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Wednesday, 24 August 1983
Page: 158

Mr PEACOCK —My question was to be directed to the Treasurer. Is he to attend Question Time today or is he to be like the Prime Minister and hide elsewhere? As the Treasurer has now arrived, I direct my question to him. Firstly, I ask whether he agrees with the comment in Budget Statement No. 2 that:

. . . it is crucial that wage and price developments be constrained within the broad guidelines set by the Prices and Incomes Accord.

Secondly, is it not a fact that, even if the prices and incomes accord holds, interest rates and unemployment will rise and inflation will continue at high levels? Thirdly, given recent wage settlements, for example in relation to building workers and food processors, how can he continue to pretend that the accord will hold?

Mr KEATING —There seems to be a simplistic notion that in some way Budget Statement No. 2 is the express invention of the Department of the Treasury and is something in respect of which I have no interest, care or responsibility. Budget Statement No. 2 is the statement of the Government, as indeed the former Treasurer said not so long ago in this chamber. I inform the honourable gentleman that I read every line of Statement No. 2 and stand by every line in it. Let me make just a couple of other points. I have said on a number of occasions-at the National Economic Summit Conference in this place and also in the May statement of economic measures-that of course there are risks to a recovery coming from the depths of the recession we are currently in.

But, be that as it may, the central premise of the honourable member's question is that on this side of the House it all hangs on the prices and incomes accord, and that without it there is no hope thereafter. I make the central point that we have always regarded the prices and incomes accord as being complementary to the other instruments of policy. The Government has taken a number of significant measures on the fiscal front to deal with the disastrous inheritance of the starting point deficit which began at $9.6 billion and went out to $10.4 billion, only to be brought back by the growth forecast engendered by the confidence this Government created. In our fiscal policy we have had to bring that deficit back within manageable limits. So, in the area of fiscal policy, the Government has taken substantial action. As regards monetary policy, I remarked last night in the Budget Speech that the former Government overshot its monetary targets five years in a row. If anything, it had an erratic tightening of money at certain times which threw the economy into a downspin. This Government has a firm monetary policy backing its general anti-inflationary policy which is understood and rational and which the Government will abide by.

It is a mystery to me what other instruments of economic policy the Leader of the Opposition has apparently conjured up in his mind and which he believes he could resort to or rely upon, other than monetary and fiscal policy, to achieve what he apparently believes this Government cannot achieve without the prices and incomes accord. Under this Government monetary and fiscal policy is in better shape than it ever was under the previous Government. And we will maintain it that way. We also have achieved something which the Opposition will never achieve, that is, an accord with the trade union movement. The Leader of the Opposition can eat his heart out because he will never achieve it. It is one of the important bases for dealing with inflation.

We have made it clear also that we will make the transition from the chaos and mayhem which existed under the previous Government with its supposed free market for wages during 1980 and 1981 and the disastrous impact on the economy which it wrought through its stupid ideological obsession with having a free market for labour. Australia had a centralised wage fixation system for 70 or 80 years. We will revert to that system. Of course, on the way through we will have teething problems; nobody doubts that. But, in the main, the accord will hang together. As the inflation rate declines, providing scope for a fall in interest rates, the Opposition will die a thousand deaths when it thinks about its vote at the next poll.