Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Hansard source

Thank you for the opportunity to examine the budget that has been handed down by the government and the assumptions that are contained therein. In particular, I am interested in looking at some of the figures that go to forecasts for wage growth and the forecast for fewer jobs over the forward estimates compared with the budget of last year. Firstly, can I go to wage growth. What we do know is that we are seeing the lowest wage growth in this country for at least 20 years. A few weeks ago, the ABS came out and confirmed what I think most Australians already know—that is, wage growth is falling in real terms. People's wages are going backwards. Effectively, there is a wage recession in this country. As a result, people are struggling to make ends meet. They are struggling to pay for essentials. They are struggling to pay for the mortgage, the rent, to put petrol in the car and to provide for their families. They are feeling the stress that is clearly the result of falling wages in real terms in this country.

We are aware that the government, despite the fact that wages are falling, wants to continue to support a decision of the Fair Work Commission to cut penalty rates, and we see tax arrangements changing to the extent that people earning a million dollars will receive a tax cut on 1 July of $16,400. That contrasts quite starkly with what will happen for other workers. Indeed, workers earning under $87,000 will receive a tax increase. So at the end of this month, retail workers will see their taxes go up and their wages go down at a time when wage growth is the lowest in more than 20 years.

Off the back of that, the budget forecasts that wage growth will actually reach 3¾ per cent at the end of the forward estimates. I am somewhat sceptical about that assumption. Having seen wages flatline over the life of this government and to now see the forecast in wage growth at 3¾ per cent over the forward estimates, it is somewhat of a surprise. I think, therefore, it is incumbent on the government to explain how it is that wages will increase to such an extent, given the recent years of wage decline. This is a very important question. It goes not only to whether Australian workers should believe the government that their wages may start to improve in real terms but also to whether, in fact, the government can rely upon the revenue that they will receive based on the forecasts contained within the budget. If the budget forecasts are wrong—if they are inflated and optimistic, as many, many commentators suggest—then not only do we have a situation where workers are not going to see the improvements to wage growth but we are also going to see a problem with revenue for the government and therefore a real challenge for the government to balance the budget, as they say they will, in the future.

On that basis, I ask the minister who is acting on behalf of the employment minister: why is it that the government is so confident that the wage growth forecasts, as contained within the budget, are correct? What evidence does the government have, beyond what is contained within the budget, to suggest that these forecasts are not unrealistic, as many commentators have chosen to conclude?

See this speech in context