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Tuesday, 20 September 1983
Page: 1003

Mr KENT(5.55) —I am pleased to have the opportunity to speak on the Salaries and Wages Pause Act Repeal Bill 1983. As the Minister for Employment and Industrial Relations (Mr Willis) explained in his second reading speech, the purpose of the Bill is to repeal the Salaries and Wages Pause Act of 1982, or what is commonly known as the wages freeze. The wages freeze was the product of seven years of conservative mismanagement. For the abysmal state of the current depression we can thank Malcolm Fraser and the men who sat behind him in the last seven years-the Peacocks, the Howards, the Anthonys and a few others-who make the rather crestfallen Opposition in the thirty-third Parliament. That we ever reached the depths of economic ruin is due to the discredited monetarist policies of the discredited and defeated Liberal-National Party coalition. Monetarism, which is espoused by the conservatives, is based on two shaky presumptions. One is that if public spending is curtailed private investment will expand. The other is that strict monetary policies restrain inflation. This is to be achieved through high interest rates, tight credits, curbs on borrowings, and reduced wages. That such restraint may be in conflict with private sector expansion never occurred to the simple minded gentlemen opposite. As Professor Galbraith said:

To expand and restrain the economy at the same time is difficult, much like walking uphill and downhill at the same time.

Thus we saw the former Treasurer racing around without direction, applying contradictory economic measures and attempting to run down an upward moving escalator until he slipped and pulled our whole economy down with him into the sorry state in which the Hawke Government found it. The honourable member for Wilmot (Mr Burr) told us a few minutes ago how the trade unions, the Australian Council of Trade Unions and the socialists are ruining this country. Let me tell him that the heritage of seven years of Fraser, aided and abetted by those remaining gentlemen opposite, is a deficit of $10 billion, one million Australians out of work, more than two million of our people living below the poverty line, nearly 30 per cent unemployment amongst our young people, a record number of bankruptcies, especially amongst small businesses, and an ever lengthening dole queue. The legacy of the wage freeze is to be repealed by this Bill.

Due to the Liberal-National parties mismanagement of the economy for seven years inflation increased by 100 per cent in that period. Savings held in 1975 are worth only half as much in 1983. Of course, the real value of wages and salaries decreased because of the Salaries and Wages Pause Act 1982, which was introduced by the defeated conservative Government and will be repealed by the Bill now before the House. However, whilst I wholeheartedly support the Government's economic program I could not help but notice with considerable alarm the mistake we made until now, namely, the maintenance of the wages freeze introduced by the former Government. It was an outright contradiction to attempt to stimulate demand on the one hand while on the other hand reducing it by cutting the purchasing power of Australian wage and salary workers.

In simple words, it made me sad to see my colleagues conned by the bourgeoisie into believing the simplistic idiocy that one man's wage increase is another man 's job. The honourable member for Sydney (Mr Baldwin) very ably dealt with that matter. The position is exactly the contrary. That is, to freeze one man's wage or salary-what in fact amounts to a real wage reduction-reduces his purchasing power and therefore further diminishes an already contracting market for our manufacturers and causes further job losses. What better proof of this have we than our own history? We should only recall the time, fifty years ago, when, in the grip of the Great Depression of the 1930s, the British banker, Sir Otto Niemeyer, came to Australia. He came at the invitation of the Commonwealth Government and advised Australian workers to tighten their belts. Niemeyer's proposals led to the so-called Premiers' plan; a 10 per cent across the board reduction in wages which resulted in a further deepening of the economic crisis. Yet the conservatives never learn. They have only one answer to the depression; to reduce the income of ordinary Australian wage and salary earners.

The struggle between profits and wages is the natural symptom of class conflict . Of course, in times of boom and expansion real wages can increase alongside rapid increases in profits. But in times of recession, which is the periodic product of unplanned private enterprise economy, the knee-jerk reaction of the employer class is to shed labour. In other words, employers sack workers and reduce the wages of the remaining work force. To add insult to injury, they blame the employees for the lack of planning, the leaders of industry for the mismanagement of the economy and the inbuilt faults and contradictions of the private enterprise system which runs amok into periodical depressions unless it is controlled and guided by public interest.

