Wages and industrial relations
Wages policy was a crucial issue for both Fraser and Hawke. In July 1981 the Conciliation and Arbitration Commission ceased to grant general wage rises indexed to increases in the cost of living (CPI). The Commission said that there was insufficient commitment to CPI-based increases, with the government arguing for, at most, partial indexation and the more powerful unions campaigning for rises beyond indexation. Wages were then determined on a case by case basis, although a $25 per week tradesmen’s’ allowance for metal workers gradually flowed on to other trades. Average weekly earnings rose 14 per cent in 1981–82 (3 per cent above inflation), while shorter working hours gradually spread through industry. The Fraser Government’s policy for most of 1982 was to oppose a return to centralised wage fixing and CPI indexation and to argue for maximum wage restraint to fight inflation and unemployment. In November 1982, as the economy stalled and a further round of wage rises threatened, Fraser attempted a more radical approach. Cabinet decided to seek a 12-month freeze on wage increases and reductions in working hours for Commonwealth and State government employees, the funds saved being devoted to employment creation schemes. Cabinet decided not to add a prices freeze to the scheme because it would be ineffective and price control was in any case a matter for the states.
The concept of a 'wage pause' was considered at a Premiers' Conference on 7 December, but Fraser's vision was only partially achieved. The jurisdictions with conservative governments (the Commonwealth, Queensland, Tasmania, Western Australia and the Northern Territory) agreed on a 12-month pause for their own employees, but the ALP governments in NSW, Victoria and South Australia would only accept a six-month pause. The policy was further fragmented as it navigated the parliaments and industrial tribunals, the pause period in most case being reduced to six months. The Commonwealth wrote to professional bodies to urge a 12-month pause in increases to fees and charges, although the pharmacists strongly resisted the suggestion. The ACTU opposed the pause and decided in January 1983 to push for a 6 per cent wage rise. Treasury was unenthusiastic about centralising wages policy and preferred wages to be set at enterprise or industry levels, where economic realities were more likely to be recognised. There was also concern that the ‘wage pause’ would only be a stopgap and that it would be followed by a 'catch-up' wages breakout.
The establishment of a Prices and Incomes Accord was central to Hawke's election strategy, although some unions were wary of the idea. The process began with a national economic summit in April, which brought together the leaders in politics, business, finance and the unions. Hawke told Cabinet on 18 April that the most satisfying aspect of the summit was the willingness of all parties to accept their shared responsibility for addressing the current economic problems. It was agreed that there would be a return to central wage fixing, unions would accept reduced wage increases in recognition of the restructured Medicare scheme and other welfare benefits, mechanisms for price surveillance would be examined, financial restraint would be shared by all and welfare should be focused on the most needy.
In December 1983 the Hawke Government decided to withdraw from court action to deregister the Builders’ Labourers Federation (BLF). The action had been commenced in 1981 by the Commonwealth, Victoria, South Australia, Western Australia and the employers, but Victoria and South Australia withdrew after changes of government. The Hawke Government and the ACTU doubted that deregistration was a viable option and preferred to seek undertakings of acceptable industrial behaviour from the BLF, which had been obtained by the end of 1983. The Fraser Government had already decided to compromise with the BLF over the flying of the Eureka flag on the New Parliament House construction site in Canberra.
