Australian Politics Forum - Economic Benefits Of Penalty Rate Cuts Not Tested

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Economic Benefits Of Penalty Rate Cuts Not Tested
Apr 21^st, 2017 at 5:15am

Economic benefits from penalty rate cuts not tested, Treasury reveals

Sydney Morning Herald
April 21, 2017

The federal government has not done any modelling on the impact of the Fair Work Commission's decision to cut penalty rates, responses to a Senate hearing have revealed, despite Prime Minister Malcolm Turnbull throwing his weight behind the cuts. Sad

In answers to questions on notice from Senate estimates to be released on Friday, Treasury said it would assess a range of policy decisions when reviewing forecasts for the upcoming May budget.

"But this would not entail a specific modelling of the Fair Work Commission recommendation," a statement from its macroeconomic division said.

"There are likely to be some positive employment effects from a reduction in penalty rates, though it is difficult to quantify the precise effect."

The Fair Work Commissions decision could see wages slashed for thousands of Australians who work on Sundays in the retail, fast food, hospitality and pharmacy industries, as penalties fall from between 200 and 150 per cent from July.

Labor claims the decision would affect more than 600,000 workers, while the government says the number of people who regularly work on Sundays is closer to 285,000.

The Australian Industry Group has long pushed for the change, claiming rates are are too high, do not reflect the community standards of a 24/7 economy and force businesses to close on weekends.

In March, Mr Turnbull offered his first public economic support for the decision, saying he agreed with the view that the reduction in Sunday rates would lead to more employment opportunities.

In a submission to the Fair Work Commission, the government urged the economic benefits of the rate cut be delivered quickly, while taking into account potential impacts on employees and "some technical issues". It agreed the new rates should be phased in "over two years, possibly longer, but not as long as five".

Shadow treasurer Chris Bowen said the response from Treasury meant Australians could comfort themselves in the knowledge the government "has absolutely no idea" what the economic benefits are. Sad

"Meanwhile, Malcolm Turnbull expects the same low- and middle-income earners who will experience the penalty rate cut to pick up the tab for the government's handout for big business," he said. Sad

The government has also refused to outline the economic impact of the company tax cuts package it passed in March after a deal with Senator Nick Xenophon.

Mr Turnbull has said the company tax to businesses turning over up to $50 million would deliver "substantial economic growth", but has never quantified the actual contribution to GDP.

A preliminary analysis by the Grattan Institute found the $24 billion company tax cut would boost the economy by less than 0.2 per cent when fully implemented over the next decade. Sad

"That translates into an increase of up to $3 billion in national income each year by the time the full effect has come in," the analysis found.

Employment Minister Michaelia Cash has been contacted for comment.

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Grappler Truth Teller Feller

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #1 - Apr 21^st, 2017 at 8:20am

I could offer an unsolicited and unsupported opinion.... cutting the wages of the lowest paid will slow spending and cause a contraction in economic activity for the 'middle class', and will adversely affect that ephemeral but massively important thing called 'morale'* - thus directly affecting 90% of the working people of this country's incomes.

This and the continuing assaults on social security recipients would have to pass the test of being the most stupid ideas any half-baked overpaid twit ever came up with. Twits like that Kenyan clown from SA need to get their minds around the simple idea that the position they seek is to SERVE the people, not dictate to them, and the best way to reduce dependence on social security is to create jobs.

*I expect many people directly affected to be seeking another position ASAP - one that will pay them correctly, and for 'productivity' to fall. Treat people well and they will treat you well - treat them badly and they will treat you badly.

I give this 'policy' around three months before the reality sinks in. Are they going to tell nurses on $40 an hour they are getting too much, or police and firies and so forth?

They haven't got the guts.

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“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”
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Jovial Monk Gold Member Online Dogs not cats! Posts: 43612 Gender:	Re: Economic Benefits Of Penalty Rate Cuts Not Tested Reply #2 - Apr 21^st, 2017 at 11:02am Exactly so, Grap. Another big direct hit to the Budget as less PAYE tax is paid plus the effect in reducing final demand.
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crocodile

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #3 - Apr 21^st, 2017 at 2:52pm

Jovial Monk wrote on Apr 21^st, 2017 at 11:02am:

Exactly so, Grap. Another big direct hit to the Budget as less PAYE tax is paid plus the effect in reducing final demand.

No effect on final demand. The quantity of money doesn't change. It merely changes to a someone else's pocket where it is freely available to be spent.

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Very funny Scotty, now beam down my clothes.

