PRIME MINISTER
CHCc AG.! NST DELIVERY EMBARGOED UNTIL DELIVERY
SPEECH BY THE PRIHE MINISTER
METAL TRADES INDUSTRY ASSOCIATION
OCTOSBER 1986
Ladioca a3 Gentlemen,
At the oztset lot me congratulate you on the timeliness and
relovance of tho theme for your national forua: New
Direction in Industrial Relations."
I will raturn to this subject a little later because our
indut[ fal relations system and its participants certainly
have a ucor role to play in rebuilding the base for
Austsrn ' s national prosperity.
But girG7t lot me observe that, in preparing for this
AddrooG, I wao struck with a certain sense of deja vu.
When I cidressed the HTIA Annual Dinner soae three years
ago, industrial relations and wages policy also formed an
important part of my address.
The isouo then was how boest to resurrect Australia from the
malaise of 1982-83 and how to achieve wages outcomes and an
industrial climate which would maximise the strength and
length of Australia's economic recovery.
The National Wage Case of 1983 had just concluded and
workers had been called upon to accept restraint in income
claims Da part of a national strategy of reconstruction end
recovery.
Many doubted that the Accord-based approach then proposed
would prevail because it required unprecedented wage
restraint for a time of expected strong economic growth.
Even a few unionists were hait -l exp'.: s some qualms about
what had been proposed.
But the record shows clearly that the doubters were proved
wrong. JKWI
* 4044WO
W~ orkers havo boon prepared to make the necossary sacrifices
In the atticona1 intarest which, of course, theyr rightly
perceive to mean the long-term Interests of all current and
potential vockers.
Those early months in the l. 1fo of this Government were
undoubted251 difficult and uncortain. but the Government
provided h~ o leadership, and the community respor~ ded In a
way which Vroducad such oucceou that our country and our
econom~ ic policy earnod plaudits from all ovar Pho wiorld.
That succoDI3 especially took fora In 650,000 Jobe; economic
growth avorcging 4-5 per cent a seari and until the
depreciation boginning early In 1905, docelerating
inl a i n,
Today wo gain faca difficult oconomic tinesi. But In some
sances tho xosponses required this tie are for m~ ore
fundamentrel. Thiree yoavo ngo there were two dominant atreaza to our
economic r; xolicy. This rem~ ains truae lso today.
One emphaoi1 waa on the traditional taska of macro-aconomic
policy to a. iaago domestic demaund and coats.. The Immediate
taalce wore oim~ ply to kickstart the economy at a tUr~ e of weak
PTI~ atC GC_-orf domand and to haul back inflation.
But just as amportant was the need to redress a numnber of
fundaaentc. 1 iehnoes in the domoutic economy which, If not
corrected, uould haive underainad the zuatain~ billtY Of
rocovory Z1h o longer term.
Those the then imbalackne between wages and profits,
our uncempotativenuss, hivlh inflation and an QXCeosiVM
fiacal deficit.
In all casoo we are now far better p laced,' aG a nction, to
onjoy sustained strong grow'th In josand output, if only we
are prepare2 to take the opportuntbie of today's very
different economic circumstances.
The second omxphasis in 1S-83 was more specifically oriented
bwards the longer term.
The premise of our policy stance then was that Australia had
clearly shown itself to be less flexible, less responsive
and less adaptable in a w orld of rapid change than many of
our regional neighbours.. mlany of our neighbours, had onco
been econocically backward but over many years they hfive
progressively outpointed Australia in world marketo and
. reaped the rouards in fost-lr growth of : ing standards.
Accordingly, the new Labor Govern~ ent laid down a oweeping
agenda for eonomic reform.
That agordk hoe onbraced overy facet of our economic
structure tcludings
0 Tho c-41r-otion system;
0 Our niot protactod and leaot affiCient laftettiesi
InductsAnX goaearch and loveloptenti
* A num!; cr of goviowa, now undorway# of the transport
Tho , Lanc1. a soctori
Tho pblic sector;
The to ~ oe
F oreign' Inestrent pollcyFi
Gonorcl Luineao rocjulation5 end
E xtoniioin aorvices to Industry and now approaches to
proacte exporta.
in oach cao we have sought to promote innovation and reform
in conseL , ction w~ ith the pairtiez 3ftected.
