Minimum wage under attack in Australia


Australia’s minimum wage has long been one of the highest in the world and a symbol of the nation’s essential egalitarianism, but that could soon change under a plan put forward to the conservative government of Tony Abbott.

Under a proposal from a business-dominated review of government finances, the national minimum wage, currently at A$16.37 (US$15.18) an hour, would be cut by almost 30 per cent over the next decade.

This would rapidly widen the inequality gap between the low-paid and the rest of the workforce with the national minimum wage falling from 56 per cent of average weekly income to 44 per cent.

The proposed shake-up would see annual wage-setting powers taken from the quasi-judicial Fair Work Commission, and handed instead to state and territory governments to set their jurisdiction’s minimum wage below or above the 44 per cent benchmark.

Unions say the proposal, if adopted, is an attack on the very foundations of Australia’s wage system, which has been in place for 100 years.

“This is big businesses’ plan to drive down wages across the community that will attack the Australian way of life,” the president of the Australian Council of Trade Unions (ACTU) Ged Kearney said after the proposal became public on May Day.

“The big business strategy is clear – if you bust apart the wages safety net you can drive everyone’s wages down.

“This is more than an attack on the low paid – it is an attack on all of us.”

In the face of a furious backlash, the government has ruled out immediately adopting the recommendation, referring it instead to yet another review of Australia’s industrial relations system later this year.

Australia was one of the first countries in the world to mandate a national minimum wage.

Since then, Australia’s high standard of living, with the minimum wage as its benchmark, has been a source of national pride.

Although wage-setting has become increasingly enterprise-based over the past 25 years, 1.54 million Australian workers, or about 16 per cent of the workforce, still rely on legal minimum wages, the majority of them women.

Lisa Erskine, a minimum wage production line worker in a woollen spinning mill in the state of Victoria, says it is a struggle to keep up when living costs like fuel, electricity and phone bills are rising all the time.

“Quite often people have to do without,” she says. “Australia is still a good place to live but I can see the times ahead are only going to get more difficult.”

“The Commission’s illegitimate recommendation to freeze the minimum wage would be a sure-fire way to increase poverty and would accelerate the widening gap between rich and poor,” says Adam Bandt, deputy leader of the Australian Greens party.

“It is a recipe for a race to the bottom on incomes.”


Reduce government spending

The proposal is among 86 recommendations in a report to the government
by the National Commission of Audit, made up solely of business leaders and people associated with Abbott’s Liberal Party, to review every aspect of government spending.

This is part of a fiscal strategy to restore a budget surplus of one per cent of GDP by 2023.

Despite Australia’s net public debt to GDP being only 12.7 per cent, according to a study by ACTU, then-opposition leader Tony Abbott won office last September partly by convincing the electorate the then-Labor government had created a “budget emergency” through profligate spending on social programs like a national disability insurance scheme and school funding reforms.

Its 428-page report recommends cuts to a suite of welfare programs, further outsourcing of government services, and privatisation of state-owned agencies, including Australia Post, to generate recurrent annual savings of A$60-70 billion (US $ 55-65 billion) by 2023-24.

The more controversial proposals included the abolition of universal free healthcare with a new A$15 (US$ 13.9) fee for each doctor’s visit, raising the retirement age to 70 alongside tight restrictions on access to the old age pension, and deep cuts to benefits for the aged, disabled, sick, families, and the unemployed.

Outside of the Commission of Audit, business and employer groups have been waging a campaign to lower – or in some cases, abolish – the minimum wage.

When the Abbott government was elected in September, ending almost six years of Labor in government, they found a friendly ear.

Since the beginning of the year, a number of senior figures from the Prime Minister down have ramped up their rhetoric about “unsustainable wages growth” – despite the fact that, last year, wage growth failed to keep pace with inflation – and “over-generous” working conditions.

There is currently a bill in parliament to broaden the use of individual employment agreements that would give employers more power to dictate wages and conditions outside the collective bargaining system.

The government has also established a politically-motivated Royal Commission into union governance in a transparent attempt to weaken the union movement.

The Abbott government has yet to respond specifically to the Commission of Audit’s recommendations, but even if it passes on that suggestion, unions believe it is only the start of an assault on wages and conditions on multiple fronts.


Check out The Story of the Minimum Wage in Australia on the Working Life website.