Gilding the aspirational lily

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In a speech to the National Press Club on 26 October Michael Chaney, the President of the Business Council of Australia drew on ‘focus group work’ to assert that there has been a major shift in the Australian mindset; that Australians are becoming more aspirational, more confident and more capable. Mr Chaney acknowledged that for many disadvantaged Australians, an aspirational view of the world is not currently a reality. However, he contended that, ‘positive attributes are being expressed by most Australians about Australia. Instead of being focused on basic needs, Australians are increasingly more focused on how they might go about locking in wealth and the prosperity they’ve worked hard for.’ Chaney suggested that this shift can best be summarised as a transition from ‘battlers’ to ‘aspirants’

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Mr Chaney’s speech generated only slightly more interest in the national media than an earlier address to the National Press Club by ACTU Secretary Greg Combet. Combet’s address, an elaborately detailed comparative study of collective bargaining practices and policies in Australia and developed countries, seemed to disappear without trace in the mainstream media a week or so earlier. Mr Chaney’s speech, which got a small write up in the Murdoch press, demonstrated that he and the Business Council of Australia (BCA) see themselves in opposition to Combet’s concern with battlers and collectivists aspiring to ‘a fair go’.

Chaney’s portrayal of Australian culture and values is nothing new — the same line was used to sell and justify policies like WorkChoices, for example in Prime Minister Howard’s ‘enterprise worker’ speech for Gerard Henderson’s Sydney Institute last year. Relying heavily on a focus group survey by Liberal-associated pollsters Crosby Textor, Chaney’s speech was a classic example of the selective representation of cultural change in order to back up a policy agenda. If the research cited by Michael Chaney is to be interpreted to mean that respondents are imbued with a desire to embrace a less secure world, what is the evidence and by whom is the embrace being made? Who was surveyed and what were they asked?

The methodologies of opinion research are often unclear, and it is important to be aware that the results of polls and focus groups may not tell the whole story, especially when the research is conducted by political groups for political ends. In an article published in the June 2006 edition of Public Affairs News, Lynton Crosby himself describes the advantage of poll research and focus group surveys in working out how a decision can be communicated to build support in the public sphere. ‘Polling can diagnose your client’s standing amongst politicians and help you align your goals with what’s important to political decision makers.’ The use of Crosby Textor’s opinion research as evidence of a changed Australian mindset could perhaps be an example of this.

Such attempts should not be given too much oxygen, as they are diversions from the real debate about the actual impact of Workchoices both on ‘battlers’ and those identified as ‘aspirationals’. It is unsurprising that many Australians surveyed might be conscious that their security is precarious, that they have to take responsibility for the development of their own human capital, and will have to be entrepreneurial in exploiting whatever market they can find for their skills. An exponential rise in this perception could probably be asserted without the need for focus groups. Propositions along those lines were established by Professor Katherine Stone several years ago, who pointed to the new psychological contract implicit in most contemporary employment in the US.

The BCA is a political player of the highest order. Despite its name it does not represent the broader Australian business community but rather the CEOs of the 100 largest companies in Australia. BCA propaganda therefore needs to be assessed with plenty of salt. Ample supplies of it could be flushed from the water that has flowed under bridges since the BCA dismissed Kyoto as dispensable in the pursuit of our economic wellbeing, or set its face against fairness in workplaces. We are not only indebted to groups like the BCA for the lag in signing up to Kyoto – the BCA is also one of several godfathers of WorkChoices and its progeny, the Fair Pay Commission.

For those reasons alone BCA propaganda needs to be assessed with plenty of salt. Ample supplies of it could be flushed from the water that has flowed under bridges and into aquifers since the BCA set its face against fairness in workplaces and Kyoto principles as dispensable in the pursuit of our economic well being. In Australia, we are indebted to the BCA not only for the lag in signing up to Kyoto. The BCA is one of several godfathers of WorkChoices and its progeny, not least the Fair Pay Commission.

Thanks to Scratch

It should not escape notice that most of the comment about the Fair Pay Commission decision last week seems to skirt around the blindingly obvious. Under the federal system a minimum rate worker would, from the time of the last AIRC safety net review adjustment in March 2005, have been paid the award minimum rate. That rate also became the new WorkChoices Federal Minimum Wage, (FMW) rate. That rate was approximately $485.64 per week for a standard 38 hour week. The FPC decision means that from 1 December 2006, that rate will become $511.86 per week.

