It hasn’t taken long for 2014 to race from the starting blocks. There’s been a lot of interesting local news around.
Treasurer Hockey’s Hard Line
In April 2012, then Shadow Treasurer Joe Hockey gave a speech in London declaring the end to the Age of Entitlement, stating:
The entitlements bestowed on tens of millions of people by successive governments, fuelled by short-term electoral cycles and the politics of outbidding your opponents is, in essence, undermining our ability to ensure democracy, fair representation and economic sustainability for future generations.
Now, in the first six months of the Coalition government, Treasurer Hockey has reiterated his words and the government has underscored his beliefs with action.
Government Focuses on Awards and Penalty Rates
In this vein, the Federal Government has also made a submission to the Fair Work Commission’s review of modern awards, urging focus on the softening economic environment, employment costs and regulatory burdens on the creation of jobs.
In particular, the submission tells the Commission it is responsible for determining whether additional remuneration such as penalty rates for working at certain hours or on certain days are appropriate in a particular industry.
It contends that ensuring modern awards are “concise and provide only minimum terms and conditions of employment will encourage parties to bargain for enterprise agreements that suit the particular needs of their workplace”.
The government has also announced changes to industrial relations laws that will allow workers to trade their penalty rates in return for more flexible hours of work.
Union Chief Admits Wages Issue
Australian Workers Union chief Paul Howes has also entered the debate, conceding there had been a pattern of unsustainable wages growth in some sectors of the market and expressing the concern that Australia “could be pricing ourselves out of the market”, although he blamed instability of legislation rather than the minimum wage and penalty rates.
It appears there has already been a pull-back in pay. Recently released Australian Bureau of Statistics data states that the seasonally adjusted wage price index has increased 2.6% in the past year, the smallest increase since the series commenced in 1997 and one that given recent inflation rises represents a fall in real wages. The Bureau also released data on Australian Weekly Earnings up to November 2013, which have increased 3.1% year-on-year for total full time work, down from 4.8% in the period to May 2013.
Government Pay in Need of a Trim?
In light of this information, it is also interesting to note that when Seek published its 2013 salary report this month, two of the five most highly paid roles were government employees: “Federal Government workers” and “Local Government Members”. The Australian Bureau of Statistics wage price index data noted that public sector rises were larger than in the private sector.
This follows the news early in January that Victoria has implemented a strict wage cap to contain its wage costs. Accordingly, Victorian Ministers will need approval from the Victorian Premier and Treasurer to increase their wages bill.
RBA Pulls Back
The Reserve Bank’s February meeting resulted in a decision that the “most prudent” course is now a “period of stability in interest rates”, leading to interest rates remaining at 2.5%. Inflation, the exchange rate and an expected lift in global growth for 2014 were outlined as the basis for the end to the easing bias. The Reserve Bank also believes that unemployment will rise before it peaks.
Gender Reporting under Fire
Employment Minister Eric Abetz is reportedly being lobbied by employer groups to water down legislation that requires companies with more than 100 employees to report annually to the Workplace Gender Equality Agency on the gender balance of its employees. Employers say the laws are too onerous. A possible path forward is to lift the threshold to 1000 employees.
Government “committed” to Action on Share Schemes for Start-ups
The government announced a two week consultation period at the end of January in respect of its review of employee share scheme use in start-ups, which began mid 2013.
The consultation is looking into the barriers to start-ups’ use of incentive schemes. In the media, the main focus has been the taxation point of options, which we commented on in 2013 as the review was getting off the ground.
We have now completed a submission to the review, which can be found here. Submissions were due on 7 February.
We also submitted to the ASIC consultation into whether to expand the relief available for employee share schemes. More details can be found here. Our submission can be found here. Submissions closed on 31 January.