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Transcripts from the Prime Ministers of Australia

Transcript 4660


Photo of Fraser, Malcolm

Fraser, Malcolm

Period of Service: 11/11/1975 to 11/03/1983

More information about Fraser, Malcolm on The National Archive website.

Release Date: 26/03/1978

Release Type: Media Release

Transcript ID: 4660

Embargo until delivery
FOR PRESS 26 March 1978
" One man's wage increase is another man's job" the prophetic
words of a former Labor Treasurer are just as accurate, just
as relevant today.
Excessive wage increases lose jobs and threaten jobs. It is
for that reason that a key element in the Government's economic
policy strongly endorsed by Australians at two general
elections is our wages policy.
Wages are an integral part of the functioning of the whole
economy. If the economy is to perform efficiently so that
more jobs can be created then wage rates cannot be allowed to
get out of line with other relevent trends in the economy.
They also cannot be allowed to get out of line with overseas
trends. In Australia in recent times, wages have grown out of all
proportion to producitivity. We experienced a " wage explosion".
For example, in the three years to the end of 1975, wages grew
by an amount equal to six years normal growth. This unparalleled
growth in wages was not accompanied by an equivalent increase
in production and productivity.
Rising wages led to higher costs, inflation and inevitably to
the loss of jobs. our industry became uncompetitive in world
markets. It is for these fundamental reasons that the Government has taken
a strong and consistent stand on the wages issue.
We have argued before the Arbitration Commission that full
quarterly wage indexation is a barrier to the return to full
economic health. It would lock the economy into higher and
totally unacceptable levels of inflation.
The Commission has seen merit in the Government's argument.
It has awarded less than full wage indexation.
Inflation in Australia is steadily falling. It is already
below 10%, but it must keep falling. It is vital for Australia.
that we hold on to those hard-won gains. We cannot risk going
back to the days of the escalating wage-price merry-go-round.
That would immediately destroy confidence in Australia's future.
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It is for this reason that the call by the ACTU Executive for
industrial action for full wage indexation is to be deplored.
It would increase both inflation and unemployment. Put bluntly,
it is in direct conflict with the national interest.
I find it almost impossible to believe that when Australia is
climbing out of a recession, which was largely the result of the
1974 wage explosion, that the ACTU could even contemplate such
a policy.
I believe the men and women on the shop floors and in offices
throughout Australia the rank and file unionist will reject
the calls of their executive.
Above all else, Trade Unionists clearly understand that excessive
wage increases threaten their jobs, and their workmates jobs.
They still remember what happened during those years when trade
union leaders got the wage increases they sought. They remember
the high inflation and the jobs lost.
The conversations I have with men and womfen in factories show
very plainly that they do understand these forces. They don't
complain about our stand on wage indexation. They know there
is simply no alternative. In fact, I have a strong feeling that
Trade Unionists generally would be satisfied with an annual
adjustment to their wage packet.
I am convinced that the action of the ACTU Executive does not
reflect the view of rank and file unionists. People understand
that if manufacturers and businesses had to add to their wage
and salary bills, they would be left with no course but to put
up their prices, which is more inflation, and would inevitably
have to reduce their workforce.
A graphic reminder of the relationship between high wage increases
and unemployment occurred in Canberra recently. Two fast-food
outlets have had to close. Owned by a worldwide chain, they
tied for the position of having the highest labour costs of the
comapny's 4,800 outlets around the world. Labour at the two
Canberra outlets had cost $ 5.36 an hour, compared with $ 2.60 an
hour in the United States, $ 3.00 in the United Kingdon, $ 2.70
in Canada, $ 1.00 in Japan, and $ 3.00 in Holland and Scandanavia.
With the closure, 10 full time and 90 part time jobs were lost.
The company couldn't afford to keep their doors open.
What more evidence does the ACTU Executive want about the jobs
that are lost and threatened by wages that are out of line with
the developed world?
Australia today is steadily on course to economic recovery. The
Government's task for this year is to build on the solid gains
of the last years.
All Australians have a role to play and all special interest
groups and sections have obligations to the total community.
I and the Government hope that for these groups the national
interest will override any other interest.

Transcript 4660