Interview - Radio National with Patricia Karvelas
PATRICIA KARVELAS: The Fair Work Commission’s delivered a 5.2 per cent pay increase for the nation’s lowest paid workers. But the verdict’s still out on how it will affect rising inflation. This week the RBA Governor, Philip Lowe, suggested any wage rise for workers should have a three in front of it, warning anything higher would stoke inflation. With the cost of living tipped to rise by seven per cent by the end of the year, that amounts to a pretty hefty pay cut, and ACTU Secretary, Sally McManus, says he’s out of touch with reality.
SALLY MCMANUS: To think somehow that the system is going to deliver across the board pay increases of five or seven per cent is boomer fantasy land, not realising that the whole system would be incapable of delivering that. We do not have centralised bargaining in this country. It would not be possible for that to happen.
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KARVELAS: That’s Sally McManus who joined us on Breakfast yesterday. Tony Burke is the Minister for Employment and Workplace Relations, and he’s my guest this morning. Minister, welcome.
TONY BURKE, MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS: G’day, Patricia.
KARVELAS: Do you agree with the Reserve Bank Governor that wage growth should be limited to about 3.5 per cent?
BURKE: Well, I don’t think he - he didn’t say limited. I think there’s been a fair bit of speculation from some- I’m not saying from yourself, but from- particularly a couple of the business groups wanting to go further than what the Reserve Bank Governor in fact said. He referred to needing to get to a point where the anchor point was around 3.5. He said that he didn’t want wage increases with a four or five to become too common. So it’s not like 3.5 is there as a cap, but he has issued a warning that we’re not currently in a wage crisis spiral and he’s wanting to make sure we don’t end up getting into one.
KARVELAS: Okay. So an anchor point and not a cap is the way you interpreted it, and as you say there is a bit of different interpretation of it. So do you agree with that statement? Would you like to see very few wage rises be in the four and the fives?
BURKE: We’re in a situation where we will always respect the opinion of the Governor of the Reserve Bank, always. And you'd expect a government to do that. It is also true that we're in a situation right now where the wage price index is running at 2.4. So even that anchor point would involve a significant increase in wages from where people have been to date. Two- you know, 2.4 to 3.5, even if you took it as a cap, which isn't what he said, it would still be the task at government end in making sure we get wages moving, doesn't necessarily change. I do agree that it would be very difficult to imagine a scenario where that wage price index started to get up to fours and fives. The nature of bargaining, the nature of how our wage system works, the limited number of people who are on awards or minimum wages does mean that what Sally McManus referred to in terms of the different challenges as to how quickly the system could even move to those sorts of numbers if it wanted to, are statements of fact.
KARVELAS: Last week you said your advice was that wages could rise by inflation and productivity, and that as long as you don't get beyond those two combined, there won't be an inflationary impact. Do you still think that?
BURKE: Well, what the Governor of the Reserve Bank said- he put two points which we need to hold them together. He didn’t just say 3.5. He also said, you know, he wanted to get inflation back to the target band of between two and three per cent. That means what he’s wanting us to get back to is a situation of exactly that scenario where inflation plus productivity, which trend productivity’s been running at one per cent, 1.2 per cent, that that is the metric that he wants us to get to which will involve continued real pay rises when we can do that. At the moment, we’re- you know, there’s speculation as to how hard inflation will go but no one can argue at the moment that we’re in a wage price spiral simply because real wages are not spiking at the moment. Real wages are running at 2.4 per cent. People are already going significantly backwards.
KARVELAS: Do you agree with ACTU Secretary, Sally McManus, that the RBA Board is out of touch and that Philip Lowe is living in boomer fantasy land over wages?
BURKE: No. Not expressions and ideas for a minute. But, look, what I will say is the Reserve Bank Board has a really important role. There’s different issues that get reviewed by government in terms of the composition of the Board, but you won’t find members of the government attacking the Board itself.
KARVELAS: Some economists argue that letting wages rise in line with inflation will mean job losses. Is it better that everyone suffers some pain to avoid hundreds of thousands of people losing their jobs?