Three yoazc ago, Includingj to this audience* I spelt out the
high Lp7Lri ; y which thia Gnvernment placod on the creation
of an eZIiclent, highlyj coznptitiva nanufacturing sector.
my meg then was that the sector's increased
compottiAveneca would depand on high levels of investment,
the appl~ cation of nev tachnology to production processes$
and an increasing oxport orientation.
And it ic very pleasing to be able to say that this
Associaion in particular has shown a willingness to address
these isoues sq~ uarely and to adopt positions which recognise
the reolity of the changing international market place.
Trhis~ Asc-ociationls contribution to the recent debate on
these ijtoues has been consistent and constructivo and has
placed2 special emphasis on the need to become outward
looking and competitive.
When I ot with representatives of the MTIA National Task
Force on industry competitiveness on 19 September 194t, I
found the approach of both the Task Torc-and itu Report to
.1he Foaral Government on thQ current e of Australia's
manufacturing industry more refreshing than probably any
meeting I had been involved in with business since coming to.
office. The Taak Forco's work recognises the need for changes within
this indUstry, the need for all sections of the industry to
work together to bring these changes about, and the need to
act now.
4.
The urgon-y wiith which this taS1h needs to be addressed flows
f rom tiko charp deterioration in the prices which we have
been re : cvinq fEor our traditional commoditioc based
exports. At curon' pricos our Lncnn heie been offect~ vely reduped by
$ 6 A ia or
Auotral~ lVa haa boon borrowing cibroad in an attempt to
maintainr Living standardo at levels more consistent with our
prcviDUJ3 2ovoLG of Income.
But wo (,. anot Indefinitely borrow on this scale. The, future
prospoirMty of Australia will dopend on how well we set about
trading our way out of our current difficulties and sustain
our llvarnq stand~ ards from Inicreased effort rather than
incroasQoA borrovings.
Thoro to~ no question that our traditional exporters will
remain fihe doninant varnarc og foxeign exchange for
Auatl~ z or docadag to cc=!.
And, oa? curce, tiia% Ao how it should be. Th* 39 are the
areas enable A~ ustralia to capitalise most on-our
natural cvantngeG of climato and resource endowment.
But theioc is a~ lco no question that there is now both a vital
need arnd , ha coriropionding opportunity for the manufacturing
sector t ploy a very much greater role than La the past.
The siopio fact Is thct the approximately 30 por cent real
dcpreciiut" on of the currency since end 1984 has provided
Austral~ si onufacturers with a once-in-a lifetime
opportunity. And thore Is abundant ovidence that
manufacturers and our curvico sector appreciate that
fact and are m~ oving to take advantage of it.
But what seems less v~ ell understood is that we cannot simply
rely on dopreciation alone.
We 5imply cannot expect to secure those extra markets
permanently without sustained effort.
The window of opportunity oponed up by the depreciation will
close, in time, unless first, we act now to increase
productivity perzzwnently and unl. ess, second, we consistently
achieve wage outcomes lots than or close to. those of our
competitors. The industrial relations system has a critcial role to-play
in both cases.
One of the fascinating featureG of Australian industrial
life ic our abiding fascination with the workings of this
quite complex some say unwieldy machinery.
But what particularly strikes me after some 3 er ls
involvement is how flexible and how adaptabl t system has
proved to be.
You will : ecal1 that in 1903 the Go ' vernmont established the
Hancock Committee to conduct the first comn rahensiv., review
of our Lnrlustriai rolr. tions oysto~ k * slco t. 0 icepttop of
the Fed: l system in 1904.
