Lessons of the Australian Prices and Incomes Accord

Former ACTU heads Bill Kelty (left) and Simon Crean (right), and former Labor PM Bob Hawke attend the Prices and Income Accord 30-year anniversary. Photo by Renee Nowytarger. Source: The Australian.

June 1, 2013 – Links International Journal of Socialist Renewal --The 30th anniversary of the Prices and Incomes Accord, signed by the Australian Labor Party federal government and the Australian Council of Trade Unions, has just been celebrated by the former employers, union officials and ALP politicians of the period. At the time, and again today, this class-collaborationist "social contract" was lauded as a tremendous step forward for workers and "the economy". The reality for Australian workers was the opposite and the lessons should never be forgotten.

Below is a talk presented to the political school of the South African Municipal Workers Union – in Durban in 2001 – by Norm Dixon, at the time editor of Green Left Weekly and a national executive member of the Democratic Socialist Perspective (since merged into the Socialist Alliance). It is excerpted from the SAMWU Political Education Book, 2002-03.

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For seven years, between 1975 and 1983, Australian workers suffered under the attacks of a union-bashing, conservative government that attempted to roll back the gains the labour movement had won in the early 1970s. While capital was able to claw back some gains – real wages were reduced – it was not sufficient to restore big business profit levels to that of the 1960s. Nor had the conservatives been able to defeat the labour movement sufficiently to allow the level of industry restructuring necessary to make Australian big business "internationally competitive".

Recognising that the conservative frontal attack had not worked, and fearing an economic upturn on the horizon in which the trade union's strength could see another shift in the share of national income to wages, Australia's capitalists sought to enlist the help of the Australian Labor Party (ALP) to achieve through cooperation what the conservative parties could not win through confrontation. Big business let it be known that it would be prepared to back an ALP victory if the party could deliver “wage restraint" from the unions. While the Accord was formulated as an alternative to the conservative parties' failed hard-line anti-union approach to industrial relations, the goal was the same: to reduce the share of national income going to wages and to boost the sharegoing to profits.

The Accord promised the "suppression of sectional priorities and demands" of workers and employers, in order to reduce unemployment and inflation. Despite its title, the text of the original Accord did not contain a commitment to control prices, only to the “surveillance" of prices. Wages, on the other hand, were to be regulated but, as the sugar-coating, full wage indexation was promised. (Wage indexation refers to the regular increase in wages in line with increases in inflation). Before the ALP was elected to government in 1983, it developed what became known as the Prices and Incomes Accord with the Australian Council of Trade Unions. Real wages would be maintained “over time", the Accord promised.

Under the Australia Labor Party accord, or alliance, with the Australian Council of Trade Unions, privatisation was willingly implemented. There were also promises to ease the tax burden on low and medium wage earners, to raise welfare payments and to boost the “social wage" (health, education and other public services. However, this last commitment, the document added, would “depend ... on the government's success in achieving a non-inflationary expansion of the economy".

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