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Bam

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #4 - Apr 21^st, 2017 at 2:58pm

crocodile wrote on Apr 21^st, 2017 at 2:52pm:

Jovial Monk wrote on Apr 21^st, 2017 at 11:02am:

Exactly so, Grap. Another big direct hit to the Budget as less PAYE tax is paid plus the effect in reducing final demand.

No effect on final demand. The quantity of money doesn't change. It merely changes to a someone else's pocket where it is freely available to be spent.

That is a very naive assessment.

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You are not entitled to your opinion. You are only entitled to hold opinions that you can defend through sound, reasoned argument.

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Jovial Monk Gold Member Online Dogs not cats! Posts: 43612 Gender:	Re: Economic Benefits Of Penalty Rate Cuts Not Tested Reply #5 - Apr 21^st, 2017 at 3:18pm Pretty much everything croc says is naive to the extreme. Company tax cuts won’t be pocketed by execs it will go to the workers
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Auggie

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #6 - Apr 21^st, 2017 at 4:36pm

Grappler Truth Teller Feller wrote on Apr 21^st, 2017 at 8:20am:

I could offer an unsolicited and unsupported opinion.... cutting the wages of the lowest paid will slow spending and cause a contraction in economic activity for the 'middle class', and will adversely affect that ephemeral but massively important thing called 'morale'* - thus directly affecting 90% of the working people of this country's incomes.

This and the continuing assaults on social security recipients would have to pass the test of being the most stupid ideas any half-baked overpaid twit ever came up with. Twits like that Kenyan clown from SA need to get their minds around the simple idea that the position they seek is to SERVE the people, not dictate to them, and the best way to reduce dependence on social security is to create jobs.

*I expect many people directly affected to be seeking another position ASAP - one that will pay them correctly, and for 'productivity' to fall. Treat people well and they will treat you well - treat them badly and they will treat you badly.

I give this 'policy' around three months before the reality sinks in. Are they going to tell nurses on $40 an hour they are getting too much, or police and firies and so forth?

They haven't got the guts.

Most of the middle-class aren't on the minimum wage. Nurses will never earn the minimum wage because it's a skilled job. No one will become a nurse if it pays at the minimum wage.

So, what the hell are you talking about?

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Auggie

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #7 - Apr 21^st, 2017 at 4:40pm

The economic affects of penalty-rate cuts can NEVER be tested. The question is how such cuts affect an individual's ability to acquire a job. This is part of the broader issue the minimum wage: low-skilled jobs have become skilled jobs because the high cost of labour means that employees almost always looked for experienced workers.

If you want a second part-time but don't have any experience in the services industry, and are over 21, you've got buckley's chance of being considered for any position because the employer would consider you too risky and investment to pay $17 p/h to. However, if you were and could receive $5 p/h, then the employer would most likely employ you over an experienced person.

This is how the abolition of the minimum wage would help low-skilled and unemployed people. Will some be worse off? Yes. But, most people will benefit from these changes.

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Bam

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #8 - Apr 21^st, 2017 at 6:10pm

Auggie wrote on Apr 21^st, 2017 at 4:40pm:

The economic affects of penalty-rate cuts can NEVER be tested. The question is how such cuts affect an individual's ability to acquire a job. This is part of the broader issue the minimum wage: low-skilled jobs have become skilled jobs because the high cost of labour means that employees almost always looked for experienced workers.

If you want a second part-time but don't have any experience in the services industry, and are over 21, you've got buckley's chance of being considered for any position because the employer would consider you too risky and investment to pay $17 p/h to. However, if you were and could receive $5 p/h, then the employer would most likely employ you over an experienced person.

This is how the abolition of the minimum wage would help low-skilled and unemployed people. Will some be worse off? Yes. But, most people will benefit from these changes.

Stupid idea. What else are you going to do? Mandate a lowering of house prices by 75%? Mandate a lowering of other costs by 75%? Devalue the dollar by 50%? Spend $2,000,000,000,000 building social housing so 5 million Australians can afford to live within an hour's commute of their jobs?

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You are not entitled to your opinion. You are only entitled to hold opinions that you can defend through sound, reasoned argument.

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Auggie

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #9 - Apr 21^st, 2017 at 8:05pm

Bam wrote on Apr 21^st, 2017 at 6:10pm:

Auggie wrote on Apr 21^st, 2017 at 4:40pm:

The economic affects of penalty-rate cuts can NEVER be tested. The question is how such cuts affect an individual's ability to acquire a job. This is part of the broader issue the minimum wage: low-skilled jobs have become skilled jobs because the high cost of labour means that employees almost always looked for experienced workers.

