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Tuesday, 13 September 1983
Page: 654

Mr MACPHEE —Does the Minister for Employment and Industrial Relations agree that the effect of the Government's submission in the national wage case is to seek full wage indexation from the beginning of the March quarter, thereby reducing the Australian Conciliation and Arbitration Commission's wage pause to eight days? Why has the Government thereby repudiated the assurance given to this House by the Prime Minister on 10 May that full indexation would commence in 1984? Is it because the Government is satisfied with its efforts in creating 100 new jobs, in seasonally adjusted terms, in its six months in office? To what extent would unemployment worsen if the Commission were to adopt the Government' s submission?

Mr WILLIS —The Government's submission in the national wage case was, of course, to have the Commission give effect to the union application for an increase in wages to take into account the increase in prices in the March and June quarters , which amounted collectively to 4.3 per cent. We did that on the basis that this was how wage indexation could be brought in, in a way which would give effect to the prices and incomes accord and enable us to have a system of wage adjustment in this country compatible with the sustained economic expansion that is essential if we are to have a reduction in the level of unemployment, which every honourable member in this House would certainly want to see.

Let me be quite clear about the Government's wages policy. We are not in any way apologetic for what we have done in the national wage case. We regard it as fundamentally important that now is the time to institute a new wages system. We completely and totally reject the Opposition's view that the best wages system would be one in which the wages freeze was maintained for as long as possible. We believe that not only would such an approach mean a further continuing reduction in the real wages and living standards of all wage and salary earners; it would also certainly mean that we would see increasingly sectional claims being pursued and eventually a wages explosion. We would be back to where we were a couple of years ago with the wages explosion of 1981-82, when we had a big increase in wages which had adverse effects on the economy. No one would want to go back to that kind of situation, but that is what will inevitably occur if the Opposition's wages policy of trying to keep the lid on wages for as long as possible were to be pursued.

We have taken the view that it is totally appropriate for the Government to use this situation now to institute a new form of wage adjustment before we reach a situation in which there is some expansion of the economy. It is appropriate to do that in the present circumstances. I strongly hope that the Conciliation and Arbitration Commission will give effect to that system. If it does, I expect that we will see a system in which there is compliance by the trade union movement, most of which will occur on a voluntary basis. However, I certainly hope that the Commission will also give effect to the provisos we put forward to it with regard to the no extra claims provision which would ensure that unions which were thinking of pursuing sectional wage claims would be dissuaded from doing so.

What we put in that regard, I believe, is fundamental to ensuring complete adherence to the centralised wages system. If that system continues we will be looking forward to a situation whereby this year we will have an increase in award wages of about 4 1/2 per cent. So far this year there has been an increase of, from recollection, about 0.2 per cent. So with the 4.3 per cent, we are looking at an increase in award wages of about 4 1/2 per cent. That means that on the basis of a 5 1/2 per cent increase in the consumer price index for the period comprising the September and December quarters of this year and the March and June quarters of next year, which would flow through into wages, in 1984 we would have an increase in award wages of around 5 1/2 per cent. With award wages increasing by 4 1/2 per cent this year and by 5 1/2 per cent next year, that situation is very compatible with a substantial reduction in our inflation rate, a substantial restoration of our competitive position and a substantial continuance of economic recovery.

We believe that wages policy is soundly based. It is one which is thoroughly equitable. It is certainly compatible with the sustained expansion of the Australian economy and it gives this country more chance of economic growth and a reduction in unemployment levels than any other wages policy possibly could do .