Treasury economists concede that the ACTU’s minimum wage claim of $25 a week will have a negligible effect on the economy.
Economic modelling undertaken by the Treasury at the request of the ACTU reveals that the 2002 Living Wage claim of $25 a week will have little or no effect on GDP growth, inflation, employment growth, employment or wages growth.
Under cross-examination by ACTU advocate Andrew Watson in the Living Wage case Treasury economist Ruth Gabbitas conceded the $25 a week claim would have a negligible impact on key economic indicators.
This admission runs counter to the Government’s submission that an ‘uncertain’ economic environment only justifies a measly $10 increase.
ACTU Secretary Greg Combet says a casual observer could be excused for thinking the Federal Government and business groups are schizophrenic when discussing the economic climate.
‘In the financial press the gangbuster talk is of a powerhouse economy and a buoyant and robust outlook. In the Australian Industrial Relations Commission the talk is more ominous. Darkness will descend on Australia if 1.7 million low paid workers win a small improvement in their living standards with a $25 wage increase,’ he says.
‘The basis of our claim is that it is an essential and decent pay increase for the low paid and it will have a negligible economic effect. The Government’s own economic experts now back this up.’
Lyndon Rowe, Chief Executive of business peak body, ACCI, says economic projections for the next three months are buoyant and ‘reflect robust actual activity levels.’
‘The Australian economy has proved very resilient. Solid sustained growth is under way. Outcomes and predictions for new orders and output are robust. Capacity utilisation is at historical high levels. Capital expenditure plans for the next 12 months are strong. Export performance has recovered,’ he says.
The ACTU maintains that the Government’s analysis that the economy will be unaffected and the business sector’s analysis that the financial outlook is buoyant are strong reasons for the $25 rise.
‘The economic climate will support a $25 pay rise and the stories of hardship that came from the low paid workers who fronted the Living Wage case shows there is an obvious need,’ says Greg Combet.
It’s bleak and hard on the minimum wage
This is what some of the witnesses to the Living Wage case had to say about life on the current minimum wage:
‘During 2001 I needed to take 6 weeks off work due to an illness (meningococal virus). During this period I used up all of my sick leave and annual leave entitlements to pay my rent. I have two bills from the Ambulance Service of Victoria for $342 with a late payment fee of $45 which remain outstanding. I had to borrow $500 from one of my children for payments owing on my rent. I still had to appear before the Tenancies Tribunal because my rental payments were falling into arrears. I owe the estate agent $375 and face eviction. All of my wages will go toward my rental payment this week. My telephone was cut off. I have no spare funds for social outings, to pursue any hobbies or to buy replacement clothing, even work clothing. My current financial position is very difficult. My wage levels provide me with no scope to make any headway in the payment of my debts or the chance to gather any savings for emergencies,’ – Elizabeth, Service Assistant.
‘The annual Living Wage increase is just a nibble, it’s a small break which then catches up with you over the next twelve months with inflation. I do not go on holidays because of the cost. I cannot afford to go given the amount I earn. The last holiday I went on was four years ago’ – Brenda, a shop assistant.
‘I spend about $28 per week post-GST, compared to my expenditure before the GST. It’s impacted on food and grocery items public transport, utility bills, clothing, garden and household maintenance items. $25 a week might help with paying my bills on time’ – Kevsar, a hotel employee.
‘I cannot pay my bills on time. I’ve had the phone cut once. My social life consists of staying home and using the computer. I can’t afford to go out. – Neil, a timber machinist.
‘I find it extremely difficult to make ends meet. Our family has not been on a holiday out of Melbourne for 15 years. My wife and I never go out together as we cannot afford the extra expense,’ – George, production worker.
‘The GST is killing me. It is very hard to live on with one income with the GST. Prices have gone up and the tax cut was not compensation for the hike,’ – Albert, a cleaner.