If you want a second part-time but don't have any experience in the services industry, and are over 21, you've got buckley's chance of being considered for any position because the employer would consider you too risky and investment to pay $17 p/h to. However, if you were and could receive $5 p/h, then the employer would most likely employ you over an experienced person.

This is how the abolition of the minimum wage would help low-skilled and unemployed people. Will some be worse off? Yes. But, most people will benefit from these changes.

Stupid idea. What else are you going to do? Mandate a lowering of house prices by 75%? Mandate a lowering of other costs by 75%? Devalue the dollar by 50%? Spend $2,000,000,000,000 building social housing so 5 million Australians can afford to live within an hour's commute of their jobs?

Ok, I've got some facts for you. According to the Huffington Post, which is a left-wing news organization: http://www.huffingtonpost.com.au/2016/10/15/poverty-in-australia-at-shameful-level/, 2.99 million Australians lve in poverty. According to a report (cited in the article), the poverty level was defined as: "a couple with children the poverty line was $895.22 per week, or $729.22 after housing, which equal around $35,000. This equals around $22 p/h assuming the person works 5 days per week, 8 hours per day. This rate is higher than the minimum wage of $17.

So, where did you get your 5 million from?

According to the article, children in single-parent homes are 3 times more likely to be in poverty than those in two-parent households, which rate of poverty was 40.6% in 2014.
--
First, this means that slightly more than 10% of Australians live in poverty, some of whom earn slightly more than the minimum wage. Unemployment in Australia is 5.7%. If we abolished the minimum wage, those 10% MAY be worst off - given that many earn above the minimum wage already, they would most likely retain that rate if the minimum wage were abolished. Second, those who are unemployed or underemployed would have a better chance of getting work, or getting another job, thereby increasing their income.

Finally, under the tax plan proposed, those earning $35k would pay no tax, so they'd be better by $5000 per year. In fact, under the Negative Income Tax, they'd get an extra rebate from the Government of $1000.

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« Last Edit: Apr 21^st, 2017 at 8:22pm by Auggie »

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crocodile

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #10 - Apr 21^st, 2017 at 8:10pm

Bam wrote on Apr 21^st, 2017 at 2:58pm:

crocodile wrote on Apr 21^st, 2017 at 2:52pm:

Jovial Monk wrote on Apr 21^st, 2017 at 11:02am:

Exactly so, Grap. Another big direct hit to the Budget as less PAYE tax is paid plus the effect in reducing final demand.

No effect on final demand. The quantity of money doesn't change. It merely changes to a someone else's pocket where it is freely available to be spent.

That is a very naive assessment.

I understand your sympathy but the statement is actually quite simple. If John has less money to spend and M3 is stable then by logical extension Someone else has more. john's missing cash must go somewhere. Final demand is therefore unaffected. The mix of items may change but not the value.

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Very funny Scotty, now beam down my clothes.

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crocodile

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #11 - Apr 21^st, 2017 at 8:15pm

Jovial Monk wrote on Apr 21^st, 2017 at 3:18pm:

Pretty much everything croc says is naive to the extreme.

Company tax cuts won’t be pocketed by execs it will go to the workers Cheesy

Should I be concerned about the trivial comments from a lightweight like George. You've never been able to rebut anything I've quoted except with your own ill informed opinion. At least all of what I've stated is backed by analysis and scholarly research. The only thing seen from you is a few cut and pastes from whirlpool.

Anytime you want to argue the economics of what I've written you go right ahead Sonny Boy.

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Very funny Scotty, now beam down my clothes.

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Grappler Truth Teller Feller

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #12 - Apr 21^st, 2017 at 10:20pm

Auggie wrote on Apr 21^st, 2017 at 4:36pm:

Grappler Truth Teller Feller wrote on Apr 21^st, 2017 at 8:20am:

I could offer an unsolicited and unsupported opinion.... cutting the wages of the lowest paid will slow spending and cause a contraction in economic activity for the 'middle class', and will adversely affect that ephemeral but massively important thing called 'morale'* - thus directly affecting 90% of the working people of this country's incomes.

This and the continuing assaults on social security recipients would have to pass the test of being the most stupid ideas any half-baked overpaid twit ever came up with. Twits like that Kenyan clown from SA need to get their minds around the simple idea that the position they seek is to SERVE the people, not dictate to them, and the best way to reduce dependence on social security is to create jobs.

