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Sydney Journalists' Club luncheon

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One of the two major issues of this campaign is economic . responsibility. Which Party is capable, through its economic management, of leading Australia responsibly in the 80s? There is no doubt that the central pillar of economic management will remain the ability to contain and lower


To achieve this, several tests must be met. Chief amongst them is the continuing containment in government expenditure and reduction of the size of the budget deficit. We have applied ourselves consistently to this responsible strategy,

and. our inflation rate significantly below, the average of advanced industrialised countries. As a result, our industries enjoy a new found competitiveness, and increasingly our rural, mineral and manufactured products

are penetrating international markets and competing more effectively against imports. ·

With this hard-won economic strength has come significant growth in employment. And in this year the annual employment growth has been the highest for the last 10 years. This is in stark contrast to the legacy -we inherited. For, under

the previous Labor administration inflation increased four fold; unemployment doubled; investment collapsed and our international trading position was drastically weakened.

Australia has progressed a. long way under our government. · In this campaign we will continue to argue the pursuit of ' responsible economic policies through containing government expenditure and attacking inflation. Only in this way can Australia's full potential be realised in the decade ahead.

We will not buy votes with short term policies which Labor is blatantly doing. They would steal back through higher inflation any benefits they are now promising. Let us see how Labor performed in government and what they offer for the'eighties Let us look at the history of spending under the previous Labor government; the growth' in Commonwealth Government outlays

in one year alone was as much as 46%. In the last five years, · the average annual growth in Commonwealth Government outlays , has been about 1%. On this comparison alone, Labor has no vestige at all of economic responsibility. '

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But what do they offer for the 80s? At least $2,500 million of additional spending commitments; and on top of that, a - tax cut to cost $900 million in a full year. That is an additional demand for resources of $3.4 billion. But how much extra revenue can they collect? The Labor Party claims it could

collect $600 million from tax avoidance but the Treasurer has been down that track. He has done more in the tax avoidance area than any Treasurer and I don't believe · that $60 0 million is a viable figure.

To collect $250 million by the retrospective abandonment of the investment allowance is a harsh measure and, in the event, they would have to wait a further year to get the

benefit of that. But even allowing for the methods that Mr Hayden outlined in his policy speech for collecting extra revenue, all of that revenue would be committed in financing the proposed tax cuts. This means that in a full year, some $2,500 million would be totally unfunded.

The enormity of this change of direction in the management of fiscal policy in Australia can be judged by the fact that such a sum would add $2.5 billion to a domestic deficit which this year has been eliminated. And only when

that figure is analysed, .does it become absolutely clear that the money cannot be found for the Labor programmes; that they cannot be sustained without massive increases in taxation.

All this would mean the destruction of everything we have achieved - growth in employment, renewed confidence in the economy, increased investment and the best balance of trade result for the decade. It would mean- that inflation would take hold of this nation and destroy the very fabric, of our society.

Quite apart from these expenditure programmes, there are other aspects of Labor policy, potentially just as damaging. And I want to talk today about the wages policy of the Labor Party and the so-called "agreement" between the Australian

Labor Party and the trade union movement. The alleged social contract with the trade unions is the whole edifice on which Labor's strategy rests. In his policy speech, the Leader of the Opposition deceived Australia when he argued

that the Labor Party was in broad agreement with the trade union movement; and that it had established a framework for conciliation and negotiation between a Labor government and the trade unions. · . .

I will argue two points - that there is no agreement between the ALP and the union movement; and any suggestion that there is, is a plain, blatant and deliberate deception. Secondly, . I will argue that what Mr Hayden has done through the sum of his "social contract"; and his agreement with the Socialist Left at the ALP Conference in Adelaide in July last year, is to

serve notice that, in government, Mr Hayden would abdicate economic responsibility to the trade union movement.

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To understand this, we need to understand in full, the demands of the union movement in relation to wages and taxes. The union movement demands full wage indexation; full tax indexation; and the unfettered right to argue, outside the Commission, for whatever additional wages it can get from employers.

