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Labor IR and workplace policy under scrutiny -

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Labor IR and workplace policy under scrutiny

The World Today - Friday, 9 May , 2008 12:16:00

Reporter: Alexandra Kirk

ELEANOR HALL: As the Federal Government puts the finishing touches on its first Budget, the
Treasurer has warned that high interest rates and slowing global growth will affect economic growth
in Australia and that this may push up unemployment.

Wayne Swan says the Budget is designed to tackle inflation and contains more than 600 spending cuts
and recast spending measures.

But there is more political pressure on the Government now to prove there'll be no detrimental
impact on employment and inflation from its industrial relations policies.

A leaked study by the economic modellers Econtech and commissioned by the Howard government, has
been obtained by The World Today and shows Labor's IR laws would put further pressure on inflation
and unemployment.

This is the second leaked document in a week to criticise the Government's workplace laws.

In Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: Just four days before Treasurer Wayne Swan delivers his first Budget, the
Government's still dotting the i's and crossing the t's. The Budget goes to the printers this
weekend. After making more than 600 spending cuts and changes, Mr Swan is at pains to point out the
importance of responding to the serious inflation problem.

WAYNE SWAN: We've got no choice in this budget but to rein in spending if we are going to spare
families from rising prices, rising inflation and rising interest rates so it has been very
substantial savings exercise in this Budget.

ALEXANDRA KIRK: The Government's other Budget message is high interest rates plus slowing global
economic growth will effect, in other words, slow, Australia's economic growth, which in turn may
effect unemployment.

WAYNE SWAN: That is why we have got to do everything we possibly can to put downward pressure on
prices, downward pressure on inflation.

That is the central objective of this Budget so we can grow the economy with low inflation.

ALEXANDRA KIRK: The Treasurer insists his Budget won't slow the economy further.

WAYNE SWAN: No, what our Budget will do will be to strike the right balance. To have sustainable
growth with lower inflation and lower interest rates in the long term. That's the whole objective.

ALEXANDRA KIRK: So if the Budget won't slow the economy, what about Labor's industrial relations
policy?

The World Today has obtained an 80-page study by economic modellers Econtech, delivered to the
Howard Government bureaucracy last September, just a month before the election was called.

It examined the direct economic and employment effects of re-regulating the labour market.
Coalition sources say it is an evaluation of Labor's Forward with Fairness policy.

The key findings were: the policy would increase unemployment by 1.48 per cent by 2011 - with a
loss of 268,000 jobs, pushing inflation up by 1.2 per cent and slashing the economy by 4 per cent
or $50 billion.

Earlier this week, the Government dismissed a leaked Treasury memo from April of last year warning
Labor's IR platform was likely to trigger jobs losses and wage and price spirals, with Employment
and Workplace Relations minister Julia Gillard pointing out the critique was done ten days before
the policy was launched.

JULIA GILLARD: This is not an analysis of Labor's workplace relations policies. It simply can't be.
This is a minute from the 18th of April last year. Labor's IR policy was announced on the 28th of
April last year, and then of course our policy implementation plan, which dealt with matters like
the way in which we were going to rid of AWA's, was launched on the 28th of August, so this doesn't
pass even the most basic common sense test.

ALEXANDRA KIRK: But the Econtech report was compiled after Labor's policy had been unveiled.

Julia Gillard declined The World Today's request for an interview, but her office says the Econtech
report had nothing to do with Labor's policy because Forward with Fairness is not re-regulating the
labour market. And others in the Government point out the report was based on undoing all
industrial relations reforms since 1993.

But Julie Bishop, the Opposition's workplace spokeswoman, maintains the broad principles on which
the Econtech report was based still apply, insisting Labor's policy is inflationary.

JULIE BISHOP: It is clear that the Labor Government has advice from numerous expert sources
including Treasury that its roll back of workplace relations reforms will drive up inflation and
cost jobs. No-one has argued that Labor's roll back will be good for jobs growth or that it will
put downward pressure on inflation.

The only debate about Labor's roll back will be the extent of the job losses and the size of the
boost to inflation.

Now, Labor has been caught out and its defence has been to dismiss the expert advice, including
Treasury advice, but they refuse to release any research or analysis or Treasury advice to
contradict the view that their policies will cost jobs and drive up inflation.

ALEXANDRA KIRK: The Government has said so far it has not commissioned any analysis of the economic
impact of its IR regime.

Ms Gillard's office says the Government's substantial workplace legislation hasn't been written
yet.

Interestingly, the leaked Econtech report was never released by the then-government as it struggled
to combat poor polling and a relentless anti-WorkChoices campaign by Labor and the unions.

Sources in the Coalition point to chaos in the dying days of the election campaign and a
realisation that the Coalition's industrial agenda was on the nose with voters. The then-Workplace
Relations Minister Joe Hockey says the opportunity just did not present itself so close to the
election.

ELEANOR HALL: Alexandra Kirk reporting.