The treasurer, Scott Morrison, has said he believes improved profits “should flow through to higher wages”, while citing the heavily unionised construction sector as a model.
In an interview for ABC’s 7.30 on Thursday night, Morrison returned to the theme of the May budget to claim there were “better days ahead”, citing profit and investment figures but acknowledging “we haven’t seen a flow on to wages yet”.
Wages growth in Australia has been stagnant for four years, leading to an increasingly assertive Labor opposition campaign on economic inequality.
Asked about poor wages growth, Morrison said other economic data was starting to improve, citing non-mining investment up 2.6% in the June quarter and the fact it was projected to be more than 5% in the next financial year.
“We’re starting to see that investment come through, and investment leads to the profits which leads to the wages growth,” he said.
Asked if profits always led to wage rises, Morrison said: “I think it should – that’s the view I hold.”
He said profits had gone backward by 0.8% “for many consecutive quarters” but the most recent two quarters had shown profits lift “largely off the back of commodity prices”.
“We need to see that sustained. And I believe once you see that sustained … it should flow through to wages.”
Asked about Reserve Bank of Australia governor Philip Lowe’s statement that it “would be a good thing” if workers now asked for a pay rise, the treasurer claimed what Lowe had “actually said was just a common sense economic observation” that when unemployment went down and profits improve, tightness in the labour market then caused wages to rise.
“That’s what we’re starting to see, we’re seeing it in things like the IT security sector, we’re seeing it in some parts of the construction sector, where there’s big construction jobs going on, particularly because of the big public investment going in.”
The Construction Forestry Mining Energy Union has recently sought higher wage rises in bargaining to compensate for conditions stripped out of collective agreements by the Turnbull government’s Australian Building and Construction Commission bill, as had been predicted before it passed.
Before the election Malcolm Turnbull promised the Coalition would stop excessive pay demands from the CFMEU because the ABCC would prevent industrial coercion.
On Wednesday the education minister, Simon Birmingham, encouraged universities to follow the lead of Murdoch University, which successfully terminated its collective agreement, throwing workers back onto the award rate of pay.
Labor’s shadow employment minister, Brendan O’Connor, said this amounted to the Turnbull government “advocating for the reduction of wages and conditions”.
On 7.30 Morrison said the “emerging economic consensus” was that his prediction in May of “better days ahead” was correct.
Asked whether the Northern Australia Infrastructure Facility (Naif) should pay for a new high-efficiency, low-emissions coal power plant, Morrison said it was a big decision but it was one for the Naif, which is independent of government, to make.
On Tuesday Turnbull said the government had “no plans” to fund coal power plants. The treasurer said he and the prime minister were in agreement and funding a plant would be a decision for Naif to make on a commercial basis.
Asked if the Clean Energy Target should be set in a way to incentivise so-called “clean coal” power, Morrison said the government was “working hard” on the proposal for a CET and, however it was set, it should “give certainty to investors to invest in greater power generation”.
