Jennie George (Throsby, Australian Labor Party) Share this | Link to this | Hansard source

In tonight’s grievance debate, I want to raise the issue of the double standards that I believe prevail in the setting of wages in our community. I do so in light of the impending decision by the Fair Pay Commission on the level of the minimum wage that should apply in Australia. As I understand it, that decision is due some time in July. When you look at the history of the deregulated wage-fixing environment that was gradually introduced over the last decade as we moved to a system of enterprise bargaining, it was always the view of reasonable minded people in the community that an industrial safety net—a living wage—should apply to those members of the workforce with the least industrial bargaining power. Then you could ensure decent standards applied at that lower end. That living wage was particularly relevant to those industries that saw large numbers of women and large numbers of workers in part-time and casual employment and to those areas where there was a large concentration of migrant workers, like the clothing trades. As we know, that is one of the industry sectors that has always battled to ensure a fair wage for their workers.

At the moment, the ACTU has a claim before the Fair Pay Commission for a $26 a week rise in award minimum wages which would apply to around 1.6 million low-paid workers. Obviously, the union movement sees that this $26 a week wage rise would be to compensate for real pay cuts that many workers suffered under Work Choices with the removal of overtime and shift penalty loadings, and also to compensate for families struggling with the impact of rising interest rates, with increases in petrol which, for many, is not a discretionary item of expenditure, and other basic pressures that come from cost of living increases. As we know, the burden for many individuals and families has been made even worse with the legacy left by the Howard government—the legacy bequeathed to the new Rudd Labor government—of a regime of very high inflation and, of course, people on these wages having to contend with 10 interest rate rises in a row. Despite the claims that the former Prime Minister made about working families never being better off, I can assure you that is not the case in an electorate like mine where there are many workers receiving very low rates of pay.

If we look at the ACTU claim for a $26 a week increase it would, in fact, take Australia’s minimum wage from $522 a week to $548 a week, which works out to $14.40 an hour. Imagine trying to raise a family on that level of wage remuneration, which amounts to less than $30,000 a year. The case that has been presented to the Fair Pay Commission by the union movement shows that 62 per cent of minimum wage workers have suffered a fall in their real wage levels, largely due to its previous two decisions. The Fair Pay Commission’s 2007 decision awarded workers on the minimum wage a $10 increase against the union’s claim of $28. This saw only four per cent of the 1.6 million minimum wage workers receive a real wage increase, which averaged just six cents extra a week. For the remaining 96 per cent of workers on minimum wages, their real wages in that period fell between 28c and $15.67.

As I said earlier, many individuals and families in my electorate fall into that low-income earning bracket and are totally dependent on increases that flow from the decisions made by the Fair Pay Commission in relation to the minimum wage. The 2006 census revealed that the median weekly individual income in my electorate was $373 compared to the national figure of $466. Many families in my electorate are struggling because they receive a lot less than Australian average weekly earnings, and a lot of them are in casual and part-time employment.

It is obvious that inflation is a major economic challenge, but it seems to me that the well-paid members of our community should, in fact, take the lead in terms of wage moderation rather than expecting people struggling on minimum wages to bear the burden. In that regard, a 12-month wage freeze for federal politicians should have sent a message to the wider community, and to corporate Australia in particular, to rein in their unrestrained salary growth in managerial and executive remuneration. Interestingly enough, just one executive—the outgoing chief executive of Macquarie Bank—last year earned more in a year than the entire federal parliament, in that he received a $33.5 million salary and bonus package. It is interesting that the business community is very silent in this debate when it touches the corporate world, but at the same time it is these people from the business community and their employer organisations who are now urging the Fair Pay Commission to restrict the wage outcome for workers on minimum wages to no more than $10 a week.

Professor John Shields, a Sydney University economist who tracks executive reward and performance, reports that the average annual remuneration for a chief executive of a top 100 Australian company is now almost $4 million. That in itself is more than 80 times the average full-time wage of around $56,000. In 1992, a chief executive then earned 22 times the average weekly earnings. So you can see by those relativities the huge growth that has occurred at the top end of town.

‘Executive remuneration has spiralled out of control,’ says Stuart Wilson, the executive director of the Australia Shareholders Association. He went on in a recent article to say:

We believe company boards, which are charged with determining executive pay, have lacked the backbone in their negotiations with their executives. Obscene executive bonuses must have an impact in the community that is negative, and that is never good for business.

As we know, often there is no correlation at all between company performance, or the views of shareholders about executive remuneration packages, and the actual outcomes that the boards determine for their top executives.

There is no doubt in my mind that Australia is seeing a rapid growth in wages inequality. Figures released by the Australian Financial Review in November 2007 showed that salary packages for executives jumped by 28 per cent to an average of $2.5 million. This constituted a massive pay rise in that year of some $570,000, or roughly $11,000 a week. In the booming mining and resources sector, the growth in white-collar income is even more acute. Analysis by recruitment consultant Derwent Executive shows that, from 2005-06, the salaries of executives earning a base income of between $200,000 and $700,000 had risen by an astronomical 55 per cent. Importantly, this figure exceeded the growth in market capitalisation and profit performance for many mining stocks. And yet all the indications are that this kind of income growth will continue unfettered, despite our Prime Minister’s urging for moderation by all in the community.

As well as inequality between the growth in wages for low- and high-income employees, there is inequality between sectors of the economy. In particular, low-skilled sectors such as hospitality, retail trade and basic clerical work all experienced a lower rate of wage growth over the year to last September than the 4.2 per cent increase across all occupations for that period. For example, hospitality wages only grew by 3.3 per cent, nearly a percentage lower than the economy-wide figure.

In conclusion, can I say that the whole community does need to be involved in the fight to rein in inflation, but it is unfair and unjust to expect that low-income earners, like the many in my electorate, should be forced to bear the brunt of the challenge, while executives and other high-income earners continue receiving huge, unfettered and potentially inflationary income and remuneration packages.