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Friday, 22 March 1985
Page: 662

Senator COOK(12.10) —As a junior senator in years of service compared with Senator Sir John Carrick's lengthy and distinguished service, I start by congratulating Senator Sir John Carrick on his speech. He is indeed an old trooper, and he gave us a classic example of a conservative militant, when all the indicators are against him, ducking and weaving through a maze of statistics to patch together a case and to try to create a silk purse from a sow's ear. It was a brilliant exhibition. One ought to recognise the exhibition as good, even though the substance was thin, and congratulate Senator Sir John Carrick on his determination and militancy. If it is not bordering on patronage, may I say that Senator Sir John Carrick perhaps made one fatal slip that he will live to regret, that is, his introduction of Max Gillies as a precedent for quotation in this chamber. In many of the satirical sketches that Max Gillies has put on, one sees more than enough ammunition for those of us on this side of the chamber to lambast the Opposition with for many years to come, and that is a Carrick precedent we will perhaps draw on in the future.

This is the debate on the Address-in-Reply to the Governor-General's Speech delivered on 21 February in opening the Thirty-fourth Parliament, in which the Governor-General charted the role for the Hawke Labor Government for the next three years. He did so, of course, by properly acknowledging what has been the most impressive economic recovery that any Western country has seen-a recovery engendered under the leadership of the Hawke Government, starting with the economic summit and going through the last two years-and he concluded the Speech with these words:

The program I have outlined is a program for consolidation of the great gains which have been achieved in the past two years. The Government and the people of this nation have, by acting in concert, brought a new approach to solving the problems facing Australia. It is the Government's desire that the momentum which has been thus built is not lost.

I assure this chamber that it is certainly the strong conviction of the Government that the momentum we have built up in the two years since coming to the treasury bench in the House of Representatives will not be lost.

It is a convention when Opposition senators open their remarks on the Address-in-Reply to indicate that, of course, the Governor-General's Speech is written in the Prime Minister's office and thus it is no disrespect to the Governor-General to criticise his Speech. I want to plagiarise their words: We are proud that the Governor-General's Speech was written in a Labor Prime Minister's office, and there is much in the Speech to be commended. It is, indeed, a speech which sets out a course for the reconstruction and ongoing development of Australia, an Australia which hopefully will achieve a greater degree of peace in the world, which hopefully will achieve a greater degree of equity and a fairer distribution of the wealth of the country among the people of the country and which will play a significant role in this region while simultaneously addressing the problems of youth unemployment-something I wish to talk about later-and some of the other great wrongs in our society that we inherited. That is, after all, the purpose of government.

I should like to make some preliminary points before turning to the general policy. First, I congratulate the 13 new senators who have been elected to this chamber. Some are returning for a second time, some are new and one was appointed. Most have made their maiden speeches-very good speeches too-and I look forward to hearing the opening remarks of those to come. Another thing that needs to be said by way of introduction is that the opening paragraph of the Governor-General's Speech referred to the fact that, of course, the Labor Party won the last election. It is a curious fiction which members of the Opposition seem to be wanting to develop that, while it is true that they lost, somehow they won. Of course, there is a certain honesty about the figures which make it very clear that this Government was returned with an endorsement of its policies and with a substantial majority. That issue should not be forgotten. Lest the writers of fiction in the Opposition get too carried away and believe that somehow the Opposition made improvements in Victoria in that State's election, I remind them that for the first time ever in that State a Labor government was returned for a second term and, at this stage at least, nominally with control of both Houses of Parliament, particularly the conservative upper House. One of my dearest wishes is to see the conservative upper House in my State of Western Australia, elected on gerrymandered boundaries, reformed to provide democracy-one vote one value-for the citizens of that State.

We have been re-elected with a substantial majority. The Hawke Government can now govern this country, be at the helm of its destiny for five years, and set in place a series of reforms now that a decade of Labor government is firmly in prospect.

It is the first time too that, in peacetime or free of recession, a Labor government has been in power at a time when the business cycle is on the upswing. It is the first time that we have not had to come to the defence of this country in wartime or to try to pull it out of a recession. For the first time, therefore, if this chamber proves not to be obstructive of the mandate we have, a Labor government has a chance to change Australian society so much for the better and so much for equality.

It is unfortunate that since the election there has been some commentary, first by the Leader of the Opposition (Mr Peacock), that Bills associated with tax reform would be let through; then the factional machinations of the Liberal Party took over; his deputy repudiated him; and now there is some significant doubt whether the Liberal Party will not try to find some ad hoc, populist association with the splinter Party, the Australian Democrats, and try to block legislation on tax reform.