The Comr: ktco rejected radical change. instoad it
recoD. Lcndcd 5000 evolutionary changes to improve the
offectivonouG of tho LV. doral Trilbunal, noting: " Tho nyStan
has prevod to be 4urable end 4so dqeply * ntrernced in tUe
sociotyo. Let rao Q> S, In pasing, thc~ t tho Government hc~ a tmon ongaged
in entcarlve con ultations on possible reforms with the key
participants in industriol relations. '-espei~ lly under tho
auspicen og thd National Labour ConAu3. tat ye Concl
The Gaveoo~ nt is givin~ i M h priority to the intgoduction
of the ogilction which will give effect to our proerred
changoo. B~ ut it Is unliftolf that the revis* O leqAlla~ ion
Vill bo einaliso( 6 until coaly In the Nov Yoor.
The choocgm3 thot tho Government will introduce trill build on
the al, oody large slonpat of Zloxibility in the qzrosent
system.
Ladies cad gontlecaon, thic present degree of 21oxibility Is
a poin'. not well bpeciated, ospecially by thoco of the New
Right w want not reform1 but e., cculotion oa th( prosent
system.
Change n that ilk wouldi pgoJet us Into unknown vaters.
The mac~ t likely outcao ,-auld bo the sort of disruption and
anarrch~ y that prevailod followlag the Collepaq of the.
indantton system
I baliove that supportors of such a departurc showi a
fundamental lack of imagination they simply lack the
imagination to oxploit tho conoiderablq possibilitioa
offered by our preont aystoza.
Howeve,-, that is not a 2ailure common to the broad range of
those rnoft closely acsociated with the current toystem.
The slystom adaptod to w~ ort for Australia in a noval way over
the pariod 1983-86. Providod we can re-establish the
neces~ a~ y perceptions of mutual interest and common purpose
betweon the major participants, the system can once more
adapt tou the new circuastancoq of today.
The historic meeting larnt month between the peak union and
busineoG groups concerning work~ and mo'n-) v' ment prLactices is
one clear indication that those very necessary
pre-conditions are boing fulfilled.
The Icint, communi que i6~ uod after the meeting showed hov
much common ground there In between the major participants.
Inportantl 17 the participants miode plain their insight that
workers a~ z maneagaoort acocl to wor k together acrosa broad
front ig we are to lift our piroductivity appropriately.
The Comzruque identifies o number ct areas for action to
lift prod:. c'_ 1vity including:
~ Ragn og? wa ond nngoment prcocticoag
Higho-1 aovola af nvostmontl and
Xsprovoa training and retraining.
Govornnont can~ va. y do s0 aiuch In any of these Droas.
We have c~ notod n environaent conducive to the necessary
changescz~ to theo xtent that Budgetary circumstances
allow~, tic L~ ive pzavicdod cu, tantlal direct support Zor
invomtonl', ond tgaining.
This inclu~ lo5 gancrovG jenorc~ l tax incentives to promote
investrnont, Guch aw 05/ 3 DIerccation" and specific measures,
particlzs2 7 in tho cantont ot tho highly succensgul
inductr~ j ? Xan.. The $ 60a U1eavy 2nginecryIng Package which.
couplas direct budgot subviontions with measuro to promote
inciccaoad 9soductivity -Is but the latest exam~ ple.
The Govar:.. zont Is preqairet to look closely at what more can
be doac L-a œ, his area. Bu~ t it is important to recognise that
any chnc w oulM nno( to bo campatibae with out genoral
budgot GsneAo9V,
We did no'. oonatruct a audgot $ 1.3 billion less than XTZA'o
Tcoai3n& d. Von ulthout good reason. Nttional fiscal
icestraint cicential to bringing Australia's spending Into
line w~ ith our now, lovor netional income.
Pundamenta!, ly, Itaover, action in these areas reca with tho
private soc. tor.
workers anC~ managements working together are unquestionably
the best placod to carry through the kinds of work place
ieforzn ne~ cdcd to cut costs, imiprove our reliability as a
supplier cind snsure zuatained high quality,
workers an~ d foanagemont trorhing together can build on tho
general economic climate to provide the kind of secure work
placo environment necessary to promnote high levels of
investment rend job security.
