Yesterday’s prime ministerial address to a conference organised by The Australian Financial Review was cosy, business-as-usual stuff — with the emphasis on business.
The standard drop to selected media outlets the day before. The usual “the prime minister will say” morning articles. The self-congratulatory pabulum from Morrison. The facile editorial write-up by the Fin — complete with its “Team Australia” invocation, as if the only team the Fin cares about isn’t strictly limited to large corporations.
The address by the Reserve Bank governor this morning, however, illustrated just how disconnected from economic reality Scott Morrison seems to be.
After Morrison had finished patting himself on the back about his brilliant handling of the pandemic, the substance of his speech related to “our workforce, what I call D&D — data and digital — and ensuring reliable, affordable and lower emissions energy”. Why some don’t-ask-don’t-tell minion in the PMO thought stealing an acronym from Dungeons and Dragons and slapping it on information technology was a good idea is anyone’s guess.
But what was interesting about Morrison’s comments on workforce was what wasn’t there: any mention of wages.
Morrison didn’t mention wages once. The word “wage” only appears twice in relation to wage subsidies for apprentices. And “income” is mentioned just once.
The only vague reference the PM made to paying workers was to echo the Nationals’ lament that lazy dole bludgers are refusing to move to rural Australia and pick fruit — in the horticulture industry, probably the single most exploitive and abusive industry in Australia.
Horticulture remains top of the list for targeted industries for the Fair Work Ombudsman, which devotes whole slabs of its annual report to describing combating worker exploitation in fruit-picking.
Morrison’s prescription for this problem isn’t to reduce exploitation and encourage higher wages in that industry, but make mutual obligation requirements for jobseekers even more punitive, and promise to get temporary visa holders back in as quickly as possible. Migrant workers are another FWO priority, by the way, being the single most exploited group in the workforce.
Philip Lowe’s speech this morning was a contrast, to put it mildly. He mentioned wages over a dozen times and devoted a section of his speech to discussing why wages had stagnated. His core message on wages is one he’s delivered over and over.
Currently, wages growth is running at just 1.4%, the lowest rate on record. Even before the pandemic, wages were increasing at a rate that was not consistent with the inflation target being achieved. Then the pandemic resulted in a further step-down. This step-down means that we are a long way from a world in which wages growth is running at 3% plus. The evidence from both Australia and overseas strongly suggests that the journey back to sustainably higher rates of wages growth will take time and will require a tight labour market for an extended period.
Wages are central to the RBA’s monetary policy setting and its expectations for the economy over the next few years. Wage stagnation is the reason why it expects inflation to remain dormant until 2024 at least, along with interest rates. Improving wage outcomes is fundamental to any kind of return to economic normality, unless you think 0.1% interest rates are normal.
But Scott Morrison has nothing to say about wages. Literally, nothing. His only proffered ideas around the Australian workforce consist of threatening jobseekers with even more punishment to force them to take underpaid, exploitive jobs, and hankering for the end of the pandemic so he can let businesses get back to relying on temporary migrants.
Both are recipes for pushing wages further down, not lifting them. But the government’s strategy is deliberate wage stagnation, and it leads by example with the imposition of real wage cuts on the Public Service and an industrial relations bill intended to make it easier to cut wages and conditions.
Rarely has there been a more stark contrast between what the central bank sees as economically crucial, and the ideological frolics of a business donor-controlled government, led by a smirking vacuum in a suit.
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I’m never sure why agriculture is exempt from the market forces view of an agile workforce. The rhetoric around the need for agricultural workers seems like it would not be out of place in the pre-industrial era, which feels completely at odds with what’s expected of workers generally and even workers in remote jobs. The mining industry has managed to get FIFO workers to do hard work in remote areas, and nothing is said about dole bludgers. Mining evidently matches the expectation of the market, while agriculture wants to reinstate serfdom…
Supply and demand (for labour) apparently does not apply in agriculture… Most rational reaction to a scarcity of labour would be to increase wages right?
Not if Coles and Woolworths are driving down gate prices like they are now.
Maybe if the rest of us didn’t succumb to the lure of $1 per litre milk, and “Down Down” promotions for food in the supermarkets, there might be more revenue for farmers to pay their workers a dignified wage.
But what goes around comes around. Many non-agricultural workers don’t have the option to reject $1 per litre milk, because their own pay is being pushed Down Down.
I get your point, but I think it would be wishful thinking to say that a rise in prices would equal a rise in wages. I’d imagine that like every other industry, that extra cost would be eaten up somewhere along the chain before it ever got to a worker. We’ve been seeing that same rhetoric justify corporate tax cuts, yet it’s not the workers who benefit from it.
That said, the $1/litre milk is an exploitation of market position, and that’s its own problem agriculture needs to deal with. I wouldn’t see it, though, as the cause of worker exploitation rife within the industry, nor something that alleviating it could potentially fix worker exploitation.
