Millions of Aussies could get pay rise under Albo

Millions of Australians could be in for a pay rise under Anthony Albanese’s government.

Millions of Australians could be in for a pay rise under Anthony Albanese’s government.

During the election campaign, the Labor leader backed the idea of a huge increase to the minimum wage.

He said if Labor won, his government would make a submission to the Fair Work Commission to lift the minimum wage – which is currently $20.33 an hour – by 5.1 per cent to keep up with inflation and prevent Australians from “moving backwards”.

But the pledge sparked alarm from experts and prompted Prime Minister Scott Morrison to label his opponent a “complete loose unit” on the economy.

Mr Albanese’s pledge came after he refused to back the Australian Council of Trade Unions call for a 5.5 per cent increase to the minimum wage as it was higher than the inflation rate, but also said “people can’t afford to go backwards”.

He was later asked whether he supported a 5.1 per cent increase to keep pace with inflation, to which he replied, “Absolutely”.

Mr Morrison said Mr Albanese’s proposal would drive up inflation and interest rates.

“It would threaten the strong wage growth we have had in employment, and ultimately it would force small businesses potentially out of business altogether,” he said.

“As a prime minister you can’t just go around making stuff up and thoughtlessly think that people can respect you when you just make these sorts of careless comments on the economy. What he said yesterday puts a chain reaction in place, dominoes falling that lead to higher cost of living.”

Prime Minister-elect Anthony Albanese. Picture: James D. Morgan/Getty Images

Industry groups and economists also warned against the idea.

“In short, wages growth of 5.1 per cent all else being equal means higher interest rates than otherwise and the pain lands on those with a mortgage,” said Commonwealth Bank head of Australian economics Gareth Aird told The Daily Telegraph.

AI Group chief executive Innes Willox said, “An increase in the minimum wages as demanded by unions would have adverse impacts on the economy, on unemployment, on underemployment and on sentiment, and would be a setback for many low-income households.”

But Mr Albanese refused to back down, telling 2DayFM it was “nonsense” that a 5.1 per cent wage increase would hurt interest rates, because Labor had a plan to ensure productivity was at a rate that would keep inflationary pressures under control.

“I don’t want people to be left behind. People are doing it really tough – the cost of living, the cost of everything is going up but their wages aren’t,” he said.

Mr Albanese told the ABC’s 730 program the Fair Work Commission had last year recommended a 2.5 per cent wage increase when inflation levels were 1.1 per cent.

Underlying inflation figures are currently at 3.7 per cent, while the consumer price index is 5.1 per cent.

“We have clearly said that people should not fall further behind,” Mr Albanese said.

Labor’s industrial relations spokesman Tony Burke stood by Mr Albanese on Wednesday morning, saying a wage increase of only three per cent was a pay cut.

“If inflation is running at 5.1 per cent, then [3 per cent] is a pay cut. The people who are most reliant on the annual wage review are the people on the lowest wages,” Mr Burke told ABC News.

“People can’t keep going backwards. It’s not unheard of at all for the annual wage review to go in front of inflation, so long as it doesn’t have an inflationary impact.”

— with Ellen Ransley

Originally published as Millions of Aussies could get pay rise under Albo