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Government proposal on indexation rejected

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Union peak councils today rejected a Commonwealth Government proposal which would have guaranteed the continuation of wage indexation for the next 12 months.

The Commonwealth approach would have enabled all workers to receive the same flat amount necessary to compensate them for cost-of-living increases and, at the same time, would have reduced the inflation rate to around 7% by the middle of next year.

An essential part of the Commonwealth's approach — more generous than that advocated in recent national wages cases — was that this level of wage increase could only be justified if industrial disputation was reduced. As the Commission said in its August 1976 wage indexation decision:

"The Commission's attempt to provide an equitable, rational and orderly method of wage fixation must fail if significant industrial disputation continues. The cumulative effect of such disputation must be to worsen inflation and further endanger employment."

The Government's proposal was made at the Consensus Conference convened by Sir John Moore, President of the Conciliation and Arbitration Commission.

No party, other than the Government, put forward a proposal to the Conference, and accordingly the Conference has now ended.

The Government welcomed the Commission's initiative in calling the Conference in the first place, and accepted that it had a responsibility — as also do unions and employers — to seek consensus in view of:

• the precarious nature of the current economic situation

• the unacceptably high level of unemployment

• the loss of employment opportunities in Australia because of high wage costs as compared to overseas countries

• the value to wage earners, employers and Government of a clear and readily understandable basis on which wages may move for a reasonable period ahead

• the urgent need for all sections of the community not only to be aware of the economic difficulties confronting Australia, but also to work together to overcome those difficulties.

The Government regrets the outright rejection of its proposal by the union leaders at the Conference. In the interests of their members it would have expected them to adopt a more constructive approach.

A copy of the Commonwealth proposal is printed overleaf.

CANBERRA 1 November 1976


c o m m o n w e a l t h p r o p o s a l

(i) All parties agree that award wages should be adjusted by amounts which would result in an inflation rate not exceeding 7% in June 1977. It would, for example, be consistent with this if award wages were adjusted for the September and December 1976 quarters and the March and June 1977 quarters, by flat amounts calculated by application of the relevant quarterly CPI movement (undiscounted) to the minimum wage (minimum wage plateau), but the parties may wish to consider other alternatives.

Note: The advancement of this proposal involving discounting of a lesser amount than the Commonwealth's preferred option in the last National Wage case is only realistic on the basis of the other points below also being adopted.

(ii) All parties agree that the only increases outside the quarterly adjustments are to be strictly in accordance with the other indexation guidelines.

(iii) All parties agree that the agreement could be reviewed following the fourth quarter adjustment, with an option for renewal; or, following the fourth quarter adjustment, a review of the existing wage fixation principles, upon which the consensus proposals are based, could be held.

(iv) The peak union councils agree to use their good offices to ensure that:

(a) members accept a moratorium On all stoppages, bans and work limitations in the 12 months "wages agreement" period; and

(b) any dispute which occurs will be referred to the Conciliation and Arbitration Commission (or the appropriate Tribunal) for settlement and that if no agreement is reached the employers and unions will accept the decision of the Tribunal.

(v) All parties agree to collaborate on the preparation of a joint statement, to be issued by the President of the Commission and distributed to all members of the community urging support for the agreement.

(vi) AH parties agree to participate in tripartite national discussions aimed at ensuring adequate skilled labour supply as the economy recovers: further, that priority in such discussions be given to measures for retraining or additional training of those persons currently unemployed who have worked in the past in skilled trades.

(vii) AH parties agree to participate in national tripartite discussions aimed at measures to increase productivity in industry.