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ANDREW PEACOCKδ η ® 3XY BROADCAST. 12 APRIL 1985 (Embargo : 8 ~ i 9.00 pm 14/4/85)

The end of the drought and strong economic growth in the United States has given Australia a tremendous opportunity to achieve a sustained economic recovery.

However, just this week, the sharp increase in unemployment and the rise in home loan interest rates, show how fragile our recovery is. <

If we are to get unemployment down again, Australia must become more internationally competitive.

But this does not just require wage restraint.

It also requires strength and discipline from the Government. That discipline was not there in 1984 and the problem has accelerated in 1985.

The current high interest rates are largely a result of the extravagant government spending in the 1984/85 Budget and of the Government's loose monetary policy.

These developments have eroded confidence in the Government's capacity to manage the economy.

This has worsened in 1985, first by Mr Hawke's back-down on the MX and second, by the Prime Minister's refusal to stand up to the ACTU on wage restraint.

When investors lose confidence in a Government, they will vote with their feet and this is exactly what is happening to our dollar.

The Government seems to have lost control. The dollar has devalued along with the decline of Mr Hawke's authority in the Labor Party.

The decline in the value of the dollar does of course provide opportunities because it makes our exports cheaper and imports more expensive.

But these opportunities will be lost if the increase in the consumer price index results in higher costs from full wage indexation.

The ACTU is not only demanding indexation but also a wage rise to reflect productivity increases. The fact is that the economy and the uemployed can't afford it.

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However, the Labor Government has not only caved in to the ACTU over full wage indexation - it has also agreed to a further increase for productivity.

The Opposition has always maintained that the Accord with the 1 ACTU gives too much power to one pressure group, the ACTU. This is now proving to be true. The Government is falling 1 into line with the ACTU on a wide range of issues and has now

even agreed to negotiate directly with the ACTU on tax - outside the Summit. No other group in the community has this privilege. j

The opportunities for a sustained recovery are available - but it will require much more strength and discipline than is being shown by the Government. The result is damage to the economy and to the interests' o.f. every Australian.

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