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Transcripts from the Prime Ministers of Australia

Transcript 2673


Photo of McMahon, William

McMahon, William

Period of Service: 10/03/1971 to 05/12/1972

More information about McMahon, William on The National Archive website.

Release Date: 12/09/1972

Release Type: Statement in Parliament

Transcript ID: 2673

The Rt Hon. W. McMAHON, M. P.
Prime Minister
Ministerial Statement
[ From the ' Parliamentary Debates', 12 September 1972]
Mr McMAHON ( Lowe-Prime Minister)--
I ask for leave to make a statement
about the 35-hour week.
Mr SPEAKER-Is leave granted? There
being no objection, leave is granted.
Mr McMAHON-I do so because it is a
matter of national importance about which
the facts should be made clear, and
because the campaign for its widespread
introduction throughout industry threatens
to damage confidence in the economy and
in the Government's programme to secure
full employment, industrial stability, economic
growth and price stability, and a
better quality of life for all people.
The Government is opposed to any
extension of a 35-hour week at this stage
of Australia's development, either on an
industry by industry basis or as a maximum
working week to replace the standard
40-hour week of the past 2 decades
for the whole of the Australian nati onal
work force. The Government has already
demonstrated its opposition by its intervention
in wage cases which include claims
for a reduction in hours to 35 a week, and
by frequent ministerial statements designed
to warn the community of the price it
would have to pay if the Labor Party and
the trade unions had their way. The Gov-
18988172 erment wishes to have this matter freely
debated in this Parliament now so that the
people of Australia will be alert to what is
happening, and so that the reasons for the
Government's attitude are better understood.
At the outset, I want to state that the
Government is not opposed to the concept
of more real leisure for the Australian
working man any more than it is in any
way opposed to the concept of increased
real wages for the work force of this
country. It applauds both concepts, and by
its progressive policies over many years it
has worked steadily to achieve both objectives.
But it also believes that in moving
towards them the gains made must be genuine
and can be supported by the resources
of the country without undue strain on the
economy. If they cannot, there will be an
inevitable wastage of those benefits through
crippling costs, runaway inflation and economic
instability. Then full employment
will be a myth and more leisure a mirage.
This is not the time for a 35-hour week.
I repeat that we are opposed to it at this
stage of the country's development. f stress
that poinit-at this stage of the country's
development. The country cannot afford it
now or in the immediate future. Before I

tell you why, let us look at the facts as
they are known. The present position is
that a 40-hour week is worked generally in
industry throughout Australia although a
shorter working week applies in some areas
of employment. These include some Commonwealth,
State and local government
employees; some white collar workers in
private industry; certain mining industries,
and stevedoring and container depots associated
with the waterfront. However, it is
sufficient for me to say, in this context
that a standard working week of 40 hours
applies widely throughout the country for
most of the work force. And on that standard
the nation's business, industrial and
commercial activity has been based. It
would be folly to upset it now.
As a point of history, the movement
over the last half century or so has been
from 48 hours to 44 hours, and then to 40
hours in 1948 at which point it stahiised
until recently. Obviously, there cannot be a
continuing downward progression in hours
because theoretically we would be moving
towards the absurd position of no work at
all. A whole complex of factors has
dictated the level of the standard working
week over the years but today the overriding
consideration has to be the capacity of
the economy to bear the cost-in truth,
the capacity of the citizen himself to bear
the cost of new concessions. That is the
position we are facing now.
The campaign for a 35-hour week has
been stepped up in the last two or three
years. The Australian Council of Trade
Unions Congress declared for it in 1969
and again in 1971, and the official policy
of the Labor Party lays it down and it was
confirmed at the Launceston Conference of
the ALP last year. Spokesmen for both
organisations have stated the case for it, in
a variety of forms, on many recent
occasions. In some industries trade unions
have succeeded in their claims before the
Conciliation and Arbitration Commission,
the most recent being in certain container
depot unions. In other industries, claims
have yet to be resolved and strikes, stoppages
and limitations on work have taken
place in an effort to apply duress on government
and employers. The Government
cannot stand aside idly while such a buildup
is taking place, especially when new
pressures on the economy have to be avoided and when there is abundant evidence
from recent polls that a majority, a
sizeable majority of Australians, is opposed
to a 35-hour week at this stage.
I have noted that in recent public statements
Labor Party and union spokesmen
have sought to justify claims for a
working week on the grounds that it would
increase job opportunities, and give more
leisure to the work force as a whole. Both
are assumptions without any basis in fact
and both, in real terms, are far more likely
to be wrong than right. So far as job opportunities
are concerned, a shorter working
week would be more likely to involve overtime
at penalty rates. This would inevitably
mean more wage-cost pressure and more
inflation. Increased leisure, for the minority
who might want it and get it, would mean
a costly personal sacrifice in material benefits.
The simple fact, Mr Speaker, is that
as a nation, we cannot have it all ways.
We cannot expect and get increased social
welfare benefits, reduced taxes and other
concessions-be paid more and then work
less. In the national context, a shorter working
week must be set against the wishes of most
people for improvements in social services,
housing, education, health, and other services
of a practical kind affecting the individual
and the community. The national
acclaim given to last month's Budget which
concentrated on these matters, while the
polls said ' No' to a 35-hour week, shows
where the public preference lies. The cost
of a 35-hour week, whether it comes piecemeal
or as a whole, would be staggering.
It is more than the economy could bear at
this stage as it is emerging from a sluggish
period with inflationary pressures still at
work. Let us look briefly at some of the effects
if a shorter working week was introduced.
The critical factor is the impact on unit
labour costs and prices. What would the
effect of a 35-hour week be to the national
wage bill and to inflation? The increase in
the wage bill would be something of the
order of $ 2,500m to $ 2,600m and, in some
circumstances, could exceed $ 3,000m a year.
Add these figures to the known effect of
recent wage increases on our inflationary
problem and all the danger signals start

