To the surprise of many, the Rudd Government has followed the lead of the Howard Government in 2006 and 2007 and has not nominated a figure in its submissions to the Australian Fair Pay Commission's review of minimum wages.
More surprisingly, the Commonwealth's principal submissions do not engage in the ongoing debate about tax cuts and the maintenance of real wages. Some may say they contain a 'nod and a wink' for the Fair Pay Commission to discount real wage increases.
About one in ten Australian workers depend on the safety net minimum wages set by the Fair Pay Commission. They are low paid workers who are unable to bargain for higher wage rates. What the Fair Pay Commission decides has a major impact on them and their families. They are the battlers at the needy end of the 'working families' spectrum.
The Fair Pay Commission needs to determine whether the real wages of the most disadvantaged workers in Australia should be increased, reduced or maintained, and whether tax cuts for the low paid should reduce the increase in wage rates.
However before it starts to answer these questions it should remember that for a single-income family of four, including two school-aged children, the federal minimum wage of $522.12 per week yields a disposable income, after tax and transfer payments, of $755 per week. Parents cannot raise and educate children on $755 per week. The maintenance of the real value of the federal minimum wage requires an increase of $21.93 per week.
Despite the fundamental strength of the Australian economy, some organisations have urged the Fair Pay Commission to reduce the real value of safety net wages as a means of controlling inflationary pressures. They have pointed to the tax cuts that will come into effect in July 2008 and argue for an increase of only $10 per week.
These tax cuts are of vital importance to low income workers and their families, but they are modest. Workers on the federal minimum wage will receive a tax cut of $8.65 per week. For workers on $35,000 to $45,000 a year, the tax cut will be $20.19 a week. So a worker on the federal minimum wage will receive proportionately less tax relief than higher paid workers who do not depend on the wages safety net.
Low paid workers did not get any special treatment from the 2008 Budget. They have been relatively disadvantaged by the tax cuts.
Let us be clear. The tax cuts were promised as a real benefit by both sides in the recent election campaign. Just think what would have happened if one side had even hinted they might be taken away from some working families by way of reduced wage increases.
In his Budget speech, Treasurer Wayne Swan declared: 'For too long, working families have watched the proceeds of the boom directed elsewhere, in the form of tax cuts skewed to those already doing very well. Tonight we tip the scales in favour of working families.'
Furthermore, the Government's post-Budget submissions refer to the tax cuts and various other budgetary changes which apply to a range of income groups and propose that the low paid 'should receive an appropriate increase in minimum wages'.
The discounting of wage increases by the Fair Pay Commission would tip the scales against the most disadvantaged working families. The Commonwealth Government must take a public and principled stand on the tax cuts issue and formally communicate it to the Fair Pay Commission.
More than that, it also needs to take a stand on the real wage issue. Consistent with its social inclusion policy, the Commonwealth should state that the real value of the wage safety net for low paid workers should be maintained.
LINK:
Australian Fair Pay Commission
Brian Lawrence is the author of Workplace Relations: A Catholic Perspective, published by the Australian Catholic Council for Employment Relations (ACCER). This article is extracted from a longer paper that is available here in the website of the Australian Catholic Commission for Employment Relations.