Page 3843 - Week 12 - Wednesday, 19 October 2005

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The minimum wage is currently set by the independent Australian Industrial Relations Commission, as you would know, Mr Speaker. Submissions are made to the commission by stakeholders, including unions, employer groups and governments, on what level the wage should be set at. The commission bases its assessment on the test of a “living wage”—that is, what a person on the minimum wage would need to live. This test has been used in Australia for nearly 100 years, based on the High Court’s decision in the Harvester case, yet the federal government now wants to change this well-performing system. It is a proven system.

These reforms are sparked in part because in the past the federal government’s submissions have been repeatedly ignored by the commission. If the Australian Industrial Relations Commission had followed John Howard’s desires, the minimum wage today would be $50 less than it is. However, the federal government has now obviously decided that its past submissions were too generous, as the federal Minister for Employment and Workplace Relations recently suggested that the wage should be set at $70 less per week.

There is no doubting what is driving these reforms: a lower minimum wage. To this end, the government plans to create a new fair pay commission to set the minimum wage based on, in the words of the commission’s new chairman, “what will maximise economic prosperity for Australia”. This will replace the living wage test Australia has used for 100 years. I repeat those words: “what will maximise economic prosperity for Australia”. That is the prosperity of the entire country—fair enough—but what about the individual? What about whether or not people are able to afford to send their children on that extra excursion? What about whether or not they are able to get that little bit ahead? It is not easy, as Ms Gallagher has already said today, to live on the minimum wage.

This new commission will not sit until spring 2006, which means that the minimum wage will be frozen for 18 months. As Adele Horin suggested in the Sydney Morning Herald recently, there is a real chance that these changes will result in a “working poor”. Ms Horin rightly points out that we should be celebrating that we enjoy one of the highest minimums of the OECD countries. Our egalitarian spirit has ensured that all members of the work force receive a fair day’s wage for a fair day’s work. Instead, the federal government is seeking to slash this wage. In my opinion, this federal government is trying to do away with the long-held Australian concept of “a fair go”.

Some economists argue that lower wages will lead to more jobs. However, a recent study by James Galbraith, a US economist, has found that European countries with similarly egalitarian traditions, such as Norway and Denmark, also enjoy low unemployment. Similarly, an American study by David Card and Alan Krueger found no evidence that reducing minimum wages increased employment. These are ill-conceived policies, which will undoubtedly lead to a race to the bottom for workers’ pay and basic conditions.

One of the other mechanisms the government will use to reduce the minimum wage is to force more workers on to individual secret Australian workplace agreements. Despite the government’s spruiking the benefits of these contracts and the fact that many Commonwealth departments have forced new employees on to them, they represent only some 2.5 per cent of agreements. Currently, the Australian Industrial Relations Commission makes awards that cover certain specified classes of employees. The

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