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Is Billy gilding the lily on wages?

Is Billy gilding the lily on wages?

Peter Switzer
15 March 2019

Call me old fashioned but when it comes to politicians’ messages, I’d love it if we could rely on them to tell us the truth. This backdated view of the world came back to me this week at least twice and I guess the reason why our political masters think they can gild the lily is because most of us don’t have the facts in front of us.

Yep, most of us are so busy doing stuff to make life work for us that we just hear what these guys and gals in Canberra say and then think: “Really?” Or sometimes it might be: “Yeah, you’re right.”

Of course, to the committed Labor or Coalition haters, many of these politicians’ revelations are greeted with: “Bullshit!”

My first encounter with untrue political messaging this week was when I was asked to talk about the wage story I wrote on whether we can weather Bill Shorten’s wage rises on ABC radio in Adelaide with Dave Bevan.

Unknown to me, the ACTU boss, Sally McManus, was already talking to Dave when I was put to air. Now, don’t get me wrong, I just about disagree with nearly everything Sally ever says but I think she is a fantastic performer. She’s like a Kiwi All Black when they play the Wallabies — they’re great players but I just can’t love them!

And because she’s so good at her job, I have tagged her the scariest person in Australia!

Asked why she could justify Bill’s “living wage” idea that could see the minimum wage bumped up by 10% or so, she quickly told Dave and the ABC audience that productivity had been rising but wages hadn’t been. And like Bill, she talked about profits going up by 10% last year so she put together a very reasonable case, provided you didn’t have all the facts.

Fortunately for me, I had time on my side before Dave brought me into the conversation so I quickly googled “Australia, chart, productivity” because I was sure I’d written (and others had too) that our productivity story hadn’t been great.

In fact, wage experts always say the problem and the solution is greater productivity. This is what I found since 2016:

Sally was not completely truthful because productivity has been on the slide and because the economy is sliding down too, maybe this isn’t the greatest time to push for wage rises. By the way, the fantastic growth of jobs can also push productivity down and that actually has been happening over the past few years, as Malcolm promised!

But Sally isn’t totally wrong, as the long run chart shows:

The productivity story was sensational from the late 1970s to 2014 and bold economic reforms, some periods of high unemployment and new technologies (like the computer, smart phones and the Internet) have helped raise our per unit of input, which is the definition of productivity.

Another political piece of gilding the lily came to me last night via Twitter and Bill Shorten, who is so far in front with the upcoming election, he really doesn’t have to play fast and loose with the truth.

His tweet last night (and let me say I get more tweets from Bill than I do from Donald!) was “Everything is going up in Australia except wage….” He led us to a video that showed us how Labor will get wages rising.

However, his throwaway line in a tweet isn’t right.

This is Average Weekly Wages and they’re going up! And because wages are rising faster than that stubborn statistic, inflation, real wages (or what we can buy) are also going up! Let me say that real wage growth isn’t great but they have been going up, not down.

On home loan interest rates, they’ve been going sideways to down and if any borrower wants to get lower rates, a mortgage broker could help!

And by the way, hopefully before Bill becomes PM, the RBA will actually cut interest rates to ensure economic growth goes up under Labor in the second-half of 2019.

Unemployment is also not going up, as the next chart shows:

I rest my case, apart from one wonderful piece of history that was delivered by the former CEO of Westpac and ex-Deputy Secretary of the Treasury, David Morgan.

This guy has to be the most interesting banker in Australian history. He was a child TV and movie actor co-starring with the likes of Olivia Newton John. He played first grade for the Richmond Tigers, worked for the IMF and was accused of being a CIA spy by a dodgy African President and was flown out of the country! And he was part of the rescue that saved Westpac from a financial fate nearly worse than death — a forced sale!

Morgan’s recently published book by Oliver Brown titled David Morgan: An Extraordinary Life, which included marrying the former Hawke-Keating Minister, Ros Kelly and advising Labor’s greatest economic reformer, Paul Keating, was the reason why I was interviewing him.

And he gave me a nice history lesson, which I’d forgotten. He said: “The political agenda Labor went with before the 1983 election was very different to what actually was implemented.”

Ahead of the election, Bob Hawke wasn’t promising a floating dollar, deregulating banks, cutting tariffs, making unions deliver productivity  for wage rises and selling off the likes of CBA, Qantas, etc.

History suggests that with a bit of luck, Bill’s promises before the election could be changed when he has the responsibility of being the country’s leader.

So, with a bit of luck, he might prove to be a fibber for entirely responsible reasons or maybe the Senate might make him go back on some of his more wacky ideas!

Let’s hope so.

P.S. Another thing that’s not going up is house prices!

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