Red Rag

Mark Bahnisch beat me to the AIRC’s last safety net adjustment, pointing out that the Howard Government’s

justification for the new Low Pay Commission is that the AIRC ignores economics and ignores effects on employment. If you actually read the Safety Net Decision, both these claims are unsustainable.

[…]

Any fair reading of the report will indicate that the claims made by the Government that the Commission does not address itself to rigorous work in labour economics … are wholly untrue.

Apparently, “[t]he Federal Government didn’t send a representative to the hearing” — could this be yet another example of turning a deaf ear to inconvenient facts?

If the Beazley ALP hadn’t gone into hibernation for the winter, the safety net adjustment could have presented them with a real opportunity to give Howard a hiding on a number of related issues.

 
Low Pay Commission

First, on the Low Pay Commission. Everyone knows the real reason the Government opposes the AIRC and the safety net adjustment: it increases wages. That’s why no Government representative was at the hearing — they’re scared of being asked to comment on the outcome.

Initially, they let the business lobby speak on their behalf. Alison Caldwell’s report captured this nicely: “The Federal Government didn’t send a representative to the hearing. The Australian Chamber of Commerce and Industry was there.” Then, when the Minister was cornered, he refused to state the obvious:

ALEXANDRA KIRK: The Government argued for an $11 a week increase but Mr Andrews won’t say what he thinks about today’s decision by the Industrial Relations Commission.

[…]

REPORTER: So what do you actually think of it? Is it too much?

KEVIN ANDREWS: Look, I’m not going to comment on the actual decision itself – that was a matter for the Industrial Relations Commission. All I’m saying is that in future, we propose that there will be a new body setting the minimum wages in Australia…

Labor and the ACTU recognise this as a chink in the Government’s armour. When refusing to promise not to cut wages, Howard has repeatedly insisted, “My guarantee is my record.” Stephen Smith is happy to remind people of that record:

If the Government’s attitude had prevailed over the commission, since the Government came to office, when you include this decision, people on the minimum wage would no be $50 a week or $2,600 a year worse off.

So is Greg Combet:

If you look back over the last 8 years, if the Howard Government had had its way, then low paid workers would have been $50 a week worse off — that is $2500 a year worse off.

It’s a simple message, but it’s powerful because it betrays the Government’s real reason for replacing the AIRC.

 
Tax cuts

The safety net case also presents Labor with an opportunity on tax cuts. The Australian regularly attacks the high effective marginal tax rates suffered by low income earners, and every time the minimum wage is raised the paper criticises it (with some justification) for being illusory. This year is no exception, but there’s a slight twist — the AIRC, which according to The Oz (and Howard) “lacks economic rigour”, has picked up their argument and run with it:

The $17 pay rise for battlers on the minimum wage will disappear in three nasty steps if the family has one parent at home. The breadwinner will lose $5.10 in personal tax and another $68c in tax rebates. The mother will forfeit $11.90 a week in means-tested parenting payment because of the father’s higher pre-tax wage.

The AIRC conceded that some of its minimum wage increase would be clawed back by higher taxes and the loss of family benefits, but blamed the Government for this problem.

“To the extent that safety net increases have been denuded by the tax-transfer system, this is said to be a consequence of the commonwealth Government’s tax reforms,” the commission said.

At the same time the Government is pushing tax cuts for the wealthiest Australians, some minimum wage earners face an effective marginal tax rate of 104%.

This offers Labor a chance to re-enter the tax cuts debate, and to divert attention away from opposition tactics, towards the real issue — fairness. For many Australians, Peter Costello’s tax cuts are worthless. Labor would put some money in their pocket.

 
But will they make the most of it?

I doubt Labor will capitalise effectively on this opportunity. Stephen Smith’s been getting pretty good media mileage with his line about Howard’s record on the minimum wage, but Beazley looks asleep. He’s certainly far from his best — when a man famed for his vocabulary resorts to, “You don’t have to do this stickly, you can do it carrotly,” then there’s a problem somewhere.

But we’ll see. The IR proposals are so far-reaching that the media is holding its breath for a workplace backlash. Here’s an example of a report from last Saturday:

In its “fact sheet” the Government boasts: “Since 1996 workplace relations reform has delivered real wages increases of over 14 per cent.”

This is a porky of outrageously bold proportions.

The increase in real wages has been delivered by the rulings of the Australian Industrial Relations Commission in the very role that the Government is now abolishing. And the Government fought those increases tooth and nail.

In fact, if the Government’s submissions to the national wage case had been successful, the real wage increase would have been a princely 1.9 per cent over eight years.

As for not cutting wages in real terms, the Government went to the commission this year with a submission to do just that.

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If Mr Howard wants to be honest about his intentions, he should tell the Australian public the Government tried to have wages cut a few weeks ago but won’t do it any more.

He should explain how allowing contracts to disadvantage workers won’t disadvantage workers.

He should produce any independent assessment that defines a business with 100 employees as small.

And he should do it with a straight face.

The fact that this was in the Daily Telegraph (hardly Bolshie agitprop) shows just what an opportunity this is — if only Labor can wake up to take advantage of it.

Update: Tim Dunlop has more, including a neat graph that shows how the Government’s submission compares to the actual award.