It is about time this Senate was informed by an authoritative spokesman from the Liberal Party of what its intention will be when those Bills come forward, because there will be a summit, there will be reform and the only way that reform can be carried through so as to be constructive is if we know that this Senate is prepared to hear the voice of the summit and to recognise what will come out of it as a substantial consensus that needs to be approved.

As did Senator Maguire, who has now joined us in the chamber, I commiserate with those of my colleagues-John Reeves from the Northern Territory, Deane Wells of Queensland and Pete Steedman in Victoria-who lost their seats in the last election. However, I congratulate my Western Australian colleagues-if parochialism can intrude for a moment-Senator Jim McKiernan, who has been elected to this place, who is a young senator and who, I believe, will have a long service and will make a distinguished contribution, and Kim Beazley in the lower House, who has risen through the ranks of the Ministry to become at the age of 36 a Cabinet Minister with the weighty responsibility of being Minister for Defence.

One of the main debates in which a Labor government is obviously concerned to participate, in fact to show the way in, is that on employment and unemployment. As I said, a moment ago we heard Senator Sir John Carrick give an old, conservative militant's view of how to interpret figures to try to make a case. However, it is important that the record of what we have achieved on the employment and unemployment front be made clear. The last Australian Bureau of Statistics figures published show that the labour market has improved dramatically. Employment, seasonally adjusted, rose by 45,200 during February 1985-the third highest monthly increase on record. After a slow-down in growth in the second half of 1984, employment is now growing at a quarterly rate of 48,500, or more than double the growth in the November quarter. On the other hand, unemployment, seasonally adjusted, fell by 11,700 or 2 per cent in February and, unadjusted, by 0.2 per cent to 8.3 per cent-the lowest rate in almost 2 1/2 years. The fall in unemployment occurred despite an increase of 0.2 per cent in the labour force participation rate and that means that unemployment has been reduced by more than 128,000, or two percentage points, since its peak in September 1983. Interesting and rewarding though those figures are, the important significant change is in long term unemployment. The number of people unemployed for nine months or more fell by 43,000, or 17.5 per cent, over the year to January 1985. There are still 202,300 people, or 30.8 per cent of all unemployed, who have been out of work for at least nine months. However, the trend in the turnaround is significant.

The labour market share for teenagers also has improved. The unemployment rate, again seasonally adjusted, amongst teenagers looking for full time employment is 23.1 per cent, a fall of 4 percentage points since March 1983 and 5 percentage points since the high point in July 1983. The number of unemployed teenagers looking for their first full time job has fallen by 22,000, or 28 per cent, since the high point in September 1983. Those significant changes ought to be borne in mind when the matter of youth employment as against wage cuts is debated. It is important also to place on record the words of the Prime Minister in his speech of 14 March to the combined meeting of the Canberra Economics Society and the Industrial Relations Society. The Prime Minister, accurately, was able to say:

In less than two years under our policies, 360,000 new jobs have been created. In seven years and four months, a total of 340,000 new jobs were created under the policies of our predecessors.

That is to say, in two years we have achieved what the Fraser Government did over seven years and four months. We want to improve on that record. Nonetheless, those figures ought to be remembered when unemployment is addressed by the likes of Senator Sir John Carrick in an apparent effort to pretend that things have worsened.

In debating unemployment a member of the Labor Party cannot be anything other than sober because, while those improvements are welcomed, the problem is still difficult and grievous. Members of the Labor Party are concerned about the level of unemployment in general terms. The area of greatest concern is that of youth unemployment. Much has been said about that. In terms of Organisation for Economic Co-operation and Development countries, Australia is ranked about sixth. It is not the worst, but it is not the best either. It is a middle ranking performance by Australia in terms of its level of unemployment, particularly youth unemployment. We also rank in the middle of the order with our ratio of youth to adult unemployment. I am talking there of the age category 15 to 24 years. They are not good signs. They are problems that we are concerned to address. It is a worrying problem, but we are convinced that the package of policies we have cobbled together to resolve this problem is right.

In order to have a reasoned and intelligent debate about youth unemployment, one must concentrate on the facts and the detail and not on hysterics. It is unfortunate that many of the proponents of cutting youth wages have not bothered to be very accurate in their comments. They have tried to develop something we have become used to getting from conservatives, namely, a fear campaign, a scare campaign which distorts the facts to make an argument that does not exist. Only yesterday a Mr Ritchie, a chief executive of the McDonald's corporation, a company that employs many thousands of young workers, was reported in the West Australian newspaper as having said:

The unions and the arbitration system want full adult rates of pay for 15-year-olds.

