A couple of years ago, the government changed the rules so that families on $150 000 a year or more wouldn’t be eligible to receive family payments. There were the predictable cries of ‘class warfare’, but there were also claims that $150 000 in Australia leaves you struggling to make ends meet.
The campaign by The Australian newspaper against the Fair Work Act has had a few phases. I’d like to go through a few of their key claims and evaluate them against recent data.
The wages breakout
I grew up in Perth, where the minimum temperature almost never goes below 1 degree. Even in the depths of winter, the maximum daily temperature is usually in the teens. There’s not a lot of need for heavy jackets or thermal underwear. It never snows.
[A]dopting an incomes policy was like jumping out of a second storey window: nobody in his right mind would do it unless the stairs were on fire… The stairs were aflame in Australia in 1983, when the Hawke Government won office. -Peter Cook.
Has the Fair Work Act made the labour market less efficient at matching unemployed people to jobs? One way economists would try to answer that question is with the Beveridge curve.
Should we consider the croupiers at Crown Casino to be public sector employees? How about people who file away books at the National Library of Australia? The answers to those questions seem to be yes and no, respectively, according to the Institute of Public Affairs.
How would we know if the labour market was ‘flexible’? One way is to look at how the jobs market responds to economic shocks. During the GFC, when the Howard Government’s labour laws were still in effect, the number of hours worked in Australia fell while the number of people in employment didn’t fall.
The Chamber of Commerce and Industry advanced this as evidence that the flexibility of the then-legislation helped to prevent a big rise in unemployment as seen in other countries:
Imagine if everyone with a surname starting with the letter C didn’t have to pay income tax. For some arcane reason, back in the mists of time when the tax was introduced in Australia, those with a ‘C’ name were completely exempted, and the exemption remained on the books, stubbornly resistant to efforts to remove it.
David Uren’s piece in the Australian today has some pretty eye-catching figures:
…nobody starts to pay tax until their earnings exceed $18,200, but the Australian Bureau of Statistics shows that 60 per cent of all households receive more in cash benefits than they pay in tax.
Tasmania has set an unfortunate record: it’s the first Australian state in which less than half of all adult men are employed full time. In the lead-up to the financial crisis, the proportion of Tasmanian men in work soared, rising faster than the national ratio, but it has since plummeted. In February 2013, just 48.3% of Tasmanian men aged 15 and over were in full-time work; this was 8.3 percentage points below the national figure of 56.6%.