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Wage rises not tax cuts -- Greens back push for a lift to minimum wage.

Wage rises not tax cuts -- Greens back push for a lift to minimum wage.

The Greens will introduce legislation to set the national minimum wage (NMW) at 60% of the median full-time wage, to be phased in at the earliest possible time in a manner determined by the Fair Work Commission (FWC).

The UK Government has set a target for its minimum wage to reach 60% of median earnings by 2020, rising according to increments recommended by its Low Pay Commission.

The UK Government has set a target for its minimum wage to reach 60% of median earnings by 2020, rising according to increments recommended by its Low Pay Commission.

The ACTU recently sought to have the FWC adopt a 60% rate for the NMW as a medium-term target, but this approach was rejected by the FWC. The Greens’ move would have the ACTU’s approach enshrined in law.

The NMW needs to lift because:

  • The NMW has not kept pace with this relative poverty threshold for almost 20 years. The NMW is currently only 55.1% of full-time median earnings, down from well over 60% before 1999.[1]
  • Almost 1 in 4 people in poverty are working full-time, meaning we have a growing class of working poor.[2]
  • One million people – over one-third of people living in poverty - are in households where wages are the main source of income.[3]
  • Since 2014, the government estimates that the number of adults on the minimum wage has increased by 25%,[4] increasing the number of people in Australia who are living in, or close to, relative poverty.
  • Wages growth is flat-lining.[5]

The FWC has stated that “those in full-time employment can reasonably expect a standard of living that exceeds poverty levels” but that the increase it awarded last year (2017) “will not lift all award-reliant employees out of poverty (measured by household disposable income below a 60 percent median income poverty line), particularly those households with dependent children and a single-wage earner.” This has been confirmed in research prepared for this year’s (2018) NMW review.[6]

Lifting the minimum wage will provide more benefits to low-income earners than the tax cuts proposed by Labor and Liberal. The Greens would complement this with a $75 increase to Newstart and Youth Allowance, which are also below poverty levels, noting that tax cuts do nothing for people solely reliant on these benefits.

Mechanism:

The Bill would amend the Fair Work Act to require the NMW to be set at at least 60% of the median full-time weekly wage.

The FWC would be required to publish a timetable for the intended phase-in of increases to meet this legislative requirement at the earliest possible time, having regard to matters including reducing inequality, the state of the economy and the circumstances of particular industries and classes of employers.

After the timetable has been set, the usual process for annual wage reviews would continue, with each year’s hearing focused on the rate and manner of phase-in, including having regard to the above matters.

Quotes attributable to Greens employment spokesperson Adam Bandt MP:

“If trickle-down economics worked, we’d all be drenched by now. It’s time for the government to put its hands back on the levers,” said Greens Deputy Leader and employment spokesperson Adam Bandt MP

“Inequality is growing, wages are flat lining and many full-time workers live in poverty.

“Having a job is no longer a guarantee of security.

“Working people need a living wage enshrined in law.

“There’s a growing class of working poor and we’re starting to become a US-style society.  

“The best way to make Australia more egalitarian is to lift the minimum wage, raise Newstart and invest in universal services like health and education.

“The Liberal and Labor tax cuts arms race will further entrench inequality.  A wage increase is better than a tax cut.

“Wage increases help secure the revenue government needs to fund universal services, but tax cuts eat away at the welfare state.”

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