The ramifications of such a huge increase
in the national wage bill would be felt right
through the economy. The surge in labour
costs would force prices up, compromise
employment prospects in some areas, create
inequalities in income distribution, and add
new burdens to our manufacturing and rural
industries, our transport services and our
trade. My colleagues directly concerned
with various aspects of the economy will
have more to say about all these problems
later. The sum of it all would be a serious
assault on our standard of living. It would
mean a cutback in real purchasing power,
that is, in our capacity to buy material goods
and services. This capacity is, of course,
fundamental to achieving a desired standard
of living.
Honourable members may fairly ask:
' Will not increased productivity help to
absorb the increase in unit labour costs?
Will not the incentive of more leisure improve
work performance?' There is no evidence
at all that it will. It is appropriate
here to look at figures relating
to wage increases and productivity.
In the decade or so prior to 1971,
the trend of average earnings showed
an annual increase of 5.4 per cent.
Productivity, in the same period, showed a
growth rate of 2.6 per cent. But in the
year to the December quarter 1971, average
earnings went up 11.5 per cent, and in the
year to the March quarter 1972, they went
up 9 per cent. That is roughly double the
rate for many years prior to 1971.
Productivity in 1970-71 was down to 1.4
per cent, almost half what it had been for
many preceding years. So what we have
been tackling in the last year has been
an abnormal rise in wages and a downturn
in productivity. Are we going to compound
that problem just at a time when we are
turning the corner and getting the trends
on the right track again? Everything the
Government has done has been directed to
keeping the economy on an even keel and
to getting it moving forward in an orderly
way. A 35-hour week would punch a hole
in our policies at a critical time. There is
little evidence, as I have said, to suggest
that a shorter working week would have any
real influence on productivity. The evidence
in other countries on the effect of reduced
working hours on productivity shows that any gains in productivity from a
week are not likely to offset to any substantial
extent the inevitable decline in output
from the shorter week.
One of the most comprehensive studies
available is that carried out by an American
research scholar, Dr F. J. Poper of New
York University. Dr Poper made a critical
evaluation of the empirical evidence underlying
the relationship between hours of work
and labour productivity. He concluded that
at a level of about a 48-hour week, a 1 per
cent decline in hours tended to be offset
by an 0.33 per cent increase in productivity,
but he also expressed the view that at around
40 hours per week decreases in hours are
not likely to bring significant hourly productivity
gains. There is also evidence that
once the working week is reduced generally
below 40 hours, the factors on which a
campaign for reduced hours was based
ceased to apply. In other words, the pressures
for increased leisure ceased and were
replaced by the financial attraction of taking
a second job.
Mr Speaker, let me summarise briefly
what the effects on the nation would be if
the 35-hour week came about, bringing
with it the extra leisure which its advocates
claim as a primary objective. Presumably
they would set their faces against increased
overtime, and presumably they would expect
industry to engage more labour, irrespective
of its fitness for the work to be done and
whether it was qualified. If this happenedthat
is, a reduction in hours, no overtime,
and more leisure-then there would be a
drop in material standards, no matter what
money there was in the pay-packet. That
money just would not go so far. Prices
would be higher, because labour costs would
be greater, and all sorts of inequalities would
arise. There would be no benefit from increased
leisure for the persons on fixed incomes
and on superannuation. There would
be disturbance in industries, costly readjustments
to make and a general disinclination
to plan for growth and expansion.
It is an act of responsible government to
warn against the dangers of a 35-hour week
at this stage of Australia's development. I
am satisfied that the Australian people are
not ' time-servers', concerned only with the

pursuit of leisure. Nor do they include idleness
in their aspirations for higher standards
of living and a genuine improvement in the
quality of life. They do not want to pursue
a 35-hour week when they know it is only
there to be bought at a price which the
community as a whole has to pay. This is a
time of great opportunity for all Australians
and we should use it well. It is not the way to a better life to sit back and say: ' Let
us do less and ask for more'. Let us be
practical. Let us be realistic. Let us not
put the brake on progress just when we are
moving forward to a period of growth and
increasing prosperity for all people in the
community. I present the following paper:
Thirty-five Hour Week-Ministerial Statement,
12 September 1972.
W. 0. MuuiY, Government Printer, Canberra

Transcript 2673