Jim Chalmers’ absurd real wage claim

Treasurer Jim Chalmers’ claims about real wage increases show he needs some serious lessons in primary school arithmetic.

Treasurer Jim Chalmers needs to understand some basic arithmetic. Picture: NCA NewsWire / Glenn Campbell

Treasurer Jim Chalmers is not only understandably delusional.

He also needs some lessons in primary school arithmetic, secondary school economics, university level statistics, and, well, reality.

After that we can think about taking off his trainer wheels.

He’s been gloating that “under Labor, real wages were rising again”.

On the basis that, yeah right, the wage price index had gone up 4.2 per cent in 2023 against a 4.1 per cent rise in the Consumer Price Index.

Put that all-of 0.1 per cent increase in wages rising faster than inflation together with the $275 cut in electricity prices ‘delivered’ by Labor, and a million champagne – and I mean, real, French champagne – corks were sent popping across the nation.

Well, first point: that 4.2 per cent generalised wage rise is before tax.

With most people paying – at least – a 30 per marginal tax rate, that’s actually at best a 2.9 per after-tax wage rise. Versus 4.1 per cent inflation.

Sorry Treasurer, that’s not arithmetic that convinces happy days (under Labor) are exactly here again.

Second, the 4.2 per cent is an average; some, especially in the public sector, got more; many, mostly in the private sector, got less than 4.2 per cent. Furthermore, let’s not mention the previous year - 2022 - with Labor in power for seven of its months.

In that year, the wage index rose 3.3 per cent. That fell just a tiny bit short of the 7.8 per cent surge in the CPI inflation index.

Let’s not also mention, that in every one of the seven years under the Coalition government from 2014 to 2020 - and that’s including the first disastrous year of Covid - wages rose faster than CPI inflation.

Over the seven years, wages, on average, rose by 15 per cent – significantly outpacing the 11 per cent total increase in CPI inflation over those seven years.

It was only in the Covid years of 2021, under the Coalition, and 2022, shared between the Coalition and Labor, that wages growth fell behind CPI inflation.

Question: which would you prefer?

Pick a Coalition year: 2018.

Yes, wages up only 2.3 per cent; but outpacing, if only just, 1.8 per cent CPI. But with home loan rates around 5 per cent.

Now, wages up 4.2 per cent, CPI 4.1 per cent. But a home loan rate north of a punishing 7 per cent.

But, the really big point: does anyone out there believe, does anyone out there feel, that inflation was only 4.1 per cent?

The CPI is not, and I repeat not, a measure of cost-of-living.

Steven - Treasury Secretary, Kennedy - should program a briefing with ABS boss David Gruen.

The ABS helpfully published in January a range of COL (cost-of-living) indexes. They showed rises of between 4 per cent and 6.9 per cent over 2023.

Earth to Chalmers: a 6.9 per cent rise in cost-of-living is just a smidge higher than a 4.2 per cent pre-tax, 2.9 per cent after-tax, wage rise. Coming on top of a 9.3 per cent cost-of-living surge in 2022.

Take heart, Jim: we’ll get the trainer wheels off some day.

Originally published as Jim Chalmers’ absurd real wage claim