In Search of the Magic Pudding

Closing Remarks

Senator John Stone

Ladies and Gentlemen.

It Is now almost two and a half years since the Society came together for its first conference and that gathering led in due course to our first and, I think, still outstanding publication 'Arbitration in Contempt'. Since that time the Society has gone from strength to strength in achievement of its stated objectives. Yet, of course, nobody here this evening would be so foolish as to suggest that there is not still a very long way to go. I think it is interesting to recall attempts which were originally made to paint us as some sinister and clandestine group with access as I said earlier to enormous financial resources (all $35 of them) and with an agenda directed, of course, to grind in the faces of the poor.

Pamela Williams in her article 'The Union Busters' in the Business Review Weekly, launched the persistent campaign of denigration which was sustained by the industrial relations club. This campaign culminated, as you will recall, in the prime ministerial description of us as, and I quote, 'economic illiterates and political troglodytes' and subsequently to the famous Mick Young interview, on the Channel 9 Sunday program, which popularised a so called 'new right' terminology.

This particular technique of political activity is rightly called the McCarthyism of the Left. At the present time we can observe the same process in full cry following the recent pronouncements by the Federal Opposition, particularly John Howard, in regard to Australia's immigration policy. With those pronouncements we are told by Michelle Grattan, and other authorities of this morning's Age, Mr Howard has lost support of what is called the opinion leaders. By opinion leaders I take it she means Michelle Grattan, and of course other assorted members of the Canberra Press. Well let me now predict that in the months to come, we shall see on this issue also who the opinion leaders, as distinct from the merely opinionated, are. Certainly that has been our experience in the society. I think it fair to claim that our first and always foremost objective, the need to stimulate within Australia a thorough going debate on the future of our industrial relations system (including the role and power of trade unions within that system), has already been achieved to a considerable degree. The repressive role played by restrictive work practices in holding down our national productivity, and hence the real incomes of all Australians, is nowadays much more clearly understood. The recent Royal Commission of inquiry into grain handling, for example, has thrown a spotlight on the work practices in that area. In today's climate of debate, even for a government so closely allied to the trade unions as our present government in Canberra, those work practices cannot simply be ignored. Three years ago that would not have been the case.

At a time when some of the fundamentals of our constitutional framework are being threatened by four proposed referendum questions, to be voted upon four weeks from today, the need for a high quality of national debate has rarely been more pressing. Within the Society's chosen field of industrial relations I believe we can claim to have made a major contribution to that national debate. There is of course, as I said, still a long way to go. Lying on the table in the Senate at this very moment is the government's much amended industrial relations bill. That bill contains, for example, provisions to concentrate even more power into the hands of even fewer trade union bosses, by forcing a number of smaller unions to yield up their independence in order to be swallowed up by larger unions, in a so called amalgamation process.

This proposal is an affront to civil liberties of the members of the smaller unions concerned that is so gross that, if it were happening in any other area of our society than industrial relations, it would have long since provoked a great outcry. Why have our civil liberties organisations said nothing, so far as I am aware, by way of protest. Why for that matter have those press gallery opinion leaders referred to by Miss Grattan this morning had nothing to say. One reason for their silence is that the question of forced amalgamation of smaller trade unions is regarded as an industrial relations issue; to be written about by industrial relations writers; a brief outside the normal canons of law and order. Yet industrial relations writers, because of their capture (I think without exception) by the industrial relations club, can be relied upon to write nothing which does not support the view of the club.

It has been one of the contributions of this society to bring home, in open and, I believe, totally civilised debate, that such industrial relations matters have implications going far beyond the dull and unprepossessing concerns of what Gerard Henderson so well termed the 'Fridge Dwellers'. I refer not merely to such implications as the effect of our industrial practices on civil liberties, but also their effects on the provision of jobs for those in society who want to work. Those of you who were here last night to listen to Paddy McGuinness's amusing and imaginative address on the Cut and Come Again Puddin will be aware of the point made in the subsequent discussion about job creation and the problem of poverty in this country.

Of all the remedies proposed from time to time to combat the growth of poverty under a Labor government nothing is so important as the one which that government itself never mentions; namely, the substantial deregulation of labour markets and reduction in the power of trade union bosses operating within those markets. These things are central to the task of reducing what economists call 'the natural rate of unemployment in Australia today.

I, of course, don't suggest that all of the poverty in Australia today is caused by unemployment. It is nevertheless undeniable that a great deal of poverty, particularly among young people, is caused by unemployment both directly and also, in many cases, indirectly. And it follows that no single measure would do so much to reduce the magnitude of the growing problem of poverty than a policy of deregulated labour markets and reducing the power of our trade union bosses who manipulate those markets against the interest of the unemployed.

There is on this issue a clear conspiracy of silence between our present government and the leaders of our trade union movement. Instead we have demands from the latter for further expenditures on behalf of the poverty industry. Because such expenditures merely treat the symptoms and never address the causes they result only in a growing queue of supplicants, patronised by the ever growing bureaucracy of that industry.

