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Tuesday, 4 October 1983
Page: 1252

Mr WILLIS (Minister for Employment and Industrial Relations)(3.25) — It is interesting that this matter of public importance has been brought forward by the Opposition parties relatively soon-six or seven months-after they moved into opposition. Doubtless they would like us all to forget what happened during their period of office. Of course, we will not forget, and nor will the people of Australia, that in their period of office they presided over a very large increase in unemployment and, in their last year of office, a substantial reduction in employment. When we came to office the economy was in chaos with an enormous amount of job loss occurring. In the very short period we have been in office we have been able at least to stabilise that situation and to provide the basis on which strong employment growth can occur.

Let me just quickly go over what happened during the previous Government's period of office. It came into office with an unemployment rate of 4.6 per cent and went out of office with an unemployment rate of 10.7 per cent. Quite clearly , it was totally unable to create enough jobs to reduce the level of unemployment. Indeed, unemployment more than doubled in its period of office. Not only did unemployment double but there was also a massive increase in the impact of unemployment on those who became unemployed in that the average duration of unemployment increased from 13 weeks in 1975 to 42 weeks at the end of its period of government. Quite clearly, there was an enormous increase in the severity of unemployment, not only in the total numbers involved but also in the amount of time those unemployed had to spend in that condition.

Of course, those increases are enormous and frightening. When in opposition we were concerned to develop policies which would arrest that situation, which would prevent the Australian Labor Party, when it came to office, from pursuing policies which would create more unemployment and which would enable it to do the reverse-to start to bring down the unemployment rate.

Finally on this matter of what happened when the previous Government was in office, let us look at what happened in its last year. In its last year there was an increase in the level of unemployment in the 12 months to March of this year of 263,000. In that period the total numbers in employment in this country fell by 159,000. Yet the Opposition parties today give us lectures in this House on the state of the employment and unemployment and demand that we pursue policies other than those we are pursuing to try to rectify the situation. The last thing we would do if we wanted to improve the employment situation, which we most certainly want to do, would be to pursue the policies they pursued when they were in office. Those policies had a quite disastrous impact on employment and meant simply that we slid further and further into recession and that Australia, apart from the blip of the resources boom, had a recessed economy with rising unemployment and, in the end, rapidly increasing unemployment and substantially falling levels of employment.

Of course, the reality which we face and which the previous Government faced is that if the increase in unemployment is to be arrested we must not only create jobs to bring unemployment down but also create enough jobs for new entrants to the labour market. The work force participation rate varies from year to year, but roughly speaking we need to provide 110,000 to 120,000 jobs a year just to stop the unemployment situation getting worse. If there is a decline of 159,000 in the level of employment such as we had in the last 12 months of the previous Government and on top of that is placed another 100,000 or more people who come on to the labour market, we can see what happens to the level of unemployment. The figures bear out that we had a decline in employment of 160,000 and an increase in unemployment of over 260,000.

Clearly, we are concerned to pursue policies different from those pursued by the previous Government. Indeed, in the period that we have been in office we have been bending every endeavour to ensure that we create a situation in which we can start to improve greatly the employment situation in this country. I believe we have made substantial steps in that direction. Let me say at once that the figures in regard to employment levels for August are certainly, on a seasonally adjusted basis, no higher than they were in March of this year. But the figure for last month showed a substantial drop. The previous three months had shown a continuing upward movement, and it may well be that last month's figure is somewhat of an aberration. I certainly hope that it is, but we will have to wait for subsequent figures to find out whether that is the case. Certainly, all the indications we have at present are that we can expect a substantial upturn in employment in the course of this financial year. The Budget forecast a growth in employment of 90,000, roughly 1.5 per cent. Of course, that is a tremendous turnaround on what happened in the previous financial year.

In the course of the previous financial year, 1982-83, there was a reduction of 124,000 in the level of employment. This year the Budget forecast is for a growth of 90,000 in the level of employment. That will not be quite enough, on our forecast, to prevent some further slight increase in the level of unemployment. That is certainly a cause of concern to us. But we must look at that situation in light of what this Government inherited. It inherited an economy which was in a state of enormous recession, with jobs disappearing at an enormous rate. We have stabilised that situation. There are not now-although there are still a few isolated cases-the massive retrenchments which occurred in the first month or two of this Government's period of office which were doubtless, at least in some cases, held over until the election had taken place as a favour to the previous Government. I believe that that situation has now stabilised and that we can expect strong employment growth for the rest of this year.

As I said, there are some indications in regard to growth. The employment advertisements series of the Australia and New Zealand Banking Group Ltd shows that for the last four months there has been an improvement in that situation. It is certainly nothing spectacular, but at least it shows that there is an underlying movement in the number of job advertisements which are appearing, and some improvement in the employment situation. The situation in regard to registered vacancies is one of some slight improvement. There are various forecasts of a pickup in the economy apart from the Government's own forecasts.

