Wednesday, March 13, 2019

Today by Paddy Manning

A referendum on wages
In a rich country like Australia, paying a living wage is not negotiable

AAP Image / David Crosling

Stagnant wages (and what to do about them) were always likely to feature heavily in this federal election. Opposition Leader Bill Shorten has kicked things along by declaring [$] that Labor, if elected, would rewrite the Fair Work Act and guidelines to force the Fair Work Commission to give greater weight to the needs of the low paid when making its annual minimum wage decision, to ensure that 2.3 million workers are paid a “living wage”. Treasurer Josh Frydenberg criticised Labor’s intervention, saying the minimum wage should be left to the commission as the independent industrial umpire. Sally McManus, today launching the ACTU’s minimum-wage submission, told RN Breakfast that John Howard had changed the rules for the umpire, which now had to take into account “a whole shopping list of issues” of which the needs of the low paid is just one, and that the system had never really recovered. The ACTU wants the rules tweaked, McManus said, so that the commission “should make a decision, independently, outside of politics, on what that living wage should be”. She said, “At the moment they’re restricted from doing that.”

At a press conference in Melbourne today, McManus said the current minimum wage was far too low at just under $38,000 a year, leaving many full-time workers in poverty. The ACTU submission is calling for a 10 per cent increase over the next two years to more than $41,000, and to ensure that the minimum wage is pegged to 60 per cent of the median wage – the OECD definition of relative poverty – from then on. “That is what’s needed in our country to stop us becoming like America, where full-time workers need a second job, just to make ends meet,” McManus said. “We need to turn around, and not follow the path of America, and restore the fair go. A living wage, a wage that full-time workers can live on, is the basis of a fair go in our country.” Labor has rejected linking the living wage to the median wage, leaving the debate up in the air.

Does a higher minimum wage lead to higher unemployment? The Australian columnist Judith Sloan this week picked up [$] on old research published by Labor’s shadow assistant treasurer, Andrew Leigh, when he was a professor of economics at ANU. This research found that “for every 1 per cent increase in minimum wages, we should expect a decline in employment of between 0.25 per cent and 0.4 per cent”. So for a 5 per cent increase to the minimum wage, Sloan wrote, we might expect 25,000 to 40,000 job losses, and we could presumably double that if minimum wages were to go up by 10 per cent, as the ACTU has urged today. It’s a fair point, if not quite a gotcha moment.

Asked about it, Leigh did not disavow the research paper but told me that he was modest enough to recognise that something he wrote 16 years ago is hardly likely to be definitive nowadays. “It’s one study of many,” he says, adding that more recent research shows that raising the minimum wage is “a good way to go”, and that any so-called disemployment effects are “quite small”.

What’s changed since he wrote that paper? One major factor is that competition in Australia’s economy has weakened, Leigh says, with fewer and larger firms exercising market dominance in sectors like telecommunications and media, energy, retail and manufacturing. “Wages are fundamentally driven by the competition between firms for workers,” Leigh argued in a recent speech. “Less competition means lower wages.”

It is hard to see where the Coalition’s arguments lead: more poverty? Higher reliance on “the tax and transfer system” (i.e,. welfare), as Sloan somewhat surprisingly appears to advocate? Luckily, an economists’ debate about the causes of wage stagnation is one thing. A referendum on wages is quite another, and the good thing is we all get to vote. In a rich country like Australia, paying a living wage should be non-negotiable, and I suspect a lot of voters will make that point at the ballot box.


“The economy is changing all the time in response to a large number of forces. Monetary policy is always having to analyse and assess these forces and their impact on the economy. But few of these forces have the scale, persistence and systemic risk of climate change … The physical impact of climate change and the transition are likely to have first-order economic effects.”

Addressing the Centre for Policy Development, RBA deputy governor Guy Debelle warns that climate change costs will need to be factored in when setting interest rates.

“For the Reserve Bank governor to be entering into the debate now, at a time when we have university students supporting a school-children’s strike to go 100 per cent renewable in Australia by 2030 is just part of the problem, especially at election time.”

ERM Power founder Trevor St Baker, who has put forward a proposal for the government’s subsidy scheme to build new coal-fired power stations, shows his true colours on RN Breakfast.

The Number

The number of years that disgraced Cardinal George Pell has been sentenced to spend in jail, with a non-parole period of three years and eight months, for the sexual abuse of two boys at St Patrick’s Cathedral in the 1990s.

The Policy

“Issues Most Important To You: Secure borders. Stop the Spread of Radical Gender Identity Politics. Defend Free Speech & Freedom of Religion. Stop Labor’s attack on Superannuation. Ensure Energy costs are reduced.”

The “policy” agenda of the conservative answer to GetUp, Advance Australia, according to a member survey released today.

The list

“The original manuscript of A Season on Earth was cut in half on original publication – at 142,000 words, it was regarded as simply too long. A Lifetime on Clouds was a critical success but commercially it didn’t warrant a follow-up. Publication of the second part of the novel was quietly dropped. Now that this excised half has been returned, we’re granted a fuller sense of Murnane’s original aims.” 


“‘It’s all about the money,’ is the assessment of one of [Christopher Pyne’s] colleagues. Certainly, as a member of the old parliamentarians’ retirement scheme – ditched in 2004 by John Howard under pressure from Labor’s then leader Mark Latham – Pyne is estimated to be looking at an annual pension of $172,196.35, based on the average of his senior ministers’ salary over the past three years.” 


“In my experience, at moments of extremity, you often become a person you know very well indeed. Whether you’re confronted by a kid who’s choking or by an adult in distress in the water, you follow a pattern, a script almost. Events swoop down upon you, unexpected but somehow not strange. The sudden, skin-prickling proximity to havoc is creepily familiar. And sometimes its arrival is no real surprise at all. Survivors of family violence talk about being able to sense the approach of savagery. Regular victims become hyper-vigilant.”


The Monthly invites readers to enter the draw for a chance to win one of 12 double passes to the 30th Alliance Française French Film Festival.

Tickets can be used for any festival session of your choice at selected cinemas in Sydney, Melbourne, Canberra, Perth, Brisbane, Hobart, Adelaide and Byron Bay, subject to Alliance Française’s terms and conditions.

Entries will close at 4pm AEDT on Thursday, March 14 and winners will be notified by 5pm AEDT on Friday, March 15.


Paddy Manning

Paddy Manning is contributing editor (politics) at The Monthly and has worked for the ABC, Fairfax, Crikey and The Australian. He is also the author of three books, including a recently updated unauthorised biography of Malcolm Turnbull, Born To Rule?


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