If ACTU’s right, let’s aim for a much higher minimum wage

The Australian, March 16, 2019

The minimum wage is currently $18.93 an hour, or $37,398 a year, and is not a “living wage”, apparently. It is more like a dying wage, probably, because anyone who earns it is living a miserable life not worth living, well below the poverty line, regardless of whether they live with other people who earn more, or whether they live in a regional town or a big city.

This is according to the superior wisdom of Sally McManus, federal secretary of the ACTU.

“Australia desperately needs a pay rise,” the ACTU website says. A pay rise — who can disagree? Our latest national account figures do show lower household spending, and this is because “a lack of fair pay rises is holding our economy back”. After all, wage ­increases for the lowest-paid “stimulate demand and can get our economy moving again”.

The ACTU wants to “close the gap” on income poverty by having the Fair Work Commission rule to lift the minimum wage by 10.7 per cent, or $72.80 a week, over the next two years, beginning with an increase of 6 per cent this year.

McManus says this change would lift all full-time working people out of poverty within two years, “while also stimulating spending and generating economic activity and growth”.

Let’s follow the logic, and ­accept the ACTU’s economic proposition. If all it takes to lift all full-time workers out of poverty, while giving the economy a much-needed shot in the arm, is for the Fair Work Commission to bang the gavel and order the minimum wage to be lifted, then let’s do this properly. Let’s set the minimum wage at $100,000 a year. Anything less would be mediocre and ­unambitious.

Also, there is no point in having lots of money but no time to spend it, and as the ACTU says: “When people on low incomes get pay rises they spend them in their local communities. This means more money circulating for small and medium businesses, as demand is stronger.”

True, one of the great quandaries in life is that whenever one seems flush with cash, one seems to be too busy working to enjoy it. If people on the minimum wage are going to suddenly find themselves income-rich but time-poor, then the economy isn’t going to be sufficiently stimulated, because no one will have the time to go shopping, buy cars or boats, or take holidays.

Australian workers are recognised globally as having a strictly limited number of ways to take paid time off work, set out under the National Employment Standards. There is only four weeks of annual leave a year, with a miserly extra week if one is a continuous shift worker. There is 10 days of personal leave, which used to be called sick leave back in the day, two days’ compassionate leave, and 18 weeks of parental leave paid at the minimum wage.

There are public holidays, which vary from state to state — but in Victoria, for example, there are only 13 a year. Finally, there is long service leave, which also ­varies, but averages almost nine weeks after 10 years of service, which is hardly anything.

The NES also provides for unpaid leave, which can be up to two years for parental leave, is unlimited when it comes to “community service leave” (as if unlimited amounts of time are time enough to do anything!), and finally, an extra five days for family and domestic violence leave.

Of course none of this includes any time taken off for unprotected industrial action, which is when employees get upset about something or other and walk off the job with no notice or permission. When this happens, employers do nothing at all about it, and rely on the government to chase their ­employees down and sue them.

As you can see, the leave system could benefit from consolidation. The commission should simply alter the NES to bundle all types of leave into one simple category, and make it all paid leave, titled simply “paid economic stimulation time”. The amount of time off work allocated to this ­activity, seeing as it is of crucial ­importance to our nation, should be substantially increased to, say, 52 weeks a year.

On a more serious note, absolutely no one wants anyone to live in poverty. I agree with the ACTU on the desired outcome, but believe in a different path to achieving it. The problem we have in Australia is not low wages but that the cost of living is out of control. Australia is so expensive now that it is quite outrageous.

We are so expensive because we have three levels of government gouging us at every turn with direct and indirect taxation, and too much regulation. The best way to help the poor, and indeed everyone else, is to reduce the burden of the inflated and inefficient state on us all and lower the cost of living. But lower taxes and leaner government are things the ACTU will not stomach.

Even though unions are income tax exempt, they still rail endlessly for everyone else to pay more tax and their demands for this are never-ending.