Those forecasts of an improvement in the level of consumer confidence are certainly encouraging in terms of expecting some improvement in retail sales and a flow on to economic activity in the course of this year. Manufacturing production has begun to pick up. The ANZ series has shown a 2 1/2 per cent increase in the last three months. Certainly, these are small indications. But we must remember that we are picking up from the absolute base of the recession. We cannot expect spectacular movement from that recession, rather a gradual turnaround which will become more and more obvious as the year wears on. It is absurd to say: 'Look, we can't see any great signs of recovery'. We are confident that that recovery will occur and with it employment growth.

I say also in that regard that we believe the growth of 5 per cent in non-farm output in the course of this year will be achieved. In fact, it may even be above 5 per cent. Unfortunately, it will not bring with it anything like the same level of employment growth because during the early stages of recovery it is easy for employers to expand production without expanding employment. They can do so because they have people working short time. People who previously worked five-day weeks are now working four-day weeks. There are many such people in the community at present as a result of the previous Government's policies. Those people can now work five days a week. That will not show up as increased employment in terms of extra people at work, although there will be more employment input by people in the work force. The same applies for people working part time. They can work longer hours. People in full time employment can work more overtime. I believe that all of those factors will occur. Some people are being kept on by employers in the hope of recovery. When that recovery is realised, employers can work them a little harder. So there will be some increase in their productivity and we will have increased output without increased employment.

For all of those reasons we must expect in the initial stages that there will not be tremendously strong employment growth, but certainly a continuance of output growth of the kind we are looking at through the course of this year-that is, 5 per cent. A continuance of that growth next year and the year after will certainly mean much stronger employment growth in 1984-85 and 1985-86. This will have some impact on the level of unemployment. I concede, however, at this stage that it will certainly be a long haul to return to unemployment levels of the kind which occurred before the previous Government came into office. We acknowledge that it will be a very difficult task. We must create 100,000 to 120 ,000 jobs a year before any impact is made on the level of unemployment. We realise that in the course of this year we are unlikely to make any such impact. We hope to do so in the course of the following two years. We also say that that will not result in a marked level of reduction in unemployment, but if continued it will certainly provide a continuing downward movement in the level of unemployment.

If we are to achieve that continuance of economic and employment growth we must certainly have policies applied by the national Government which will give an underlying impetus to recovery, and ensure that there is stimulus to the economy , and an increase in production and employment. But we must also have policies to tackle inflation which do not impede that recovery process. Of course, that is what the prices and incomes accord is all about. The prices and incomes accord is designed to enable us to have an impact on the inflation rate, to ensure that stimulus to the economy becomes a stimulus to production and employment and not a stimulus to inflation.

The previous Government-the present Opposition-obviously has no policies at all in this regard. It has nothing to put forward which can ensure that any economic recovery would not be soon curtailed by the outbreak of inflation. We have that policy in the form of the prices and incomes accord. That accord, as the House is very much aware, is now fully in place with regard to its central component- that is, the wages element-after the recent national wage decision which provides a basis on which we can have not only the maintenance of real wage levels, but also a substantial decline in the level of inflation, an increase in our international competitiveness and an assurance that increased stimulus to the economy will not lead to inflation, rather to increased production and employment. The prices and incomes accord has allowed us to achieve a wage increase this year of about 4 1/2 per cent in award rates. Next year the wage increase will be about 5 1/2 per cent, with full indexation applying. That is made possible particularly by the impact of Medicare on the consumer price index . It will knock 2 1/2 per cent to 3 per cent from that index. So the increase in wages next year will be only about 5 1/2 per cent, which will be sufficient to maintain the real purchasing power of wages and certainly also to ensure that we will have a substantial downward movement in our inflation rate.

I strongly argue that we have applied an economic policy which is directed towards ensuring employment growth. That is certainly the case at the macroeconomic level. In order to ensure employment growth, my Department in particular has also initiated various actions to bring about employment opportunities. In the Budget a strong emphasis was placed on capital works which will provide strong employment growth. Through my Department the community employment program will provide 40,000 jobs of an average duration this year of six months. At the end of this year it will be run at a rate to provide 70,000 jobs. We have implemented in my Department an increase of 19 per cent in employment and training programs this year and we have other programs which will also have some impact on the employment front.

I believe that the Government has adopted those policies which are most likely to have the maximum impact on the level of unemployment. That is our primary concern. The Government's main concern is to bring down the unemployment level. We realise that that cannot be achieved overnight. But the policies we are pursuing are best designed to bring that about.

Mr DEPUTY SPEAKER (Hon. Les Johnson) —Order! The honourable member's time has expired.