Treasurer Jim Chalmers slaps down business lobby’s call for wage restraint following tax cuts

The Treasurer has hit back at claims minimum wage workers should receive a smaller increase from July due to the stage 3 tax cuts.

Treasurer Jim Chalmers has hit back at the business lobby over its push to reduce the size of this year’s increase to minimum and award wages in light of the relief workers will receive in the form of the stage 3 tax cuts.

Speaking in Canberra on Monday, the Treasurer said the Albanese government would simultaneously push ahead with its reformed tax package and support a pay bump for the lowest paid.

“We want to see a decent increase in the minimum wage as well as – not instead of – these tax cuts that we are proposing,” Dr Chalmers told reporters.

“Our tax cuts are never intended as a substitute for the decent wages that workers in our country need and deserve.

“This is not an either or here. We want to get wages growing in our economy at the same time as we provide additional cost-of-living relief via the tax system.”

Treasurer Jim Chalmers said the government would press ahead with its tax changes and support a ‘decent increase’ to minimum wages. Picture: NCA NewsWire / Martin Ollman

The annual wage review, conducted by the Fair Work Commission and released in July, affects almost three million award and minimum wage earners.

On Sunday, business groups called for any increase to be docked given the Albanese government’s overhaul of the Morrison-era tax cuts, which will provide additional relief to low and middle income earners while paring back support for those on higher incomes.

“The government should put the case that the Fair Work Commission should take full account of the income tax changes when it considers this year’s increase in minimum wages,” the Australian Industry Group said in its pre-budget submission.

“Moderating the National Minimum Wage increase that would otherwise be applied will substantially reduce the inflationary pressures stemming from wages growth.”

Ai Group chief executive Innes Willox argued the minimum and award wage decision should account for the Albanese government’s overhaul of stage 3. Picture: NCA NewsWire / Martin Ollman

In 2022 and 2023, the Albanese government effectively backed an inflation-matching wage increase for minimum wage earners by arguing that Australia’s lowest paid “should not go backwards”.

Last year, the industrial umpire ruled that about 180,000 minimum wage earners would receive a pay increase of 8.6 per cent to $23.23 an hour, while 2.6 million award-reliant workers would see their pay rise by 5.75 per cent.

But whether the government will again support an inflation-matching wage rise is yet to be determined.

Dr Chalmers has previously warned that minimum wage claims should not rise in line with inflation in every annual determination by the commission.

“We don’t believe that there should be an automatic, mechanical minimum wage rise on every occasion that perfectly matches the headline inflation rate,” Dr Chalmers said following the commission’s 2022 determination.

On Wednesday, the Australian Bureau of Statistics will release updated inflation figures for the December quarter that economists expect will show a further moderation in price pressures.

Asked on Monday whether he would consider any changes to Labor’s updated tax package in order to ensure its passage in the face of criticism from the Coalition and the Greens, Dr Chalmers said the government’s intention was to pass the changes as announced.

“So I say to the parliament … If you accept that Middle Australia’s under pressure and it is, you have to back out tax cuts for Middle Australia,” he said.

“You can’t be for Middle Australia and against the tax proposals that were put forward last week.”

Originally published as Treasurer Jim Chalmers slaps down business lobby’s call for wage restraint following tax cuts