Longer-term prospects for growth are also good, and are helped by the ongoing fiscal consolidation confirmed in the recent Budget. At the same time, this growth does not seem likely to put upward pressure on inflation in the next year or two. Such a judgment, however, also depends on the longer-term outlook for inflation, and here domestic costs, particularly wages, become a key consideration. Recently, this has been an area of some uncertainty as the data have been difficult to interpret and subject to revision. Recent decisions by the Industrial Relations Commission, particularly the Safety-Net Review, have helped in this respect, and removed one factor which could have pushed up aggregate wages.
Increases obtained in enterprise bargains appear to have moderated slightly in recent quarters.
The results of the survey of average weekly earnings, particularly ordinary-time earnings in the latest figures, seem to be consistent with the maintenance of a satisfactory inflation performance. In the private sector, earnings growth appears to be a little below that. Our overall assessment of wage bargaining still recognises that some settlements remain higher than seems likely to be sustainable over the longer term. Pay settlements of 5 per cent, except in unusual circumstances, are likely to be too high, given our level of unemployment. All rights reserved.