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.
A discussion of Australian political and economic issues and ideas, by Matt Cowgill.
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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.
Now imagine I travelled to Siberia. Having never needed thermal underwear or gloves before, would it be right to conclude that I wouldn’t need them in Siberia? Clearly not. Walking around Oymyakon in jeans and a hoodie would be a recipe for a rapid and unpleasant death. The fact that I’d endured countless Perth winters with only a jacket would be no defence against the cold.
In a Perth winter, a jacket and jeans might be enough to stabilise my temperature. In Siberia, I’d require much more. The ‘neutral’ clothing differs depending on the circumstances. Just as it makes sense to adapt to your circumstances when getting dressed, so does the Reserve Bank need to adapt to changes in the economy.
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.
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.
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.
A household in the middle 20 per cent of the earnings distribution pays income tax of $143 a week but gets cash social benefits totalling $164. Subsidised health, education and childcare deliver that average household a further $346 a week.
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%.
Imagine that it’s grand final day, only rather than being the massive television spectacle we’re accustomed to, no cameras or journalists are allowed inside the MCG. No spectators are allowed to communicate the score with anyone outside the ground.