The quotation I have given and the quotation I will give are not those of journalistic commentaries; these are the words of Mr Ritchie, as reported in the article. He also said:

In 1970 a first-year apprentice was paid 45 per cent of the adult rate of pay. In 1980 a first-year apprentice was paid 70 per cent of the adult rate of pay.

This is more than an 80 per cent increase.

With those words Mr Ritchie was arguing for a cut in junior wages. Considering his statement independently of political bias, we see immediately that he damn well does not know what he is talking about. He has tried to argue politically something that is factually incorrect. Mr Ritchie said that the unions and the arbitration system want full adult rates of pay for 15-year-olds. That is just not true. I know of no union that seeks adult rates for 15-year-olds on any grounds, unless those 15-year-olds happen to be doing adult work as labourers and thus are doing the job of adults, and thus require the adult wage. But there is no concerted claim for adult rates for 15-year-olds and it is a travesty to say that the arbitration system wants that.

The arbitration system is a system that sits in the middle of industrial relations, listens to the arguments of employers and unions, and has no policy. It brings the principles of equity and justice and the substantial merits of the case to bear on the arguments that are put to it. It then makes a decision. It does not pursue a policy. I do not know whether Mr Ritchie, like his corporation, is an American import, but if he is he certainly does not know how the arbitration system in this country works. To pretend that it has a policy and, moreover, one for full adult rates for 15-year-olds, is a complete misrepresentation. The arbitration system has the sober duty to make decisions on the cases presented.

Of course, the rest of Mr Ritchie's comment is also wrong. He has omitted to note that the entry age for apprentices has gone up in the years in question so that more apprentices are entering the apprentice system at 16 and 17 years of age than did so in 1970. At that time apprentices were entering into apprenticeships at 14 and 15 years of age. Therefore, the rates of earnings of first year apprentices have changed by comparison. They have not changed because of any age relationship, but because of the fact that they came in at a higher rate commensurate with the higher educational background that was necessary. It is unfortunate that that sort of hysteria has been injected into the argument. It is also unfortunate that too often it comes from the ranks of employers.

I am reminded of an anecdote, which is perhaps somewhat instructive, about the way in which employers tend to debate this issue. In 1921 an employers advocate, a Mr P. Cleak, in a wage case for junior rates argued that wages for boys should be lower than those for girls. His reasons are very interesting. He argued that if boys get a lower wage they will be taught the moral and upstanding value of thrift. They would have to learn to make do on lower wages and to squeeze the then pound much further. It was felt this would be morally instructive for them and would enhance their character. The employer was concerned about character building, not about his profits. If one goes further and asks why he supported a higher rate for girls it becomes an even more interesting argument. He said that girls rates had to be higher because if they were too low they may be forced on to the streets to perform immoral acts to earn further income. We have learnt from that description that in the 1920s the employers were concerned not about their profits or the viability of the company, but about the moral rectitude of the community, in particular, the teenage section of it. However, that is just an anecdote I put in as an aside.

The point I wish to make is that the argument is highly coloured and not very instructive with reference to fact. However, let us now move to the facts and try to straighten out the record. One of the key reasons for youth unemployment is that employers in a market with a high level of unemployment choose experience and skill at the job over inexperience and youth. Employers have chosen more adult workers who have had experience in the work place, an understandable choice. The argument therefore is that if we cut youth wages we will reduce the cost to employers, so that the idea of employing younger workers becomes more attractive and they will overlook the experience aspect. This Government's response was to recognise the problem before it got to this point.

Shortly after coming to government we commissioned the Kirby Committee of Inquiry into Labour Market Programs. That study has now reported that as a government we should introduce a traineeship system to make up for the lack of experience of young workers, to encourage them to be more expert and to learn higher skills so that they can compete on equal terms with adult workers in the work force. Although the youth traineeship system is only on the drawing board at this stage-it has to go through an exhaustive consultative mechanism with employers and unions and ultimately to the Australian Conciliation and Arbitration Commission for wage levels to be decided-the point is that the Government recognised immediately that the proper course was not to blame the victims but rather to help those who need the help by adding an extra dimension of skill and traineeship or experience to their attractiveness as employees. I hope that this is a course which the Government will follow.

On the other hand, in the national wage case hearing which has closed in Melbourne this week the employers concentrated their fire-with the support of the conservative Opposition in this place and in some State parliaments-on demanding a wage cut. The interesting thing about that demand is that the wage cut needed in order to create full employment for young workers has never been specified. What we have is a general assertion, backed up by no statistics.