*I expect many people directly affected to be seeking another position ASAP - one that will pay them correctly, and for 'productivity' to fall. Treat people well and they will treat you well - treat them badly and they will treat you badly.

I give this 'policy' around three months before the reality sinks in. Are they going to tell nurses on $40 an hour they are getting too much, or police and firies and so forth?

They haven't got the guts.

Most of the middle-class aren't on the minimum wage. Nurses will never earn the minimum wage because it's a skilled job. No one will become a nurse if it pays at the minimum wage.

So, what the hell are you talking about?

So we have various classes of worker now? THAT is what I am talking about.....

You reckon serving piss to dickheads and such is NOT skilled work? Try it some time.

Now try to keep up... Roll Eyes

On a personal note - no man of wisdom would seek to challenge me with vitriol and scorn and by falling into the trap laid for him..... NEVER mix with a Gemini Ox.

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« Last Edit: Apr 21^st, 2017 at 10:25pm by Grappler Truth Teller Feller »

“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”
― John Adams

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Grappler Truth Teller Feller

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #13 - Apr 21^st, 2017 at 10:22pm

Auggie wrote on Apr 21^st, 2017 at 4:40pm:

The economic affects of penalty-rate cuts can NEVER be tested. The question is how such cuts affect an individual's ability to acquire a job. This is part of the broader issue the minimum wage: low-skilled jobs have become skilled jobs because the high cost of labour means that employees almost always looked for experienced workers.

If you want a second part-time but don't have any experience in the services industry, and are over 21, you've got buckley's chance of being considered for any position because the employer would consider you too risky and investment to pay $17 p/h to. However, if you were and could receive $5 p/h, then the employer would most likely employ you over an experienced person.

This is how the abolition of the minimum wage would help low-skilled and unemployed people. Will some be worse off? Yes. But, most people will benefit from these changes.

Utter rubbish - no employer will put on more staff to do the same job.

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“Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”
― John Adams

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Auggie

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Re: Economic Benefits Of Penalty Rate Cuts Not Tested
Reply #14 - Apr 22^nd, 2017 at 12:04am

Grappler Truth Teller Feller wrote on Apr 21^st, 2017 at 10:20pm:

Auggie wrote on Apr 21^st, 2017 at 4:36pm:

Grappler Truth Teller Feller wrote on Apr 21^st, 2017 at 8:20am:

I could offer an unsolicited and unsupported opinion.... cutting the wages of the lowest paid will slow spending and cause a contraction in economic activity for the 'middle class', and will adversely affect that ephemeral but massively important thing called 'morale'* - thus directly affecting 90% of the working people of this country's incomes.

This and the continuing assaults on social security recipients would have to pass the test of being the most stupid ideas any half-baked overpaid twit ever came up with. Twits like that Kenyan clown from SA need to get their minds around the simple idea that the position they seek is to SERVE the people, not dictate to them, and the best way to reduce dependence on social security is to create jobs.

*I expect many people directly affected to be seeking another position ASAP - one that will pay them correctly, and for 'productivity' to fall. Treat people well and they will treat you well - treat them badly and they will treat you badly.

I give this 'policy' around three months before the reality sinks in. Are they going to tell nurses on $40 an hour they are getting too much, or police and firies and so forth?

They haven't got the guts.

Most of the middle-class aren't on the minimum wage. Nurses will never earn the minimum wage because it's a skilled job. No one will become a nurse if it pays at the minimum wage.

So, what the hell are you talking about?

So we have various classes of worker now? THAT is what I am talking about.....

You reckon serving piss to dickheads and such is NOT skilled work? Try it some time.

Now try to keep up... Roll Eyes

On a personal note - no man of wisdom would seek to challenge me with vitriol and scorn and by falling into the trap laid for him..... NEVER mix with a Gemini Ox.

Ye Grappler, I never said that nursing wasn't an skilled job. I said that because it was a skilled job, nurses wouldn't be paid the minimum wage even if it were abolished because the market would pay nurses more than that. Where did you get that from?

Regarding the classes of workers, this is a typical socialist argument. You're looking at society through the prism of class warfare. Life's more complex than that. There are many classes, one could argue, and not all of them are logical supposedly. For e.g. I'm a highly educated person and can speak several languages, but have a low-income; whereas a beer-drinking bogan who drives trucks in the mines earns a hell of a lot more than me. According to your view of the world, I should be the rich, privileged person, and he should be the poor, dispossessed person, but it's not like that. So, where's your class warfare now? And the only requirement he has is that he has no intelligence.

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