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National wage case decision



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TREASURER

N O . 90

EMBARGO

STATEMENT BY THE TREASURER, THE RT; HON. PHILLIP LYNCH, M.P.

NATIONAL WAGE CASE DECISION

The Treasurer, Mr. P h i l l i p Lynch, expressed considerable disappointment

at today's decision of the Conciliation and Arb itrat io n Commission in

the la test National Wage Case.

Mr. Lynch said that the grave imbalance between real wages and productivity

resulting from the 197A wage explosion s t i l l remained A us tra lia 's major

economic problem. .

I t was therefore p a r t i c u l a r l y unfortunate that the Commission had again

f a ile d to bring down a decision that would have contributed in reasonable

measure to a speedy recovery in economic a c t i v i t y and the creation of new

job opportunities.

The Commission had made some allowance for devaluation so as to prevent price

rises from this source from flowing through into award wages; i t was, however,

using devaluation to do no more than i t was doing before.

The extent of indexation awarded was fa r too great.

Overall, the Commission's decision was equivalent to about 83 per cent of

f u l l indexation and could be expected to add approximately $21k m ill io n to

the quarterly wages b i l l , or more than $.800 m illio n on an annual basis.

This was a much larger proportion than the Commission had given in average

in..its decisions since the beginning of 1976.

The Treasurer also noted that the Commission, i'n its comments and figuring

on real wage movements, had used the unadjusted Consumer Price Iftdex.

2

This included the ef fec ts of the changed health care arrangements on the Index.

The Index had, of course, been sharply influenced over the past year by

changes in the health insurance arrangements having nothing to do with .

i n f 1 a t ion as such. .

Excluding health and medical services from the Consumer Price Index movement,

real male award rates rose by approximately 1.2 per cent over the 12 months

to June 1977; the corresponding ris e for real female award rates was 2.1 per

cent, and for real average weekly earnings (male unit) 0.6 per c e n t .

Against that background, the Government was not able to accept the Commission's

approach as the appropriate one in the circumstances.

At best, the decision would contribute only marginally to the reduction of

the sizeable real wage/productivity imbalance that s t i l l persisted in the

economy.

The desirable outcome of increased job opportunities and, lower unemployment

would be a t t a i n a b le a l l the more quickly were there to be greater moderation ■ . . . , , \

on t h e p a r t o f t h o s e d e ma n d i n g wa g e i n c r e a s e s and on t h e p a r t o f t h o s e

a w a r d i n g t h e m .

F o r t h i s r e a s o n t h e Go v e r n me n t w o u l d be l o o k i n g t o t h e Co mmi s s i o n i n t h e

f u t u r e t o p a y g r e a t e r r e g a r d t o t h e e c o n o mi c c o n s e q u e n c e s o f i t s d e c i s i o n s ,

e s p e c i a l l y a s t h e y a f f e c t i n f l a t i o n and u n e m p l o y me n t .

M r . L y n c h s a i d t h e Bu d g e t t a x a t i o n r e d u c t i o n s w o u l d h a v e t o be s e e n d u r i n g t h e

y e a r a h e a d a s a means by w h i c h t a k e - h o m e p a y c o u l d be i n c r e a s e d w h i l e a v o i d i n g

i n c r e a s e s i n t h e c o s t s f a c e d by t h e b u s i n e s s s e c t o r . .

M r . L y n c h c onde mne d t h e A L P 1s a t t i t u d e t o wa g e i n d e x a t i o n a s h y p o c r i t i c a l a n d

c o n t r a r y t o t h e i n t e r e s t s o f r e d u c i n g u n e mp l o y me n t .

T h e p r e v i o u s T r e a s u r e r e x p l i c i t l y r e c o g n i z e d t h e r e a l wa g e p r o b l e m i n h i s

1 9 7 5 B u d g e t S p e e c h when he s a i d : -

" I t d o e s e mp l o y e e s g e n e r a l l y no good t o g e t h i g h e r and h i g h e r money

i n c o me s i f t h e r e s u l t s a r e j u s t h i g h e r p r i c e s , a s e v e r e s q u e e z e on

p r o f i t s , a s l u mp i n new i n v e s t m e n t a nd a c o n t r a c t i o n o f j o b o p p o r t u n i t i e s .

.·.<■

Mr . Lynch a l s o p o i n t e d t o t h e words o f t he p r e s e n t Leader o f t h e Op p o s i t i o n a t

t h e 1975 Young Labor C o n f e r e n c e : -

" I n f l a t i o n t oday is undoubt edl y and a l mos t s o l e l y due t o wage c l a i ms

and i n c r e a s e s . "

- 3 - .

2 2 A u g u s t , 1 9 7 7 .