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Free-for-all best option
letter published in The Australian Financial Review, 5 May 2009

Alan Mitchell points out that, in addition to the size of any budget  stimulus,  the Rudd Government faces numerous other policy questions "as the recession grinds on" ("Stimulus size will be under scrutiny", Economic Briefing, May4).

He questions, however,  the suggestion by Monash University's Peter Dixon and Maureen Rimmer of a negotiated real wage restraint in return for tax cuts.

Particularly given the differences in circumstances, any idea of a return to the days of the Accord of the 1980s must surely be out. Even so, there is much to be said for the Dixon/Rimmer argument  that "any given level of employment growth can be maintained only if the real costs of employing labour are reduced". Indeed, having regard to the halt in employment growth in the last three months, any significant growth in the foreseeable future seems unlikely without such a reduction.

The best option must surely be to suspend the introduction of the Fair Work Act (and any remnants of  the Workplace Relations Act), leaving employers and employees free to negotiate terms and conditions that take account of changes in competitive conditions.

Des Moore
Director, Institute for Private Enterprise
South Yarra Vic

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