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Wednesday, 13 November 1985
Page: 2074

Senator COOK —My question is addressed to the Minister representing the Minister for Employment and Industrial Relations.

Senator Chaney —Oh, it is the economic expert.

Senator COOK —I am pleased to see that someone reads my speeches. Perhaps the honourable senator should read more of them. I ask: Is the Minister aware that on the AM program this morning Mr Howard advocated a wage freeze? Can the Minister inform the Senate of how such a freeze could be implemented under a decentralised wage fixing system, which Mr Howard also advocates? Under what circumstances was a wage freeze last imposed?

Senator WALSH —I heard Mr Howard make that statement on AM this morning and I nearly fell out of the car. He was asked: `What about a wage freeze?' Mr Howard replied:

What about a wage freeze. Well, our credentials on a wage freeze are immaculate. I was the Treasurer responsible for bringing in a wages freeze.

He continued by saying that if the economic circumstances required it he would do it again. Senator Cook asked me quite specifically how, in the absence of centralised wage fixing or, at least, regulated wage fixing, a wage freeze would be implemented. Frankly, I do not have the faintest idea. I think it is a matter for wide-eyed conjecture. I just cannot imagine how, in the absence of some formal mechanism for regulating or setting wages, a wage freeze would be implemented.

As to the second part of the question regarding the circumstances under which a wage freeze may be applied, it is correct, as Mr Howard said, that he was the Treasurer who presided over the introduction of the wage freeze. It was applied because not only the Commonwealth Government of the day but also the States legislated in support of that wage freeze. It was a highly centralised wages policy enacted by the Commonwealth Government with complementary legislation from the State governments. It was about as regimented a wage policy as it is possible to get and, of course, was at the opposite end of the spectrum to the deregulated labour market about which Mr Howard also talks sometimes and advocates.

The economic circumstances to which Mr Howard and Senator Cook referred, I think, are worth recalling. On the empirical evidence, the wage freeze at that time was fairly effective at freezing wages. This brings us back to the real point of Senator Cook's question; that is, the circumstances under which the wage freeze, backed up by a highly centralised system of wage fixing-the most centralised system conceivable-worked. At the time Mr Howard was destroying 186,000 jobs. He was driving the Australian economy into the deepest recession it had known since the 1930s. He was rounding off his big trifecta of double digit inflation, double digit unemployment and, at the end of his two years, double digit wages growth. Under those circumstances, where the economy was sinking into the deepest recession it had known for 50 years, a wage freeze was effective. In the same circumstances it may even be effective again provided the co-operation of all the State legislatures could be guaranteed.

What is yet to be demonstrated is that attempts to control wages, either through a wages freeze without any prior agreement from organised labour or through collective bargaining-the experiment which Mr Howard had tried a year or two earlier-will work in periods of high economic growth such as Australia has experienced since this Government has been in office and which it appears very likely it will continue to experience as long as this Government remains in office. If it is the desire of the country that these circumstances in which the last wage freeze was introduced be recreated Mr Howard might well have his wage freeze, but it is not the desire of this Government, and I do not believe it is the desire of the Australian community in general, that those disastrous circumstances of late 1982 and early 1983 should be reproduced.