FOR PRESS 26 March 1978

ELECTORATE TALK

"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. 1  '

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 women 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. " ‘

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