Page 3408 - Week 11 - Tuesday, 20 September 2005

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economic model that the ACTU embraced. I naively thought that maybe they were moving into an era of better economic management. But clearly that is not the case. The people of the ACT must seriously wonder why, when they hear that the ACTU, the Labor Party and their representatives here in Canberra keep advocating these knee-jerk, populist measures that will do nothing to help the ordinary households of this city.

The ACTU’s rationale that we immediately increase wages because petrol prices have gone up, of course, as most sensible people would realise, will hurt households even more than the current escalation in fuel prices that is happening, because every time we take these knee-jerk reactions on wage increases it flows through into all the aspects of the economy, including supermarket items.

It seemed to me that Mr Combet and the ACTU need to take a few lessons in basic economics; they need to hear from people such as Dr Andy Stoeckel who is well regarded in this city and has been involved in economics for a very long time now, from the Centre for International Economics. He used to head up the Bureau of Agricultural Economics.

Ms MacDonald: The petrol increase is already affecting the cost of goods in supermarkets.

MR MULCAHY: Ms MacDonald, who is muttering away over there, does not like this because it is a bit close to home. It is really important that people who think these are great ideas stop for a minute and think a bit about economics and the flow-through, because the victims in these situations are not the high-income earners whom they always want to go after but are in fact ordinary people. Having already dealt with the cost of fuel, which is a real issue in many households in this territory, their answer is: increase the wages; make every employer pay more. Immediately the costs of goods and services will go up.

We do not hear them say—and I would not advocate, just in case they choose to misquote me—that interest rates are now the lowest we have had in decades, so everyone’s wages should go down. It seems every time there is a price variation we have got to change the rates of pay. What they are not so flash about is dealing with sustained economic growth.

Dr Stoeckel said, when talking about this issue, that economic growth could be 1.6 per cent lower and inflation higher as a result of higher petrol prices. Lower economic growth, of course, means less employment, and so does higher inflation because it makes business less competitive. One thing the union movement excels at is trying to put people out of work, by unjustified wage increases, because they have no regard for people who are in casual employment, people who are part timers; they simply do not suit the agenda.

It is for that reason that, sadly, they have found that their market share, as I would describe it, is down to around 18 per cent in this territory. Many of the people who vote Labor now consider that the way in which their union representatives operate in the city is sadly getting off the money.

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