Dispatches From the Moderate Left

Friday, November 04, 2005

What A Week

Wow, what a crazy week in politics it's been. It's hard not to get a little conspiracy-minded about some of it, with Howard announcing an extremely non-specific major terror alert which just so happened to coincide with the day controversial anti-terrorism laws were tabled and subsequently rushed through. I'm not sure how, exactly, making this announcement helps law enforcement, or how announcing to the possible bad guys that we're coming after them fits with the whole secrecy provisions of the new laws, but I guess we're not meant to know such thing.

Oh, and the 600-odd pages of new Industrial Relations laws were tabled at the same time and it's good to see that the government has given parliament and the public a completely adequate period of time to analyse and scrutinise these laws before they're passed. One week is more than enough, can't see why anyone would say otherwise. We had smiling people giving thums up to the camera in a saturation advertising campaign, what more do you need to know? Sheesh.

Unfortunately some extremely harsh exam scheduling (all my exams are over by the third day of the exam period) means I barely have enough time to read about these things, let alone analyse and write about them. I will pick up on one particuarly troubling aspect of the new IR laws though, one of those little details that somehow wasn't covered in those afore-mentioned ads. The factors which the increasingly Orwellian "Fair Pay Commission" has to take into account are these:
The bill specifies four "parameters" to guide the commission's decisions. It must focus on the employment prospects of unemployed and low-paid people, as well as "employment and competitiveness across the economy". It must set wages for junior, trainee and disabled workers that ensure that "they are competitive in the labour market".

All three parameters imply that it should keep wage rises low. The one parameter pointing the other way requires it to provide "a safety net for the low-paid". It is up to the commission to decide what that means.

That three of four factors are designed to keep wages low, and youth wages even lower than their current ridiculously low rate (AU$4.75 an hour anyone?), is troubling. But I think it's even more troubling that the minimum wage is being explicitely set at a "safety net" level. Maybe I'm just old-fashioned, but isn't that meant to be the job of the welfare system? Since when are our lowest paid full-time workers meant to be just scraping by, living of a flipping safety net??? I realise it happens already, I realise that we do have some casual working poor, but this is enshrining that notion in legislation.

And what of the effects of this on the welfare system? It hasn't been talked about very much, but if you start cutting real wages you have to cut welfare too. Real wages are almost certainly going to be cut - the "fair pay" commission isn't required to keep wages growing in line with the CPI, as the explanatory memorandum to the Bill kindly emphasises. At the very least, unemployment benefits won't be able to keep up with the CPI or else the effective marginal tax rates will become astronomically high (more than they already are). I don't think it's a stretch to predict that over the next little while, real wages for the lowest income earners will fall (I mean, that's the whole point of IR reform of this type) and then the government will "discover" a massive increase in EMTRs and be "forced" to cut back benefits to deal with this "unexpected crisis". I can't wait, really.


  • Just to play devil's advocate, since we have a safety net provided by the welfare system, why do we need a minimum wage?

    Doesn't the welfare system itself act as a defacto minimum wage by setting a minimum level of income an employer would need to replace before they can attract workers?

    By Blogger JP, at 8:55 PM  

  • Two problems with that. One is that we boot people off welfare if they don't accept a job that is offered to them, so at a practical level your idea doesn't work. Two, the moral principle I was getting at in my post is that someone who works 40 hrs/wk is entitled to more than a subsistence wage, more than a safety net and is entitled to some dignity. I do not believe that the social cost of providing a living wage to all workers outweighs the benefit of having a guaranteed level of dignity for those willing to do an honest weeks work.

    By Blogger Jeremy, at 8:47 PM  

  • I would prefer to have lower than living wages for unskilled workers, and be able to accept 100,000 unskilled workers a year into this country, than have a living wage for unskilled workers and the current "Smart Australia Policy" immigration scheme (which is really a jumped up "White Australia Policy" where the skill requirements replace the old language test).

    By Blogger JP, at 12:49 PM  

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