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Tuesday, 29 October 1996
Page: 5976

Mr MAREK —My question is addressed to the Prime Minister. Prime Minister, is it a fact that all sections of the community have to play their part in keeping interest rates low so that mortgage burdens on home buyers and small businesses are eased? Prime Minister, given the fact that inflation is now low and government policies are in place to keep interest rates low, do you foresee anything on the horizon that might jeopardise this favourable climate?

Mr HOWARD —Mr Speaker, one of the reasons why the outlook for interest rates is very promising at the present time is that we have over recent times seen a very significant measure of wage restraint. That has made a contribution to the low levels of inflation. It is undoubtedly the case that wage increases linked to productivity and, through that, low inflation, is one of the prime reasons why we can hope that interest rates might fall further in the future.

Can I say to you, Mr Speaker, and to the House, that the obligation to display wage restraint, the obligation to ensure that wage increases are linked to productivity gains, is not an obligation that is confined to people on low and middle incomes. It is an obligation that is also to be accepted and to be met in full by people on high incomes.

I hope that I would have the support of all members of this parliament when I say to the working men and women of Australia that we would understand if you felt that there were one law for you and one law for the rest of the community. That would be quite unacceptable, and I would simply say to all people who have wage setting responsibilities in the Australian community that it is essential that there be equality of sacrifice in the Australian community.

The Australian people will always accept reforms, the Australian people will always accept the need for change, if two conditions can be demonstrated. The first of those conditions is that the national benefit is explained and understood. There is a national benefit in wage increases based on productivity because they contribute to low inflation; low inflation contributes to faster economic growth through lower interest rates and greater investment activity.

The second condition that people want to be satisfied about is that when restraint is urged, when sacrifice is asked for, all sections of the Australian community share that sacrifice—except the very vulnerable, of whom it is unreasonable to make the same demands that we make of other sections of the community. If you can satisfy the working men and women of Australia that it is fair across the board, that the sacrifice that they might be asked to make on occasions, the contribution they might be asked to make, is matched by the contribution of other sections of the community, they would accept it.

One of the reasons why the budget was so well received was that it was seen by the battlers—the working men and women of Australia—as being a strong budget but a fair budget—a `fair go budget', in the words of the Sydney Daily Telegraph. I simply say to them that we expect a fair go for them in relation to the fixing of the salaries of high income earners in this country.