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Wednesday, 16 October 1985
Page: 1351

Senator LEWIS(5.38) —I move:

That the Senate take note of the paper.

I find this report a grave disappointment. The first annual report of the Economic Planning Advisory Council was made last year, and right from the word go EPAC indicated in that report that Council members were concerned with policies that bear on unemployment. Early in its report last year it said that it had arranged for a paper on alternative approaches to unemployment to be prepared by the Department of Employment and Industrial Relations and the report continued:

Council agreed that labour supply side approaches were not an alternative to demand side measures . . .

That jargon indicates that in 1983-84 this body was going on with the same sort of nonsense we have heard from members of the Australian Labor Party here today-that wages are not relevant to the employment situation. I would have thought that a body such as EPAC, with all its expert advisers and supposedly intelligent people, would have worked out by 1984-85 that in the previous year they had been on the wrong path and that it was time to come back to some sensible thinking on the problem of unemployment.

In Australia at present unemployment is running at 8.1 per cent and with the recovery we have had-thanks to the Fraser Government's wages pause, thanks to the world economic recovery that started in the United States of America, and thanks to the ending of the drought-unemployment should be much below that figure. It is nonsense for members of the Labor Party to talk of the number of jobs that have been created in this country since Labor has been in office. The only jobs that have been created in this country since Labor got into office have been created as a result of the Fraser initiatives, the recovery in the world economy and the ending of drought conditions in Australia. What happened in 1984-85 is that the Economic Planning Advisory Council came out in its report saying the same sort of thing. I quote from page 8:

. . . the most effective approach to the employment problem involves the adoption of appropriate macro-economic policies. Unemployment needs to be countered on a broad front.

The Council was talking about macro-economic policies. I draw the attention of honourable senators to what it said in the previous sentence. It stated:

. . . Council members have expressed concern that without sustained high rates of economic growth unemployment will remain a serious problem for some considerable time.

I draw the attention of honourable senators in the chamber to what the Organisation for Economic Co-operation and Development has said. It stated:

The OECD predicts that even if Australia experiences two more years of solid growth, as it expects, there will still be eight per cent unemployed at the end of 1986.

Why? It is because the prices of labour are too high. That is what it is all about. Let me quote what Tim Colebatch said in an article in the Age on 7 June 1985. I have to change one word because he was telling a story about oranges. I will leave out the word `oranges'. He said:

Most economists would agree that one crucial reason-

I am not denying that other factors are involved. Certainly other factors are involved. Senator Button knows that the most important factor maintaining unemployment in this country at present is the high rate of wages being maintained by the union movement and the Government's famous accord. The article stated:

Most economists would agree that one crucial reason why growth has not cleared our unemployment is that we . . . have set our prices too high. In the 12 years to the end of 1984, real wages in Australia increased more than 20 per cent. And this happened against a background of very high unemployment, intense import competition, and shorter working hours.

Senator Button —Precisely.

Senator LEWIS —Senator Button says `Precisely'. I accept that my case is proven. In the past 20 years-I acknowledge that we were in Government for eight of those years and I acknowledge our fault in those years-

Senator Button —For eight years out of 20 years?

Senator LEWIS —Well, 7 1/2 of those years, whatever it was. In the past 20 years wages have risen far too high. I acknowledge that we did not deal with that matter in government but, by gee, we will next time.