ARBITRATION COURT RESERVES DECISION

Press, Volume CVIII, Issue 31740, 25 July 1968, Page 22

ARBITRATION COURT RESERVES DECISION

(New Zealand Press Association)

WELLINGTON, July 24.

The Arbitration Court today reserved its decision on the joint application for a general wage order. The hearing of the first application to be endorsed by the Employers’ Federation began at 10 a.m. and finished at 4 p.m.

Retail prices had increased by 10.2 per cent in the two years since the quarter ended June, 1966, the Court was told by the president of the Federation of Labour (Mr T. E. Skinner).

Mr Skinner asked the Court to increase wages “as the Court thinks just and equitable on the facts submitted to it.”

The application was heard by the judge of the court, Judge A. P. Blair. With him are the employers’ and workers’ members of the court, Mr W. N. Hewitt and Mr A. B. Grant. Mr Skinner said:

We ask the Court to take note of the present position of wage and salary-earners in relation to the cost of living, which continues to rise, and also in relation to the over-all state of the economy. On both grounds we believe that there is a case for a general wage increase, which would not only help to restore the standards of workers, but would also be beneficial to the economy as a whole. The statistics show that retail prices have risen in the last two years by 10.2 per cent and there has been no compensation for this in wage rates.

As the Court has pointed out previously, increases in living costs do not constitute grounds for increases in wage rates decided in the negotiation of individual awards, and are dealt with only by way of general orders. ‘Not Expected’ The balance of payments situation which was such a prominent factor in the last hearing, has changed to an extent which was not expected by anyone.

The Minister of Finance has said that the achievement of a surplus on current account has come about in half the time which had been anticipated. In the circumstances, we ask that the Court should, in justice and equity, make an order increasing wage rates to restore living standards and to stimulate the economy.

Mr Skinner said that he would not make submissions on the scale usual for past applications because the application had the endorsement of the Employers’ Federation, and the Court had recently heard lengthy discussions of matters covered by the criteria set out in the regulations.

A great deal of statistical and other factual material was submitted to the Court at the last general wage order hearing and it appeared sufficient that this should be brought up to date for this hearing without repetition of

the arguments of the last hearing. Mr Skinner said that the Government Statistician, Mr J. V. T. Baker, had provided supplementary tables of statistics which extended the information provided at the last hearing to the latest available dates. Highest For June

Mr Skinner told the Court that the Reserve Bank’s latest monthly statement of overseas exchange transactions showed that the receipts for exports in the year ended June last was the highest yet recorded for a June year and disclosed that there was a surplus of $37.3m in current account transactions during the year. The latest statistics showed that there had been a fall in both production and employment and a consequent reduction in productivity.

Mr Skinner cited the following figures which were an addition to those in the federation’s earlier case for a general order. They showed that manufacturing production had fallen by 2 per cent compared with an over-all reduction of 1.3 per cent in total production.

The statistics support the suggestion that a measure of reflation was necessary to stimulate the economy and to prevent an accelerating run-down of production and a growing amount of unemployment New Zealand’s wool stocks at present in storage were “money in the bank,” said Mr Skinner. Two Advances The marked improvement in New Zealand’s economic position had allowed the repayment of large overseas advances, he said. The summary of balances shown in his submissions to the Court did not include the recent repayment by New Zealand of two advances of $31.25m each. These had been paid off before the due date—an indication of an improvement in New Zealand’s economic situation much in excess of what the Minister of Finance expected.

Since the Court heard the Federation of Labour’s application for a 7.6 per cent general wage order, significant changes in official statistics were available that provided new material warranting the Court making a general wage order, the employers’ advo-

'cate, Mr P. J. Luxford, said today. He was supporting the F.O.L. in asking the Court for a “just and equitable” general wage increase. Mr Luxford declared that “there is growing evidence that the erosion of effective wages has begun to undermine the morale of the labour force and thereby reduce the efficiency of operation. “This in turn is reacting adversely towards achieving that level of economic activity and output which best serves economic stability, the promotion of which is the purpose of the Economic Stabilisation Act, 1948.” Mr Luxford said that since the Court’s decision not to make a general order, four major reviews of the country’s economy had been published.

Present Application They were relevant to the present application in that they provided more recent official and semi-official assessments of the state of the economy than were available at the earlier hearing. “These reviews provide new material sufficient to warrant the Court reaching a different decision upon the present application,” said Mr Luxford. The four reviews were the latest report of the Monetary and Economic Council, the quarterly prediction of the Institute of Economic Research, the Minister of Finance’s economic review, and the 1968 Budget. Mr Luxford said: “We are conscious that in the earlier proceedings our submissions very strongly opposed the making of any general order and that they were substantially upheld by the Court

“The evidence then available supported the submissions which we made; and in now endorsing an application for a general order for such increase as the Court thinks just and equitable we have fully taken into account the many factors referred to in the present submissions. “It is essential that the country’s efforts be directed towards increasing production and productivity, and if these are achieved considerable progress will have been made towards restoring that level of economic activity and output which best serves economic stability. “The Court will also be aware that very soon after its decision was released Government decided to increase practically all social security benefits by 50c a week for single beneficiaries, and by $1 a week for married couples. These represented increases up to approximately 4J per cent. Farming Income An estimate of a 13 per cent increase in farming income in New Zealand for the current year was backed today by Mr Baker. The forecast for 1968-69 compared with the previous year had been made by the Institute of Economic Research.

A large part of this increase would be directly attributable to devaluation, said the institute in a quar-

terly prediction on national income and expenditure. A witness called by Federated Farmers, the director of the economic section of the Department of Agriculture, Mr J. V. White, painted a gloomy future for New Zealand’s dairy produce. He said it was meeting excessively stimulated production from subsidy-supported cows in Europe and protectionist tactics from the United States.

Production was increasing with Common Market political subsidies to their peasant farmer communities, and consumption was decreasing in the United States he said. Even in Britain, returns would be dragged down by the lower prices from outside markets, mostly East Europe, be said. Latest Information The Court should consider the latest information on the state of the primary industries along with other data on the nation's economic health, the general secretary of Federated Farmers, Mr J. G. Pryde, submitted. “As we see it the state of the country’s economic health must be the ultimate arbiter of incomes in our economy," he said.

Recapitulating the points made before the Court in April and giving additional evidence available since April 4, Mr Pryde said there was little indication of any significant rise in wool prices in the 1968-69 season with the exception of the predictions of the Institute of Economic Research. However, the institute had sdid its figures were subject to important qualifications. External Debt There had been a Welcome improvement in the current account position in the balance of payments but it would be unwise to read too much into this recovery because there was a great deal of external debt maturing in the next few years. Also, the price expectations for some exports were poor. The effects of devaluation would not be continuous. In his final brief submission, Mr Skinner said that the membership of the sheepfarming section of the Federated Farmers was 351, and there were 154 members of the dairy section. This made a total of 505 out of 75,000 farmers and farm managers in the countiy. There were no other final submissions made, and Mr Skinner asked the Court to give a decision as early as possible.