In its 2014 Annual Wage Review decision the Fair Work Commission (FWC) decided that the 'appropriate reference household for the purposes of setting minimum wages is the single person household' (the single person benchmark).
This was the first time in more than a century of minimum wage setting in Australia that an industrial tribunal has decided that minimum wages should be set on that basis, thereby excluding considerations of the needs of the low paid with family responsibilities.
The legislation under which the FWC operates does not require the single person benchmark: it was a policy decision by the FWC for which no notice was given or reasons supplied. The Australian Catholic Council for Employment Relations (ACCER) has lodged submissions in the current wage review, arguing that the single person benchmark is contrary to law.
We need to see this development in the context of changes over the last four decades. In August 1973 a single breadwinner couple with two children, where the breadwinner was on the lowest minimum wage rate, had a disposable income of $58.50, of which 7.7 per cent came from transfer payments. The lowest minimum wage rate is now the National Minimum Wage (NMW).
By the time of the FWC’s decision in 2014 transfer payments accounted for 39.3 per cent of the NMW-dependent family's income, assuming the children were 8 and 12 years old and that the family was entitled to maximum rental assistance. In January 2015 transfer payments for this family were $380.59 per week. The increase in family payments had reduced reliance on the wage packet, but had not eliminated it.
On the face of it, the position of families should have improved. But this was not so because the value of the wage component relative to average wages has been declining for many years.
Changes in wages, taxes and transfers are reflected in poverty line comparisons. From January 2004 to January 2015, the NMW-dependent family of four fell further into poverty: from 3.3 per cent below the poverty line to 8.7 per cent below it, with a poverty gap in January 2015 of $91.91 per week. Over the same period the NMW-dependent single worker’s margin over the poverty line fell from 25.9 per cent to 15.8 per cent.
What was a manifestly inadequate wage in 2004 was a grossly inadequate wage by 2014 when the FWC adopted the single person benchmark. Families were deeper in poverty. The