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Monday, 8 March 1999
Page: 2313


Senator MARGETTS (1:42 PM) —I would like to begin my contribution to the second reading debate with a quote taken from an article by Mike Steketee in the Australian on Thursday, 4 March. The quote was:

There is plenty of evidence that permanent marginalisation of particular groups will generate high social costs down the track and can have inter-generational consequences as well.

Who was this quote from? It was in fact from employment minister Peter Reith—if it is reported correctly—writing to John Howard on 3 December 1998. The article mentions that in an interview the Minister for Family and Community Services, Senator Newman, had argued against the relevance of the Henderson poverty line as an indicator of what is happening in our society.

The Henderson poverty line is the most commonly used measure. Updated to 1996, it shows that 16.7 per cent of households in Australia are below the poverty line and this is compared with 12.5 per cent when the line was first calculated in 1973. What does this say? We know that those figures do not coincide strictly with unemployment figures. We know that they are a fair indication that what we are seeing in Australia is a growing number of working poor. If you put that in line with the quote from Minister Reith you begin to see that he seems to understand part of the problem, but has not quite linked up his own actions with the creation of this marginalised underclass of working poor.

As other senators have indicated, the Workplace Relations Legislation Amendment (Youth Employment) Bill 1998 —although I am not sure where the employment is in this bill—amends the Workplace Relations Act 1996 and the Workplace Relations and Other Legislation Amendment Act 1996 to promote the inclusion of junior rates in awards and workplace agreements, and to exempt junior wage rates from the antidiscrimination provisions of the Workplace Relations Act. It is an issue that we have debated at least twice during my time in the Senate and it may not surprise the Senate to know that the Greens have not changed their position.

There are two aspects to this issue in the context of the current bill: the first is a process issue, and the other is the substantive issue. The process issue relates to the fact that, when we last debated junior wage rates in 1996, section 120B was inserted requiring the Australian Industrial Relations Commission to undertake an inquiry into the whole question of youth employment and junior wages. The report, as we have heard from other senators today, is required, under the act, to be presented to the minister before 22 June 1999.

The simple question therefore is: why are we debating this bill prior to the presentation of that comprehensive report? The Greens certainly do not see any rational explanation for this fast tracking. Also, as we have heard today from Senator Murray, there is a signed statement, a signed commitment from the minister, indicating that that would not happen. So I think the public, and perhaps the House of Representatives, will need an explanation.

The substantive issue—that is, whether we should be paying lower wages to workers between the ages of 16 and 21 and whether the discrimination provision in the Workplace Relations Act should be waived in relation to junior wages—as I have indicated earlier, has been debated previously in the Senate. In 1994, for example, during debate on the Industrial Relations Amendment Bill (No. 2) 1994, I quoted from a submission by the Australian Youth Policy and Action Coalition.

The government has, or has certainly tried, to close this group down because it dared to criticise the government, or it dared to represent its constituents. This group has had done to it what so many groups and so many voices in our society in recent times have had done to them: it has been gagged for daring to speak up for the people whom it represents. But in this particular case, at that time AYPAC stated:

Young people are entitled to a living income. While acquiring work experience is crucial, it should not be a mechanism for exploitation. AYPAC regards competency, not age, as the crucial determinant for wage income. AYPAC has consistently advocated the removal of youth provisions for industrial awards.

The arguments that I outlined in 1994 are as pertinent now as they were then, and I would like to quote from a speech I made at that time, because the points made by AYPAC succinctly counter many of the arguments put forward by the government. AYPAC stated:

The practice of paying young people lower wages than adult workers is based on a number of unsustainable arguments:

. Young people do not have the same social needs as older workers (such as families to support) and should be paid less.

This concept of `social need' has been applied to wage determinations for most of this century and has been the philosophical underpinning of reduced wages for women and Aboriginals. This argument also implies that young people receive some form of parental support, when, in fact, many young people who are working and living at home contribute to the household from their earnings and receive no financial support from their parents.

I am not sure that there are many landlords or landladies who actually look at a person's age and say, `Fine, you're young, I'll charge you less.'

Another assumption was:

. Young people are less productive and less competent than older workers.

AYPAC responded:

Some employers consider that young people are, by virtue of their age, immature and inexperienced. Physical labour performed by a junior worker may have a higher work value than an older worker but would automatically be paid the lower youth wage. Similarly, a young clerical worker with knowledge and skills on computers and new technologies is assumed to be less skilled than an older clerical worker and paid less regardless of either person's actual skill level. AYPAC believes that young people in employment must be paid on the basis of competency, not age, and age discrimination must be removed from industrial awards.