BURKE: Look, I- this is why I’m very cautious of how some people have tried to spin what the Governor of the Reserve Bank said, and it’s for this reason. We were told for a decade wages couldn’t go up because inflation was low. Now some people are saying wages can’t go up because inflation was high. We were told that wages couldn’t go- would be able to go up once unemployment was low. Unemployment’s now low and some people are saying, well, you can’t get wages going up. It’s no surprise that we’ve ended up with a situation where the profit share of the economy and the wages share of the economy over the last decade have just moved in such different directions. So the principle that we need to get wages moving, that people do need to be able to get pay rises, is real. We need to do that in a way that’s respectful of the advice that’s coming from the Governor of the Reserve Bank and we will make sure of that.
KARVELAS: Okay. So you think…
BURKE: But no matter which way you look at it…
KARVELAS: …a three in front of it? A three in front of it is where we should be going as well in terms of wage rises?
BURKE: Well, you want to- what the Governor of the Reserve Bank has said is that he doesn’t want fours and fives to become too common. That doesn’t mean you won’t get some wage rises at four and five per cent. He said that he doesn’t want it to become too common. I expect it’ll be the case that there’ll be union agreements that are higher and non-union agreements that are lower. You know, it’s always been the case that people who are union members end up being paid more than people who are not. You know, there's two pretty simple truths of household economies, which is if you shop around, you'll spend less. And if you're in a unionised workplace you'll earn more. That's one of the reasons I encourage people to join their union.
KARVELAS: Okay, but as the Minister for Employment, you say there will be some cases where a four or a five per cent wage rise might be- might happen or might be necessary. Where do you think those kind of wage rises should happen in the economy?
BURKE: Well, they'll be worked out through negotiation and you can expect that the areas where there are the greatest productivity dividends will be the areas where they're able to deliver the highest pay rises. That's what you'd logically expect. But I'm not going to be dictating here and there within the economy as to who gets a pay rise and who doesn't. But I think we just need- and the conversation we're having now gets right back to the accurate words of the Governor of the Reserve Bank of talking about 3.5 in the medium to long term, but talking about it as very much an anchor point where some will be above, some will be below.
KARVELAS: If you're just tuning in, the Employment Minister, Tony Burke, is my guest and you're listening to Radio National Breakfast.
Does the Reserve Bank need a workers’ representative on its nine-member board?
BURKE: I think you want to - Well, that's a decision for the Treasurer. [Indistinct]…
KARVELAS: Yes. But, what do you think, as a Labor Government, in terms of being? Because one of the claims by Sally McManus yesterday was that they just don't get it, that they don't understand enterprise bargaining - that's part of her critique of the RBA.
BURKE: I want to make sure - and this is the most you'll get, I know you might keep pushing me two more- a couple more times - but we want to make sure that all the boards of government are as representative and skills based with the expertise required as possible. That goes for the- from the Governor- from the Reserve Bank Board through to the smallest advisory committee.
KARVELAS: Okay. So do you feel at this stage that all the boards - RBA's the one I was asking about - are reflecting that?
BURKE: Oh, there's boards that I'm responsible for where the composition of there’s going to need to change over time very significantly. You know, I'm also minister for the Arts - we've got the National Portrait Gallery, I think it is, at the moment without a First Nations representative on it. There's a series of boards where, dealing with Australian culture, where the composition is just not where I believe we need to get it to.
KARVELAS: Sally McManus also disagreed with the RBA's boss on what was driving inflation, Minister, and whether it was due to domestic factors like wage increases or international factors. Are wage rises in Australia are already driving inflation?
BURKE: Well, we- High wage growth can't be driving inflation at the moment because we don't have high wage growth - 2.4 per cent on the wage price index is not high wage growth. And this is where I get frustrated with, particularly one of the business representatives you had on yesterday, where-
BURKE: Innes Willox.
BURKE: With the line of: I hate to say I told you so, but I told you so, and wanting to sheet home the blame for inflation on working Australians. Like, the reality is they've been going backwards. It's not the fault of working Australians that there's a war in Ukraine pushing prices up. It's not the fault of working Australians that we've had a decade without an energy policy. It's not the fault of working Australians that the skilled labour force that were on visas were told to go home during the pandemic and we're having trouble getting them back. All of those inflationary pressures are inflationary pressures that are not the fault of working Australians. And then, to start to imply, well, all the burden needs to be put back on them, I just don't think it’s a reasonable argument.
