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Wednesday, 6 November 1985
Page: 1654

Senator COOK —My question is directed to the Minister representing the Minister for Employment and Industrial Relations. In view of the Opposition and industry association criticism of Monday's national wage case decision to restore the purchasing power of wages by 3.8 per cent, does the Government have any projections of what wage increases would have applied had the centralised wage fixing system been abandoned? What happened last time a centralised indexation system was scrapped? In an expanding economy, as is now the case, would the same response be expected?

Senator Chaney —Mr President, I raise a point of order. That is a totally hypothetical question. It is based on a totally false premise. There never was a departure from the centralised wage fixing system. Mr President, I ask you to rule the question out of order. In 1981 the wage rises flowed through the centralised wage fixing system.

The PRESIDENT —Order! There is no point of order.

Senator WALSH —Yes, I am aware of some industry criticism. Senator Cook asked whether the Government had a projection-Senator Chaney could not have been listening at that time-of the sorts of wage increases which would have taken place had there been no centralised wage fixing system or no accord. So far as I know, the Government does not have a projection in any formal way. I will check that with Mr Willis and see whether he has anything to add. However, there can be no doubt, based on previous experience that what would have happened with the sorts of high and sustained growth rates and falling unemployment, which we have had since this Government has been in office, in the absence of a centralised agreement on wage fixing and the accord is that wage rises in a six months period-be it the six months ended in September or, indeed, any six months period in the previous 12 months-would have been very much greater than the 3.8 per cent outcome of the September national wage case. Of course, the reason why history leads us to that conclusion is the abandonment of centralised wage fixing in the middle of 1981 by the Fraser Government at a time when we had economic growth running at lower rates than the rates of growth that have prevailed since this Government came to office.

Senator Tate —It was negative.

Senator WALSH —No, it was not negative in 1981. In a period of lower economic growth the abandonment of centralised wage fixing, the flirtation with the free market, deregulation of the labour market and all of that produced a wages explosion of 11 per cent in 1981 and 14 per cent in 1982. Based on that experience, one could confidently expect that if that system were prevailing instead of the accord wages for the six months ended in September this year would have increased by 7 per cent or something more than 7 per cent, roughly double the outcome which was actually achieved. That flirtation with the deregulated labour market, as I said, initially produced the wages explosion. Ultimately, of course, it produced double digit inflation, double digit unemployment and the most serious recession the country had experienced since the 1930s. Again, I find it absolutely remarkable that, given that experience, the Opposition has made a decision to resurrect that policy and give us a re-run of the disasters of 1981 and 1982 should it be returned to government.