The validity of the assertion cannot be checked. Those propounding the argument that a wage cut is necessary are found wanting because unless they specify by what degree we cannot check their calculations and prove their inconsistencies.

Senator Maguire —It is fairly typical.

Senator COOK —It is very typical of the incentive argument; it is an airy-fairy vague thing; one feels somehow that it may be better. Members of the Australian Labor Party have never believed that if one feels it may be better it is indeed better. We have always felt that the only way to handle the matter is to go to the facts. The facts are that since this Government came to power we have had substantial economic growth. The economy has expanded and more job opportunities have opened up. Significantly too, by virtue of the wages and prices accord, we have had non-inflationary growth, a major achievement for any Western country in these decades. I understand that it is the first occasion on which Australia has experienced significant non-inflationary growth of the order that we have now experienced.

Another factor that should be borne in mind is that in that time the shares of gross domestic product going to wages and salaries and the shares of GDP going to profits have changed. The percentage going to wages and salaries has declined; the percentage going to profits has increased. We are now beginning to see a growth in private investment in the economy, given that there is more profitability in businesses. That too is a significant achievement if one considers that it has been achieved in a non-conflicting way. There was virtually no industrial disputation while those shares changed. It is a remarkable comparison if one looks at the alternatives propounded by the conservatives. The Government has achieved general economic growth. The shares have been disbursed and there are now the right proportions for the economy to go further with the injection of further private investment, and this now appears to be what is happening.

I come back to the problem of youth unemployment. It is the Government's concern that the problem of youth unemployment be tackled so that the stock of skills available in the community for a modern, sophisticated industrial base continue to be enlarged and be competitive on an international trade basis. Therefore, it is very obvious that the traineeship program has great merit. It has great merit in that it enables young workers to compete more on equal terms with older workers and it also has great merit on the basis that it provides some dignity for young workers who, having come through that program, are able to say: 'I now have this skill'. That is preferable to their being non-skilled entrants to the wage market.

However, the proposal to cut youth wages ought to be rejected on the following grounds. The first and most overriding effect a cut has is that it does not alter the number of jobs available in the community; it merely alters who stands in the dole queue. It takes adult workers out of employment, as employers dismiss them to recruit young, unskilled, cheap labour, and puts breadwinners and family heads out of work and on the dole. It is very difficult to say who has a greater right to employment if the pool of employment does not meet the needs of all those who are offering themselves for work. Certainly one does not want any discrimination against young workers, but equally, if one looks at the health of the economy and where real consumption is necessary, one sees that it is certainly at the family level. The proposal to make cheap young labour available at the expense of older adult labour, family heads and breadwinners is a proposal which cannot by itself stand up.

Another significant reason why the proposal to cut youth wages should be rejected is that it does not address the problems of skill in the labour market about which I have spoken. Another reason why the proposal should be rejected is that it is against centralised wage fixing and the accord. As I have said, we have had non-inflationary growth in this country, and that has been made possible because of the prices and wages accord. If we throw out the baby with the bath water and go back to the wages explosion, to the free market competition of wages that honourable senators opposite talk about and which they would introduce, it will militate against the whole structure and balance of the economy.

I have already mentioned that the shares of GDP have changed in favour of profits and we are now seeing investment which would perhaps return to its old levels were there to be open competition and not central wage fixing. Central wage fixing is a significant factor which ought to be supported. To remove it would be socially disruptive.

To make my final point I go back to the figures. Recently it was reported that there is a wages drift, that wages have increased by more than award increases. That raises an interesting point. It appears that most of the increases have occurred because over award wages have gone up or, to use a new term, 'incremental creep' has occurred with employers promoting employees through the wage classification structure more quickly than they would otherwise be entitled. That shows that the market for wages-I expect it to be a patchy result-is lifting above the arbitrated level of wages. That indicates that some particular classifications of skills are already in scarce demand. Whether that has translated through to youth wages is not known on the figures. However, if it has it means that the price of youth labour is now moving to a level above the award rate, which suggests that cutting award rates will have no effect on the price of youth labour. But if it means that youth wage prices have remained constant while adult wage prices have lifted, that suggests that informally the youth wage structure has not yet caught up and that informally a cut is occurring in youth wages in any case and that trend will continue to the point at which youth skills are available to meet the scarcity of demand there might be elsewhere in the economy which is causing the adult wage lift. On that basis the course which the Government has set itself is the proper course. It is a course to encourage greater training and skill at the youth end of the economy to make equal and greater opportunity for young workers to participate, not a course to cut wages.