KARVELAS: So it brings me to the policy response for how to deal with the very different messages we're hearing from business, trade unions - you're right, Innes Willox yesterday, also Sally McManus. So that leaves you as kind of the middleman, the Minister trying to deal with this conundrum in the economy. You're bringing together this jobs summit. Do you want to devise, for want of a better kind of terminology, a new accord to try to get some sort of deal around wage rises, productivity? Is that what you'll be trying to do?
BURKE: Where consensus is possible, we want to find it and we want to drive it. I was really frustrated a couple of years ago when the previous government held their roundtables and there were areas where there was consensus between business and unions, and the government refused to take those issues up because they didn't match the ideology of particular members of the Liberal Party So where consensus is possible, we want to drive it. Where it's not possible, then you work through the ideas that are there. But getting everybody together and working out what government can bring to the table I think makes a huge difference.
With those working groups a couple of years ago, the government got everyone around the table but the only thing that the previous government brought to the table was the table itself. This time we'll be bringing to the table the productivity improvements and participation improvements of a childcare policy. We’ll be bringing to the table areas of free TAFE and acting on skills shortage. There'll be a series of changes that the Government will be bringing to the table to drive productivity, and hopefully that's able to unlock a higher level of consensus than we've seen previously.
KARVELAS: Just on some other issues, if we could do them briefly before I get to my political panel. A parliamentary enquiry into sexual harassment in WA’s fly-in fly-out mining sector has found women have been subjected to an appalling range of behaviours in the industry and that sexual harassment has long been prevalent across the industry. What did you make of this report?
BURKE: We- I've only read the summaries of it. It's a WA report, but I've asked to get a copy of the full report today.
We had all hoped it was getting better in that industry. We had all hoped it was getting better. And you know, if you look at what are the key issues- some of the key issues on safety that we need to deal in the workplace, and what are some of the key issues on wages that we need to deal with in the workplace, they come to the same theme - too many women don't have a safe workplace. Too many women aren't paid the same. And that's going to have to be a key focus of this term of Government.
KARVELAS: Just one final issue that you've been dealing with as part of your portfolio. The new JobSeeker system starts next Friday. It requires JobSeekers to earn 100 points through JobSearch or other activities including study, training, hours or employment, or work for the dole. You've said it's too late to scrap this mutual obligation, but that tweaks may occur. So what have you changed, given there is so much concern about the rolling out of this new scheme?
BURKE: Okay, so the- I've been meeting with the Department during the week and the brief arrived to my home, actually, last night and I've been working through it overnight. So I'm very close to being able to make a decision. But the principles that I'll be applying are these. First of all, anybody who's been doing the 20 applications a month system, if they keep doing that, nothing will change - so nothing will be harder for anyone. Secondly, because-
KARVELAS: So hang on, does that mean that you're, kind of, grandfathering the people on that scheme so they just keep doing the same thing? Is that what you're saying?
BURKE: Well, no. If you want to be able to keep doing the same thing, you'll be able to - so that's the way the point system will be designed. Second thing, everyone will start the new system with a clean slate. So there'll be people who have various penalties from previous months. We're going to be starting the new system as everybody from day one, clean slate. And-
KARVELAS: So you scrap the record? Like, you can clean it out?
BURKE: That’s right.
BURKE: That's right. And the third principle is, if- I want to be able to reward other forms of activity other than the applications of people who are doing that. But I want to do it in a way that if, for example, there is a course that can get you job ready - at the moment, if you suddenly get a job interview, you've got to stop doing the course. And a very high proportion of people now in the case load, higher than we've had previously, are long term unemployed. So if there is a course that is going to get them more job ready, whether it be a skills course or an English language course or whatever it might be, I want them to finish it. I don't want to have a situation where we've built into the structure that you'll start the course, then you'll have to go off for a job interview and then the next month you'll have to try to do the course again. So if you're in a situation where you're doing a full time course, then the full time course becomes your priority, and the moment that's done then you're back to making sure that you're in the job market seeking work.
So they're the three key design principles for how I'll be changing it.
KARVELAS: Thank you so much for joining us and sharing what you will be doing with this scheme as well. Really appreciate your time.
BURKE: Great to talk. Thanks for the opportunity.
KARVELAS: Tony Burke is the Minister for Employment and Workplace Relations.