Socialist Equality Party (Australia)
The Historical and International Foundations of the Socialist Equality Party (Australia)

The Accord and the Hawke-Keating Labor government

213. This powerful movement of the working class, along with the visible disintegration of the Fraser government, provided the impetus for behind-the-scenes preparations by the Labor and trade union leaderships for a so-called prices and incomes Accord. The Accord was an agreement between the trade union and Labor leadership for fixed wage increases, determined by the arbitration system. It committed the trade union leadership to suppress all additional wage demands outside this framework. This scheme for wage-cutting was accompanied by the claim—most assiduously promoted by the CPA Stalinists—that living standards would be maintained through increases in the “social wage”—additional social welfare and other benefits that a Labor government would provide.

214. The Accord was to form the programmatic centrepiece of the Hawke Labor government, which came to power in March 1983. The key lesson drawn by the Labor and trade union leaders from the 1975 Canberra coup was the need to have in place a mechanism for the suppression of the working class when Labor next came to power. As ACTU secretary Bill Kelty remarked, it had become clear “to unions and to some in the Labor Party that we really had squandered an opportunity with the Whitlam Labor government. Despite the fact that there were international pressures, we had really let it get away from us. The result was that in economic management the Labor government did not have a good record and the unions appeared uncooperative. A number of unions were determined not to squander an opportunity again.”[1] The Labor Party could not make these preparations alone—it needed the help of the various Stalinist parties, both in devising the Accord and then implementing it. The final document was actually drafted by leading members of the Communist Party of Australia and carried into the union movement by CPA officials, together with the Maoist and pro-Moscow parties, whose leading members held key positions in some of the largest and most militant unions.

215. The Accord was not only a means for suppressing the kind of wages struggles that had developed under Whitlam. It was aimed at breaking up every form of independent working class organisation in order to create the framework for intensified exploitation and the driving down of social conditions. On February 3, 1983, the very day Prime Minister Fraser called an early election, Hawke, who had entered parliament in 1980, was installed as Labor leader after Bill Hayden was removed through an executive coup. Hawke was elevated to the post because his close connections to big business on the one hand, and his relationship with the trade union bureaucracy on the other, meant he was uniquely placed to implement the Accord. Nine days later, the unions adopted the Accord at a special conference.

216. The ALP won a landslide election on March 5, 1983. Five weeks later, before parliament had been convened, Hawke’s first act as prime minister was to preside over a four-day summit comprising employer, union and government representatives in the House of Representatives chamber. Opening the conference ACTU secretary Kelty declared: “Let me say openly to those employers who sometimes misunderstand the perceptions of the trade union movement that we accept that enterprises need to make profit, and, in the current environment, may require profit increases to establish increased employment.” Hawke later commented that the summit “took the employers somewhat by surprise for they were not quite used to the idea of trade union leaders agreeing to wage restraint, let alone urging it.” The unions’ pledge was delivered. In the first four years of the Accord average real earnings fell by 4.2 percent. Over the entire period of the Hawke-Keating government the annual real percentage increase per employee was slightly less than zero, compared to more than 4 percent under the Whitlam government and slightly less than 2 percent under the Fraser government.

217. The rush to finalise the Accord was driven by international developments. In December 1983 the Labor government decided to float the Australian dollar. Under the Bretton Woods system, the value of the Australian currency had been fixed against the US dollar and the British pound, and thereby to all major currencies. After the system collapsed in 1971, the value of the Australian dollar was periodically adjusted by the Reserve Bank, through its interventions into global currency markets. But by the early 1980s, this was rendered impossible by a vast increase in the flows of international finance. No single bank or regulatory authority could counter such movements. The Australian dollar’s float had far-reaching consequences. It removed one of the central foundations of the system of national economic regulation that had underpinned the economic program of every government since federation. The huge daily global flows of finance and capital now imposed their own demands on governments in every country, each of which was driven to ensure its own national economy remained “internationally competitive.” In response to the transformation in the world economy, the Labor government and the unions worked to further develop the Accord. Simply suppressing wages was no longer sufficient. Working conditions and relationships developed under the system of national regulation had to be broken up and productivity continually increased to meet the new demands of international capital. The unions took on the task with gusto. No longer was their role to seek limited concessions that would advance the social position of their members. It was now to impose productivity increases dictated by the pressure of global competition. Outlining the new perspective in the document Australia Reconstructed, adopted at the 1987 ACTU Congress, Kelty wrote: “Structural change and the promotion of a productive culture are necessary to enhance our international competitiveness. We are about nothing less than the reconstruction of Australia. These are historic times. Our future is increasingly tied to the rest of the world. Many other countries faced with similar challenges are ‘internationalising’ apace. Understanding and responding to the international pressures is a national requirement—a requirement to which the unions must contribute.”[2] In other words, trade unions would become the central mechanism for boosting profits.

218. Time and again throughout the 1980s workers entered into struggles to defend their wages and conditions, only to be isolated and betrayed by their union leaderships. Each defeat—from the dismantling of the builders labourers’ union in 1984–85 and the sacking of the SEQEB workers, to the Robe River mining dispute in 1986—marked the starting point for a new offensive, culminating in the use of the armed forces to break the pilots’ strike in 1989, with the enthusiastic support of the ACTU and the entire trade union bureaucracy. At the same time a deliberate policy was instituted of breaking up workplaces and shutting down factories that employed large numbers of workers with a history of militant struggle. In those that remained open, shop committees and other forms of organisation were either destroyed or turned into pliant instruments of management. Any semblance of democracy inside the unions was abolished and militant workers victimised. The Labor government’s privatisation program resulted in the handover of public assets to corporate owners, much to the benefit of the banks and financial firms that organised the deals. Social infrastructure was increasingly privatised and the practice of user pays extended. In short, the program initiated in the US by Reagan and in Britain under Thatcher was carried out in Australia by the Hawke-Keating Labor government, with the full collaboration of the trade unions.

219. The “economic restructuring” orchestrated by the Labor government led to widening social inequality. In the decade 1986–96, the average real income of the bottom 40 percent of households fell by around $98 per week. In the 30 years following World War II, real wages increased, on average, by 2–3 percent per year. After 1975 this growth stopped, so that by 1995, real wages were between 30 and 50 percent lower than they would have been had they continued at the previous rate. There was a massive redistribution of income away from wages towards profits. In 1975, at the peak of the post-war boom, the share of wages in national income was 62.4 percent. By 1992 it had dropped to 56 percent and by 2008 to 53 percent.


Edna Carew, Keating: a biography, Allen & Unwin, Sydney, 1988, p. 72.


Nick Beams, Industrial relations and the trade unions under Labor: from Whitlam to Rudd, Socialist Equality Party, Bankstown, Australia, 2007, p. 12.