Academic journal article The Economic and Labour Relations Review : ELRR

The Accord: An Assessment

Academic journal article The Economic and Labour Relations Review : ELRR

The Accord: An Assessment

Article excerpt

"Oh wad some POW'R the giftie gie us, To see ourselves as others see us!" (Robert Burns)

1. Introduction

In the first six months of 1990, Australia has been graced by the presence of the Professor of Industrial Relations from Cambridge University, the Professor of Industrial Relations from the London School of Economics and a senior Fellow in economics from Oxford University, all of whom have been here to study the Accord from one perspective or another. There is tittle doubt that, in international terms, the Accord has attracted a great deal of attention and a degree of critical acclaim, as my quotation from Robert Bums is designed to indicate. There is also little doubt that, in the eyes of the principal begetters of the policy, it is a major success.

Given this international acclaim, and the general satisfaction of the "parents" with their "offspring", it may seem somewhat surprising that some practitioners and academic commentators in Australia are still debating the question of whether or not the Accord is a "success". This paper attempts to provide a set of guidelines for an objective and critical assessment of the Accord. These guidelines are drawn from the extensive post war literature on prices and incomes policies; the criteria and the appropriate methodology for assessing any incomes policy are well specified within the corpus of economics, and it is only by applying these recognised criteria that we can hope to assess the success or otherwise of a particular prices and incomes policy.

The paper is organised as follows. The first section outlines what criteria should be used to assess the Accord on its own terms. I draw from the Accord its principal objectives and assess its performance against these objectives.

The second position looks at the established literature on prices and incomes policies prior to the commencement of the Australian experiment. This literature provides a set of criteria for assessing the Accord. Such an assessment is "internal" to the discipline of economics. This assessment is particularly important because it helps us see the prices and incomes Accord as one example of a long tradition of similar policy interventions. This Australian example is particularly important because, in many ways, it has produced results which turn the conventional wisdom on the efficacy of prices and incomes policies on its head.

Following this, there is a section on the aspects of the prices and incomes Accord which have only evolved "through time". This section looks at initiatives under the broad umbrella of the Accord document which were only tangentially dealt with in the original Accord blueprint The next section deals with areas of concern or "problems" which various commentators have raised with the Accord framework.

The final section attempts to draw some tentative conclusions and provide an overall assessment of the prices and incomes Accord.

2. Has the Accord Achieved What It Set Out to Achieve?

On the first two pages of the original Accord document (ACTU 1983) we can find the simplest and most direct statement of the prime objective of the prices and incomes Accord. The principal or prime objective of the Accord is the achievement of "full employment" without imparting an inflationary bias to the economy, while pursuing sustained economic growth:

... Both organisations have seen fit to try to develop a mutually agreed policy on prices and incomes in Australia for implementation by a Labor Government. Such a policy offers by far the best prospect of enabling Australia to experience prolonged higher rates of economic and employment growth, and accompanying growth in living standards, without incurring the circumscribing penalty of higher inflation, by providing for resolution of conflicting income claims at lower levels of inflation than would otherwise be the case. With inflation control being achieved in this way, budgetary and monetary policies may be responsibly set to promote economic and employment growth, thus enabling unemployment to be reduced and living standards to rise. …

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