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Thursday, 30 April 1987
Page: 2073

Senator SHORT —I direct my question to the Minister for Finance. I preface it by saying that I had proposed to ask about the prospects for a significant reduction in the national rate of inflation-which is, of course, now made more difficult than usual because today's figures for the March quarter are incomplete, extraordinarily, because collection of data has been disrupted by an industrial dispute. However, working on what is available, is it a fact that the March quarter consumer price index result of 9.3 per cent to 9.4 per cent means that to achieve even the unsatisfactory Budget forecast of about 8 per cent for 1986-87 as a whole will require an outcome of about 0.4 per cent CPI for the current June quarter? In view of the great concern about the possibility of excessive wage rises under the new two-tiered wages system, and noting that representatives of the Business Council of Australia are meeting with the Government today to discuss that very issue, does the Minister agree that, in the near future, there is no real prospect of the dramatic fall in Australia's rate of inflation that would be necessary to bring it down to anywhere near the average of our major trading partners of well under 2 per cent?

Senator WALSH —It is, of course, correct to say that the March quarter CPI data is incomplete because the Sydney figures have not been factored in. My advice is that it is highly unlikely that the factoring in of the Sydney figures would change the figure for the other seven capitals by more than 0.1 per cent, and the change could be in either direction. That applies to both the provisional March quarter figure of 1.8 per cent and to the figure for the year ending March of 9.3 per cent. The 9.3 per cent figure is higher than the Government or any other sensible person would like it to be, but it is a significant reduction on the 9.8 per cent annual figure for the year ending December 1986.

Senator Messner —There was a March quarter in it.

Senator WALSH —There was a March quarter in the other figure as well, Senator Messner. By definition, the March quarter figure for 1986 was in the figure for the year ending December 1986.

Senator Messner —No, it was not. That is not right.

Senator WALSH —Senator Messner is telling me that there was no March quarter figure in the annual figure for the year ending December 1986. I do not understand how there could not have been a March figure in the figure for the whole of 1986. However, that is not really important.

There was a great deal of wages drift, which the Government is concerned about, in the second half of calendar year 1986, some of it probably attributable to cashing out of fringe benefits. The indications are that the drift is high enough to be a matter of some concern. Senator Short asked what the Government is doing about it. The Government is using moral pressure and other processes available to it to resist claims for wage increases that the Government regards as excessive on equity grounds and dangerous on macroeconomic grounds. However, it becomes extremely difficult for the Government successfully to pursue a campaign of moral suasion against unions whose members are paid, on average, $400 or $500 a week-and, in many cases, less-when there is another militant, irresponsible union imposing work bans in an attempt to secure a wage increase of $350 a week for a part time job. That is exactly what the doctors union in Canberra is doing-with, I repeat, the apparent support of all members of the Opposition, except Senator Reid.

Senator SHORT —I wish to ask a supplementary question. The Minister has not in any way addressed the question that I asked, so I ask it again. Does he agree that, given the results to date in this financial year, there is no prospect of the dramatic fall in Australia's rate of inflation that would be needed to bring it down to anywhere near the average of our major trading partners, which is well below an annual rate of 2 per cent?

Senator WALSH —If the militant, irresponsible, greedy Australian Capital Territory doctors union got away with its wage claim, there would certainly be no prospect of that. If the dispute spreads throughout Australia-and the doctors have announced their intention to make it so spread-there would certainly be no prospect of getting down to a very much lower inflation rate, either in the short or the long term.

Senator Michael Baume —What if the plumbers' arrangements spread throughout Australia?

Senator WALSH —Precisely, Senator Baume. The demands of the plumbers were resisted stoutly by the Government. The actions of the Plumbers and Gasfitters Union were denounced by Mr Willis, probably by the Prime Minister, by Mr Keating, by me and by a number of other people.

Senator Short —On a point of order, Mr President: Senator Walsh's comments bear no relation to the question and do not give me the answer that I was seeking. I ask you, Mr President, to bring him back to the question.

The PRESIDENT —Order! There is no point of order and I have no powers to direct the Minister on how to answer the question. He can answer in his own way.

Senator WALSH —In fact, I was answering an interjection from Senator Short's bench mate, or whatever he should be called, who is concerned about the wages claim pursued unsuccessfully by the plumbers union for $92 a week but is not at all concerned about the wages claim for an extra $350 a week for a part time job being pursued by the doctors union. I do not know how the honourable senator can reconcile such inconsistency. He is obviously frightened of the doctors union but not of the plumbers union.

For a variety of reasons, inflation has gone up during the past 18 months, and we all know that. Indeed, it has gone up so much that it got to within a little over 1 percentage point of its rate when John Howard was Treasurer. Everybody is concerned about it. However, the movement is downward and there is sound reason to believe that, on an annual basis, it will continue to move downward from its current level of 9.3 per cent by-and I will not make any precise predictions-several percentage points over the next year or so.