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Friday, 8 November 1985
Page: 1851

Senator Sir JOHN CARRICK —I ask the Minister for Finance: Was a centralised wage system in existence in the period 1973 to 1975?

Senator Ryan —Don't you remember?

Senator Sir JOHN CARRICK —It is the Labor Party that wants to forget. Was a Federal Labor Government in office in that period and was Mr Hawke President of the Australian Council of Trade Unions and of the Federal Labor Party in that period? Did wages rise 37 per cent in a period of 18 months and 52 per cent in that three years period? Did inflation rise to 16.8 per cent in 1975? Were not those wage and price rises under the centralised wage system of the Labor Government of record size and far greater than any in the period of the Fraser Government?

Senator WALSH —There was a centralised wage fixing arrangement between 1973 and 1975 but there was no prices and incomes accord. There was also from May of 1975 an agreement on wage indexation which could be regarded as a rough prototype of the prices and incomes accord, and as a result of that indexation decision, wages growth slowed down very, very substantially. Indeed, the fact that that had happened and that a prototype of the accord had been established in 1975 was, I suggest, a major reason why the then Federal Opposition was determined to truncate the term of that Parliament and that Government, which ultimately led, of course, to a corrupt Chief Justice giving advice to a corrupt Governor-General to dissolve the Parliament because they both knew that the Senate would cave in and pass the Appropriation Bills before the end of that week.

Senator Chaney —I raise a point of order, Mr Deputy President. The expression `corrupt' should be withdrawn.

Senator Grimes —The Standing Orders are quite clear in this area, I suggest, and I do not believe that the term `corrupt' applied to someone who is no longer Chief Justice or the term `corrupt' applied to someone who, thank heavens, is no longer Governor-General, should be withdrawn under any circumstances.

The DEPUTY PRESIDENT —The Standing Orders do not protect retired members of the judiciary; only good taste does.

Senator WALSH —Senator Carrick asked whether wages increased by 35 per cent in 18 months. I do not know for certain, but there was certainly a very high rate of wage increase. He asked whether inflation peaked at 16.8 per cent in a 12-month period. I think it was the 12 months ending September 1974. Yes, that is correct-and that is two-thirds as much as the record rate of inflation that Australia ever had inflicted upon it in a 12-month period, which was under the Menzies Government for the 12 months ended December 1951.

As for the other implications of Senator Sir John Carrick's question, he asked whether the present Prime Minister was then President of the Australian Council of Trade Unions. I am not sure of the relevance of that or what inferences should be drawn from it, but in view of comments that various members of the Opposition have made in recent days, from which it appears that they use that fact in some attempt to discredit the present Prime Minister, I shall ask the Prime Minister for his view on that, but I think it is likely that the Prime Minister, between 1974 and 1983 or 1982, became convinced not only of the value but probably of the essentiality of a prices and incomes accord in establishing the framework for non-inflationary sustained high rates of economic growth. I think that is probably a fair description of the Prime Minister's attitude and one with which he would agree. He was probably led to that conclusion, as many of us were, by the empirical evidence, both abroad and in Australia, which showed that the common denominator for all those countries which had maintained growth rates throughout the late 1970s and early 1980s sufficiently high to hold unemployment down to levels of the 1960s and which had simultaneously held down inflation rates was the existence of an effective wages policy. The Australian experience, conversely, showed that in the absence of a wages policy, from 1981 onwards we had a wage explosion of 11 per cent in one year and 14 per cent in the other.

If that is all correct, the essential difference, I think, between the Prime Minister and the Liberal Party was that the Prime Minister, like the Australian Labor Party in general, has learnt from experience and absorbed, in an unpreju- diced and unbiased way, the empirical evidence from Australia and abroad. I regret that the Liberal Party and particularly its Leader still fail to do so. His attitude is that he wants to have a re-run of the debacle of 1981 and 1982.

Senator Sir JOHN CARRICK —I ask a supplementary question, Mr Deputy President. I ask the Minister again: Were not the wage and price rises of those three years under the Labor Government far greater than any during the period of the Fraser Government?

Senator WALSH —I am not sure what the wage rises in that three-year period were and I am not sure either what point Senator Sir John Carrick thinks he is making, as I said in the beginning that, yes, there was a centralised wage fixing arrangement in place in 1973-74 but there was no prices and incomes accord, or anything remotely resembling a prices and incomes accord, until May of 1985. I have already conceded that wages growth, in an 18-month period at least, if not a three-year period, was higher than it was in the final years of the Fraser Government. But the unique distinction of the Fraser Government, of course, is that it managed to preside over double digit inflation and double digit unemployment, plus double digit wage increases, in its final two years.