Can Albo be Bob Hawke in economics?


Labor and its leader Anthony Albanese pioneered the killer’s game – a commitment to keep wages in line with inflation – and in doing so backed the union’s call on the Fair Work Commission for a pay rise. 5.1% of minimum wage.

Business is not happy. Scott Morrison is not happy and tags Albo as a wrecker saying he is not ready to handle the economy.

But low-wage workers, whose wages are influenced by the minimum wage, would be genuinely happy with the future prime minister’s pledge to back the big wage hike.

Politically, his support appeared to be on the run, as he had not shown such full support until yesterday, when a reporter asked if he backed the 5.1% hike: “Absolutely”.

Albo’s newly revealed stance must have come as a surprise to Australian Chamber of Commerce and Industry (ACCI) CEO Andrew McKellar, who on Thursday hosted the Labor leader at Doltone House in Sydney (which I attended). There was no reference at lunch to supporting the ACTU’s 5.1% claim to the Fair Work Commission, which is currently unfolding. “Forcing unaffordable wage increases on small businesses will create cruel jobs, not create them. Any increase of 5% or more would inflict additional hardship on small businesses and the millions of jobs they maintain and create. Small businesses can’t afford it,” McKellar said.

The minimum wage case fixes the wages of 2.7 million workers and the unions want the hourly rate to go from $20.33 to $21.45. In government, a Labor prime minister will tend to let the Commission determine what is fair and affordable, but ahead of an election, a Labor opposition leader is much more likely to fully support a steep rise in the minimum wage.

And they’ll say things like, “If you’re on minimum wage, you’re struggling to pay your rent, you’re struggling to buy food, you’re struggling to get by, and the Fair Work Commission should support this in mind in the decision they make.

These types of calls are less likely from a prime minister, who in reality can help struggling people with tax cuts and direct payments.

At last week’s ACCI lunch, Albo brought an A team with him, which was attended by former Treasurer and Prime Minister Paul Keating. And a comparison Albo wanted us to think about was the great achievements of Labor under MM. Hawke and Keating. This was highlighted in so much of his speech that you knew he was saying that this possible Labor government could be like this Labor government. Of course, things went wrong under this team (home loan interest rates at 18% in the late 1980s and a deep recession in 1990-91 that caused unemployment to rise by more than 10%), but they were prolific reformers, which partly explains why our economy reached 30%. years without a recession, which came with that damn Coronavirus.

But if you want to see how an opposition leader differs from a successful Labor prime minister, let me remind you that a reporter accused Bob Hawke of being a Labor leader where profits rose in detriment of wages. Hawke’s response was that he could do more for his constituency in government than he could by championing causes that might throw him and his team on the losing side of Parliament. That said, the graph below shows how workers had been highly paid in the 1970s, so the 1980s was a time of wage moderation.

Ultimately, if Albo is too soft on wage increases and we get a wage-price spiral, we will end up in a recession. And it’s not the sort of economic “feather in his hat” that will get him a second term as prime minister, assuming he looks likely to get a first!


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