Accord 2 - Government and ACTU Agreement Regarding Implementation of Accord

Agreement Between The Government And The ACTU Regarding Implementation Of The Accord Over The Next Two Years

The parties acknowledge the benefits that have flowed from the development and implementation of the Prices and incomes Accord. These benefits have encompassed high economic and employment growth, substantially reduced unemployment and inflation, improved international competitiveness, the maintenance of living standards through full a wage indexation and tax reform, and improvements to living standards through the "social wage".

The Accord strategy was based on the need to handle both inflation and unemployment simultaneously, whilst at the same time providing the opportunities for maintaining, and over time, improving living standards. Under the Accord, Australia's economic performance has consistently bettered that in other Western countries.

This Agreement is designed to reduce the level of inflation by overcoming the problem associated with depreciation whilst maintaining the high levels of growth necessary to ensure further increases in employment and the capacity to improve living standards through superannuation.

Both parties agree that the Accord strategy must not only continue but is manifestly preferable to the contractionary policies pursued by the previous Government, as part of its failed "fight inflation first" strategy.

To ensure the continued successful two operation of the Accord over the next years, the parties have agreed to the following:

1. Adjustment for the effect of depreciation

The parties agree that the effects of depreciation must involve an approach in which wages, tax, productivity and prices are integrated within the framework of the maintaining and developing the Accord.

For this to apply the finalisation of the current agreement shall occur.

A further period of agreement should be entered into on the following basis 1. Wages. Wage rates shall be fully adjusted in accordance with movements in prices, provided that an amount of two per cent shall be offset by a tax cut designed to maintain the real value of the industrial wage.

To this extent the ACTU accepts that the two per cent shall be offset in the national wage adjustment expected to cumulative effect of depreciation as measured by the ABS is two per cent or greater.

2. Wage/Tax trade-off. The Government agrees to restore the value of the industrial wage by a tax cut from the first of September by reducing personal income tax by an amount equal to the after tax equivalent to a two per cent wage increase. The operating date of September 1 will provide the opportunity for the easing of poverty traps, within the context of responsible fiscal policy.

3. Tax Reform. It is recognised that tax reform will continue to establish a fairer income tax base and prevent the further development of practices which are destroying both the tax system an the basis of an equitable incomes policy.

4. Superannuation. It is agreed that superannuation should be extended and improved on an industry by industry, occupation by occupation or, in limited circumstances, company by company basis.

The improvement should be offset against national productivity and be based, on a three per cent wage equivalent.

It is agreed that negotiations can proceed on superannuation on the above basis provided that the cost impact of new or improved arrangements except in very isolated circumstances will not occur before July 1 1986.

The parties are committed to the establishment of genuine superannuation. The government, after consultation with Employers and Unions, shall issue a set of guidelines covering: vesting, preservation, security, portability, contributions, and control.

These provisions shall be the basis upon which taxation concessions are provided for occupational superannuation.

Before the expiration of the current parliament the Government will legislate to:  establish a national safety net superannuation scheme to which employers will be required to contribute where they have failed to provide cover for their employees under an appropriate scheme.

 provide for superannuation changes, particularly vesting, consistent with the productivity case to its own employees.

5. Prices. In the context of a bouyant economy and the induced price effects of price restraint consistent with the wage restraint embodied in this agreement so that all sections of the community share the burden of adjustment.

The Government will not support pricing policies which exceed general movements in unit costs, and will instruct the Prices Surveillance Authority accordingly.

The Government will consider the concerns expressed by the National Companies and Securities Commission regarding the inadequacy of appropriate criteria for the measurement of profits and the absence of agreement on a voluntary standard with the Accountancy profession.

6. Wage Fixing Principles.

Both parties will support amendments to the current wage fixing principles in the following respects: allowing claims for reduction of standard hours to 38 to be arbitrated; o a special review of the problems associated with the differences between paid rates and minimum rates awards, including the issues of supplementary payments and the making of paid rates awards.

7. Industry Development. The ACTU and the Government recognise that maintaining high levels of growth on a continuous basis requires policies which will enable industries to increase their market shares both at home and abroad. Such policies should focus on import replacement and exports in the capital goods sector.

The Government will draw from the planned meetings on heavy engineering to develop a capital goods investment strategy.

8. Accord Processes. The above provisions have been developed through discussions within the framework of the Accord.. Consistent with that framework it remains open to either party to raise for discussion any major difficulty which may emerge.

Congress endorses the proposed Agreement between the Government and the ACTU regarding implementation of the Accord.

