The Guardian November 8, 2000

Wages cut as prices rise

by Anna Pha

Last week the ACTU launched its Living Wage Claim 2001. Unions are seeking 
a wage rise of $28 per week for award rates of up to $492.20 per week and 
5.7 per cent for all higher award rates. This is a modest increase, 
especially when seen in the context of the higher prices which have hit 
workers from every direction.

Repayments on home loans, credit cards and other debts have risen as 
interest rates were lifted.

The GST has added to the cost of clothing, books, transport, 
communications, many food items and other purchases.

The price of petrol has risen by around 40 per cent.

The value of the Australian dollar plummeted against other currencies, 
pushing up the price of imported goods.

Not surprisingly, the Consumer Price Index  a measure of price inflation 
 rose by 3.7 per cent in just three months (over six per cent in last 12 
months) and further increases can be expected as the full impact from the 
economic trends are felt.

So what is the Government doing to address the situation?

What did it do as the Australian dollar struggled to keep its head above 
the US50 cent mark? Nothing.

Treasurer Costello bemoaned the fact that the dollar "has not been 
reflecting fundamentals". After all, Australian governments have done all 
that the World Bank, the IMF, the OECD and financial markets demanded of 

The Australian dollar was floated back in 1983, the financial sector 
largely deregulated, and the budget brought into surplus. But this didn't 
stop the financial markets giving the dollar a beating.

"Whilst you have a floating exchange rate, you've got to live with 
volatility and you've got to live sometimes with the fact that markets can 
overheat", said the Treasurer.

Costello is not prepared to intervene to prevent any overheating  "leave 
it to the markets" is the Government's creed.

As fuel prices rocketed, what did the Government do? Nothing.

Never mind the higher cost of transportation that would be passed on in 
higher prices and eat into workers' wages and pensions as they pay 30 or 40 
per cent more for petrol.

When it comes to oil prices, Prime Minister John Howard explains that it is 
"unrealistic" to expect the Federal Government to cut fuel prices because 
they were being driven higher by spiralling oil costs.

It is all the fault of the OPEC countries, says the Government.

"We can't influence the prices ...", bleated Howard.

What he really means is that the Government is not prepared to intervene 
and put a break on prices.

It could, if it had the political will.

Take a litre of petrol at $1. The Government siphons off 9.1 cents GST and 
38.1 cents excise  a total of 47.2 cents per litre.

There is plenty of scope to reduce the price.

The Government could also take measures to force the oil companies to 
charge less, especially for locally produced petrol.

But it chooses to leave it to the markets.

There is a similar story when it comes to interest rates. The Government 
has handed its powers over to the (big business controlled) board of the 
so-called independent Reserve Bank.

Once again, the Government is not prepared to intervene, not even to put a 
ceiling on interest rates or exempt home loans from future increases.

Along with the 10 per cent GST, the increases in petrol prices and interest 
rates, and the devaluation of the dollar, are creating inflationary 

So what is the Government going to about inflation? It will join the 
employers in the only area where it is willing to intervene, and oppose any 
and all wage increases.

Costello says workers were compensated for the GST. This is nonsense.

As ACTU Secretary Greg Combet points out, "Workers on the minimum wage of 
$400 a week got a paltry $9 tax cut under Mr Howard's tax package. That 
disappears after one trip to the petrol pump."

Employers, backed by the Government are not only opposed to any wage 
increases but are attempting to reduce real wages.

Casualisation, use of contract labour, individual contracts, longer working 
days, unpaid overtime, competitive tendering, and contracting out are all 
being used to drive down wages.

There is an organised employer offensive to drive down wages, as well as 
working conditions, at a time when the cost of living is on the rise.

It is important to support the ACTU's Living Wage claim, which will not be 
won by economic debates in the Commission. The amount of wage increase will 
be determined by the support and actions of workers.

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