The Sun Herald
Sunday, November 8, 1998
PM urged to cut pay rates
By Fia Cumming
THE Howard Government is preparing a major assault on
unemployment as a new study suggests that up to 900,000 new jobs could
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.
FULL REPORT: Page 2.
900,000 NEW JOBS
The game plan - 900,000 jobs
By Fia Cumming
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
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
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
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economic reasons for wage controls are now out of date.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
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
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.