Let me take the first point. While the platform of the Labor Party commits the Party to full tax indexation and to full wage indexation, I am not aware that Mr Hayden made any commitment to these objectives in his policy speech. In addition,

Mr Hayden is totally silent about union demands for the right to argue for whatever additional wages they can get out of collective bargaining. Mr Hayden is unlikely to make those commitments which, in the unions' view, are a pre-condition of any "agreement". Because, on top of his other commitments,

$2.5 billion of expenditure and tax cuts totalling $900 million a year, such commitments will be seen as totally and grossly irresponsible. But perhaps this part of the argument is academic. The new President of the ACTU has said there is no

social contract, no agreement, and Mr Hayden is whistling in the dark to suggest that there is. That puts paid to the prospect of Labor holding inflation. The . second part of Mr Hayden's deception is that he

has sought to hide the fact that a Labor government would be involved in a sell-out of its economic responsibility to the union movement. T o 'understand this, it is necessary to go back to the start of the Adelaide conference of the Party in 1979 where, in the end, there was no anti-inflationary policy. Mr Hawke called Mr Hadyen's performance "gutless" and a "sell-out to the Left" for it was at that conference that Mr Hayden did his deal with the Left wing of the Labor Party.

It was at that conference that Mr Hadyen made the decision to share power with the Left wing forces within the Australian Labor Party and the union movement. It was at that conference that his close affinity with the AMWSU came to the fore,

and his reliance on Jim Roulston as an economic adviser came into the open. While Mr Hawke would deny that today, he was . asserting it very loudly and vigorously at the time, as you all know.

I remind you of some of the pertinent things Mr Hawke was saying then. He said that as far as the relationship between himself and Mr Hayden was concerned it was finished. He told delegates outside the conference that he regarded Mr Hayden as gutless

and that he no longer had any regard for him. He described Mr Hayden's deal with the Left as a dereliction of leadership and claimed that Mr Hayden went to water. Reportedly, he told ALP National Conference delegates that he now feels

he cannot trust Mr Hayden; that Mr Hayden was "a temporary leader".

What has happened since that Adelaide conference? We have seen the union movement reaffirming its wages policy; calling again for full wage indexation and full tax indexation; demanding the right to collective bargaining; to national productivity increases on top of wage demands; to a 35-hour week on an ...industry basis; and to the continuation of work value decisions.

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That hardly provides the basis for any agreement, with.any - government unless the government is going to abdicate totally its responsibility. Indications that this would happen under a Labor government were' given earlier in the year during . the campaign for the 35-hour week. Mr Hayden started by · opposing it, indicating that it was bad for firms, bad for

jobs. But then, when there was a debate in the Parliament, he supported the 35-hour week because he had been pulled ' into line by the Left wing forces within his Party.. And all we got in his policy speech were vague references

to an agreement with the union movement which the new president Mr Dolan, says is not an agreement at all.

What would all of this mean if Labor were in government? We have seen it all before. Mr Hawke, as president of the ACTU and the President of the Labor Party, was a person of great influence in the Whitlam years. Yet during that period, Commonwealth award wages went up by almost 40% in one year,by

over 75% in three years.

Industrial disputes reached an all-time record and as a result of what Mr Hayden would presumably regard as the special relationship beween the Labor government and the trade union movement. The plain fact is that the union movement believed

it had a right to anything that it asked for. And, quite ruthlessly, it set about achieving it, with grave and lasting damage to the Australian economy and to men and women of the union movement itself.

Since the union movement then was acting with all Mr Hawke's support and encouragement; since the 35-hour week itself was begun by the ACTU during his presidency; what evidence is there to suggest that he would not use his influence the same way

again. Only a matter of weeks ago Mr Hawke remarked that his major contribution as Minister for Industrial Relations would be to take the government out of the role of active participant in wage hearings before the Commission. This is

a virtual "hands off" approach to wage fixation in which a Labor government would refuse to argue the public interest.

It is policy such as this, from 1972-7-5, that did this nation so much damage. It is these policies now, coupled with the extravagant expenditure programmes of the Labor Party, which would push inflation to 20%. It is these policies, taken

together, which would undermine the totality of the economic recovery that we have achieved. It would destroy the confidence and optimism that are now evident in the Australian economy here and overseas. And it would make unobtainable many of the objectives which we share, as a nation, for the eighties.

But there is another thread in all of this which we should not forget. The platform of the Australian Labor Party commits a Labor government to allow unions to strike in the course of their activities, immune from any pain or penalty directed against unions or unionists. This is rank capitulation. The Australian Labor Party also accepts the rights of unions

to regulate their own affairs free from government and judicial interference. Mr Hayden is on record as saying the union movement "... is very important to us historically. Without the financial support they give us, we would ... wither and '

go into extinction". Is it any wonder that the Labor Party . . . / 5