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Tuesday, 14 May 1957

Mr HAROLD HOLT (HIGGINS, VICTORIA) (Minister for Labour and National Service) . - The honorable member for Bendigo (Mr. Clarey) has sought to give his interpretation of the policy of the Government in respect of basic wage adjustments. He has given an interpretation of what I have put to the House and have said in other places from time to time. I should now like to give my own interpretation, because it differs very materially from the version we have heard from the honorable member for Bendigo.

The first thing I want to make clear is that the Commonwealth Government has never resisted the notion of an adjustment in the wage level according to economic capacity. The Commonwealth Government has never resisted the idea of a periodic review of this question of the highest basic wage that the economy can carry. That is the first point. What we have argued against is the weakness of a system of quarterly adjustments which was brought into being under circumstances entirely different from those that obtain to-day, as against a regular annual review which, we believe, is not only far better based from the point of view of industry and economic progress, but also far more likely to render justice to all concerned, and far more likely to preserve a situation of full employment to which this

Government has declared itself bound. In considering this question we must, of course, keep in our minds the necessity to do justice to the wage-earning section of the community, but what the honorable member has overlooked in his approach is that justice does not begin and end there. There are other sections of the Australian community who also have rights which have to be guarded. Normally, justice for the wage-earner and the welfare of the community go hand in hand.

It could be argued that in some instances, an increase in price levels and wage levels might benefit one section of the community, but only at the cost of another section of the community. We all have a vested interest in price stability in Australia. .If cost levels rise unduly sharply, then, firstly, the impact which is felt by those on fixed incomes is serious. We have heard honorable members opposite, often enough, plead in this place the case of the pensioner. But pensions are subject to an annual review, not to quarterly adjustments. If, in the meantime, there were a sharp rise of prices because of quarterly adjustments of the basic wage, every person in this country on a fixed income, including the pensioner, would be affected. Many Australian wageearners to-day have their own insurance policies, or superannuation funds which operate in the industries in which they are employed. They have a vested interest in price stability. So we view this as an endeavour to do justice to the wage-earner and at the same time to maintain, if possible, a price stability which will enable a continuation of Australian prosperity that will avoid dislocation, so far as people on fixed incomes are .concerned.

Away back in the days of Mr. Justice Powers, to which the honorable member has referred, the basis of fixing the wage was one of needs. The judge set out to decide what was the need of the average Australian family in terms of a man, wife and two or three children. As the years went by, the conception to which the court addressed itself was a very different one. The court said that it was not sufficient to look at the matter purely on the basis of need. If justice is to be done and the economy is neither to be over-strained nor to provide too big a share of the cake to the management section as against the employee section, the real issue to be determined is the economic capacity of .the community as a whole to carry a particular wage.

Mr Whitlam - This Government briefed senior counsel to persuade the court to that conviction.

Mr HAROLD HOLT (HIGGINS, VICTORIA) - The court has been moving in that direction for many years, as the honorable member will be aware, if he has studied the judgments. The Government accepts the logic and good sense of that reasoning. Does any honorable member opposite contest the principle that the basic wage should be the highest that it is within the capacity of the economy to pay? If honorable members opposite want it to go any higher than the capacity of industry or the economy to pay, then, of course, they are driving the nation into bankruptcy. If they want it to he any lower than the capacity of the economy to pay, then they are not seeking social justice for the wage-earner.

We have had conferences on this matter with the Premiers of the States, and I have put that principle to them. Not one State Premier, whatever his politics, challenged the principle I have just been enunciating, and I do not think that one honorable member opposite would dare to challenge it. If we accept the principle that what the tribunal has to decide is the highest wage it is within the economic capacity of the community to pay, how does that measure up with the system of quarterly adjustments in accordance with the C series index, which have nothing whatever to do with the capacity of industry to pay? Movements can take place within the C series index which are not related to the capacity of industry to pay, and in some instances they may suggest a weakened capacity of industry to pay. If State governments raise their rail freight charges or their charges for electric light or gas, these costs come into the C series index, but instead of improving the capacity of industry to pay a higher wage, they weaken the capacity of industry to do so. If, as happened last year, a freak season in potato production occurs, does that increase the capacity of industry to pay a higher wage? It is fantastic to suggest that it does. No government in Australia, to my knowledge, is unwilling to accept the principle of the capacity of industry to .pay. The system .of quarterly adjustments is quite inconsistent with that principle, because the adjustments are based on a retail price index which reflects price movements in certain commodities. The first test of the system is its wisdom. I think that few responsible people, apart from honorable members opposite and the officials of some trades unions, for whom they claim to speak, would contest the wisdom of the course we have now adopted. The best-informed and highest industrial tribunal of this country has accepted the wisdom of this system. I do not know of any industrial tribunal in the world which is better informed in point of detail than the Commonwealth Conciliation and Arbitration Commission of Australia at the time it comes to give a decision on a wage question. Having ceased quarterly adjustments in 1953 and reviewed the matter on more than one occasion since then, the Commonwealth commission has reaffirmed its view in its most recent judgment.

