Albanese lays down challenge for Dutton over wages

Labor will ignite a political fight over wages by urging the workplace regulator to order a real increase in pay for 2.6 million workers, reviving a central dispute from the last election and challenging the Coalition to match the move.

Prime Minister Anthony Albanese will move on Wednesday to back the increase in the minimum wage in the same way he campaigned for a $1 boost to the hourly rate three years ago despite strong objections from employers.

Prime Minister Anthony Albanese on the campaign trail In Adelaide visiting Nathaniel’s Coffee and Panini, joined by Premier Peter Malinauskas and Labor candidate for Sturt Claire Clutterham.Credit: Jason Edwards

But the call for a pay rise will not come with a specific target and will not canvass the funding needed for employers to cover the costs, given that the higher wages would be paid by industry rather than taxpayers.

The stance also comes when Australia has suffered a long fall in productivity growth, seen by economists as a key factor in lifting incomes over time.

The move followed the Reserve Bank’s decision to keep interest rates on hold at 4.1 per cent on Tuesday, governor Michele Bullock saying she did not want to “take the brakes off” and see inflation accelerate under lower official rates.

Labor will pitch the position to voters as another sign it will help with the cost of living when it is attacking Opposition Leader Peter Dutton for vowing to repeal the $17.1 billion personal tax cut in last week’s budget.

Opposition Leader Peter Dutton in Berwick in the seat of Bruce on Monday flanked by Liberal candidate Zahid Safi and MP Jason Wood.Credit: James Brickwood

Dutton campaigned in Victoria on Tuesday on his plan to cut fuel excise by $6 billion over the next year, saying this would be worth $28 every week for someone commuting in Melbourne traffic.

Asked about concerns within the Coalition about his campaign so far, Dutton said: “I don’t think you’ve seen anything yet.”

“When you see the difference between the two parties by election day, you will see a prime ministerial candidate who will be able to protect and defend our country when the prime minister is too weak to do so,” he said.

The government’s position on the minimum wage, to be made in a formal submission to the Fair Work Commission on Wednesday, revives the dispute from the 2022 campaign when then-prime minister Scott Morrison called Albanese a “loose unit” for backing the pay rise.

The argument at the last election led Albanese to hold up a $1 coin at his media appearances to highlight his support for an increase in the minimum wage despite the Coalition attack.

Albanese said in a statement on Tuesday night that he had “absolutely” supported the pay increase three years ago and would do the same now.

“This campaign, we will again be advocating for workers to get a pay rise to not only help them deal with the pressures of today, but to get ahead in the future,” he said.

The Labor position in the 2022 election campaign was that it backed a 5.1 per cent increase in the minimum wage to match inflation at the time. The government submission to the wage umpire last year said the commission should ensure wages “do not go backwards” for low-paid workers.

The position this year is worded to encourage a pay rise, not just a decision to match inflation, because it asks the Fair Work Commission to award an “economically sustainable real-wage increase” to workers on awards.

Labor estimates this would help 3 million people, including low-paid workers in retail, childcare and cleaning industries.

The Reserve Bank noted on Tuesday that inflation could not be the “sole focus” but that it was the bank’s priority.

“Inflation is the number-one thing you have to keep in control,” Bullock said.

“We’ll have an eye on what’s going on with unemployment, but there’s no point taking the brakes off and letting inflation accelerate because that will mean that unemployment eventually has to go up.”

Monthly inflation data released last week showed price growth continued to ease in the 12 months to February, with the bank’s preferred measure – the annual trimmed mean – dropping from 2.8 per cent to 2.7 per cent, within its target band of 2 to 3 per cent.

However, the quarterly inflation figures due at the end of this month will have a greater influence on the bank’s next decision in May.

Financial markets put the chance of the RBA cutting rates at its May 19-20 meeting at 75 per cent.

The Reserve Bank’s head of economic analysis, Michael Plumb, warned in February that labour productivity in Australia had averaged only 0.2 per cent per year in the six years to June 2024.

“Productivity matters because it is a key driver of economic living standards,” he said. “Over the longer run, higher productivity growth expands the supply capacity of the economy and supports growth in incomes, wages and aggregate demand.”

While productivity growth has been slow, workers have gained about $7500 per year in higher wages under the Fair Work decisions since the last election, according to government estimates.

Industry groups have warned about the rising costs for employers when they must plan for other expenses, including an increase in the superannuation guarantee levy from 11.5 to 12 per cent from July 1.

When the ACTU argued for a 5 per cent increase in the minimum wage last year, the Australian Industry Group countered with a 2.8 per cent increase and the Australian Chamber of Commerce and Industry said it should be 2 per cent.

The business groups believe the decision on the minimum wage will flow through to about 3 million workers, including many who are on higher pay rates, arguing the Fair Work decision sets the baseline for wage negotiations under enterprise bargaining.

“To suggest the decision has a minimal impact on workplaces across the economy is simply a myth,” Australian Industry Group chief Innes Willox said last year.

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