That might be true, but without a rise in prices there won’t be the money to pay for a rise in wages
Dairy farmers are self employed and choose to operate in a trade-exposed industry. Supermarket prices for milk apply to domestically consumed products – a small share of total production. The much-maligned $2/litre milk was for fresh milk and represented a much higher return than for manufactured products, export and domestic. The subsequent increase to $2.40 was a windfall to farmers lucky enough to have contracts to supply fresh milk. Most discussion of fruit and vegetable prices and wages is similarly confused. Part of the wages problem in horticulture is caused by unreasonable ambitions to compete on export markets – Australia is already handicapped by high transport costs, poor soils and an unforgiving climate. These handicaps can only be partly overcome by fiddling migration rules and poor enforcement of labour conditions. Providing the worst abuses are curtailed, employment of Pacific Islanders and backpackers in these industries is on balance a good thing.
Yeah, we probably need to pay more for goods – at least enough to reflect their costs. But why is agriculture singled out as being beyond market forces, including labour?
There’s nothing special, after all, about the deals made in agriculture compared to other industries, yet we’re willing to excuse all sorts of exploitative behaviour by that industry by saying we don’t pay enough on our end. If the costs to produce the goods exceeds what people are willing to pay for it, isn’t the rational thing that the good no longer be produced and instead that labour goes towards a good that people are willing to pay for?
Surely it’s up to farmers to form collectives or some such as a means for combating the the likes of woolworths, coles, iga and aldi to keep pushing prices down. Only then will they be able to pay the kind of wages necessary to get workers out there. Other countries somehow deal with this, why can’t we?
Seems enticing but, buying/supply chain decisions are generally not made locally by supermarkets but in cities; not so confident that other countries have an optimal solution?
Family farms (with declining net income and numbers of children not interested in farming), are being bought out and consolidated by corporate agriculture (who have access to capital and technology) and meanwhile the National Party has less connection with small farmers.
The NFF National Farmers’ Federation would be most effective as they do promote regionalisation, climate science, environmental initiatives, water management etc..
If you raise retail prices, wages would likely stay the same, producers’ income would remain the same, and Coles/WW dividends would grow. But raise wages first (that is intervene in the market by encouraging or mandating wage rises) and, without further intervention, the costs would eventually be passed on to the consumer. In the case of $1 milk, and the $2/kg grapes on offer from Coles yesterday, probably fair enough, as long as all basic wages rose..
You and Drew above raise valid points, but I think if farmers joined together they could quite easily make the argument to have customers pay a dollar or three more for produce if the money was to pay for their very existence and a fair wage to workers. In most 1st world countries both manufacturing and farming are heavily subsidised. We’re following a different trajectory and it’s going to bring us nothing but grief.
When a duopoly of majority foreign owned retailers dominate the supply chain it always ends badly.
I’d like to join this discussion on food prices being too low but, with two comments already held up, it’s pointless.
Poor wages and the amount of food that goes to waste are both evidence that there is too much supply in the agriculture sector. We need to stop subsidising this sector to reduce the supply and to improve efficiency
Absolutely agree about the paucity of wages and the appalling waste of food.
It should be remembered that 70-90% of agricultural output (depending on product, highest for meat at 90%) is exported.
Try to find Australian food in the supamarts – we import pineapples, peanuts, lemons, peas, beans, prawns etc.
Apart from the lunacy of importing things such as pig flesh – from China of all places!
Fresh veg & fruit is far too cheap in this country to pay 1st world wages.
Yet it is more expensive that the prepackaged, precooked, seemingly predigested crap that fills shopping trolleys.
Have a close look, next time you line up at a FoodFlood check-out.
The majority of people spend the majority of their money on stuff that is actively deleterious to their health, happiness & well being.
The post above was blocked by the MadBot – WHY?
Haha BK I love the “smirking vacuum in a suit” – best description of this non-event PM ever!
You have to be sorry for his wife, imagine sharing the same house with him, it is bad enough sharing the same country for a lot of us.!
A lovely pointed example of quality journalism. Great use of the English language “a business donor-controlled government led by a smirking vacuum in a suit”. Par excellent.
Why would Morrison comment on wage growth, both he and Frydenberg are devout disciples of Reagan/Thatcher trickle-down economic policies, Morrison was made federal treasurer by Turnbull even though he has no university degrees or in fact, any training at all in economics and couldn’t even explain where the missing millions disappeared to when Howard made him CEO of tourism Australia WHO THEN SACKED HIM., where the bloody hell are you should have been changed to WHERE THE BLOODY HELL DID THOSE MILLIONS GO.
Rising wages if they contribute at all to inflation do retirees and in fact everyone on a government support payment a major di-service given that government pension and support NEVER keeps up with inflation.
it is way beyond time that we moved to a system whereby the only reasons to increase wages are
Inflation adjustments to wages should be automatic.
Productivity gains should be the role of unions to argue before a Commissioner.
There is no other reason i can think of for baseline wage rates to increase and certaininly the building union approach should be outlawed as the wage increases they demand only add to inflation and unless the building industry can demonstrate productivity gains there really is nothing to share and the wage gains they extract are nothing but greed at the expense of the rest of the community using buildings and the like
One reason wages should increase is that they’ve gone down in real terms over the last 2 or 3 decades
Number 2 hasn’t been honoured by business. Rises in productivity have not been passed on to workers for more than 10 years. So there’s that.