Interview with Catherine McGrath

ABC AM

Monday, 19 December 2005
8.00 am

SUBJECTS:

Industrial relations, Treasury minute

TONY EASTLEY:

Well a short time ago Peter Costello told our Chief Political Correspondent, Catherine McGrath that he had not misled the Parliament and he still believes the industrial relations changes will provide economic benefits for Australia.

TREASURER:

Well the, what’s on the front page of The Australian today is a minute from the Treasury which has been publicly released and which is available for people, anybody to read. What it does, is it makes the case for workplace relations reform, and it finds that workplace relations reform will not only lift productivity but it will lift employment. It cites the reasons for that and it cites all of the findings of international bodies such at the IMF, the OECD, which have consistently argued that labour market deregulation is positive for an economy, for productivity and for employment.

MCGRATH:

Well just a minute, you told Parliament that that advice didn’t exist.

TREASURER:

No, no, no, no, the Treasury did not commission a secret report in relation to modelling.

MCGRATH:

Well just a minute, I think you are playing with words here, aren’t you? You were asked whether there was information about it, whether Treasury had investigated the economic benefits. You said no.

TREASURER:

I am sorry Catherine but a report was carried in The Australian on the 5 th of November 2005 which said that there had been specially commissioned advice from the Treasury and Catherine, not me, The Treasury put out a statement saying that there hadn’t been specially commissioned advice from The Treasury in relation to that. And that was a statement by Dr Martin Parkinson of the 5 th of November 2005.

MCGRATH:

I have got that in front of me actually. It does sound like a lawyers defence though, I mean you were asked in Parliament about economic advice from the Treasury. What is printed in The Australian today looks to most Australians like economic advice from the Treasury.

TREASURER:

No, no Catherine. The question was about modelling. It was evidence in the Senate Economics Committee and the Treasury itself put out a statement, not me. The Treasury itself put out a statement which said that that report in The Australian was not accurate. Now what has been released today is a minute which is not a specially commissioned research or modelling, but a minute which gathers together all of the economic case in relation to the importance of labour market deregulation. That has been released to The Australian . These are not secret, it has been released and it can be read by anybody, which gathers together the international research from the IMF, the OECD and everything else.

MCGRATH:

Well we will let the public decide the difference between a minute gathering together the economic case and a more specific inquiry, but can I ask you particularly about some of the other points brought up in this so-called minute. It questions the productivity gains and says that low income earners in the short term will be worse off.

TREASURER:

No, it finds that, this is the Treasury’s view, it finds that productivity will increase.

MCGRATH:

But there are short term losses.

TREASURER:

No, no, no, I think what you are referring to another thing is where they say in this minute in relation to minimum wages, they say that minimum wages under the Fair Pay Commission may not move to the same degree as they would under the Industrial Relations Commission that is what the Treasury says. Now whether or not that is right I would be very doubtful to be frank. The Australian Fair Pay Commission is required to take into account all sorts of economic matters and I believe in a growing economy with stronger productivity you actually could see minimum wages move faster. But that statement that is made in this particular minute, it is not my view, that is a projection that is made in relation to this particular minute.

MCGRATH:

Treasurer the Government has also said there will be productivity gains because of the IR changes, this minute says that employment growth will quote be not huge and the impact on productivity growth will be slow and difficult to quantify.’

TREASURER:

What it says is that there will be an increase in employment and there will be an increase in productivity. What it also says is it is very hard to actually put a figure on that and I’d agree with that. Until you actually see the system, the results, it will be very hard to say what that would be. But I would be absolutely confident that an improvement in industrial relations will lead to higher productivity and more jobs.