Ross Greenwood speaks to Treasurer Scott Morrison about the latest unemployment numbers and the slowdown in wage growth.
Why are our wages not increasing?
Ross Greenwood: I want to take now to Australia’s economy. Brilliant news and that is that the unemployment rate is the lowest in October that it’s been for almost five years, 5.4%. There are jobs being created and there are in fact, plenty of jobs this year, 296,000 of them but there’s an issue here. Because yesterday, we heard that wages are very, very low. Barely keeping up with inflation. Certainly, if you’re working in the private sector which most people are, they are right on the inflation right now. If you’re in the public sector, you’re getting just a little bit more of wage rise.
How could this possibly be that more jobs are being created but wages aren’t moving? Because you’d imagine if there’s more demand for labor and the employees are out there hiring that the wage increase should start to move up but it’s not happening. Because of course, it’s good that more people have got jobs, because more people are therefore paying tax but what should actually like to see, is that they’re getting wage rises to take some of the pressure of the squeeze on households. Let’s go to federal treasurer now, Scott Morrison who’s on the line. Many thanks for your time treasurer.
Interview with: Scott Morrison, Treasurer
Scott Morrison: Happy to be with you, Ross.
Ross Greenwood: Can you explain that conundrum to me, to families who are listening to this, to businesses who are listening?
Scott Morrison: Well, the first thing I need to explain is since the beginning of this year, almost 300,000 people have got a job and that is the best first 10 months we have had in 40 years. To those who didn’t have a job this time last year, well, over 300,000 of them have got one now and that’s great news for the Australian economy but as you rightly say, the continued frustration is that we’re seeing on wages now. The figures we saw the day before on wages still go to real wage growth and that was a slight improvement on what we’ve seen under previous period. What we are although seeing is that labor market is tightening in some sectors.
We are seeing wage moving a bit stronger than the average figures that we saw the day before but we’re still as an economy, at 5.4% and you’re right. That’s the best unemployment rate we’ve seen since the start of 2013. That’s still point four of a percent above what you’d call the full employment rate which economist refer to. Once you go below unemployment of 5%, that what they would call the non-accelerating inflation rate of unemployment. Which means your inflation starts to grow because your labor market is even tighter than would seem to be at a full employment. I don’t know if that’s the best retail explanation. [chuckles]
Ross Greenwood: All right. Don’t worry. That’s the best.
Scott Morrison: My point is we’ve got more people getting into jobs and as that continues to happen that would put more pressure on wage increase and when that occurs, obviously, that will continue to support consumption on the growth in the economy. It’s heading in the right direction, the ship is heading in the right direction. That’s what the jobs growth is but the wage growth bigger show that there’s still a distance to travel.
Ross Greenwood: That was my question. When does the pressure start to come off households? They got right now higher electricity process, higher gas prices, higher private health insurance premiums and indeed, more recent times higher petrol prices. These squeezes on families even though inflation is not necessarily rising the things that they are paying for are rising in price but no wage increase.
Scott Morrison: To fix the things they do — you can’t avoid the water bill, you can’t avoid the electricity bill and the rent bill and all of these things, all the mortgages and so on and that’s true. But as we know mortgages, rates are being lined up for some period of time and that is something to be welcomed and that’s a good thing for households. Many of the other things that households buy, particularly, retail goods, households goods, we know that we’ve seen a lot of falls in prices in that area and that’s what’s reflected in the inflation rate. While you have some things like power prices going up and we have our national energy guarantee and plans to ensure that we push those prices down.
Some of the other parts of the economy people are getting great deals on the thing which is relieving some of the pressure. But the things have to happen, that are being seen for years now, is that we need to do things that drive and improving in people’s real wages and that happens when two things happen. One, is the business is more and the business is to grow. Secondly, that we all can work smarter so we can earn more from what we’re doing and that’s what our policy’s designed to do.
Ross Greenwood: You can see the squeeze on the household through looking at the retail sales numbers. You can actually see it in the number of retailers who are actually collapsing at the moment. You can actually understand that there is some sort of a disconnect now. It may connect up in the future but at the moment there is a disconnect between where you hope the economy might go, the government, the reserve bank and both got very optimistic focus, as some would say, about our Australian economy. What is happening right now and indeed inside many families and many smaller businesses?
Scott Morrison: Look, I think there is that — to say disconnect, Ross. I’d point out that we seat in the made budget of last year’s gross, would come in at one and three quarter and it’s coming at two. I think our focus are positive and forward-looking but we’re also making them and that’s what important. You talk about retail sales and I think you are right to do that because when people look at the economy, just going about their daily lives, they assess it by what’s going on in the shops. What we do know was what happening in retail, you talk about it often on your program, is the disruption that is going on in retail; with online sales, major changes in the retail industry.
What we’re seeing there is retail volumes being at one level but retail prices being at another because of discounting and the disruption that occurring. The retail sector is actually doing — the on-the-straight retail sector is continuing to do it quite tough. I’ll draw your attention to the National Australia Bank survey that came out earlier in the week on business conditions. Now, they found that business conditions, however often, the economy were the best survive level for 20 years.