Much has been made of the magnitude of that increase and particularly of the $27.36 a week increase to the FMW. Pundits familiar with national wage fixation predicted that the first FPC decision would be relatively generous. That prediction, made by myself among others, assumed that the FPC could be relied upon to maximise electoral effect, and minimise the risk that the FPC would become even more of a political millstone for the Coalition Government as it goes into an election year.

No less importantly, last week’s FPC determination was delivered against a background of decisions by State industrial tribunals to adjust the respective state minimum wage rates for the most part by $20 per week. Furthermore, the High Court has yet to pronounce upon the validity of the system of which the FPC is an integral part. Put these factors together with the political considerations relating to the FPC’s own survival instinct, and the odds weigh very heavily in favour of the first adjustment of minimum rates being a headliner skewed towards a high impact result.

Predictably, most of the commentariat has now jumped onto the government bandwagon. There is hardly a dissenting voice to suggest that the FPC decision is no more than a blow to those who have criticised the independence and role of the FPC. Personally, I am unrepentant and no less inclined to be critical. I fearlessly predict that should the FPC get into clear air after the next Federal election, it will further decrease the real value of minimum rates to levels above the bare minimum and maintain at least the current outcome of not increasing the real value of the FMW. There is a minor problem with this prediction in relation to the 2007 decision promised by the FPC for mid-year. An election does not have to be held until January 2008. Unless the State industrial tribunals fall into line, and the FPC departs from the path it has rather provisionally adopted in its first decision, it may have difficulty avoiding a follow-up adjustment to take effect from July 2007. On the other hand, inflation and other economic destabilisers may cause the FPC to wish that it had stuck more closely to the script intended for it by the BCA and the statute which established it.

The generosity of the FPC adjustment should not be overstated. As Prime Minister Howard pointed out, the ‘genius’ of the adjustment was to effectively reduce the real minimum rate applicable to classifications above the base. No comment that I have seen yet has contrasted the respective effect of the adjustments to state minimum wage rates and the FPC adjustment of the Federal minimum rate. The New South Wales Industrial Commission adjusted the State award minimum rates from 26 June 2006 by $20. That adjustment took the weekly rate, based on a 38-hour week, to $504.40. The date that this rate came into effect in particular awards varies from award to award. It is a supportable assumption that the adjustment came into effect in some awards from the first day period on or after 26 June 2006. On that assumption, for the financial year from 1 July 2006 to 30 June 2007, an employer paying the New South Wales state minimum wage would be up for $26,304.46 on a full-year basis. Of course, that employer would still be obliged to honour award obligations in relation to penalty rates, spread of hours, overtime and so on. These ancillary payments would substantially augment the minimum wage rate.

In contrast, the FPC was determining a rate that effectively constitutes the floor below which wage rates in AWAs, or other wages paid by an employer under the federal system, should not lawfully be set. The new federal minimum wage, converted to a 38-hour week is $511.86. It will be in operation from 1 December 2006. For the financial year ending 30 June 2007, the federal system employer paying the FMW will be up for 22 weeks at the old rate of for $485.64 and 30.15 weeks at the new rate of $511.86; in other words $26,116.65 for the full year. That is about $188 less than an employer who is still bound by the state system award would be paying. And that calculation does not take into account any loss of ancillary payments. Neither does it incorporate the fact that, unlike the FPC determination, the State award adjustment does not taper the increase for classifications such as tradespersons above the FMW in order to bring about a decline in the real value of that particular rate.
 
Some might think that $7 a week margin of the FPC’s federal minimum rate over the NSW State minimum rate is rather poor compensation for the increased exposure that federal system employees now undoubtedly face due to the loss of ancillary payment entitlements. Those who don’t, and those who proclaim the FPC as an adequate substitute for the system it replaced, may soon need all the aspirational and entrepreneurial spirit they can muster. If the FPC consolidates its function by surviving the 2007 electoral round, it is a safe bet that the 2006 FMW increase will prove to have been a payment in fool’s gold.


References

1  Passing on Prosperity — Raising the High Bar on Reform Michael Chaney AO
Address to the National Press Club 25 October 2006

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