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The Prime Minister wants to reduce the minium wage.



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M E D I A R E L E A S E

Stephen Smith MP Shadow Minister for Industry, Infrastructure and Industrial Relations Member for Perth

20/06 27 March 2006

THE PRIME MINISTER WANTS TO REDUCE THE MINIMUM WAGE

Today in Question Time I asked the Prime Minister the following question:

I refer to comments on 16 March by the President of the Australian Industrial Relations Commission, Justice Geoffrey Giudice, that the creation of the Fair Pay Commission would

…be accompanied by a slowdown in the rate of growth of minimum wages - that's what the Fair Pay Commission is for.

Isn’t it the case that if the Government’s submissions to the National Wage Case over its period in office had been accepted, the nearly 2 million Australian employees dependent upon the minimum wage would today be $50 a week or $2,600 a year worse off?

Prime Minister, isn’t Justice Giudice right, that all Australians have to look forward to - from today - is a reduction in the minimum wage in real terms?

The Prime Minister responded simply by saying that he disagrees with Justice Giudice.

The problem for the Prime Minister, however, is his legislation.

John Howard has established the Fair Pay Commission to set the value of the Minimum Wage, stripping the requirement that fairness for employees in the context of living standards and inflation be taken into account when determining the level of the minimum

wage.

That can only be bad news for Australian employees and their families already struggling to make ends meet on the Minimum Wage.

The Prime Minister continues to fudge his record on the Minimum Wage since coming to office.

John Howard’s defence is that under his Government the Minimum Wage has increased by 12 per cent in real terms.

But the Minimum Wage has increased by 12 per cent in real terms since 1996 despite John Howard’s best efforts, not because of them.

If the Prime Minister had had his way since he has been in office, the Minimum Wage would currently be $50 a week or $2,600 a year lower than its current $25,188 pa.

Had the Government’s submission’s prevailed, the current 2005 minimum wage would be $434.40 per week not $484.40. (See Attachment 1)

It is in any event disingenuous for the Prime Minister to claim as he does a 12 per cent increase in the Minimum Wage since 1996. There was no National Wage Case/Safety Net Wage decision in 1996, and 1997 was the first time that the Howard Government made a submission to the National Safety Net Review.

To look at the Prime Minister’s actual record, 1997 is the starting point, not 1996.

On that basis, when the actual increase in the Minimum Wage awarded by the AIRC in real terms is calculated from 1997 to 2005, the increase is 9.17 per cent in real terms - 2.75 per cent less than the 12 per cent the Prime Minister refers to. (See Attachment 2)

And, had the Howard Government’s submissions to the AIRC been accepted from 1997 through to 2005, there would have been a real reduction in the minimum wage of 1.55 per cent, not the 9.17 per cent real increase granted by the AIRC, which the Prime Minister in any event opposed.

In four of the past nine years, the Howard/Costello Government has proposed a minimum wage increase less than its own inflation forecast - a result that would have delivered in effect a drop in the Minimum Wage in real terms on four separate occasions. (See Attachment 3)

John Howard refuses to guarantee that the value of the Minimum Wage will be maintained in real terms.

And the reason he refuses to do so is because he wants a drop in the Minimum Wage in real terms!

Contact: Courtney Hoogen on (02) 6277 4108 or 0414 364 651

Attachment 1

Had the Government had its way since it had been in office, the minimum wage would currently be $50 a week or $2,600 a year lower in nominal terms.

YEAR

HOWARD GOVT. SUBMISSION INCREASE AWARDED BY AIRC

HOWARD GOVT. VS AIRC VARIANCE

MIN

WEEKLY WAGE

1997 $8 increase pw $10 pw $2 pw $359.40

1998 $8 increase pw $14 pw $6 pw $373.40

1999 $8 increase pw $12 pw $4 pw $385.40

2000 $8 increase pw $15 pw $7 pw $400.40

2001 $10 increase pw $13 pw $3 pw $413.40

2002 $10 increase pw $18 pw $8 pw $431.40

2003 $12 increase pw $17 pw $5 pw $448.40

2004 $10 increase pw $19 pw $9 pw $467.40

2005 $11 increase pw $17 pw $6 pw

$484.40 ($25188 pa)

Cumulative difference between AIRC Decision and Howard Government’s position $ 50 a week or $2,600 a year

Attachment 2

1997 Base Methodology

1997 Actual Min W age (2005 Dollars) $443.72 =>(1997 Actual Min W

2005 Actual Min W age $484.40 =>2005 Actual Min W

Real Increase in Actual Min Wage 9.17% =>Percentage change

1997 Govt Min W age Submission (2005 Dollars) $441.25 =>(1997 Govt Min W a

2005 Implied Govt Min W age $434.40 =>2005 Govt Min W a

Real Increase in Govt Min Wage Claim -1.55% =>Percentage change

Attachment 3

1997 1998 1999 2000 2001 2002 2003 2004

AIRC Increase $10.00 $14.00 $12.00 $15.00 $13.00 $18.00 $17.00 $19.00

Actual Minimum Wage $359.40 $373.40 $385.40 $400.40 $413.40 $431.40 $448.40 $467.40

Govt Min Wage Submission $8.00 $8.00 $8.00 $8.00 $10.00 $10.00 $12.00 $10.00

Percentage Increase Proposed by Government 2.29% 2.23% 2.14% 2.08% 2.50% 2.42% 2.78% 2.23%

Forecast Inflation (Financial Year) 1

1.00% 2.50% 2.00% 5.75% 2.00% 2.75% 2.75% 2.00%

Government Claim Less than Inflation? No Yes No Yes No Yes No No

1. Source: Forecast Financial Year Inflation from Treasury Budget Papers