.1 acknowl? oc~ e the IITIA is onre t~ oiti.' which has these
matters c~. early at the fore-front of its agenda. Your
Association Is to be congratulated on that score. But with
world tracing conditions & io adverse, the time has come to
accelerate the pace at which the action takes place in
practice.
I acknowledge, too, that canufacturing investment has
recovered charply over tho last two years from the
debilitatflnc trough of 1902'-63. Dut w9 need to go such
further.
our inab~ lty to rotain c~ aw market share over the pat
years in cl. oor ovidonco that othog countries ea tvoll ahead
of us in tAo vfliot place.
We need citcinly to tacgot our offort on those nichet in
the market whoe we can onploit rna adventage. But our
economy L3 no tntorralated tha~ t we need also to lift our
pcrforaan.-a gaoral1l 00ton ona firm's high cost output is
another'c high cost hput, , a the detriment og both firms.
The qualityj of Industrio1 oolationri within firms and
industrico in litholy to havo e~ major impact on theco htinds
of decloics
Uncorin : r about the indtrial climate is likely to
tranGlato into an uncertain outlook for productivity
improvernmnZ end invostaento But, increasingly, Itt is also
being ro-cgnised that uncartGiinty Ebout investment
performanca and job security can aloo create uncertainty in
the induGW-rial onvironmant.
There cen be little doubt eaut the benefits of freo and
honest comnmunication botweea all parties on these Issues.
And that asu simply anothos u~ ay og atating ono of the
fundamientn~ l principl os of thto Govarnmentna a proach to
economic Teform, which. is that changes will a Mays be more
readily achieved when tho nood for change 4n4 the
consequonc( es of It aro well undor~ tood.
of course the most direct linkage between business costs and
industrial rolations is wageo setting.
It is a credit to our industrial relations system and the
degree of commitment of its participants to appropriate
outconac that real wages have fallen in the latrt three
years. Zvery other period of comparable economic growth in
recent htctory has been azsociated with significant real
wages iflcroa& 305.
That outcome v~ as deliberately engineered, under the Accord,
in ordeT to lay a firm base for sustained growth in
employment. By end 1S984 the Accord had delivered virtually a halv-ing of
our inflation rate to just over 5 per cent and good
.' prospects for continued moderation, ii" 1. Iie witfi the
downward trend of our trading partners.
The downward movoraent, however, has bean temporarily
arrested becausc of the charp increase in import prices in
the wake of tho depreciation.
Indeed the feed-through of the 10 per cent plus depreciation
of the slddle months of this year will be a major force
operating to keep our inflation rate in terms of the CPI
high for the rest of 1986. This phenonemon was anticipated
at the time of the Budget, which clearly forecasts
moderation of inflation, beginning in 1987.
The e~ sential point, however, is that if we want to preserve
our now fcund competitivenGoG beyond the immediate period
those higher import prices cannot be allowed to flow through
into hichor wcgo coots.
The Government is discussing proposals to this end with both
the ACTU and representatives of business. Those discussions
are still at a preliminary Gtage and many details are still
to be determined.
But therc can be no doubt about one thing. And that iG that
the only changos which will be acceptable to the Government
and to tho community at large will be those which can
deliver apropriotoly restroined wages outcomes without
debilitating industrial conflict.
Again our chancos of success depend critically on the
cooperation and realism of the direct participants and
their mcmberships.
Both parties must recognise the economic realities and
also the valuable role which a constructive approach to
industria. relations can play in satisfying those realities.
Ladies and Gentlemen
Australia faces a very difficult period of adjustment. More
than ever our efforts must focus on improving the capacity
of our traded goods sector, particularly manufacturing.
Your Association has demonstrated its ability to recognise
the changed environment within which we all must operate. I
congratulate you and express the unqualified conviction that
if all Australians and their relevant organisations
demonstrate the same attitude, this country can meet and
overcome the challenges before us.