Michael Keenan (Stirling, Liberal Party) Share this | Link to this | Hansard source

My question is addressed to the Prime Minister. Would the Prime Minister update the House on the latest Australian Bureau of Statistics wage data? Is there any risk to continuing growth in wages?

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I respond to that question from the honourable member for Stirling by saying that today’s statistics on wages growth confirm the spectacular success of our industrial relations policy, because what they show is that this economy has maintained strong but containable wages growth. These statistics show that wage rates in the private sector increased by one per cent in the June quarter to be 3.8 per cent higher over the year and that wage rates for all sectors rose by 1.1 per cent in the June quarter to be four per cent higher over the year. What this proves yet again is that we are able to sustain simultaneously record lows in unemployment, relatively low interest rates and strong wages growth, but wages growth which is affordable and relevant to the productivity levels and prosperity levels of the different sectors of the Australian economy. It is relevant to recall some remarks made by the Governor of the Reserve Bank on 14 June. He said:

Despite, on most counts, the tightest labour market conditions for a generation, growth in most measures of labour costs has remained well disciplined for the past two years or more, after a mild acceleration earlier. Wages are rising quickly in some areas, but quite slowly in others. That is, relative wages are changing, adjusting to the forces at work on the economy, but without, so far at least, a serious inflation of the whole economy-wide cost structure. This looks like a text-book case of adjustment.

That was a ringing endorsement of the industrial relations policy of this government, and I say in reply to the member for Stirling: there is a threat to that orderly and affordable growth in wages and that is the introduction of the Labor Party’s industrial relations policy. Any return to centralised wage fixing will threaten the non-inflationary growth in wages in this country. It will threaten low unemployment. It will put pressure on inflation and thereby on interest rates, which, in the words of Econtech, the respected economic consultancy, will rise by 1.4 per cent and unemployment by 300,000.

I read a few articles in the paper this morning and there was one that really caught my eye. It was an article written by the respected columnist Paul Kelly, who had this to say in his very last paragraph:

But Labor’s folly is industrial relations. This threatens the economic credentials of a Rudd government and the risk is lethal: higher interest rates. Just look to history.

I say, ‘Amen to that!’