or          "they would have got there on their
whether they just add up to a bigger
wrong. The second wrong is said to be
committed once the most highly qualified         With the current Australian interest in
person is passed over on the ground of         human rights at the national
sex, race, or ethnic origin. This is a very    parliamentary level and with a healthy
probable consequence of those schemes          and increasing public interest in the
which propose 'quotas' or 'targets' and        position of women and minorities
`timetables' for government departments        generally, there is sure to be a growing
or firms to achieve a socially represen-       demand for policies which imply or
tative composition. It is not avoided by       sanction reverse discrimination. To
calling such schemes guidelines rather         concede such policies, and in effect use
than directives, for guidelines have a habit   selective racism to fight racism, or limited
of functioning as directives in the hands      sexism to fight sexism, is not only fun-
of the diligent bureaucrat.                    damentally wrong in principle, but most
    If wrong, is reverse discrimination a      unlikely to achieve its very desirable
justifiable wrong, or a lesser evil than       objectives.

IPA Review — July-September, 1980                                                        65
        It is with deep regret that we record the deaths of two of our colleagues.
                                                 W. A. BEATTIE
                                                     W. A. ("Bill") Beattie, a leading
G. R. MOUNTAIN, A.M.                             agricultural and pastoral consultant,
   G. R. Mountain ("Rowley") had a               joined the Council of the Institute in 1964
longer association with the I.P.A. than          and became a member of the Executive
any other person, whether a member of            and Editorial Committee in the same
the Council or Staff.                            year. In 1975 he was invited to suceed Mr.
   As the senior economist of the National       Angus Jones as Chairman, a position
Bank and a personal assistant to the Chief       from which he resigned in 1977.
Manager, Sir Leslie McConnan, he was                 Bill Beattie's great service to the I.P.A.
involved in the early steps which led to the     had its roots in a passionate belief in the
establishment of the Institute in 1943. He       importance of the Institute to the com-
became a member of the original                  munity and in the goals it was pursuing.
Editorial Committee (formed in 1943) and            For many years he had a close personal
he remained a member until his death — a         association with the Director. He was a
remarkable record of 36 years service.           prolific letter writer and was accustomed
   As a highly respected economist, both         to set down his views on paper at con-
in business and academic circles, com-           siderable length for Mr. Kemp's con-
bining a deep knowledge and love of              sideration. They had a breadth and a
theory with a flair for the practical — the      vision which gave rise to fresh insights
two by no means go together — Rowley's           and were invariably provocative of
advice and assistance over this long period      thought.
were invaluable. His close friendship with          Unpretentious and unassuming, Bill
the Director of the I.P.A., C. D. Kemp           was liked and respected by his associates.
(which commenced when they were boys             He had a dual love — a love of
at Scotch College) meant that many of the        scholarship and a love of his country. It
ideas whcih eventually appeared in the           distressed him when he felt that the
Institute's publications were discussed at       realisation of its great potentialities was at
length between the two. Mr. Kemp                 times being frustrated by second-rate
depended on him greatly.                         leadership or by unwise policies.
   During the attempted nationalisation of          Not long before his death he completed
the trading banks in the late 1940s by the       a book, "Australia's North-West
Chifley Labor Government, Rowley                 Challenge", to demonstrate to his fellow-
played an important role as an adviser to        Australians a great national task that still
Sir Robert Menzies. His invariably               remained to be done. Unfortunately he
cheerful personality, his acute sense of         was too ill to attend the launching of a
humour, and his kindness to others, won          work to which he had devoted untiring
him the affection of his colleagues in the       energy and his considerable intellectual
banking world, in the Institute and in           gifts.
University circles (with which he never             Bill was an important influence in
lost touch). He will be greatly missed by        I.P.A. affairs and will be sadly missed by
many people.                                     his colleagues.
   We extend our deepest sympathy to his            We extend our sincere sympathy to his
wife, Lyndsay, and his family.                   wife, Kay.
66                                                            IPA Review — July-September, 1980
                 "NUCLEAR ELECTRICITY
                  A CONTINUING OPTION"

  ...is the name of a video-tape recently produced by the Institute of Public Affairs.
  The tape runs for some 18 minutes. It is entirely Australian in context and we feel it
makes a worthwhile presentation of factual data whilst proposing a case in favour of the
use of nuclear energy as an acceptable option.
  Many thinking people will find the tape interesting and informative on a critically im-
portant subject. In secondary schools it will be a useful teaching aid and a stimulant to
senior classroom discussions. It has been approved by Departments of Education in
various States.
                             SONY UMATIC 3/4 inch CASSETTE
        Available on loan from:—
                               BUSINESS FILMS PTY. LTD.,
                                  424 ST. KILDA ROAD,
                              MELBOURNE, 3004, VICTORIA
                                 TELEPHONE: (03) 26 6735

        No charge to borrowers except freight (where applicable).

IPA Review — July-September, 1980                                                      67
                              THE SCOURGE
                             Why We Have Failed To Beal It

                                      C. I). KEMP.

                                                   Price SI (Postage Included)
                               PUBLISHED BY THE INSTITUTE OF PUBLIC AFFAIRS.

                   Inflation — The Scourge
                 Why We Have Failed To Beat It
                                by — C. D. Kemp, C.B.E.

Every year since World War II prices have risen. The average rate of increase per year is
5.6 per cent.
   The I.P.A. has just published a booklet which endeavours to explain why Australia has
failed to overcome the scourge of INFLATION. The author is C. D. Kemp, Director of
the Institute from 1948 to 1976.
  Mr. Kemp attributes our inability to defeat inflation to faulty and superficial diagnosis
by the economics profession and to a failure of leadership by Governments.
  On the latter, he writes that "Governments neglected to enlist the support of the people
by education and information on the causes of inflation and on the unavoidably unplea-
sant measures required to bring the monster to heel."
  A majority of the economics profession, Mr. Kemp claims, was strongly biased toward
an ever-expanding public sector, consequent heavy taxation and supported unrealistic
goals of development and immigration.
  The price of the Booklet (including postage) is $1.

68                                                                         IPA Review — July-September, 1980

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