Australia faces a future of “low growth, low productivity, flat wage economy” if the Morrison Government does not devise a long-term vision for the nation, Opposition Leader Anthony Albanese has said.
In a speech to the Committee for Economic Development of Australia (CEDA) on Thursday, Albanese accused the Coalition of “wage suppression” and failing to drive the next phase of economic growth.
“Australia has reached a crossroads,” Albanese said.
“Are we going to surge forward from our head-start, or drift back to what we had before: a low growth, low productivity, flat wage economy?”
Annual wage growth is currently at an all-time low of 1.4 per cent.
The COVID-19 pandemic interrupted Australia’s 29-year run of economic growth for the first time, but the economy has since rebounded as government stimulus kicked in and businesses recovered.
However, while the Morrison Government’s multi-billion dollar stimulus packages steered the nation out of immediate danger and kept many Australians and their businesses afloat, many longer-term issues have risen to the surface.
“The economic uncertainty gripping Australia goes beyond the urgent challenges posed by the pandemic. In fact, much of it pre-dates the pandemic,” the Labor leader said.
Meanwhile, Australian National University Crawford School of Public Policy Peter Martin has said the last high point for Australia’s productivity growth was 2005, a data point that isn’t likely to improve with Australia’s closed borders stemming the flow of migrants.
Research from thinktank the Australia Institute Centre for Future Work has shown that that the penalty rate cuts have resulted in $80 million in lost pay for Aussie workers.
Albanese took square aim at wage growth, which has hit its slowest point in a generation, according to a new McKell Institute report.
“When my colleagues and I talk about Australians finding it harder to pay rent, make ends meet, put food on the table, it’s not a question of feeling, it’s a matter of fact,” Albanese said.
“The struggles being put on everyday Australians are the result of this government’s choices.”
A report by Per Capita found that consumer spending is expected to drive the next phase of Australia’s economic growth, but that this would not happen without a lift in wages.
“Higher wages for low and middle-income earners translates directly to more consumer spending in local economies,” the report said.
“Put simply, if people don’t have enough hours of work, or if their hourly rate of pay is insufficient to meet the growing costs of living, they won’t have sufficient money to spend into the economy.”
Low wage growth is on purpose
The Coalition themselves have made moves in the past to suppress wages by way of a cut to penalty rates all the way back in 2017.
The rationale at the time was that the penalty rate cuts would make way for the creation of new jobs by encouraging businesses to hire more.
But 2019 research conducted by University of Wollongong and Macquarie University academics found that not only were there virtually no new jobs created as a result, but that work actually declined for some.
Wage growth has hit its lowest level since it began to be measured in 1997, according to the McKell Institute.
"Slow wage growth is an economic problem created at least in part by deliberate government policy," wrote McKell Institute director of policy Edward Cavanough, Director of Policy.
"In March 2019, then Federal Finance Minister, Mathias Cormann, described low wage growth as 'a deliberate design feature of our economic architecture.'"
Albanese noted that wages had grown under the Labor Government between 2007 and 2013 by 4.6 per cent.
But since the Coalition took power in 2014, wages have been stuck at 2.5 per cent, he said.
“Put another way, if this government had done nothing but sustain the same rate of wages growth as there was under Labor, the average worker would be $254 a week better off today. That’s $13,000 a year.”
This has implications on Australia’s economy, he added.
“When Australians aren’t earning enough to pay for the essentials, the first thing they do is cut back.
“When families go without, family businesses miss out. Everyone gets hurt when wages stay too low for too long.”