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Treasurer ties interest rates to industrial relations reform; Shadow Treasurer accuses government of complacency; shadow minister and Queensland Premier oppose plans for industrial relations reform.

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Monday 7 February 2005

Treasurer ties interest rates to industrial relations reform; Shadow Treasurer accuses government of complacency; shadow minister and Queensland Prem ier oppose plans for industrial relations reform


PAUL LOCKYER: The Federal Government contends that the latest economic assessments by the Reserve Bank make an even stronger case for proposed industrial relations reform. 


Treasurer Peter Costello says onl
y another round of industrial relations changes can arrest inflation and keep interest rates low. 


Labor, however, is arguing that the Government has broken its election campaign promise on interest rates, and that the Reserve Bank warning reflects Federal Government complacency over the current account deficit and the national skills shortage. 


From Canberra, Chief Political Correspondent Catherine McGrath reports. 


CATHERINE MCGRATH: If there was any doubt about how serious the Government is about its new round of industrial relations reforms, that was cleared up today when the Treasurer warned that without them inflation and interest rates could rise. 


PETER COSTELLO: If we don't have another round, a strong round, a vigorous round of industrial relations changes, then in a situation where we've got the lowest unemployment in 30 years, and some skill shortages, we could see inflationary pressures emerge. 


REPORTER: So, without IR reform interest rates would rise? 


PETER COSTELLO: Well, if you were to get in a very low employment economy, wage rises which were not based on productivity, and if that were to move into inflation, then obviously we'd have to take action to contain inflation. 


CATHERINE MCGRATH: And with warnings last week from the OECD that the pace of economic reform in Australia has slowed, and that skills shortages and a lack of infrastructure could hamper future growth, Shadow Treasurer Wayne Swan says the Government hasn't done enough. 


WAYNE SWAN: There's a clear signal in this report that interest rates are on the way up, and one of the reasons interest rates are on the way up is the complacency of Federal Government policy who have sat back idly and watched skills shortages develop and watched the infrastructure bottlenecks develop.  


In addition to that, we've had the complete denial from the Government that the current account deficit is a problem for this country.  


Quite simply, there has been too much consumption in this economy and not enough investment. 


CATHERINE MCGRATH: Wayne Swan says John Howard has broken an election campaign promise on interest rates. 


WAYNE SWAN: The Prime Minister constructed a political campaign that gave the electors of this country the impression that interest rates would not rise under the Howard Government and now we face the prospect of higher inflation and higher interest rates, which is a direct result of Federal Government complacency. 


PETER COSTELLO: Well, look, Labor can say what it likes but the truth of the matter is that in Australia's near full employment economy, with an economy which is still growing, I think interest rates have been stable for 14 months and at historic lows.  


From memory, the home mortgage interest rate is, what is it, six-and-a-quarter I think, and when Labor left office it was ten-and-a-half. 


CATHERINE MCGRATH: The Treasurer's view that industrial relations reform is central to keeping interest rates low will be a key to the Government's political agenda which it'll continue to promote when Parliament resumes tomorrow. 


Labor's Industrial Relations Spokesman, Stephen Smith, is gearing up for a fight. 


STEPHEN SMITH: IR is not the be all and end all of an economic debate, as the OECD and the Reserve Bank make it clear. But I think our challenge this year is firstly to regain our political respectability, and I think Kim's done that by his election and conduct since then, but secondly to hold the Government to account.  


There's actually an order to this, and the fact the Parliament's back this fortnight reflects that. They're floating out an idea on IR. We say it's extreme, it's unfair, it'll be divisive. That's what they've always been about. 


CATHERINE MCGRATH: State Labor governments are seeking legal advice on mounting a challenge to the Coalition's plans to establish one national industrial relations system, effectively outlawing State awards. 


Queensland Premier Peter Beattie says his State has the best industrial record in the country.  


PETER BEATTIE: This is just ideological obsession. I, for the life of me, don't understand why this is on their agenda, and let me give you an illustration. I don't know why anybody would possibly want to upset the Queensland industrial relations system, which is the best in Australia. What John Howard ought to be doing is following our system, not trying to destroy it. 


CATHERINE MCGRATH: And while Labor politicians across the country, and union leaders, have been attacking the Government's industrial relations plans, in an unexpected intervention, former prime minister Gough Whitlam has backed the idea, saying in a statement: 


GOUGH WHITLAM (voiceover): Liberal Prime Minister John Howard correctly wishes our National Parliament to have jurisdiction to make laws with respect to the terms and conditions of industrial employment. 


CATHERINE MCGRATH: And he continued: 


GOUGH WHITLAM (voiceover): If John Howard achieves his objective by legislation, our national governments will be able to take action to implement International Labour Organisation conventions and recommendations. 


CATHERINE MCGRATH: This may be his view, but it won't help Labor trying to mount a campaign against the Howard reforms. 


PAUL LOCKYER: Chief Political Correspondent, Catherine McGrath.