The Agreement draws together from the Accord the critical issues for the next two-year period and integrates them into a programme of implementation which will underlie the achievement of major economic goals within the framework of the Accord.

The proposed Agreement –

 guarantees the maintenance of real wages through the interaction of wage indexation and taxation cuts;  provides for the improvement in living standards through the distribution of national productivity in the form of extending or improving superannuation schemes;  recognises the need for tax reform to achieve a fairer income tax base;.  proposes that the Government instruct the Prices Surveillance Authority that it will not support pricing policies which exceed movements in unit costs;  seeks to explore means of addressing inadequate and inconsistent profit measurements;  supports specific changes to wage fixing principles  provision of a reduction of standards hours to 38 by arbitration; a special review of the problems associated with the difference between paid rates and minimum rates Awards, including the issues of supplementary payments and the making of paid rates awards. recognises the importance of developing policies which focus on growth in import replacement and exports in the capital goods sector. As such the implementation of the Agreement:

 meets the fundamental requirement of the trade union movement that living standards should be maintained and overtime increased in line with national productivity.  the growth rates necessary to achieve these outcomes will be assisted through the stability and certainty offered by the totality of the strategy.  critical social welfare priorities wit ' h respect to alleviation of poverty traps have been addressed.  places great emphasis on containing price increases.  offers potential to develop continuous growth from the important producer goods industry which thus generates  jobs.

The ACTU in accepting the Agreement notes –

The ACTU has the right to pursue further amendments to the wage fixing principles, consistent with the Statement on Wages and Working Conditions.

That the Agreement is based on the understanding that the tax cut and its timing will not mean a reduction in real Government expenditure.

That the ACTU will be able to review wage rates if the share of profit increases in the current circumstances of growth on a continuous and measurable basis.

While the agreement places new emphasis on the need for price restraint this emphasis must be given practical effect by the Government. Prices, particularly those which effect the day to day lives of people must be monitored. The price fixers who impose increased burdens on the community should be effectively and publicly exposed by providing sufficient additional resources to monitor price increases.

That in view of the windfall gains made by some employers arising from devaluation that further consideration should be given to ensuring that windfall gains are shared equitably amongst the community, including the need for such gains to be allocated to increased employment.

That the Agreement must be implemented in all aspects to ensure that the expectation outlined in this resolution are fulfilled within the two year period.

That the protection of security of employment and redevelopment of industry to create jobs is an integral element in the on-going development of the Accord.

The need for Government to maintain regulation of housing interest rates. Congress condemns the introduction of Mortgage Servicing charges which have been introduced by most institutions. The charges are nothing more than a method for circumventing the existing ceiling for mortgage interest rates and pose a significant and unfair financial burden on Australian workers and their families which was not envisaged in the proposal for a New Accord. Congress calls on the Federal Government and where appropriate State Governments to seek the removal of such charges. That it is vital to ensure that all workers receive the benefit of the 3% wage equivalent productivity adjustment. To this end the ACTU will liaise with unions and co-ordinate a campaign, consistent with the Agreement, to ensure that this objective is met.

In the implementation of this Agreement, the ACTU Executive with its State Branches shall ensure that all State Government employees and State Statutory Authority employees receive superannuation improvements to existing schemes and the establishment of superannuation schemes where they have not previously applied consistent with the productivity case outcome. The intervention of the Federal Government shall be sought in order to bring about the implementation of the Agreement, as necessary. Congress believes that an essential ingredient in negotiations between the parties to the Accord is the involvement of the affiliates in that process. Congress therefore determines that, in future negotiations of this nature that the Government understand that every endeavour should be made to allow affiliates to consult members on proposed agreements before the final decision is made.

Congress believes that given the nature of the Agreement it is vital that attempts by employers to reduce wages and working conditions particularly in State Tribunals be resisted. The Union effected together with the ACTU, and with the support of the Federal Government should seek to protect such conditions by pursuing the principle of no reductions in wages or working conditions.

The ACTU Executive shall have the responsibility of development and implementation of a campaign to implement the Accord. In this regard union groups shall meet regularly to assist in the above task.

The ACTU, and State Branches will develop implementation strategies and enter into negotiations with State Governments to ensure that the elements of the Accord which are the responsibility of State Governments are effectively implemented or adhered to.

In adopting this Agreement Congress calls on each affiliate to ensure that this decision and the reasons behind it be conveyed to members and calls on each State Branch and TUTA to make all necessary arrangements to assist affiliates in communicating with members.