Senator MURRAY (10:42 AM) —I understood what was happening. It was just that people needed to find time around the sheets and the amendments. For those listening or taking note, the chamber has before it, if you add up all the government amendments and the non-government amendments, 150 pages worth of amendments, which we are flicking between. So I hope that those listening realise that it is quite difficult at times.

I wish to address the next section on the issue sheet. The chamber staff have suggested the way in which matters should be grouped. By leave, I would like to deal with that a little differently. I would like to put these amendments in two groups. The first group consists of item (4), (5), (6), (20) and (20C). The second group consists of (3), (7), (17A), (19), (19A), (20A) and (57). All of those are from sheet 4765 revised.

Leave granted.

The TEMPORARY CHAIRMAN —Senator Murray, perhaps for the sake of the chamber you might again want to tell us what the first batch consists of.

Senator MURRAY —by leave—I move Democrat amendments (4), (5), (6), (20) and R(20C) on sheet 4765 revised.

7J AFPC’s wage-setting parameters

Subdivision AA—Indexation of minimum wage

90EA Indexation of minimum wage

These are critical—of course, much in this bill is critical—amendments which refer to the Fair Pay Commission’s wage-setting parameters. At the outset the Democrats oppose the bill as a whole —and this is a point that the minister picked up on earlier in the debate—and we oppose replacing the independent Australian Industrial Relations Commission with the Orwellian named Australian Fair Pay Commission. We do not use the term ‘Orwellian’ as a piece of rhetoric, because we are not convinced that the legislation guarantees that the decisions of the commission will be fair, nor are we convinced that the outcome will be anything but a relative lowering of wages for poorer people over time.

The Democrats have long been supporters of the Industrial Relations Commission as an independent umpire, and we have long thought that its deliberations have resulted in good overall decisions with respect to wage increases. The Industrial Relations Commission—that is, the Australian Industrial Relations Commission, not the state commissions—has a brief to provide a safety net for employees who are unable to protect their own interests through enterprise bargaining and who need to achieve some real income growth. The commission must ensure that employment is not put at risk in doing so. The Workplace Relations Act already requires the Industrial Relations Commission to consider economic and employment issues. I refer you to sections 88 and 90.

The government have been boasting that workers real wages have increased—I think this is the latest figure—by 14.9 per cent since 1996. This is not entirely their doing, although they are perfectly entitled to take some credit for it. Under the Workplace Relations Act, which they plan to gut with this bill, the Australian Industrial Relations Commission and the national wage case have delivered these outcomes. Yet the government propose to take the Industrial Relations Commission’s power, trash it and introduce a low-pay commission that will reduce the very real wage increases that the Prime Minister has been boasting about.

It should be remembered—and this point has been made frequently by others in the debate—that the government argued on the basis that the minimum wage should be $50 a week less than it is now, which naturally, as a consequence, means that the 14.9 per cent increase in real wages would not have been achieved if the government had had its way. The government has refused to guarantee that that there will not be a decline in real wages, and I understand that, because there will be a decline in real wages. The government will not index the minimum wage. They will not give any idea of compensation in this area. It is quite clear to me, on reading the bill and listening to what ministers say, that over time real wages not only are likely to but will deteriorate.

The aim of our amendments is to put fairness and balance back into the wage setting objectives. Our amendments put back the provisions of the current act that have served Australia well. The amendments insert into the objectives of the Fair Pay Commission the key aspect of section 88B(2) of the current Workplace Relations Act—that is, to ‘ensure that a safety net of fair minimum wages and conditions of employment is established and maintained while promoting economic prosperity’ in Australia.

The amendments put back provision 88B(2)(a) of the current Workplace Relations Act, which requires the Fair Pay Commission to have regard to ‘the need to provide fair minimum standards for employees in the context of living standards generally prevailing in the Australian community’. That is a specific social objective. Alongside this government’s new criteria that the Fair Pay Commission have regard to employment and competitiveness—that government view is perfectly reasonable—our amendment puts back 88B(2)(b), which is, ‘economic factors, including levels of productivity and inflation, and the desirability of attaining a high level of employment’.

As I have said before, the marks of a civilised, successful, first-world liberal democracy are high living standards, equitably shared wealth, and an egalitarian society that respects and protects the working poor and the disadvantaged and has advanced working conditions. It is critical that, when setting a minimum wage, we ensure that the disadvantaged, the vulnerable and those who have no bargaining power are still provided an adequate standard of living. That requires a balance between the level of wages able to attract work and the level of wages able to provide for a reasonable living standard.

Our amendment introduces a new provision (d) that would require the Fair Pay Commission to have regard to relevant taxation and government transfer payments. On my web site, for anyone who is interested in esoteric, technical tax matters, is a technical tax paper on the tax-free threshold. In that paper I argue, as I argue elsewhere, that you have to attend to the tax and welfare intersects as well as the wage intersects when you are referring to this matter of low wages.

