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Hawke wins business and union backing at economic summit

Prime Minister Robert Hawke's Australian economic summit last week - drawing together the nation's top businessmen, union leaders, government officials, and interest groups - was as successful as it was novel.

Never before has a prime minister attempted to bring the usually warring factions of big business and the trade unions together.

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But Mr. Hawke did it, and the result was that both camps gave a stamp of approval to his economic plans.

The summit agreed to the new prime minister's plan to reduce inflation, stop the spiral of unemployment that has hit Australia over the past year, and prepare the way for economic recovery.

Hawke never doubted the summit would succeed. He has spent years advocating such discussions. But few others anticipated it would go so well.

Part of the basis for the talks was a wage-and-price plan hammered out by the Australian Council of Trade Unions (ACTU) and the Labor Party, under which the unions promised to moderate wage demands if a Labor government kept the lid on prices.

Liberals - the party of business interests - had described the plan as meaningless in the March election campaign. But at the summit business leaders wound up giving a sort of endorsement to the plan after union leaders promised not to demand new wage increases to compensate for the six-month wage pause instituted by the Liberals at the start of 1983.

By the end of the conference, business interests were prepared to allow the government to establish a prices surveillance authority. They agreed that business directors' fees and dividends should not be increased out of line with wages. They also agreed that professional fees for lawyers, doctors, and accountants should be kept under review, and that taxes might have to rise.

The sole note of disagreement at the conference was provided by Queensland Premier Joh Bjelke-Petersen, who as one of just two Conservative state premiers in Australia sees his role as guardian of ''free enterprise.''

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He warned the senior executives of the largest corporations in Australia that they were ''putting their heads in a noose.'' He said that in agreeing to the conference communique, they were giving the new labor government a ''blank check.''

Businessmen responded by making it plain they would have preferred other strategies to the government's, but at the same time they accepted the need for wider support for a government economic plan.

At this point, the economic plan to be adopted by the government appears to involve a small wage increase of about 3 percent later this year and a substantial increase in the federal budget deficit (from about $4 billion this year, to some $8.5 or 9 billion next year) to boost housing, construction, and public works.

The government expects inflation to fall dramatically, from about 11 percent at present to about 6 percent by the end of the year, with further falls to follow.

Unemployment is expected to increase slightly, from about 11 percent to 12 or 13 percent, before falling in 18 months' time.

The government has decided to create an economic planning advisory council with a mix of government, business, and union representation to monitor economic developments and provide advice. Business supports this step, and one leader said that business would be prepared to pay some of its costs.

Following the summit, Prime Minister Hawke said he had hopes that Australian economic recovery could proceed faster than was predicted at the summit. He pointed to external factors such as some signals that show the American and Japanese economies are improving, and because of renewed confidence created by the summit itself.

The achievements of the summit are regarded in Australia as remarkable partly because of the class nature of Australian political parties. The Labor Party was created to represent trade union interests, while the Liberals have been the party of business - generally big business. The National Party (formerly the Country Party), which often serves in coalitions with the Liberals, represents farmers and graziers.

All parties have sought to attract the middle class, but none has ever attempted to bring all the interests together in the way Hawke sought to do at this economic summit.

Several of Australia's most important corporate executives expressed the view that the summit had made them realize that the trade union leaders ''did not have horns'' and that their arguments had to be listened to. Many intend to take a greater personal interest in labor relations within their companies.

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