EMBARGO: 5:00PM

PRIME MINISTER

FOR MEDIA

137

SUNDAY AUGUST 9 1981

ELECTORATE TALK

Discussions which the Government is to hold this week with  representatives of employer groups and the ACTU on Wednesday,   followed by a special Premiers' Conference and Loan Council  meeting on Thursday, will help to decide the direction of the  Australian economy. For we stand at a critical point: In one

direction there is a path to sustained prosperity, continued  growth in employment opportunities and rising real living  standards. In the other direction is a path back to the  economic conditions we faced five or six years ago, with  rapidly growing prices,  rising unemployment and economic  stagnation.

As a result of the Government's policies, pursued steadfastly  for nearly six years,  the Australian economy now has an  underlying strength which is the envy of other major industrial  nations. In the year to March, excluding the drought affected

farm sector, the economy grew at a real rate of 5.6 per cent,  a rate considerably higher than any of our major trading  partners were able to achieve, and a rate which the OECD has  predicted we can sustain or improve if our policies are  maintained. .

Employment has also been growing rapidly, particularly in the  last two years during which over 300,000 new jobs have been  created, and the unemployment ra.te on a month by month basis  has been lower throughout 1981 than in any of the previous

four years.

Our success in restoring the health of the economy has derived  primarily from the pursuit of policies which have restored  business confidence and our international competitiveness  by reducing the rate of inflation. Our inflation rate of 8.8%

in the year to June remains significantly below that of our  major trading partners,  but it will have to be lowered still  further to keep us ahead, and the Government remains determined  that reducing inflation should have the highest priority.

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One of the many signs of the faith that now exists world-wide  in Australia's economic strength and prospects is the increasing  strength of the Australian dollar relative to the currencies  of the countries with which we trade.It is particularly interesting  to observe,  for example, that the Canadian dollar is now worth  only 72 Australian cents. But the confidence that the world  has expressed in Australia's prospects, the real gains that we  have made in recent years, can so easily be frittered away.

It is the danger of that happening, particularly through a  renewed burst of inflation caused by a wages explosion, that  has led me to call for the top-level meetings during the coming  week. -

To some extent, the very success of our economic policies have  contributed to the wage pressures that exist,  and the Government  has acknowledged the need for flexibility in the wage  determination system. The Government is not against wage

increases as such, but in the interests of all Australians  theyÂ»have to be wage increases that industry can afford to  pay without reducing employment. In all of this, we have to  think of those without jobs as well as those with them. What we are concerned about is excessive wage increases that

can only harm other people. The growth we now have in the  economy has established the circumstances in which some  employers feel they can give in to wage increases when  otherwise they would not and when some unions feel in a

strong position to bargain and demand more. But these pressures  should be resisted.

At the talks this week, the Government will be discussing  the options that are open to us to.resist those pressures,   options which ultimately have to be argued out before the  Arbitration Commission^. I have noted that the ACTU President,  Mr Dolan, has said he does not want wage earners to bear the

full brunt of economic stability. I agree with him on that,  but there are people at present without jobs who want to be  wage earners, and I am sure he would want more people to be  employed, as we would. ,  Ã¢ÂÂ

I also want to make the point that throughout last year, wages  increased by 13% to 14% while inflation was 8.8%, so quite  plainly there was a very real increase in wages and living  standards over the past 12 months. There are questions as

to whether that was fairly shared amongst the community, or  whether an undue proportion of it went to strong unions and their  members.  What about the unions that have not been able to argue  their case so well because their bargaining power or 'clout' has

not been great? It is not a question of wanting Australian working  men and women to bear the brunt or pay the cost of economic stability,  it is a question of establishing circumstances which are fair  and reasonable, that will enable this country to capitalise

on the enormous advantages that Australia has, and on the  great gains that have been made since 1975. That is why an  orderly system of wage determination and less industrial disputation  is essential. .

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Too much should not be expected of the discussions this  week, for the history of industrial relations is a continuing  history of human relations, and dramatic answers are unlikely  to be found. What we can achieve is a clearer understanding  of the options facing the country, the mutual responsibilities

on all governments, on the ACTU, and on employers to make sure  that we all put Australia first, to make sure that we all  act as people belonging to one country which we are determined  to build and make a better place for our children.

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