This is an important point that was highlighted by the Australian Catholic Commission for Employment Relations. The interaction between wage setting, taxation and welfare payments is an important issue. The Democrats believe that the living standard and employment costs conundrum can be more effectively dealt with through the tax and welfare systems. The government, however, has continued to ignore calls by the Democrats to raise the tax-free threshold, although I am delighted to see that Mr Turnbull, in the lower house, has picked up on our view that at least a $10,000 tax-free threshold should apply. Long before he came into the parliament, we introduced that as an amendment to the Taxation Administration Act, and it was rejected. The fundamental problem is that people are taxed too high at low-income levels. People earning as little as $12,500 a year are paying income tax on half their wages—and $12,500 is the official poverty level recognised in this country.

Australia needs a much higher tax-free threshold. I argue for it to be at least $20,000 to match that which is already applicable for three million older Australians. Recent talk of tax reform suggests that the government have no intention of looking at the tax rates of the low paid and instead intend to continue to cut the tax rates of those who are wealthier. While the government continue to fail to address the tax issues for the low paid, tax and welfare payments should at least be taken into account when setting the minimum wage. The amendment also reinstates much of subsection 88B(3) of the current Workplace Relations Act, which would require the Fair Pay Commission to have regard to skills, training arrangements, people with disabilities and, critically, anti-discrimination provisions. The absence of anti-discrimination provisions in wage setting is of particular concern to the Human Rights and Equal Opportunities Commission. As HREOC pointed out, the potential exists for indirect discrimination to permeate the setting of minimum wages if, for example, the parameters contain unstated bias about the value of certain skills and attributes.

We have also included an additional clause which requires the Fair Pay Commission to have regard to the need to apply the principle of equal pay for work of equal value. That is an iconic statement in Australia: equal pay for work of equal value. This is an important amendment, given that women employed in the work force full time still earn 15 per cent less than men doing the same work.

We have also included an important amendment which addresses an issue the Democrats have campaigned on for a long time—that is, youth wages. We do not believe that an 18-year-old adult should be paid youth wages. Youth wages are one of the worst examples of age based discrimination. The coalition—and Labor, I regret to say—argue that increasing youth wages will lead to higher youth unemployment. The same argument was used to justify paying women less than men. Young people are required to pay the same amount for food, rent and clothing as other Australians. Only full-time students have access to cheaper public transport and other concessions. Australia’s discriminatory practice is in breach of the Universal Declaration of Human Rights, which Australia signed in 1948, which declares that everyone has the right to equal pay for equal work without discrimination. Youth and junior rates have been abolished in Canada, Greece, Hungary, Japan, Mexico, Poland and Spain and they are severely restricted in many other countries. In the United States, junior rates apply for only three months and only to those under 20 years of age, whereas in Australia they can apply for in excess of that time.

Subclause (2)(c) of item (5) in combination with item (20C) will change the definition of ‘youth’ or ‘junior employee’ from 21 to 18. This requires the Fair Pay Commission to consider the need, using a case-by-case approach, to protect the competitive position of young people in the labour market; to promote youth employment, youth skills and community standards; and to assist in reducing youth unemployment through appropriate wage provisions. Those provision include, where appropriate, junior wages taking into account the extent of labour market disadvantage faced by young workers; the work value of young workers at different ages; the promotion of skills development and training of young workers to reduce their labour market disadvantages; the desirability of minimising discrimination on the basis of age in wage rates, only to the extent necessary to further these objectives; the structural efficiency principle; and that 18 years of age is considered an adult. (Extension of time granted)

Referring to items (4) and (6) in particular, the Fair Pay Commission reviews wages annually. Currently, wages are reviewed on an annual basis by the Australian Industrial Relations Commission. Under the bill, the Fair Pay Commission determines the timing and frequency of wage reviews as well as the scope and manner in which wage reviews are conducted and the date when wage setting decisions are to come into effect. Therefore, under the proposed new arrangements, wages will not necessarily be reviewed on an annual basis. The government have indicated that the first decision of the Fair Pay Commission will be in spring 2006. The Democrats are concerned that there is no time frame placed on the Fair Pay Commission to review the minimum wage after that date. A lot can happen in a year and the Democrats think we should put an onus on the Fair Pay Commission to review wages annually. We have included an amendment accordingly.

Item (20) refers to indexing the minimum wage to the CPI. We are moving an amendment to provide an indexation of the minimum wage in line with the consumer price index in an attempt to keep the real wage at least at parity. The pension wage at present is indexed to AWOTE, which is a better and stronger measure. It seems odd to me that we would provide an indexation for pensioners but not for those on the lowest wage. The Democrats are moving this amendment accordingly—to keep the minimum wage in line with changes in living standard. CPI indexation already occurs, as I said, for government benefits and indeed the amendment refers to the processes undertaken in the Social Security Act.