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Wednesday, 10 October 1984
Page: 2019

Mr MACPHEE —I refer the Minister for Employment and Industrial Relations to this statement last night by the National Director of the Metal Trades Industry Association:

The much-vaunted accord between the ALP and the trade union movement has in practice done nothing to assist manufacturing industry to become more competitive. On the contrary, the accord has made it worse, because although the accord is between the Government and the unions it requires a third party, that is the employers of Australia, to continually dish out more money and more benefits.

I ask the Minister: As manufacturers throughout Australia are now apprehensive about their future, what steps is the Government taking to ensure that these damaging consequences of the accord are rectified?

Mr WILLIS —I have noted the comments of Mr Evans of the Metal Trades Industry Association. I can understand Mr Evans's concern about the state of his industry . Clearly it is going through a rough period. However, that rough period is particularly attributable to the structural problems faced by the metal industry , largely because of the ending of the resources boom and the impact that has had by way of the diminished demand in the metal industries and the heavy engineering industry as a whole. Of course it is also partly to do with the fact that when prospects looked much brighter wage increases in that industry were conceded which were clearly beyond the capacity of that industry to pay and which then led to great troubles for the industry and indeed for the whole of the economy.

It is important for it to be clear that we totally reject the allegations by Mr Evans that the accord has been damaging to the metal industry and to manufacturing industry as a whole. I strongly assert that, on the contrary, the accord has been of great assistance to manufacturing industry in various ways. Quite clearly, it has had a major effect in reducing real labour unit costs. As I have said to the House previously, there is now no doubt that real unit labour costs are down to the levels of the late 1960s and early 1970s. On the other side of that coin, the profit share is on the upturn. Therefore, we are getting that area of costs and profit shares back into the more normal state which prevails at times of high employment.

Last year we had an increase in wages of 4.3 per cent, and this year 4.1 per cent, for most employees. These rates of wage increase are far below the rates which applied in the period of the Fraser Government. Under the Fraser Government award wages increased on average by 10 per cent per annum. The wage increases occurring now are clearly far below that level. The accord, therefore, has played a major part in bringing about that reduction in real labour unit costs. Moreover, it has done so in a way which has had the acceptance of the trade union movement. It has also built in a system in which wage justice applies. The accord has also enabled a reduction in the inflation rate, which has been halved under this Government and which is forecast in the course of this year to be only 5.25 per cent. It has also provided the basis upon which interest rates have been able to fall. We expect a further decline in interest rates in the course of this financial year. With the freeing of the exchange rate, we have also seen that side of things improve. The depreciation of the currency has improved the competitive position of manufacturing industry.

Thus, in a whole range of ways this Government has sought to assist manufacturing industry by setting right the basic economic parameters. It is quite wrong for Mr Evans to accuse us of taking action which has not been in the interests of manufacturing industry as a whole. Indeed, if one looks at what has happened to manufacturing industry, one sees the improvement that has occurred. I remind the House that in the last 12 months of the Fraser Government, employment in manufacturing industry declined by 101,000. In the 12 months to August this year we have seen an increase, admittedly small at just under 10,000 , but at least we have stopped the decline in jobs in manufacturing industry and we are back on a growth path. Moreover, between May and August this year employment in manufacturing industry on a seasonally adjusted basis has grown strongly. On my Department's seasonally adjusted figures, there was a growth of about 17,000 in the course of that three-month period. Job vacancies as shown by the Australia and New Zealand Banking Group series, seasonally adjusted, show strong growth over the last few months.

There is absolutely no doubt that manufacturing industry is on a strong recovery path. It is certainly true that the metal trades industry will be the last segment of manufacturing industry to recover because of particular structural problems it is experiencing, but it will recover, along with the rest of manufacturing industry, so long as the present Government's policies continue to apply. In that regard, Mr Evans should recall what happened when the centralised wages system was dropped in 1981 and we went to a system of industry bargaining. I say to him and to others who think like him, particularly the Opposition, which also would have us drop the centralised system and go to some industry bargaining system: Think back to what happened in 1981. There were negotiations in the metal industry, a $39 a week wage rise and a 38-hour week. The impact on manufacturing industry and on the economy as a whole was clearly very adverse. It was beyond the capacity of industry to pay. Quite clearly it flowed through the whole economy.

That is what would happen again if we were to drop the centralised system and go back to the kind of wages system which the Opposition would have if by some incredible mischance it were to become the government of this country. There is no doubt that the wages system presently being pursued by this Government is highly conducive to economic growth and to recovery of manufacturing industry. That recovery is occurring and will continue to occur quite strongly over the next several years.