Last week’s The Fair Pay Commission’s ruling continues to echo through political debate. The punditocracy seem to have missed its importance – but one Crikey subscriber was succinctly spot on when they wrote: “It used to be referred to as ‘fattening the lamb’. I guess you are aware of the lamb’s fate.” We are. The lamb isn’t.
The Fair Pay Commission, although it is stacked with market economists, has made a political decision.
Any standard economic textbook will provide arguments against raising the minimum wage, but the Howard Government’s “revolutionary” commission has lifted wages to an extent that the old Arbitration Commission would have been wary of.
Why? Economics? Charity? Of course not. It’s pure politics. This move is calculated to blunt the attack by Labor and the ACTU. The next five, 15 or 50 may be unfavourable, but this is the one that counts in public perception.
And John Howard is happy with this. If he was truly committed to dry economics, he would be a very different Prime Minister – just the way that if he was truly committed to dry economics he would have been a very different Treasurer a quarter of a century ago.
The FPC’s decision acts as a shield against one of Labor’s most potent weapons – pay scares.
As Ross Fitzgerald notes in The Australian today, Kim Beazley is striking out. Striking hard.
Blunt his blows now and his task next year will be all that much harder.