A few months ago just after the May Economic Statement, Mr Keating was reported to have said that labor market reform was the last great area of change to be overcome.

If we leave aside the totally unsubstantiated assumption implicit in that regrettably characteristic arrogant claim we must nevertheless ask just what signs there are of this government even beginning to address this last remaining frontier. Some have affected to see in the so called two tier arrangements, resulting from the March 1987 wage case decision, a move towards a more deregulated wage bargaining process.

Those who constructed that rather large castle upon that rather slender and indeed shifting foundation were also, until recently, expressing the hope that following the recently concluded national wage case hearing we should see further movement in that direction. Well, we shall see. My only comment is---don't hold your breath. The truth is surely that the trade union bosses are not disposed to yield up any of their present power. The Commonwealth Conciliation and Arbitration Commission has been so far reduced in status that nobody much cares whether it is disposed to yield up some of its paper powers or not. The older and still chiefly recognised employer representative bodies such as Confederation of Australian Industry have become largely discredited through their persistent associations, and dealing, with the other members of the Industrial Relations Club.

Some other employer bodies, such as the National Farmers Federation, are now presenting to the Commission submissions of remarkably high analytical quality. But since there is nobody on the Commission with either the wit, or the wish, to understand those submissions even that development was capable of changing little. Meanwhile the quality of the Commonwealth's own submissions have deteriorated even further, to a point I would say of invisibility.

How anyone can expect, out of this mishmash, any coherent outcome to emerge is beyond me. The unhappy fact is of course that there has probably rarely been a time when it was more important to get our labour market outcomes right than at present and for the following reasons.

Whilst it is inappropriate tonight to give an address on economic policy, anyone who has been taking a passing interest in recent economic events must recognise what an extraordinary pass we now seem to have come to. In the financial year just ended Australia recorded a deficit on the current account of its balance of payments of $11.5 billion, which was a reduction from the deficit of $13.2 million recorded in 1986/7. So far you might say, so good. Consider however that in the year just ended the rises in the prices of most of our major export commodities, wool, nickel, copper, aluminium and so on, alone accounted for an improvement in our balance of payments of some $3 to $3.5 billions. In other words but for this fortuitous rise in export prices, and I use there the Treasurer's own description of those developments in his unguarded moment of truthfulness during his address to the Premiers on 12 May, our balance of payments position would have actually deteriorated further in 1987/88. Even at his fortuitously improved level of only $11.5 million our balance of payments deficit for 1987/88 still amounted to about 3.8% of the gross national product. This would have been a very high figure even by what I sometimes refer to as traditional standards of 15-20 years ago. But, for a country which, since that time, has run up a net international indebtedness position of over $88 billion (around 30% of GDP), it is an intolerable one. As things stand today there is simply nothing being done to rectify that intolerable situation. The Treasurer is, it is true, promising or threatening to knock up a $4 or $5 million budget surplus this financial year but says this will be chiefly through a growing tax yield including the usual proceeds of bracket creep. Much of this improvement in public sector saving, therefore, will be from private sector saving so it will be interesting to see on budget night the estimate for this year's balance of payments outcome.

The point is the fiscal policy has stalled, and with labour market outcomes beginning to deteriorate, the only weapon now left, it seems, to the government, certainly the only one they are currently employing to dampen down the rate of economic growth, including growth in imports, is interest rates and of course the rising exchange rate which is associated with that rise in those interest rates, that is relevant to those obtaining overseas financial markets.

All other considerations apart there seems to me great risks in this economic policy mix. But what if twelve months from now, we find ourselves looking at a very different international economy, with a new United States administration then beginning to slow down the pace of that giant economic motor? What if the head-long upsurge in Japanese industrial production (up by 11% in the last twelve months) has also been slowed significantly? What if, as a consequence, the prices of our major export commodities have dropped and these prices begin to sag perhaps gradually but also perhaps faster? With our still underlying balance of payments crisis and the associated crisis of our growing domestic indebtedness thus being exposed once again as our export income falls or grows more slowly, what will then be the outlook for an Australian dollar which now if anything is embarrassingly strong? What if that dollar then begins to fall? What will our monetary authorities then be required to do by way of even higher interest rates to stem that fall? I don't know the answer to any of these questions but what I do know is that no country, with the basic balance of payments and international debt problems which we have, should be behaving as our Labor Government in Canberra has been behaving. For the past twelve months they have behaved as if there is no tomorrow.

Ladies and Gentlemen there is a tomorrow and when it comes we shall see a different political scene as well as a different economic scene in this country. When it comes it will be all the more necessary that our markets for labour should prove capable of the high degree of flexibility that such circumstances would require of them if a large rise in unemployment is to be avoided. At the moment I fear that there seems to be no likelihood of that. Just this afternoon Gerard Henderson expressed a degree of pessimism and apprehension over the future policies of the Greiner Government. This evening I have to express the view of a degree of apprehension and pessimism over the future, not of the Hawke Government as such, but of Australia under that government in the months ahead.