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Tuesday, 24 February 1987
Page: 493

Senator MICHAEL BAUME —I refer the Leader of the Government in the Senate to the Government's propaganda booklet issued 18 months ago at public expense, called `The Accord-The First 2 Years', which boasted that, in having the accord as the centrepiece of its economic policy, Australia was the only nation in step as-I quote from the booklet-`in contrast to many other countries, the Australian Government is determined not to revert to the orthodox response to devaluation of using contractionary economic policies to reduce inflation' and that, as a result, the accord had achieved `record growth, falling inflation and dramatically rising employment'. I ask the Minister: To what extent has the Government consciously abandoned these out of step policies that brought about Australia's worst ever relative inflation rate compared with our trading partners, which is now about twice as bad as in the last year of the Fraser Government? I further ask him whether the Government has now belatedly adopted the contractionary economic policies it rejected between 1983 and 1985, and will this be confirmed in its May economic statement-or is the present collapse of economic growth, lack of investment, record real interest rates and continued high unemployment in Australia simply the inevitable consequence of the Government's excessive, overlong and mistaken commitment to the accord?

Senator BUTTON —First of all, let me say to Senator Michael Baume that he cannot have it all possible ways, as he tries to do. I begin by pointing out to him that it is the policy of his Party, the Liberal Party of Australia, and has been for several years, to have a wages freeze. His Party then luxuriates in accusing this Government of lowering living standards as a result of some deliberate strategy. He cannot have it both ways. It is extraordinary that this man, upon whom so much public money has been lavished in giving him a tertiary education-this product of public sector expenditure who appears in the Senate today-asks a question of this calibre. If Senator Baume does not know, everybody else does know that since that booklet was published there have been significant changes in the circumstances of the Australian economy as a result of declining commodity prices and a fall in national income.

Senator Michael Baume —We warned you about that.

Senator BUTTON —Senator Michael Baume says: `We warned you about that'. That was very big of him and very nice of him. It is a pity that his Party did not heed the warning in its seven years in government because all the signs were there when people such as him were talking up the resources boom. All the warnings were there but they did not heed them for one moment. Let us talk about the last three years of those seven years, in which wage increases were 14 per cent, 16 per cent and 12 per cent. Inflation was over 10 per cent, government expenditure in the last Budget was enormously up and unemployment was up. All those things happened. If the warnings were not there then, I do not know when the honourable senator had to get them.

Senator Michael Baume has asked a question and he is endeavouring, by interjection, to ask a few supplementaries already. I have not finished with the first one yet. For his benefit let me make it absolutely clear that under the accord, as referred to in the document to which he made mention, the Government had embarked upon a policy which produced significant wage restraint in the Australian community-a very significant wage restraint compared with what existed in the years under the Fraser Government, when I understand the honourable senator was an adviser as well as a member.

Senator Michael Baume —You benefited from our wage freeze.

Senator BUTTON —Do a bit of work, Senator, and do not come in here mouthing that sort of cliche. In the last 12 months the Government has quite deliberately in response to the terms of trade and the fall in national income endeavoured to slow the rate of growth in the Australian economy. We have said that a hundred times and probably a thousand times.

Senator Messner —But inflation keeps going up.

Senator BUTTON —Yes, Senator, inflation has been going up in the last few months, and that has been because of the devaluation effect. Everybody knows that except perhaps the Opposition spokesman on finance. The original question was whether the Government has consciously abandoned its policies which are dealt with in the accord document to which Senator Michael Baume referred. The answer to that question is no, because that document is basically directed to establishing a degree of wage restraint in Australia to which people were totally unused under the performance of the previous Government. That has been successful and that was the central thrust of the accord. The accord, as renegotiated, has been devoted to the same purpose. In respect of that matter about which the document was primarily concerned, the answer is no.