- The Government supports the increase in the minimum wage
- Fair Work Commission to carry out annual review
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Tax cuts are no substitute for much-needed pay rises and Australia’s lowest-paid workers cannot see their wages retreat during a cost of living crisis, the government says.
The Commonwealth will make its submission to the Fair Work Commission on Thursday, before it decides on changes to minimum wages and awards during its 2023-24 Annual Pay Review.
The industrial arbiter increased wages by 5.75 per cent in June, citing a combination of low unemployment, falling wages and high inflation.
The federal government has backed a pay rise for the country’s lowest-paid workers, urging the industrial arbiter not to use its upcoming tax cuts for low-income earners as a substitute for an increase in the national minimum wage.
The government’s much-discussed tax cuts are expected to ease some financial difficulties when they take effect in July.
But his presentation points out that this policy should not replace a salary increase.
“These tax cuts… are designed to complement any increases in allowances and minimum wages awarded by the Fair Work Commission,” the submission says.
Under the government’s new tax cuts, the lowest income tax rate will be reduced from 19 to 16 cents on the dollar, meaning workers will pay less for the first $45,000 they earn.
The second tax rate will be reduced from 32.5 to 30 percent for people earning up to $135,000, and the rate to 37 percent for people earning more than $135,000, along with the top tax rate of 45 percent. , will apply to $190,000 instead of $180,000.
In recent months, economic conditions have improved: employment remains at historic lows, inflation moderates to a two-year low of 4.1 percent, and real annual wages grow 0.1 percent over of the year until the December 2023 quarter.
But inflation remains above the Reserve Bank’s target band and the worst economic challenges are still borne by low-income Australians, the government presentation warns.
“Low-wage workers and their families are particularly affected by cost-of-living pressures because they typically do not have savings to draw on to cover rising costs,” their submission reads.
The government, by calling for a wage increase for low-paid workers in line with inflation, influenced a 5.75 percent increase in all award rates and an increase in the national minimum wage from $812.60 to $882.80 per week.
Treasurer Jim Chalmers (pictured) said workers were entitled to both tax cuts and a pay rise.
Treasurer Jim Chalmers says his government will urge the commission to consider this in its decision.
“We recommend that the Fair Work Commission ensures the real wages of Australia’s low-paid workers do not go backwards,” he said.
“We believe one of the best ways to ensure workers can cope with cost-of-living pressures is to ensure they earn enough to support their loved ones and get ahead.”
However, the government’s presentation does not suggest that wages should automatically rise with widespread inflation.
In the long term, productivity should be the key driver of real wage growth.
The Fair Work Commission is expected to make its decision later in 2024.