It’s been a difficult couple of days at The Australian. First there was the unfortunate Newspoll “bounce” for Labor after the paper had infamously shrieked about class war the day after the budget. The movement in Labor’s favour was barely out of the margin of error but, stuck with its own logic, the paper’s spinners had to admit class warfare had been rewarded.

It was also, we were told, “the first major poll conducted entirely after last Tuesday’s budget”, a claim derided by Fairfax’s Phil Coorey, who pointed out the Nielsen poll run on Saturday had been conducted before Newspoll and entirely after the budget. For that matter, Monday’s Essential poll was conducted entirely after the budget as well. Still, who cares, it’s only opinion polls, and as we know, The Oz is the in-house journal for the assertion-based community.

It was also intriguing to see Annabel Hepworth today covering business reactions to the cash handouts in the budget. Was The Oz standing up for fiscal responsibility? Taking a welcome line against middle-class welfare? Joining those of us who have long campaigned against what Joe Hockey calls “the Age of Entitlement”? No, it was because the budget cash handouts “have put wage rises in jeopardy, as employers launch a new assault against significant increases for workers on the minimum wage”.

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I confess confusion, because I thought the main narrative coming from government critics was that its industrial relations system was causing wage pressures and driving up business costs, making Australia an Expensive Place To Do Business™, not reducing pressure for wage increases via the transfer payments system. Hepworth has been a loyal footsoldier in The Australian’s various wars on things Labor, but in this case her actual article focused on business submissions to the forthcoming minimum wage case; it was her editors and sub-editors who, typically, made the leap to the lurid “ambush” of the headline.

It raises a fair point, however, and businesses, while not exactly coming to the debate with honest intentions, have a point: surely all changes in the incomes of the lowest paid workers, the ones most likely to benefit from increases in the minimum wage, should be considered when determining whether they merit an increase?

This, after all, was the basis for the Hawke government’s remarkably successful Accords with the union movement, in which unions agreed to support economic reform and wage restraint in return for “social wage” reforms like Medicare and, later, tax cuts. It transformed the hostile 70s and early 80s battleground of industrial relations, in which the Fraser government lost all control of wage outcomes, into a partnership that played a crucial role in establishing a reformed economy and the growth in real incomes that flowed from it (indeed, some would say, it created the aspirational Australia that turned on Labor with such fury in 1996).

One of the curious results of this achievement was that the rhetoric from conservatives about the labour movement changed through the 80s and early 90s. With the traditional criticism of union irresponsibility undermined by the success of the Accords, hardline IR reformers began complaining that the problem wasn’t that the labour movement put too much pressure on wages, but that it stopped Australians from enjoying higher wages because of its inflexibility.

Putting aside that the only flexibility IR reformers wanted was the downward variety, this moving of the goalposts, one suspects, might be due for another go as wages data stubbornly shows that the Fair Work framework is not producing any of the wage pressures claimed by business.

But it also puts the onus on the union movement to explain why employers should be paying more when the government itself has boosted real incomes for low income earners. It certainly removes the case for any unions tempted to campaign for higher wages based on the (tiny) cost of living impact of the carbon price.

The Accords were at a time of high inflation, which they helped bring under control, although not to levels we currently enjoy. There’s no pressing inflation case for wage restraint at the moment, but in transferring a corporate tax cut into cash handouts, the government might yet be providing the case for wage cost outcomes even lower than they otherwise would have been — an outcome that is also good for business. Perhaps losing the tax cut will, depending on the outcome of the minimum wage case, prove not to be an unmitigated disaster for business after all.

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Peter Fray
Peter Fray
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