Members of the Liberal-National Party, together with the media, are keen to promote the fallacy that high wages are causing unemployment. I again remind honourable gentlemen opposite that wage reductions in the Great Depression of the 1930s plunged us into an even deeper crisis and postponed recovery. For this reason, the Salaries and Wages Pause Act Repeal Bill before the House is very important. I would also like to point out that, in times of economic boom or recession, high wage countries have always had higher employment rates than low wage countries. I think honourable gentlemen opposite have enough intelligence to accept this fact without my wasting time giving examples and statistics. It should be obvious, even to them, that countries, such as the Western countries, that have a more even distribution of income have a higher overall level of production and economic activity. An unequally distributed national income acts as a disincentive to production. After all, as I have said before, it is highly unwise to reduce employees' wages and salaries since they, as consumers, represent our domestic market. The reduction of their purchasing power will further reduce demand.

When the wage freeze was first advocated as the solution to our economic ills by the former Prime Minister late last year when the former Government wanted to be seen to be doing something it was dismissed by most economists as a gimmick. However, the same economic commentators quickly changed their tune when they were told to do so by the Establishment. The media embarked on a campaign to sell the fallacy of the freeze as our economic panacea. The onslaught of the Establishment-controlled media on the public opinion created such a situation that even some of my colleagues started to believe that the wage freeze would work. Anyone who dared to oppose it was almost accused of incest or sedition. Of course, the wage freeze created a godsend windfall profit to many employers, especially those who still had orders. The less they pay out in wages the more money they can stuff in their private pockets. Does anyone believe that, because of the wage freeze, the extra profits made by a supermarket chain are invested into job creation programs or given to charity for welfare purposes? The owners of the supermarket chains were very shortsighted. While they greedily welcomed the extra profits as a result of the wage freeze they were forgetting that they faced reduced turnover as workers had less to spend.

The wage freeze operated for several months yet there was no improvement in the economic activity. As a matter of fact, there was a further fall in production and, consequently, a fall in investment. At best, the level of unemployment will remain static if not rise even higher. The wage freeze has not resulted in creating a single job. It created only a bonanza of windfall profits to all those who sell commodities other than their labour or skills. While wages and salaries were frozen prices of consumer products and food rose rapidly. The consumer price index went up; steel prices rose. That was soon reflected in many products. The cost of motor cars went up and will rise further as a consequence of steel price rises. The workers of this country were ripped off left, right and centre. One should only ask the housewives who know, through their daily shopping, how much more they have to spend now compared with six months ago. Recently I was shopping in a supermarket in my electorate. Amongst other things, I brought a container of harpic, which cost $1.72. When I took it into the bathroom I looked at the price tag on the empty container. I had paid $1.41 for the same product bought two months previously-almost a 30 per cent increase. It is unbelievable! While the capitalist media is preaching wage restraint to wage and salary earners the people in industry and trade are busily increasing their prices and they are changing their price tags almost daily to rip off the workers and rob the housewife.

Honourable members opposite have stated often that wage rises have outstripped rises in profits and have created inflation. One needs only to go and shop in a supermarket a couple of times to realise that the contrary is true. After all, since 1904, the only commodity that was subject to price control in this country was the price of labour and skill. Everything else was freely sold and bought bar a few years during the war when some prices were controlled. Last year not only were wages controlled by the Australian Conciliation and Arbitration Commission but also they were frozen at last year's level. Yet the promised results-the fall in inflation and more jobs-did not eventuate.

The wage freeze, as it was introduced by the former Liberal-National Party Government is being repealed now by the Bill before the House. It will be replaced by the wages and incomes policy of the Hawke Labor Government. I hope that there will be a constant monitoring of prices so that irresponsible price rises will not escape public attention and there will be intervention where necessary. I support the Bill.