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.