The one sector where that was not true was the retail sector. All the other sectors were showing a real improvement in their conditions including in manufacturing. I think there is a real story going on there in retail but that isn’t the story that, necessarily, of the whole economy.
Ross Greenwood: Okay. Let’s get to something else as well because last time you and I spoke on this program, I asked you whether you thought you could manage the parliament and manage the job of government in a minority position. You right now, are in a minority position after the resignation of John Alexander. Would you expect that life at the Greens and some of those independent members, I spoke with Bob Katter the other day, who’s insisted that there should be Royal Commission into our banks? Would you expect that there might be some pressure for a Royal Commission into our banks while you are in a minority position?
Scott Morrison: No. They might say to do things like that, Ross. The reasons for not doing it are still the same we are taking action now when it comes to issues with the banks. I’ll go over the things again, the Banking Executive Accountability Regime, making banking accountable for the decisions in the executives, personally accountable for decisions they’re making. The new complaints tribunal which will ensure that people get access to justice and have this cases heard and cases settle. The increase resources and powers with given to asset. More competition in the banking sector.
Last time I think, we spoke, we talked about how we’re framing up the mutuals and the coops and the customer on banking sector so they can be more competitive. We’re taking the actions on the banks right now. What a Royal Commission, I understand, they think we’ll achieve is, I’m not sure. Because at the end of the day, no one gets compensated. People might have their case referred to, on chapter 23 after 18 months of some hearings, where the only people who’ve got paid are lawyers but their case hasn’t been settled.
It doesn’t actually give an apt, comforting one would change anything. What we’re doing is changing things right now and those measures are going through the parliament. I don’t think anyone can accuse Mayor or the Prime Minister being soft on the bank, Ross. We’ve seen all the evidence to the contrary this year, I should say.
Ross Greenwood: You wouldn’t still discount the fact that the labor party, the Greens and people such as Bob Katter could try it on as it were.
Scott Morrison: Look, this is the reality of it. Only the Government, the Executive government can actually commence a Royal Commission. The Parliament cannot establish a Royal Commission. That’s not how it works. Only the Executive Government can do that and only the Executive Government can make the funds, vote the funds through appropriation to create those institutions. Now, it’s not the Government policy to do that because we believe that we need to take action now. Not have a queues complaints desk run and spending a $150 million and more. The Royal Commission into an issue which has great validity and that is in sexual abuse amongst institutions.
That bill for that is now well over $400 million going close to $500 million. Now, I don’t think people think we should spend money on other issues like the banking issue to achieve I don’t know what. I think the Royal Commission and other very important topic has followed different path and was dealing with a very specific and identified problem and is really providing real assistance.
Ross Greenwood: Okay. Sir, can I take another subject? A lot of my listeners would be actually sitting here and saying, we’ve got a parliament now that seems to find this incredible bipartisan outpouring for same-sex marriage which was all very well and good in the people have had this. So there’s no doubt. But what people would like to see is a bipartisan support for trying to fix the budget to try and actually pay down some of the debts to do that. We’ve seen politically they’d be stuck in that, why can we not get that times up?
Scott Morrison: We’re talking about labor, is that simple.
Ross Greenwood: Well, that might be one answer. But of course, what people are frustrated by is the lack of consensus, that’s the issue. Is there no places where the two political parties can agree?
Scott Morrison: We’ve passed almost 180 pieces of legislation since the last election. That include budget repair measures. We have tens of billions, 40 billion dollars worth of measures we have been able to pass since the last election. It hasn’t been easy to do it and we’ve had to guilt, the Labor Party into some of it and other parties into other parts of it but that’s the nature of the political process. I wish we had bipartisanship on fixing the budget but the Labor Party doesn’t agree with us.
We have 14.7 billion of measures that we try to get through over four years which they refused to do. I had to find another way to save the trip away riding this time last year and we did that. Continuous to remind a challenge but we’ve kept the budget on track, to come back to balance projected in 2021 and we’re committed to doing that.
Ross Greenwood: You know and I know that political pressure is on and you can see it in the polls and the surveys, all that type of thing. The pressure’s on the Prime Minister, the pressure is on your government right now. At what point do you expect or would you hope to see a turnaround in opinion in regards to this government? Do you believe it is possible?
Scott Morrison: Of course, I do and the time for that is in the next election. We’re halfway through this term. Any suggestion that there’s going to be a general election in the early part of next year or the later this year is just complete bunkum which is getting on with the job as we spoke last time. It’s necessary to do that because the country’s interest must come first. Creating those jobs, getting those wages up, getting the investments flying.
We’re doing well in so many different sectors of the economy and I’m excited about the new businesses that are being started and in the economy. That’s where many of these jobs are coming from and we’ve got to keep that happening. I’m more focused on how they’re doing and I think if I do that, then people will see the government, I think, continue to improve in it’s standing.
Ross Greenwood: Treasurer Scott Morrison, as always we appreciate your time.
Scott Morrison: Thanks, Ross.
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