Another assumption was:

. Lower wages provide an incentive for young people to remain in training and/or education instead of entering the work force.

AYPAC responded:

It is assumed young people are easily tempted by the immediate gratification of a waged income. It is assumed that high wage incomes may induce young people to desert education or training (perceived as having a long term benefit) and that this would not be good for the overall quality of the Australian work force. There is no evidence to substantiate this argument. In fact, data indicates that an increasing number of young people are staying in education when (if employment opportunities were available) they could be receiving an adult wage.

The next assumption was:

. Increasing youth wages would cause an increase in youth unemployment and a decrease in youth wages would cause a decrease in unemployment.

AYPAC responded:

International and Australian research—

as has been mentioned today—

indicates that there is inconclusive evidence to support this assertion. Youth unemployment cannot be attributed to "high" youth wages. In fact, youth wages are 5 per cent lower in real terms than they were a decade ago. Spiralling youth unemployment is primarily attributable to major structural changes in the nature of the work force.

These arguments are not new. Groups such as AYPAC have been pursuing this issue for many years and government departments and parliamentary committees have similarly examined the question of youth wages. Why, then, do we need to delay any further the implementation of competency based awards for young people in the work force? Are we to continue to allow some employers to exploit the youth of this nation with wage levels below the poverty line.

It is important to note that this push by the Government to push down costs for business so that we can be `internationally competitive' is only leading to a race to the bottom in terms of wages and conditions for workers. If we are to be truly competitive should we be paying the same wages as workers in developing countries who are forced to subsist on a few dollars a day . . .

or less?

In more recent times AYPAC staff, working part time and without any funding, have managed to make a submission to the AIRC inquiry on junior rates which is being ignored by this government. In that submission, they expand on some of the points that I have just outlined and they summarise their position as follows:

AYPAC is opposed to the retention of junior rates of pay and considers that they constitute a barrier to finding lasting solutions to youth unemployment. An alternative system based on the recognition of skills must be put in place. Young people should be paid based on their output not on their age. Junior rates do not provide young workers with an incentive to acquire skills and training, because they are paid regardless of their contribution to the workplace.

The AYPAC submission to the AIRC inquiry also refers to research in the United States by David Card and Alan Kreuger, which throws serious doubts on the government's claim that the elimination of junior wage rates will cost hundreds of thousands of jobs. Professor Richard Freeman from Harvard University has acknowledged in an article reviewing Card and Kreuger's book that many economists have overestimated the danger of job losses from increases in the minimum wage.

I believe this government should have undertaken similar research and a thorough examination of the forthcoming AIRC report before embarking on any legislative change. Their claims to date about the impact of not making the changes they have proposed are based on hearsay and very questionable assumptions. One of those assumptions is that, by eliminating junior wage rates, all young people will be paid full adult wages. On the basis of the relevant skills of young people and adult workers, that claim has no foundation.

We have a really good idea of what is behind this issue. We know that it is likely to add to the working poor in Australia. But I would also like to add another dimension from the Mike Steketee article on 4 March, which states:

Reith acknowledged another wrinkle.

This is from the discussion paper from Minister Reith to John Howard on 3 December 1998. It continues:

"Discounting wages would also likely require complementary action on the social security entitlements for this group if adequate work incentives were to be provided," he wrote.

In plain English, this means that unless welfare benefits were cut along with wages, the unemployed would not find it worth their while to get a job.

I think that is the nub of the issue. The government are just planning to throw $3.5-plus billion a year into subsidising diesel users and destroying the environment in the process. But they want a further excuse to reduce the wages, reduce social security benefits, pathetic and pitiful as they are, to young people. By making this push in relation to youth wages, they will use the argument to reduce even further the common youth allowance and any other social welfare benefits to that group of people.

In summary, the Greens will be opposing this bill because of the failure of the government to live up to its commitment to examine the AIRC report on junior wages and also because of the substantive issues related to discrimination against young workers. I have read the second reading amendment put forward by Senator Murray for the Australian Democrats, and I indicate that the Greens (WA) will be supporting this amendment. It certainly makes no sense at all to not look at this bill. I think the bill itself is flawed, but it makes no sense whatsoever to be having this debate and putting this question until the Australian Industrial Relations Commission have presented their report. What was it all about if the government have no interest whatsoever in the outcomes of that report and appear to have no interest whatsoever in what the wider community has to say on the realities of youth wages in Australian society? I hope the message will be quite clear to the government that what they are doing is silly, short-sighted and quite clearly goes against their own statements and commitments.