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Thursday, 21 March 1985
Page: 574


Senator SHORT —My question is to the Minister representing the Prime Minister. I refer to the Prime Minister's address last week to the Canberra branch of the Economic Society of Australia and New Zealand. I ask whether the Minister is aware that the Prime Minister is reported as having said, during that meeting, in response to a question:

I would need an enormous amount of evidence put to me to suggest that greater flexibility in the labour market is to be equated with greater economic rationality.

I ask whether the view of the Prime Minister that it is irrational to believe that economic growth and employment would be assisted through greater labour market flexibility reflects the considered policy of the Government. If so, why does the Government ignore the overwhelming evidence from overseas experience, and earlier experience in Australia, that the price of labour, namely wages, affects the demand for labour and that high wage and wage related costs in Australia are one of the basic reasons for our existing unacceptably high level of unemployment?


Senator BUTTON —I was not aware that the Prime Minister made a speech to the Economic Society in Canberra last week and I certainly was not aware of questions which he was asked or answers which he allegedly gave.


Senator Chipp —Don't you read all his speeches?


Senator BUTTON —Yes, on most occasions, but last week I was reading Izvestiya. In Senator Short's question he attributes to the Prime Minister in an answer the remark that he would need a great deal of evidence in relation to labour market flexibility. I do not know what weight in that context can be attached to that quotation. Insofar as wage levels and on-wage costs are concerned, of course they are a relevant factor in industry competitiveness. I have said so on numerous occasions in this chamber and elsewhere. I state in answer to the honourable senator's question that it is not a considered view of the Government that those things are irrelevant. It is very important to consider what is meant by labour market flexibility. It may mean a number of things and not only flexibility in relation to the wages system. If it is intended to relate to the wages system, there are a variety of factors, historical and otherwise, which are very relevant in the context of wage fixation in this country and which this Government believes have to be taken into account.

Whatever the future holds, this Government is firmly of the view that the prices and incomes arrangements reflected in the prices and incomes accord have been a success, beneficial to the macro-economic environment in this country and with consequent benefits for Australian industry. I speak not only of the prices and incomes arrangements themselves but also of what has flowed from them in terms of industrial relations issues and so on. If Senator Short attributes the comment about labour market flexibility to issues other than wages, I must say that for my part I agree that there are enormous rigidities in the labour market situation in Australia which this country would do better without. But these things cannot be overcome overnight; they are matters of concern to the Government which have to be worked out in a steady and regular way.

I also agree with the implication of the question that labour market factors are relevant to the question of employment and unemployment. I just make the point that there are many high wage societies-higher wage societies than Australia-which have been infinitely more successful in terms of industry, entrepreneurship and success in exports, for a variety of reasons other than their wage fixation procedures and their flexibility of labour markets. The issue of addressing competitiveness and the performance of industry generally embraces a wide range of issues of which that is only one. It would be helpful in the context of a debate in Australia if the Liberal Party was not fixated in the intellectual time warp of 1976 to 1982 but instead considered a wider range of issues in the discussion relating to industry competitiveness and the performance of the industry economy in Australia than it has been prepared to do in the past.