I think that the honorable member for Bendigo will accept the " Age " newspaper as a calm and reasonable journal in these matters. It is very interested in industrial affairs. Its view was expressed in the issue of 25th October, 1956. In the leading article, headed "Wage Confusion Increases ", that view was summed up in this paragraph -

The system of adjusting wages to the " C " series index already stands condemned. The last quarter has shown clearly the absurdity of accepting an index which can be heavily weighted by the ruling prices of a single commodity. In Melbourne, seven-eighths of last quarter's rise was attributable to the price of potatoes and onions.

Of course, that was not related directly to the cost of living, because when housewives found that potatoes were scarce and, therefore, the price went sky high, they went about buying rice or spaghetti, or gave their families more bread to substitute for the quantity of potatoes that they might otherwise have eaten. Similarly, in relation to -other -commodities, as their prices tend to get out of line with the general level, people look for substitutes, and the cost of living, accordingly, does not move in the same proportion.

The other test which can be reasonably applied to the Government's policy in this matter is whether it has worked substantially favorably to the wage-earner of this country. We have had a process of completely twisted reasoning in the fantastic allegations by the honorable member for Bendigo. He said that as a result of the suspension of quarterly adjustments, workers in various States have lost a certain amount of money. I ask honorable members to measure that statement against the facts. What better illustration of the real facts of the situation can be found than in the statistics of the average weekly earnings recorded in Australia? If we take the movement of average weekly earnings in Australia, we find that not only have they kept pace with increases in the cost of living, but they have also gone well beyond it. In the December quarter of 1953 - that was shortly after these adjustments were suspended - the average weekly earnings recorded for the whole of Australia amounted to £16 6s. 7d. By December, 1956, they had risen to £19 2s. 7d. That was an increase of 17 per cent, in that period. During the same period, the movement in the C series index, including onions and potatoes, was 11 per cent. So the average weekly earnings throughout Australia rose by 17 per cent, and there was a movement in the C series index of the order of 11 per cent.

It has been said that industrial unrest has been occasioned because of the Government's refusal to continue quarterly adjustments. Industrial unrest has not arisen because of the wage level. As I have shown, that has risen higher, proportionately, than have prices as shown by the C series index. The industrial unrest over wages has been due to the fact that there is disparity between the State wage, fixed on the quarterly adjustment basis in some of the States, and the Commonwealth wage. As the commission has pointed out, it has fixed the wage awarded by it on the basis of the capacity of the community to pay and has been compelled to fix a slightly lower wage for those under federal awards because a higher wage than the community could carry has been fixed under State awards by those tribunals still functioning on a quarterly adjustment basis. Therefore, if we want social justice in this country we will first work towards the highest wage that it is within the capacity of industry to pay, and then see that that principle is applied by all the wage-fixing tribunals in Australia.

It is the habit of honorable gentlemen opposite to try to present this Government as unsympathetic to the wage-earner. We are proud of the fact that, throughout our term of office, there has been substantially full employment, and that Australia has continued to enjoy a period of unparalleled prosperity. Under full employment the movement in the wage itself is not the only thing of consequence to the family. More bread-winners are contributing to the family income and the family standards rise accordingly. That has been the Australian experience, as any one with eyes in his head to see can confirm. Therefore, we say that our policy is working justly both towards persons on. fixed incomes without quarterly adjustments to help them meet costs, and towards wage-earners, because average earnings have moved more rapidly than has the C series index. As well, there has been full employment and continued prosperity, and we have built up an export trade, thus ensuring a continuance of that full employment and prosperity. If our wage levels were to get as far out of control as the irresponsible economic policy of honorable gentlemen opposite would place them, the economy as a whole would receive a severe shaking and our prospects of expanded export markets and continued full employment would be placed in jeopardy.

Mr ACTING DEPUTY SPEAKER - Order! The Minister's time has expired.

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