All sorts of concerned citizens constantly point out to the government the failings of the current system under which we operate, where many tens of thousands are homeless, where people on the dole and people on pensions are below the poverty line, and where underemployment is rife. Given the extraordinary amount of evidence available it is easy to believe that the Coalition government is so incompetent as to be unable to do anything about these problems. However, to do so would be a mistake, because these are symptomatic of what the government wants. To this end, they have done or plan to do the following:
They have cut penalty rates and will attempt to abolish them completely.1,2 The government maintains that it is to create more jobs, but this is a lie. It is only to increase profitability of businesses, which the government hopes will be more inclined to support them or donate money to them. Indeed, decreases in penalty rates have failed to stimulate jobs growth. In fact, they seem to have slowed jobs growth3.
The government want to keep the minimum wage low or to abolish it. Government ministers will say this is not so, but that increasing it too much will decrease jobs or ‘harm job creation’. This is a common refrain which is at best debatable. Studies on the effects of minimum wages on employment have shown that a moderate minimum wage has little effect on overall unemployment in European countries where the studies were undertaken4. Some studies from the US have stated that increasing the minimum wage will have a devastating effect on employment, but many such studies have no credibility because of who is funding them. A classic example of this is a piece in Forbes which comes from the Charles Koch Institute5. Charles Koch is a climate change denier who funds all sorts of libertarian far right organisations. In addition to this, the policy wing of the Liberal Party, the Institute of Public Affairs has, as one of its aims, the complete abolition of the minimum wage6.
Most people would have heard of the 457 Visa scheme, whereby employers can import skilled workers if they cannot find local workers to take certain positions. However, employers, by their own activities, dragged this scheme into disrepute. So, in 2018, the government replaced the 457 Visa system with the Temporary Skills Shortage 482 Visa. This allows employers (sponsors) to nominate approved positions from the occupation list for overseas workers to fill. These overseas workers must have the required level of work skills and English skills to be granted a visa. The work skills required having at least two years’ work experience in the nominated occupation ‘or a related field’7. There also must be labour market testing and this requires suitable advertising to have been unsuccessful within four months before lodging a nomination application and that the company must not have retrenched an Australian citizen or permanent resident within that 4 months. Proof of these must have been submitted to the government when making a nomination8. While this may sound reasonable, part of this 482 Visa system is the setting of a lower limit to the salary for a temporary skilled migrant, the Temporary Skilled Migration Income Threshold (TSMIT), which is $53,900. However, that has not increased since 20139. Given that the average annual inflation rate has been about 2% since 201310, this should have meant that the salary lower limit should now be over $60,000. This is just another method of keeping downward pressure on wages.
The prevalence of labour hire firms in employment is also increasing. Their spiel goes that it is about increasing flexibility in a business’ workforce, allowing businesses to stay agile and cope with fluctuating demand, without the costs incurred in taking on part-time or full-time workers11. However, it is also a way to circumvent enterprise agreements and to drive down wages and entitlements, including penalty rates12.
Earlier this year, Reserve Bank Governor, Philip Lowe, told the House of Representatives Economics Committee that the underlying issue with the economy is the lack of income growth. He explained that this was because people borrowed money, assuming incomes would grow, as had been the case previously, but now they haven’t, as wages have stagnated. Now they have less free cash, which limits their spending. It used to be that wages and conditions for particular occupations were set centrally by an industrial tribunal in an award system which covered employers and employees in an industry. The recent low wage growth is in part a symptom of systematic action by businesses to cut labour costs. On top of this, deliberate government policies are aimed at curtailing employee bargaining power. This move away from centralised wage fixing was initiated by the Labor Party which moved to workplace-level wage setting through ‘enterprise bargaining’. The award system then simply became a baseline ‘safety net’. However, this has all but collapsed, as workers covered by enterprise agreements has declined such that in 2017, only 12% of the private sector were covered by them. This has led to the proportion of employees reliant on the basic award ‘safety net’ more than doubling since 2013 to more than 25%13.
The Howard government’s Work Choices legislation was an attempt to individualise employment, to further undermine collective bargaining, to reduce the role of the Industrial Relations Commission in determining employment conditions and resolving industrial disputes, and to make it more difficult for unions to enter workplaces or organise industrial action14. This legislation was simply another way of decreasing the proportion of turnover of companies going to wages. The current Morrison government is planning to introduce legislation to alter the industrial relations landscape again. The initial attempt will be the Ensuring Integrity bill, which will further restrict the ability of unions to organise and campaign on workplace issues and workplace bargaining. The legislation even extends to dismissing union officials despite them being elected to those positions by their members, and restricting what a union can do with its own funds15. This will more likely decrease bargaining power further, and will lead to a further decline in wages. It also has an added bonus for the government in that it will wipe out a major source of donations to the Labor Party.
As I said above, you would be mistaken to think that the government are too incompetent to fix Australia’s problems, especially slow wage growth, because they do not see this as a problem; it is what the government wants. Recently, Mathias Cormann let the cat out of the bag when he described the downward ‘flexibility’ in the rate of wage growth as a design feature of the coalition’s ‘economic architecture’16. The reason the government wants to keep downward pressure on wages is because it decreases the amount of a company’s turnover going to wages and increases that going to shareholders, and it is these companies and their shareholders who donate large amounts of money to political parties, including the Liberal and National parties. The government want to create a large underclass of menial workers and gig workers who are so desperate that they will take any job on offer at any price, or will have to work several jobs just to keep themselves or their families fed, clothed and housed. The government wants to turn Australia into the United States.