Media Release - Fair Pay Commission Decision Takes Away Tax Cuts and Overlooks the Plight of Low Paid Working Families

Catholic Social Services Australia's Executive Director, Frank Quinlan, said while the Australian Fair Pay Commission's decision to increase the Federal Minimum Wage by $21.66 a week will equate roughly to a CPI increase for the 100,000 workers on the minimum wage, other low-paid workers will be not be so lucky.

Mr Quinlan said the AFPC's decision applies to 1.3 million low-paid workers. A rise of $21.66 a week represents a 4.1 per cent pay rise for workers on the minimum wage, but represents a much less significant rise for the remaining 1.2 million workers affected by the decision.

In a joint submission to the Australian Fair Pay Commission, Catholic Social Services Australia said the Commonwealth must commit to a strategy that ensures the maintenance of real wages.

Catholic Social Services Australia also said that with inflation at 4.2 per cent since the 2007 decision, a minimum increase of $21.93 was needed just to maintain real wages for people on the Federal Minimum Wage and that the CPI should be applied to higher rates of pay.

"The value of the pay rise will be further eroded because the most recent CPI only measures price rises to 31 March 2008 and the pay increases won't come into effect until October this year - six months later," Mr Quinlan said.

"The lapse between the July announcement and the implementation of the increase will cost workers on the minimum wage around $250 in the three month period, amounting to roughly $5 a week over a 12-month period.

"In addition, the AFPC has used the tax cuts announced in the 2008 Federal Budget to justify the decision to award a reduction in real wages to some of Australia's most vulnerable workers. This has effectively removed the benefit of the tax cuts promised to low income workers in the last election campaign.

Mr Quinlan also drew attention to the Commission's finding that a family of four with one breadwinner on the Federal Minimum Wage and two school-aged children, only has a disposable income of $776 per week after tax, family payments and rental assistance are taken into account.

"Catholic Social Services Australia has always held the view that minimum rates of pay must be sufficient, after allowing for income tax and relevant government transfers, to support a family of four without the need for the second parent to undertake paid employment. Parents cannot raise and educate children on $776 per week", Mr Quinlan said.

Mr Quinlan also drew attention to the plight of these single breadwinner families: they are the most deprived of the ten kinds of households reviewed by the Commission: they are only 8 per cent above the Henderson Poverty Line and 7 per cent below the poverty level as measured by reference to the Australian median income benchmark.

"These figures confirm what our members all over Australia are telling us - that increasing numbers of working people are seeking help," Mr Quinlan said.

"The figures confirm that the emergence of poor working families must be the top priority for the Commonwealth's newly appointed Social Inclusion Board.

"Around one in ten Australian workers depend on the safety net set by the Australian Fair Pay Commission.

"The AFPC's recent decision will have a major impact on those workers and their families," Mr Quinlan said.

Catholic Social Services Australia provides services to over a million Australians each year through its 64 member agencies in remote, regional and metropolitan Australia.

11 July 2008

CONTACT Judith Tokley 02 6285 1366 / 0408 824 306