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National wage case decision

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NO. 32






The Treasurer, Mr. Phillip Lynch, described today's decision by

the Conciliation and Arbitration Commission in the latest

National Wage Case as an advance on past decisions.

Mr. Lynch warned, however, that the decision would still add

substantially to inflationary pressures within the economy.

While the decision was consistent with a more speedy return to

economic normalcy than would have been possible with full or

nearly full indexation of award wages), the Commission's decision

had fallen a good way short of what the Commonwealth had sought

in its submission.

The Treasurer said the decision overall was equal to nearly

60 per cent flow-on of the Consumer Price Index into wages

and salaries and would add around $350 million to the quarterly

national wage bill, or some $120 million more than the increase

flowing from the previous wage case.

It was the Government's firm view that a return to a sustainable

economic recovery required that inflation and inflationary

expectations be reduced.

The Government regarded wage restraint as essential to that

objective, and had therefore argued strongly in the recent case

for a small increase.

The Commission had awarded a substantially larger increase than

was suggested by the Commonwealth - i n fact, about twice as large.

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Mr.. Lynch said' that he believed that the part of the Commission1 s

award that corresponded to the 3.2 per cent increase in the CPI

due to the health Services component was the most equitable

decision that could be made, in all the circumstances.

The increase of $2.90 was eqxial to the maximum Medibank levy for

single people or for a husband or wife whose spouse is also an

income earner. People in these categories account for about .

70 per cent of wage and salary earners.

To have allowed full indexation of the Health Services component of

the CPI increase would have given an addition to the incomes of

most wage and salary earners considerably iri excess of the Medibank


However, it was disappointing that the Commission had decided to

award an amount of $2.80 in respect of the rise in other components

of the index in the December quarter.

The Commonwealth had argued that there should be ho such increase

at all.

The Treasurer went on to say that he welcomed the broadly-based

Inquiry into the wage-fixing system announced by the Commission.

The determination of award wages was a vital element of Australian

economic life.

It should be subject to thorough-going examination from time to time.

The Commonwealth had pointed out in its submission in the National

Wage Case that the prime issues of such an Inquiry - the suitability

of the CPI for wage adjustment purposes and the possibility of

reverting to a 2-part wage system - were matters of very real

substance and importance.

As such they warranted detailed examination and debate by all

parties before the Commission.

Mr. Lynch noted the arrangements that the Commission had announced

for adjusting the "basic" component of wages during the period

before the Inquiry was completed.

The Government was pleased, he said, that the Commission had

recognised the merit of its argument against any automatic

indexation of wages during this period. :

In the March and June quarters there will be a component of the

rise in the CPI attributable directly to devaluation.

It would be contrary to the objectives of devaluation and damaging

to general economic recovery to index those price increases into


In conclusion, the Treasurer said that he hoped it could be taken

from today's decision that the Commission would henceforth be

paying greater regard to the economic consequences of its decisions

than it had done in recent, times,.

31 March, 1977.