THURSDAY, 25 FEBRUARY 2016
SUBJECT/S: Lowest wage growth on record under the Coalition Government’s economic management; Tax reform
MARIUS BENSON: Andrew Leigh, good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning, Marius. How are you?
BENSON: I'm well. Do you share that view – I guess it's not a view, it is an Australian Bureau of Statistics fact – that we are getting poorer?
LEIGH: It’s a real concern, Marius. I think the reason this has come about is people have been focussing on the headline GDP number for many years. But GDP doesn't account for population growth. We are one of the fastest-growing countries in the OECD in terms of population. When you take that into account, you can look at something like Net National Disposable Income per person and that has actually fallen 3.5 per cent since the Coalition came to office. That is one of the best measures of living standards that we have.
BENSON: Let me ask you a question I don't know the answer to. Was it falling during Labor's term as well?
LEIGH: No, it ended up rising over that period even though there was the biggest global crisis since the Great Depression. There was growth in Australian living standards during that Labor period in office, despite very tough international economic circumstances; the worst in 70 years.
BENSON: Presumably the Government would say that was because Labor was throwing money at people to combat the GFC and it resulted in a big deficit.
LEIGH: Our response to the Global Financial Crisis has been recognised internationally as best practice. Saving the economy from going into recession was absolutely critical. The difference between the Coalition and Labor is that we ensured wages continued to grow. Under this Government – for all their talk about a wages breakout and the need to cut back on penalty rates – in fact wages growth in the private sector has been, as you said, slower than inflation. So people are getting real wage cuts.
BENSON: Do you blame the Government for that, or is that just a narrow political argument?
LEIGH: In that environment, I certainly blame the Government for thinking the right approach is to go after penalty rates. We know, Marius, that penalty rates go disproportionately to those on the bottom of the distribution of income, and they are those who have seen some of the slowest wages growth over the past 40 years. Wages have grown three times as fast for the top tenth, that’s people like financial dealers and surgeons, than they have for the bottom tenth, people like cleaners and checkout workers. So to say to those cleaners who are getting penalty rates that they shouldn't be able to see any wages growth is going to make inequality worse. It is probably going to slow down economic growth as well.
BENSON: Why is Labor not making more of this politically or pursuing other issues in Question Time, for example?
LEIGH: To use a Defence metaphor, Marius, it is a target-rich environment. This is a Government which seems to have just given up on the issue of tax reform. It is a bit like a Waiting for Godot theme: "Let's go" - "We can't" - 'Why not?" – “We're waiting for Godot". The Government are always waiting for something else before they take action on tax reform. Having promised economic leadership, Malcolm Turnbull really looks a whole lot more like Tony Abbott in a silver wig.
BENSON: Andrew Leigh, thank you very much.
LEIGH: Thank you, Marius.
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