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Labor's wages achievement - good news for interest rates



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I B Media Release Hon Gareth Evans QC MR Deputy Leader of the Opposition and Shadow Treasurer

LABOR S WAGES ACHIEVEMENT - GOOD NEWS FOR INTEREST RATES

Today's ABS wages figures provide more confirmation of the healthy economic legacy of the Labor government.

Wages rose 1 per cent in the quarter, and 3.7 per cent in the year, well within the Reserve Bank's target range.

With inflation dropping to 3.1 per cent for the year, the prospects for an interest rate cut are now much brighter.

If the Reserve Bank does not now move to drop interest rates, it’s time to ask why.

If the only reason is doubt about the future course of wage movements, then it is the Howard Government who should carry the can:

- the Government’s gamble with a confrontational industrial relations policy, added to the dumping of the Accord, has not been designed to encourage moderation from the trade union movement; and

- the pursuit of Budget cuts which harm the living standards of Australian families, cannot help but put further pressure on wages.

A savagely contractionary Budget will of course create its own momentum for interest rate cuts - not as a reward for good fiscal behaviour, as Mr Costello seems to think, but as a necessary corrective for an economy with the stuffing knocked out of it.

25 July 1996

COMMONWEALTH PARLIAMENTARY LIBRARY