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Tuesday, 18 March 2008
Page: 1167


Senator MURRAY (8:05 PM) —I move item (9) on sheet 5457 revised:

(9)    Schedule 3, page 109 (after line 4), after item 7, insert:

7A  After Subdivision A of Division 2 of Part 7

Insert:

Subdivision AA—Indexation of minimum wage

181A   Indexation of minimum wage

         (1)    This Subdivision provides for the indexation of the minimum wage, in line with the Consumer Price Index, to start on commencement of this section.

         (2)    The indexation factor is to be worked out in accordance with section 1193 of the Social Security Act 1991.

         (3)    The rounding of indexed amounts is to be worked out in accordance with section 1194 of the Social Security Act 1991.

 The chamber will note that this refers to the indexation of the minimum wage. It is the Australian Democrats’ view that an easy device for dealing with the minimum wage issue and keeping it current and up to date with the current value of money would be to index it. Like any economist, I recognise the dangers if inflation gallops away. You might get a bit concerned if you were indexing it in Zimbabwe, where right now I understand the indexation would be about 150,000 per cent, but I do not expect any such danger here. I rather like Treasurer Swan’s declaration that, in minimum wage discussions, attention needs to be paid to the tax welfare area as well and to how well people are doing with respect to government policy and cuts there.

I know that argument has previously attracted the coalition—that is, you cannot examine wage claims in isolation of tax and welfare changes which advantage lower income people. My attention was drawn to this many years ago, and I have remarked on it in this chamber before. It was first presented to me on this basis: if you give a minimum wage increase of say $17, in the hand of the recipient it might be as low as $8 and in the hand of the employer, because of on-costs, you might be talking about $23 or $24. That is not productive or efficient for either party—either the employee, who gets $8 out of $17, or the employer, who ends up with a cost of $23. It is important to pay attention to what is being offered in the tax and welfare area with respect to wage claims. Nevertheless, having said that, you do need to keep your minimum wage standard up to date and indexation would achieve that. I am well aware that the minister is going to knock this off. I certainly will not push it with a division or anything, but I really want to take the opportunity of this bill to put before you policy ideas which I would like you to consider when you come to the substantive bill. That is the purpose behind this.