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Thursday, 1 December 1983
Page: 3170

Mr GEAR —Has the attention of the Minister for Employment and Industrial Relations been drawn to reports of calls for a two-tiered system of wage fixation which would allow unions and employers to opt out of the arbitration system? if so, what is the Government's attitude to this proposal?

Mr WILLIS —Yes, I have seen reports that the Deputy Leader of the Opposition last week was calling for a two-stream system of wage fixation. This, I think, is further evidence of his desire to be seen as the alternative shadow Minister for Employment and Industrial Relations, which fact was made even more obvious by his recent appointment of an officer of my Department to his staff. As I understand it, the Deputy Leader of the Opposition is advocating that we should have an opting out system in which employees and companies can opt out of the arbitration system. We would thus have two streams, the arbitration system and beside it those who had completely opted out. The Deputy Leader of the Opposition says that the argument for that is that we need to have more flexibility in the wages system, especially for paying less than award rates, and we have to have a wages system which allows a sustained economic recovery.

In regard to the flexibility aspect, it is not true to say that there is no downward flexibility under this system as it has operated to this day. The fact is that in the last couple of years we have seen evidence of companies which have been able to persaude the Australian Conciliation and Aribitration Commission that wage increases which have generally applied should not apply to them. Indeed, in the food preserving industry last year some four food preserving companies persuaded the Arbitration Commission not to grant their employees the second part of the community round which everyone else enjoyed. The other group which was similarly affected comprised employees under the pastoral industry award, who did not get the second part of that community round and who still have not done so. So they have been some 18 months without that second part of a wage increase which flowed to everyone else. That was done by the Commission on the basis that the pastoral industry was going through bad times because of the drought. So there is, under the existing system, some element of downward flexibility.

If the Deputy Leader of the Opposition wants to have a wholesale move of companies being able to pay less than award rates, of course he then faces a different ball game. Undoubtedly if there was to be a substantial move in that direction there would be enormous resistance. There would most certainly be a tremendous amount of industrial disputation if that were the Deputy Leader of the Opposition's intention. The more likely event is that we would not have that kind of thing happening. Rather, if we allowed that opting out, we would have the other side of the equation; that is, in the strongest areas of the economy those companies with the greatest capacity to pay and which were willing to pay anything for a quiet life would be the ones which would be prepared to opt out of the system and pay wage increases well above those which were coming from the arbitration system. We would then have a system where for a time a section of the work force would be getting wages increases which were well above those being provided under the present system. That would put enormous pressures on the arbitration system to grant increases of a similar kind; otherwise there would be more opting out from the arbitration system and the Arbitration Commission would face an erosion of its jurisdiction.

This two-stream approach has enormous dangers. It would almost certainly lead to a substantial wages blowout, which would ensure that we would not have the sustained economic recovery that we believe is absolutely and totally essential if we are to overcome the unemployment problem. Our wages policy is, completely, designed to enable us to have that sustained economic growth. That is the whole basis of the present Government's wages policy. In addition, it has the element of absolute equity for wage and salary earners because they are assured that their wages and salaries will be protected against inflation. It also has the enormous benefit that we will have a lower level of industrial disputation because wages are largely being taken out of the industrial disputation system.

I noticed on the weekend that the Deputy Leader of the Opposition said that wages policy had been the weakest part of the Fraser Government's policies. I suppose that was one way of absolving himself as Treasurer from the responsibility for the mess that was created under the previous Government. Let me say that the policy he is propounding at present does not give us any reason to believe that, should we be so unfortunate as to have a Peacock-led government or a Howard-led government in this country at some future date, its wages policy would be any more successful than that of the Fraser Government.