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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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.
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.
My last post consisted of the sort of Sisyphean snark about The Australian that I’d like to cut back on, but can’t resist writing. I was a little taken aback that the same paper that labelled a modest trim to family payments for high-income households as ‘class warfare’ would unashamedly lament that ”the old principle that welfare should exist only for those who genuinely need it appears no longer to hold.”
The Australian editorial, 11 January 2013:
Australia’s welfare system is crying out for comprehensive reform… Is it fair that a couple with one child and a household income of $160,000 a year receives a family tax benefit, or that a young couple buying, for their first home, a $700,000 apartment in Toorak are paid the first-home owners grant? The old principle that welfare should exist only for those who genuinely need it appears no longer to hold.
Yesterday, the national accounts released by the ABS showed that we had the fastest productivity growth in over a decade, in the year to the March quarter. You would think that this would give pause to the alarmists who claim that our current industrial relations laws are ruining the economy. You would be wrong.
At 11:30 this morning, the ABS published the Australian national accounts for the March quarter of this year. Among other things, they show that the rate of productivity growth has surged – in the past year, labour productivity in the market sector grew at its fastest pace in over a decade. I’m sure this will be a major focus of the news coverage tomorrow, just as the disappointing productivity numbers were closely examined in early 2011. Just in case The Australian doesn’t choose to highlight the issue, here’s a handy chart for your reference:
Labour productivity in the market sector – year ended growth
Source: Calculations based on ABS 5206, table 1.
While it’s true that you should be careful about drawing too many conclusions from the quarterly productivity data, that was just as true this time last year when various pundits leapt on the data to suggest that the Fair Work Act has damaged Australia’s productivity performance.
Imagine if Australian prices and wages both went up by five per cent in a year. The cost of living for Australians would be unchanged.
