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The Sun Herald
Sunday, November 8, 1998

PM urged to cut pay rates

By Fia Cumming
Political Correspondent

THE Howard Government is preparing a major assault on unemployment as a new study suggests that up to 900,000 new jobs could be created.
The astonishing figure, which would slash jobless rates and provide work even for those who have stopped looking, comes in a secret report commissioned by Employment Minister Peter Reith.
It recommends a radical combination of cutting the minimum wage while adopting tax credits for the low paid.



900,000 NEW JOBS
The game plan - 900,000 jobs

By Fia Cumming
Political correspondent

From Page 2

THE Howard Government is preparing for a major assault on unemployment, armed with a consultancy study promising up to 900,000 new jobs, by cutting minimum wage rates.
The confidential study, which was commissioned by Employment and Workplace Relations Minister Peter Reith, is designed to trigger a national debate involving industry and unions.
Consultant Des Moore, director of the Institute for Private Enterprise, suggests that welfare payments already replace the need for a minimum wage safety net.
But in a radical move, he suggests the Coalition adopt Labor leader Kim Beazley's tax credits system to ensure low paid workers have an acceptable income.
Senior ministers are in favour of reducing controls on wages, especially for the young and unemployed, as the key to creating a surge of entry level jobs.
The ministers include Prime Minister John Howard and Treasurer Peter Costello, as well as Mr Reith.
Mr Reith is expected to tread cautiously on a second wave of industrial reforms and will governments to avoid confrontation with unions or the Senate, following the waterfront showdown.
But the Government is determined to deal with a problem that cost it dearly during the Federal poll last month.
It has also been urged to proceed in the direction of wage deregulation by the International Monetary Fund.
An IMF review of the Australian economy recommended last month a more free market approach to wages to move Australia closer to the United States, where unemployment is just 4 per cent.
Mr Moore has handed Mr Reith his report concluding that the social and economic reasons for wage controls are now out of date.
Mr Reith will present it to the next meeting of the council of labour ministers on November 27, after which it will be made public.
A spokeswoman for Mr Reith said yesterday he was still considering the report.
But she said the Government welcomed contributions to the debate on creating jobs, such as the wage freeze proposed by five leading economists, and Mr Moore's report.
"We are prepared to look at all these various options that are put to us," the spokeswoman said. "But certainly we are not in a position of endorsing or rejecting any of them at this point."
Mr Moore is understood to conclude that the centralised industrial relations system is no longer needed to protect workers because of the comprehensive welfare system.
Low income workers and the unemployed would be better off with less regulation and a tax Credit system - similar to that proposed by the Labor Party before the election - to top up low wages.
The minimum wage is $373 a week, set by the Industrial Relations Commission in April, although most awards have higher minimum rates.
Mr Moore's analysis suggests the Australian system has not stopped low paid workers from falling behind and the gap between high and low paid workers has been growing since the 1970s.
Moreover, the proportion of "working poor" in Australia is about the same as in the US at about 7-8pc, even using a generous definition of less than 25000 for a family income.