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Wednesday, 8 December 1976

Mr LYNCH -I am not sure that I picked up the point which the honourable gentleman queried. If I did not, I invite him to raise the matter again with me during question time. As I recall what he was querying, it was the basis upon which there were references to the question of wage and salary increases in the context of the decision to devalue. As senior Ministers have made perfectly clear, both in this House and outside, one of the underlying reasons which ultimately led to devaluation was the very heavy lift in wage and salary movements over a considerable period. I refer particularly to the honourable gentleman's period in government. As I have repeated on other occasions, during the last 6 years wages in Australia's manufacturing industry increased by 130 per cent, compared with 53 r cent in the United States and 70 per cent in est Germany. Clearly, on any reasonable reading of the basis of the movement in wage and salary levels in recent years, that was a position which was not sustainable. The Government at the same time, because of anti-inflationary strategy, had determined to hold the rate as long as possible. The more recent decision, while in that general context, paid very heavy heed to the inevitability of a movement in the rate which arose from the very significant speculation during the course of the past 3 months. As to the 2.2 per cent, the honourable gentleman ought to be aware that the Budget assumptions bore in mind a continuation of plateau indexation. The 2.2 per cent increase, which was the passing on of the full consumer price index increase in that quarter, would therefore have been inconsistent with the Budget assumptions. For that reason, it was one of the factors which was pointed to the statement concerning devaluation, but it ought not to be seen by the honourable gentleman as a very significant factor against the other areas of consideration that I have mentioned.

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