The Australian a Council of Trade Unions has put forward a number of policy priorities which it would like to see implemented if Labor wins the next election.
They are a mixed bag. The six demands were for a GST roll-back; tax cuts for low income families; a system of tax credits; a test case for more reasonable working hours; a decent annual wage rise for the low paid; and abolition of workplace laws that have weakened unions. Some of those demands coincide with existing Labor policy. On other points, the ACTU would like to break new ground.
It is the aim of both major parties, unions and employers to lift the living standards of Australian workers, including those who at present are among the lowest paid in the community. The only difference is how does one go about achieving that. There is little point granting pay rises to employees if employers businesses do not get productivity gains to sustain those rises. All that results in is higher inflation and everyone being worse off. On this score, the idea of passing new laws that will give the unions a more privileged position is flawed. So, too, is the idea that the mere say-so of an arbitration commission can generate additional community wealth sufficient to pay some arbitrated pay rise. Any attempt by industrial-relations tribunals to increase wages must be paid for by its someone somewhere – – usually in the form of fewer jobs as employers desert for more competitive environments or force their existing workforce to fill the gap, often in the form of a longer working hours – – ironically one of the other concerns of the ACTU.
Nonetheless a nation as a wealthy as Australia should be able to set certain minimum standards of pay below which the community should say it would be better for that business not to operate at all rather than operate on slave wage rates. But this concept should be limited to a safety net. On that score the ACTU is right. The Labor Party should commit itself to a decent minimum wage.
On at the question of tax credits, the ACTU urged at the Labor Party to continue with its 1998 policy. Labor has backed away from this policy saying it should only be introduced when it budgetary conditions allow. The tax credit scheme was one of Labor’s better policies at the last election. It meant that people on welfare could earn extra money without falling into the trap of very large marginal tax rates that acted as a disincentive to work. Labor’s 1988 policy would have set a negative tax rate for some people moving from welfare to work so that rather than facing a fairly pitiful net gain for a large effort in the workplace, people were given extra payments rather than extra tax for going out to work. Rather than abandoning this policy, Labor should have fleshed out of the details and continued with the policy into the next election. Getting people out of the welfare trap should be a major priority of both major political parties. On this score, Labor should heed the ACTU’s urging.
On the other hand, Labor should ignore the ACTU’s call for special laws that put the union movement in a special position. The best bulwark against falling union membership is not special privilege laws but for unions to earn more widespread membership by satisfying member needs. On this occasion, Labor was wise to state that it would not enter into a formal accord with the ACTU as was done after Labor won office in a 1983. The history of the 1983 record is a dismal one. Its upshot was that in return for government sanctioned greater union power the pay and conditions of ordinary workers fell.
On tax cuts, the ACTU called for targeted cuts for lower income families. It should have widened its call. Most of the so called targeted cuts of previous years have been merely winding back of bracket creep. A more long-lasting tax cut would be to reduce the top marginal rate.
On the winding back of the GST, both the ACTU and Labor have got it wrong. Most of the GST woes can be put down to the fact that the GST has got too many exemptions. If anything, the GST needs a roll forward to apply it more universally and even at a higher rate. In return income taxes should be cut.