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Tuesday, 29 October 1996
Page: 5978

Mr WAKELIN —My question is addressed to the Treasurer. Given the recent reduction in inflation, can the Treasurer advise the House of the implications for wages policy and the outcomes which should be expected by employers and employees?

Mr COSTELLO —I thank the member for Grey for his question. The inflationary pressures have been moderate over the course of this year, and the September quarter for 1996 underlying rate of an increase of 0.5 per cent met a 2.4 per cent underlying rate for the year to September 1996. That means inflation is now back to pre-Whitlam levels, and that it is no longer necessary in Australia to have wages chasing prices. Recently the national secretary of the Australian Manufacturing Workers Union, Doug Cameron, said in relation to the claim in the metal industry:

We want to maintain our members' standards of living and their buying power. That means we have to go out and chase wage increases.

The whole point about low inflation is that you do not have to chase wage increases to chase prices. Prices are low. It is no longer necessary in enterprise agreements to factor in expectation of price increases in order to maintain buying power. In fact, it is now necessary to recognise low prices which means that there is no factor to be built in to maintain wage buying power, and wages should be settled on the basis of productivity.

Wage outcomes have to take this into account. In an economy exposed to international competition, wage rises that are unreasonable will lead to job losses. This is a point that was made recently by the outgoing chief executive of the MTIA, Bert Evans, who warned that in the metals industry—an industry which is subject to international competition—wage settlements, and particularly a wage claim of 15 per cent over two years, was defying gravity. He continued:

While they may well secure short-term gains for their members, in the longer term jobs will be lost, investment will be diverted offshore and Australian manufacturing industry will decline even further.

It is important in this climate to understand the importance of wages based on productivity rather than on expected price movements. Let me make it entirely clear—I think I have said that a few times in this House—that enterprise agreements where wages are based on productivity improvements will lead to real increases in remuneration. It is essential to get the productivity outcomes in relation to wage enterprise agreements.

The Prime Minister has also mentioned a point that was emphasised by me on a number of occasions in doorstops recently: when it comes to productivity based wage increases and enterprise agreements, that applies to executives as much as it applies to the blue-collar work force. As far as the government is concerned, wage-productivity outcomes based on restraint, locking in low inflation, are a two-way street. It is a question of not just the work force but management as well realising the potential that they have to lead by example in this area and to set the example in relation to wage outcomes and wage agreements.

In a low inflation economy where we have the opportunity for wages based on productivity outcomes, where we have cooperation, at both the executive and non-executive level, we can set up the conditions for an easing in the high interest rates which were the legacy of the failed Keating years. By setting up the opportunity to overcome that monetary policy—the legacy and failure of the Keating years—we can sustain the kind of economic growth which will see the employment opportunities for Australians which are so desperately needed.

Mr Martin —Mr Speaker, I rise on a point of order. A little earlier the Prime Minister offered to table some documents. Have they been tabled? Have they been received again? You took them back a minute ago. Have they been given back?

Mr Howard —Stephen, really!

Mr SPEAKER —Order! The documents have been tabled.