Wage Cut Economist Heads Commission

Date: 13 October 2005

The right-wing economist appointed to head the Howard Government's proposed Low Pay Commission is on the record opposing the way Australia has historically set wages based on a 'fair and reasonable' level, says NSW Industrial Relations Minister John Della Bosca.

Professor Ian Harper has spoken out against the Harvester Judgement of 1907, in which the Commonwealth Court of Conciliation and Arbitration established a precedent for calculating the basic wage, based on 'the normal needs of the average employee regarded as a human being living in a civilised community'.

Writing for the Centre for Independent Studies' Policy magazine, Professor Harper noted how other countries weren't burdened with the need to pay a socially determined minimum wage:

...other countries did not try to divorce wages from the low levels of productivity characteristic of high-employment manufacturing industry. Employers in the sweatshops of lower Manhattan were not obliged to raise wages to 'fair and reasonable' levels....

In reality, the standard of fairness and reasonableness was set by the higher wages paid (and afforded) by higher productivity primary industry. It was considered unfair and unreasonable to pay lower wages to those whose employers...could not afford to pay wages at the same levels. Faced with the choice between greater wage dispersion and lack of international cost competitiveness, Australia chose the latter (while, faced with the same choice, the US chose the former).
Ian Harper Policy vol. 18, no. 1, Autumn 2002 http://www.cis.org.au/Policy/aut2002/polaut02-9.pdf

NSW Minister for Industrial Relations, John Della Bosca, said the appointment of Professor Harper was an indication that minimum wages would no longer be based on the cost of living.

"The Commonwealth Minister has previously claimed minimum wages in Australia are $70 a week too high http://www.smh.com.au/news/National/Tribunal-bypassed-in-fixing-base-wages/2005/02/28/1109546799458.html," Mr Della Bosca said.

"It appears that Professor Harper has been hand-picked to fix that."

"There is a school of thought that says employers shouldn't have to pay a wage that gives an employee the ability to clothe, feed and shelter themselves," Mr Della Bosca said.

"This concept of paying the lowest wage that anyone will work for flies in the face of a 100 year old Australian tradition of fairness, based on the Harvester Judgement."

For further information

Contact:	Andrew Plumley - Office of John Della Bosca
Phone:	9228 4777

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