Tim Watts (Gellibrand, Australian Labor Party) Share this | Hansard source

Earlier this week we saw something extraordinary—a recognition, at the highest levels of economic policymaking, of a truth that is currently being felt in households across Australia. Reserve Bank Governor Philip Lowe told the Crawford Australian Leadership summit that the lack of real wage growth in the Australian economy was 'a crisis'. And he is right. Australia has now experienced four years of declining wages growth under the Abbott-Turnbull government. Wages growth is flatlining at just 1.9 per cent per annum—the lowest on record. In real terms, wages have actually contracted—indeed, they have contracted the most since the recession of the 1990s. Living standards have stagnated and inequality is at a 75-year high.

Things have gotten so bad that even Senator Abetz has stopped warning about an imminent wages breakout. The Reserve Bank governor is not interested in this as a question of industrial fairness though. Things have gotten so bad that the absence of wage growth is now a serious economic challenge for the Australian economy. Indeed, he noted:

Households are gradually coming to grips with slower growth in their real incomes. Growth in wages is unusually low, average hours worked have declined and the nature of employment is changing ... Many households are also coming to grips with higher debt levels and, in our largest cities, high housing prices. We need to watch these issues carefully.

Wages growth is so weak that it is now acting as a choke on household spending—limiting the growth prospects of the Australian economy.

The RBA governor came to the conclusion that workers should ask for a raise. The RBA governor gets it, but the Prime Minister and the Treasurer remain completely out of touch. The Treasurer, this week—overturning decades of economic orthodoxy linking wages to productivity growth—suggested in response to questions about this economic crisis that the best way to respond to this crisis was to cut company tax because this would increase corporate profits and 'wage increases should follow the profits that companies are making'.

Let us pause just for a moment to reflect on a Treasurer who has become such a lost cause and a joke that nobody is even surprised at his latest fumbling of basic economic policy. It is barely noted. The Treasurer's transformation in his short period in office is he has evolved from a bullyboy Biff Tannen type, when he was on top, to a shouty but unpersuasive Brick Tamland type, to today's sad spectacle: the vaguely pathetic Ralph Wiggum, who we have seen in action this week. He is a joke. Even if you were to subscribe to the Treasurer's unique, corporate profit-driven view of the world, company profits were up 40 per cent last year while wages were only up by 0.9 per cent. Does that sound fair?

A government that cared about fairness would be trying to tackle this crisis. What is the Turnbull government's response? What do they say when they are asked what their plan is to deal with this crisis and give Australian households an income boost? More of the same! More of the same $65 billion tax cuts. It is not quite as good as that. If they were doing nothing, it would be fairer than what they were actually doing. Instead, they are actively making things worse, greasing the rails for the well off, who are already doing well, and adding yet more lead to the saddlebags of working Australians.

In 10 days time, on 1 July, we will see an increase in income tax for all PAYE earners earning over $21,000. Not all of them, actually. On the same day, we will see a $16,400 tax cut for millionaires and a tax cut for the top two to three per cent of income earners earning more than $180,000 a year. On the same day, quarterly power bills will go out, pricing in the policy uncertainty, the policy failure of the Turnbull government's ideological divisions on energy and climate policy, pricing in a refusal to act on the recommendations of the Finkel review to introduce a clean energy target—to bring down emissions, to bring down electricity prices to provide certainty of supply for Australian households.

We will see a continuing refusal to address tax concessions, skewed to the top end of town, like negative gearing and capital gains tax, prioritising those who are already doing well and prioritising the best off. Most shamefully of all, we will see a government continuing to refuse to intervene to stop a cut to the wages of Australia's lowest paid. This week the Reserve Bank governor said Australian workers should ask for a raise. And this week the Turnbull government will refuse to stand in the way of a cut to the wages of 700,000 of the most vulnerable workers in our economy. These are the people who need a wage rise the most. These are the people who are living from pay cheque to pay cheque. These are the people for whom every dollar that comes in goes back out to the Australian economy, driving the jobs and growth that those opposite so often claim.

What is the Turnbull government doing to attack this macro policy problem, the problem of a lack of consumer spending in our economy? What is the Turnbull government doing to address the moral problem that we confront with inequality at a 75-year high? Those who have— (Time expired)

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