No ‘cure-all in Australia’

Press, 25 September 1989, Page 9

No ‘cure-all in Australia’

PA Wellington The Australian experience represented no cureall for New Zealand, even though “we can learn much from Australia,” the Minister of Commerce, Mr Butcher, said yesterday. He has just returned from a meeting in Sydney of the Australian Industry and Technology Council. ' “The Australian wages policy, with its highlycentralised pay-fixing system has resulted in the airline pilots’ 30 per cent pay claim leading to a very damaging industrial dispute,” he said. “This is exacerbated by the fact that, unlike New Zealand, Australian airlines are guaranteed freedom from competition. Pilots’ jobs do not depend on winning and retaining customers, and the interests of customers have tended to be overlooked.”

Another factor was the huge balance of payments deficit of $2.6 -billion in a single month in Australia. “Despite the Federal Government’s huge budget surplus and the very high Australian interest

rates, which are now greater than those in New Zealand, the Australian economy seems to have a structural problem with too great a demand for imports,” Mr Butcher said. “It was significant that as I arrived a new $6O - million Government bounty for Kodak, a multi-national manufacturer, was announced. “Australia has made a great deal of progress in the reduction of protection and C.E.R. has been of great benefit to both nations. However, Australia has retained many of its industry assistance measures. There are bounties, tax breaks and subsidies at both the state and Federal levels.” Mr Butcher said he reported to his counterparts that the elimination of many of these measures

had the effect of increasing industry productivity, reducing the demand for capital equipment and inputs, and could contribute towards a greater balance in the trading accounts. “C.E.R. is providing a significant catalyst for removal of these damaging distortions. Much of the discussion at the A.I.T.C. centred around improvements in Government purchasing systems. This mirrored reforms that New Zealand introduced two years ago,” he said. “While the Australian economy still has the appearance of booming, there are many disquieting signs about. “It is certain that many of the Government’s critics have realised that this appearance of prosperity does not represent the panacea they once thought it did.”